Healthcare Reform Deadlines Look Dead

September and October dates will likely pass, but some type of reform still expected by year end

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While healthcare reform will indeed be the central focus for Congress as it heads back from its August recess September 7, Washington insiders believe that the Senate Finance Committee will not have a healthcare bill crafted by its original September 15 deadline, and the odds of lawmakers getting legislation to President Obama's desk by October 15 is iffy at best. But they are optimistic that some type of reform will be passed by year end.

The big unknown now, says Frank McArdle, principal and manager of Hewitt Associates' Washington, D.C., research office, is what members of Congress "feel they can sell to their constituents" about healthcare reform post hearing a lot of input--positive and negative--from the public during town hall meetings held in August. There were some calls from the public to "slow [healthcare reform] down and scale it back," McArdle says. "There is still a very heavy investment in healthcare reform and a full court press to get something done before the end of the year, but exactly what that comprises and how it will come about is uncertain at this point."

The death of former Senator Edward Kennedy (D-Massachusetts), who chaired the Senate Health, Education, Labor, and Pensions Committee, also leaves the outcome of healthcare reform in flux. The Massachusetts legislature has scheduled a September 9 hearing to discuss filling Kennedy's Senate seat. Kennedy "was adept at reaching bipartisan compromises," McArdle notes, so all eyes are now on the six Senators who have been attempting to craft a bipartisan healthcare bill. The group of six Senators "hold the key as to whether there will be a bipartisan approach [to healthcare] or not."

Meanwhile, a recent RAND study addressed how healthcare costs affect the U.S. economy by estimating how healthcare cost growth that exceeds growth in gross domestic product (GDP) affected three economic outcomes in U.S. industries: employment, output (measured as revenues), and value added GDP. The analysis, which included data from 38 industries over the 19-year period 1987-2005, posited that "the effect of excess cost growth on economic outcomes depends on the percentage of workers with employer-sponsored insurance (ESI)." Health care cost growth, the RAND analysis found, "would have a stronger effect in industries that have a larger percentage of workers with ESI: Increased healthcare costs can translate into higher labor costs, which might cause firms to hire fewer workers, produce less output, or raise prices."

The study found that "excess growth in healthcare costs has adverse effects on employment, output, and value added to GDP in the United States, and that the effects are greater for industries in which high percentages of workers have ESI." For example, the study notes, "over the period 1987 to 2005, when health costs were rising rapidly, the workforces in industries with larger percentages of workers with ESI grew more slowly -- the workforce in the construction industry, in which about 43% of workers have ESI, grew about 2.1%; in the hotel industry, in which 54% of workers have ESI, the workforce grew about 1%. But in the utilities industry, in which about 84% of workers have ESI, the workforce shrank by 2.8%.

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