WASHINGTON WIRE

January 28, 2004
Issue 1

In this issue, you'll find:

Budget To Be Released on February 2
President's 2004 Health Care Priorities Outlined in State of the Union Speech
HHS Releases Health Disparities and Quality Reports
Final FY 2004 Appropriations Enacted
Hearings and Events for the Week of February 2, 2004

Top Story

Budget To Be Released on February 2

The President's FY 2005 Budget is will be released Monday morning. It is anticipated that no major budget areas, with the exceptions of homeland security and defense, will see increases in funding of more than one percent. Go to http://www.whitehouse.gov/omb/ to view the FY 2005 budget documents. (OMB website will publish them at noon on Monday, February 2, 2004)

President's 2004 Health Care Priorities Outlined in State of the Union Speech

On Tuesday January 20, 2004 President Bush delivered his fourth State of the Union address that focused much of his health policy intentions on reducing the rising costs of health insurance and medical care. As a result of several controversial proposals, Mr. Bush has spent much of the week promoting and defending the policies, such as Association Health Plans, discussed in his speech.

Beginning the speech's health segment with the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Bush proudly recapitulated his recent signing of the controversial reform bill and congratulated Congress on their commitment to seniors by "giving them the modern medicine they deserve." He highlighted new provisions in the law such as, prescription drug coverage beginning in 2006, coverage for preventative screening against diabetes and heart disease, wellness exams for new Medicare beneficiaries, and the eventual option for participation in private health care plans under Medicare. Although the President stressed the need for bipartisan efforts, he vowed to veto any attempts to limit the influence of private health plans in the new Medicare law.

However, the American Association of Retired Persons (AARP), vocal supporters of the Medicare Bill, has already released proposals for three technical corrections centered on the prescription drug coverage sections. On Wednesday, January 28, House Democratic Leader Nancy Pelosi (D-CA) issued a press release stating the intent of Democrats to repeal the prohibition of Medicare to negotiate lower drug prices as well as plans to eliminate the "$12 billion Medicare HMO slush fund."

Piggybacking on the new legislation, the President stressed the value of tax-free Health Savings Accounts (HSA), which allows all Americans, including Medicare beneficiaries, to put aside savings, tax-free, that would be used to pay for medical expenses. Bush showed his faith in the program by proposing that individuals be able to deduct the full cost of their high deductible or catastrophic health insurance policy from their HSA. Supporters believe that such an expansion would make coverage more affordable for those who do not receive coverage through their workplace. Opponents fear that besides the economic consequences of a tax reduction, such a policy could prove to be insensitive to the poor and/or disadvantaged by favoring high deductible policies and potentially causing other traditional providers to increase their coverage costs.

President Bush continued his speech by urging Congress to pass legislation establishing a refundable tax credit for low-income workers in order to help them purchase health insurance. These tax credits, which have been proposed at up to $3000 per family, enjoy bipartisan support; however, efforts to enact them have proven unsuccessful to date.

The President also asked Congress to support legislation that would permit Association Health Plans (AHP), which would give small and medium size businesses the opportunity to join with other similar businesses under umbrella, group health plans. Ideally, AHPs would increase coverage and lower health insurance costs. However, negative reaction to this legislation points to the possibility that without regulation, AHPs could be free to exercise risk selection, thereby leaving out high-risk individuals with exorbitant premiums and deductibles.

Resurrecting the issue of medical malpractice reform, which failed in the Senate last year, the President blamed rising health care costs, in part, on "wasteful and frivolous" lawsuits against physicians. While "tort reform" legislation is favorable with such powerhouses as the American Medical Association, many, including consumer and disability groups, aim to oppose the bill.

Health Care News and Publications

HHS Releases Health Disparities and Quality Reports

On December 22, 2003 the Department of Health and Human Services released two reports: the National Healthcare Quality Report and the National Healthcare Disparities Report. The reports present data on the quality of, and differences in the access to, services for seven clinical conditions, including cancer, diabetes, end-stage renal disease, heart disease, HIV and AIDS, mental health, and respiratory disease. The reports also include data on maternal and child health, nursing home and home health care, and patient safety. The report found that in some areas attention should be paid to improvement of care for several populations, including African-Americans and people of lower socioeconomic status. A full copy of the report can be found http://www.qualitytools.ahrq.gov/.

Final FY 2004 Appropriations Enacted

The Omnibus Appropriations Act, 2004 (H.R. 2673), which funds the federal government in Fiscal Year 2004, was signed into law by President Bush on Friday, January 23, 2004. The bill is comprised of seven separate spending bills that failed to be enacted prior to the end of Fiscal Year 2003. Highlights from the final HHS spending bill are as follows:

Centers for Disease Control funding is $4.78 billion, $262 million above last year and $439 million above the budget request.
Community Health Centers are expanded - third year of the President's proposed expansion of health services through the Community Health Centers Program. ($1.627 billion - +$122.3 million)
National Institutes of Health continues the long-term funding commitment to the NIH by providing $27.982 billion, $1 billion more than last year. This is an increase of more than 7 percent because of one-time costs in FY03.
International HIV/AIDS, TB and Malaria programs are funded at $754 million, which is increased $50 million over the request.
Infectious disease programs are enhancing CDC's resources for preventing and controlling emerging infectious disease threats, such as SARS, West Nile Virus, and Monkeypox. ($383 million - +$24 million)
Homeland Security/Biodefense programs are supported at $1.625 billion in NIH, $1.116 in CDC and $518 million in hospital preparedness.
Ryan White AIDS program is increased by $64 million over FY03 with total funding of $2 billion. Children's Graduate Medical Education (GME) is funded at $305 million, $15 million more than last year and $106 million more than the President's request.

Upcoming Events

Hearings and Events for the Week of February 2, 2004

Tuesday, February 3, 2004

Committee on Armed Services
9:30 A.M
216 Hart Senate Office Building
Hearing - The Defense Authorization Request for FY2005 and Future Years Defense Program

Committee on the Budget
10:00 A.M.
268 Dirksen Senate Office Building
Hearing -The President's FY2005 Budget Proposals

Committee on Finance
10:00 A.M.
215 Dirksen Senate Office Building
Hearing- The Revenue Proposals in the President's FY2005 Budget

Committee on the Budget
2:00 P.M.
210 Cannon House Office Building
Hearing- The President's Budget for FY2005
Speaking: Joshua Bolton, Director OBM; Gregory N. Markiw, Chairman of Council of Economic Advisors

Committee on Ways and Means
2:00 P.M.
1100 Longworth House Office Building
Hearing - To examine President Bush's FY2005 Budget Proposals"

Kaiser Family Foundation
2:00 P.M. ET
Kaisernetwork.org will webcast a panel discussion on President Bush's budget, which will have just reached Capitol Hill. Click here to access the webcast.

The experts include:
-Bill Hoagland, Director of Budget and Appropriations, Office of Senate Majority Leader Bill Frist (R-TN.)
-Jeanne Lambrew, associate professor of health policy, George Washington University's Department of Health Policy
-Victoria Wachino, associate director, Kaiser Commission on Medicaid and the Uninsured
Send questions ahead of time to ask@kaisernetwork.org or call 1-888-KAISER8 (524-7378) during the live
broadcast.

Wednesday, February 4, 2004

Committee on Finance
10:00 A.M.
SD- 215 Dirksen Senate Office Building
Hearing- The Administration's Health and Human Services Budget Priorities
Speaker: Secretary Tommy Thompson

Committee on Veteran Affairs
10 A.M.
334 Cannon House Office Building
The President's Proposed FY2005 Budget for the Department of Veteran Affairs

Committee on Ways and Means
10:30 A.M.
Hearing- To Examine the President's FY2005 Budget Proposals
Speaker: Joshua Bolton, Director OMB

Thursday, February 5, 2004

Committee on Health, Education, Labor and Pensions
10:00 A.M.
430 Dirksen Senate Office Building
Hearing- Mad Cow: Maintaining Confidence in Our Consumer Products

For More Information

For further information on any topics discussed or publications listed, or to get copies of anything mentioned in this alert, please call (202) 466-6550 and ask for the Legislative Practice Group.

Powers Pyles Sutter & Verville P.C. is a full service law firm specializing in health care and education law and located at 1875 Eye St., NW 12^th Floor, Washington DC 20006