11/23/2009 05:12 am ET | Updated May 25, 2011

Baucus Bill Hearings Day 1: Heroes--Cantwell, Kerry, Nelson, Wyden. Grumpy Old Men--Republicans. Goat--Tom Carper.

Late night owling it on CSPAN, I report some encouraging events in the Senate Finance Committee markup of the Baucus bill that has met with deservedly widespread criticism. If the trend continues, something very good may yet emerge. The following are recounted in alphabetical order:

Senator Maria Cantwell (D-WA) had already convinced Baucus to accept her changes in his "modified mark" that put a stake in the fee-for-service system that provides perverse financial incentives for volume of patients and procedures rather than outcomes. This stems the inexorability of health care cost inflation exceeding the CPI, and thus will have a major impact on improving outcomes and bending the cost curve down.

Senator John Kerry (D-MA)
offered an amendment to reduce the amount of decrease in payments for home health care delivery. The Senator correctly pointed out that home health care is highly desired by the elderly community, improves outcomes and is substantially less expensive than institutional or hospital care. He noted that home health care was taking a larger percentage hit than any other area, and that such priorities were misplaced.

Senator Bill Nelson (D-FLA)
proposed that Medicare part D be permitted to reimburse drug companies at Medicaid rates for seniors who qualify for both programs, approximately 8 million people. He noted that those were the rates that applied prior to the (Republican Congress) outlawing that practice in its Part D plan in 2005, and he was merely suggesting a rollback to the prior practice. This would save the system $86 billion over 10 years that would enable the donut-hole ($2700-$5800 of drug expenses for which seniors pay premiums but receive no benefit) to be filled and still leave a cool $30B to satisfy other needs in the system.

Democrat after Democrat applauded Nelson and requested to be added as co-sponsors. Senator Chuck Schumer (D-NY) wondered aloud how anyone could oppose it, and bluntly stated that many in the room had supported provisions to aid one or another interest group, and it was time for the Committee to do something for the American people. For a while, the Republicans just squirmed, although Chuck Grassley, with whom Baucus was "negotiating" for months, blurted several sarcastic remarks.

Enter, Senator Tom Carper (D-Del). He began carping about the 'unfairness' to the pharma industry that had 'negotiated' an $80B deal--although not, Senators Kerry and Schumer pointed out, with Congress, but rather (supposedly) with people in the White House. He suggested that, since drug costs were only 10% of health care expenses, whereas hospital costs were 35%, that hospitals should be contributing 3.5X the amount the drug companies did "in order to be fair." His position was carefully filleted by Senators Kerry and Schumer, who noted that many hospitals are non-profits, some are losing money, and others have very thin profit margins.

While Carper carped, the grumpy old men on the Republican side began to remember their talking points. Only 12% of medicare patients, Grassley harrumphed, were in the donut hole. [neglecting to say is that that is more than 5 million people(!), and how many are not in it because they cannot afford it, and are thus just not taking those medications?]. Probably the most ridiculous argument was that if the pharma companies did not make their $86B over 10 years fleecing poor seniors, they would raise the prices of the drugs for children, as if children were on such drugs as Lipitor®, Rituxan® or Forteo®, or even that most drugs for children are still patent-protected and thus not subject to generic competition.

Senator Ron Wyden (D-OR) denounced the original bill for not providing choice, and pointed out that most versions of the public option are only for those who do not have or lose their insurance. He challenged the committee to open the health care plan available to all Members of Congress and all federal employees, and that thus already operates in every state (because they have federal employees) to the public. This would fulfill, he said, the President's argument that "if it is good enough for Members of Congress, it should be good enough for the American people".

Overall, it was a good opening day. One could measure how good it was by the sour faces and wounded-appearing body language of the Republicans. After their opening statements--spouting the same poppycock that they too were for reform, that malpractice reform would reduce costs substantially (a position refuted by the Congressional Budget Office, in 2004, under a Republican Congress), and that opening competition to insurance across state lines would reduce costs--they were unable to mount any cogent responses to the Democrats' modifications or amendments. As noted in an earlier article, if the Democrats pass a good universal health care bill, Republicans will become politically irrelevant for 2+ generations. ("Permanent Irrelevance: Outcome for Republicans if Dems Pass Universal Health Care Reform", September 9, 2009). Their body language, their harrumphing, and their lack of anything cogent to offer is a harbinger of that status.

Although much of the comments were directed to costs, in fact many of the proposals lowered costs because they improved health outcomes. That is the key to success, and ought to be the focus of the President's messages on health care.

There is a long way to go before the Baucus bill is transformed into real reform that benefits real people. Day 1 was a good start.