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Executive Summary

A universal outpatient prescription drug benefit and coverage for long-term care currently remain in health care reform legislation envisioned by the Clinton Administration, White House Senior Advisor for Policy Development Ira Magaziner told a March 10 health care reform seminar in Washington, D.C. Asked whether an outpatient prescription drug benefit and comprehensive long-term care coverage can be included in health legislation affordably, Magaziner said: "We are considering both of those for inclusion in the comprehensive bill." One or both of those benefits may have to be jettisoned before the final introduction of the proposal in May, "once we see what those options look like in the context of everything else," Magaziner noted. Nonetheless, the working groups developing legislative options as part of the White House's health care reform task force "felt we needed to lay out a full set of options," including a drug benefit and long-term care, he said. Magaziner emphasized the all- inclusiveness of President Clinton's concept for health care reform. "The President has told us," Magaziner noted, that "he wants a comprehensive bill." The seminar was jointly sponsored by the National Association of Chain Drug Stores and the National Retail Federation. The White House policy advisor also indicated that global budgeting is likely to be included in the legislative proposal, but it is intended to be a "fallback" provision rather than an intrusive element of the system. President Clinton "wants some kind of a budgeting system, almost as an insurance policy" for the health care system he envisions, Magaziner explained. "If the advocates of pure managed competition are correct, the competitive process itself may ultimately keep [the growth in costs] down," Magaziner said. "Personally," he added, "I hope that winds up being the case." However, he continued, if improved competition alone does not stem the growth of health care costs, "then we want some sort of insurance premium on that -- that is, some type of budget." The global budget "may become a useless appendage" to the system "if the competitive process works," Magaziner said, "but it's there as a fallback in case it doesn't." The Pharmaceutical Manufacturers Association has said it supports prescription drug coverage under health care reform, but without global budgets or other forms of imposed price controls. PMA has said it will support voluntary price restraint with some enforcement mechanism. Magaziner pointed out that "there are about six different definitions" of global budgeting. "We're not using any one yet; we're still in the broadening stages" of policy development, he reported, and there are about "12 permutations still on the table of what a budget might look like." Noting that the task force "will narrow" its legislative options "over the next six weeks," Magaziner said they currently include "some type of overall [health care] expenditure budget" administered by states, a cap on the maximum charge for a "guaranteed benefits package," a tax or "low-cost fine" on charges for benefits over a certain threshold, "a budget at the level of the hospital or physician group or the level of the plan or the level of the premium." At a March 10 conference on rural health care in Little Rock, Ark., Assistant to the President for Domestic Policy Carol Rasco said that no final decision has been made on whether to include a health insurance deductibility cap in the reform plan. Asked at a press briefing if limiting the tax deductibility of health benefits had been ruled out by the administration as politically unfeasible, Rasco said: "That decision has not been made in a final form." Noting that Task Force director Hillary Rodham Clinton was quoted as saying the administration had ruled out a deductibility cap option, Rasco said: "I don't know that she was characterized entirely correctly." At a March 10 briefing in Washington, Rep. Cooper (D-Tenn.) similarly advised caution in ruling out the potential of a deductibility cap. A co-sponsor of the managed competition plan in the 102nd Congress, Cooper said: "I would read the press statement very closely. I do not see the door slammed shut on that issue." Cooper distinguished between tax exclusion for employees and the tax exclusion of health benefits via a business deduction. "We do suggest touching the deduction" of health care costs as business expenses, Cooper said. He characterized those expenses as a "highly visible benefit...[that] the boss and the boss only enjoys" and a "very unfair and wasteful deduction." The administration currently is "analyzing in great detail what we think are the most workable ways" of enforcing some budget discipline, Magaziner said. "There are systems in other countries that do this now, so this is not all theory." He pointed out that the German and Canadian health care systems are examples of "private sector systems that operate with budgets" and caps. Magaziner emphasized that the Clinton Administration continues to prefer a market-based, competitive system to a government-run single-payer plan. The president "wants a private competitive system; he doesn't want doctors to be employed by the government," Magaziner said. President Clinton's vision of health care reform is based on "a framework of managed competition within a budget," Magaziner said, and he wants a "system that maximizes consumer choice" of providers and services. Reflecting one of his basic principles for health care reform, the president has directed the task force to devise a system that will "phase in universal coverage as soon as possible," Magaziner said. "Leaving a lot of people outside the system winds up costing a lot of money" as well as suffering, he explained. Magaziner's use of the phrase "as soon as possible" may be an indication that the administration concedes it cannot provide universal health care coverage beginning immediately after enactment of reform legislation. Responding to criticisms from organized medicine, Magaziner noted that the more than 400 people working on the health care reform initiative "include over 60 doctors, of whom about 30... have been practicing physicians." They also include "a number of people from the business community, nurses, social workers and so on -- it's a broadly representative group of people," he said. However, the task force has not allowed "people from organized interest groups to actually participate as members of the working groups," Magaziner pointed out. There are so many interest groups in the health care industry, he explained, if they were permitted to participate, "you'd be talking about thousands of people." Instead, the working groups are seeking advice from the interest groups through meetings. Magaziner said the various working groups have met with a total of "about 150 interest groups so far." The groups also have solicited written submissions from health care organizations. The task force is "processing about 1,000 letters a day," he said. The National Wholesale Druggists' Association was one of the groups writing to the White House during this phase of outside advice for the administration. NWDA President Ronald Streck decried the acrimony of the administration's recent attacks on the pharmaceutical industry. He noted that the administration's approach to the pharmaceutical industry has helped to drain more that $129 bil. from the market value of pharmaceutical manufacturers and biotech company stocks. "Investors' decisions not to invest in these companies as a result of your comments will most assuredly doom their existence," Streck wrote. Streck urged the administration to hold a health care summit to permit more access by the industry segments of the health care sector most affected. Washington, D.C. federal judge Royce Lamberth ruled March 10 that the White House health care task force could not continue to meet with private industry interest groups in closed-door meetings. In his ruling, Lamberth held that task force members "are hereby preliminarily enjoined from holding or conducting any meetings of the President's Task Force on National Health Care Reform and any subgroups or any subcommittees thereof until such time as the task force is in full compliance with the requirements of [the Federal Advisory Committee Act]. In addition, all fact-finding and fact-reporting meetings of the task force must comply fully with the requirements of FACA." The suit was brought Feb. 24 by the Tucson, Ariz.-based Association of American Physicians and Surgeons, the American Council for Health Care Reform, located in Arlington, Va., and the D.C.-based National Legal and Policy Center. Judge Lamberth agreed with the plaintiffs' argument that the task force is an advisory committee subject to FACA. He cited the failure of the committee to meet the law's requirements of registering with the Library of Congress and issuing Federal Register notices of upcoming activities. Although the ruling apparently may hamper the efforts of the President's task force to conduct private meetings, the ongoing activities of the more than 400 members of the panel's 30 working groups may not be affected. In a second section to his ruling, Lamberth granted in part the administration's motion to dismiss those portions of the suit addressing the activities of the task force working groups. As a result, charges maintaining that the meetings of the task force "which are held for the purpose of formulating advice and recommendations for the president are also dismissed." Maintaining that the task force is "willing to be flexible," Magaziner noted that the U.S. Chamber of Commerce "has come up with some constructive ideas [regarding] an employer role in this universally," with assistance for small businesses. Bill McInturff of the political polling firm Public Opinion Strategies told the NACDS conference that there is more support for a reformed health care system based on managed competition than for a single-payer system. People want the government to "police the system, not run the system." On the other hand, McInturff said there is only "soft support" among the public for global budgets, which is associated with limited access. He urged the Clinton Administration to coin a different phrase for "managed competition" because focus groups indicate that "no one likes being 'managed,'" and "competition" suggests that some will be denied access to medical care. McInturff added that the biggest political challenge to reducing the deficit is cutting the entitlements. "If President Clinton can get the members of Congress to cut Medicare, Medicaid and Social Security and get them re-elected, he deserves all our praise." NACDS President & CEO Ronald Ziegler introduced Magaziner to the conference, commenting that "the 60,000 operators of the drug stores throughout the U.S....fully support the President's objectives to reform health care in America, and we're very supportive of...the thoughtful, businesslike process that is being followed to achieve the reform legislation."

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