Spring thaw, but will nursing homes bloom?

Winter dragged on in Washington this year. Snow fell just before the Cherry Blossom Festival and young children actually were beginning to dread the thought of another day of school closings. Then, suddenly, the temperatures soared into the 70s and 80s, leaves and flowers erupted, and thousands of Washingtonians rushed to remove debris and plant new bulbs in the thawing soil.

The winter was especially bitter on Capitol Hill this year. For months, nearly every piece of legislation had been locked in a deep freeze. Health care reform in particular was thought to be incurably damaged by the heavily frosted relations between the Republican congressional majority and the Democratic minority. Other legislation, including the federal health and human services budget for the current fiscal year, was moving toward passage with all the speed of a glacier.

And then the thaw came. The first sign of a spring blossoming of legislation affecting nursing homes came on March 28, when the health insurance reform legislation known as Kassebaum-Kennedy suddenly cleared the House of Representatives. The Senate passed the bill, with somewhat different provisions (e.g., including mental health coverage and excluding the medical savings accounts favored by the House), three weeks later. In both the House and the Senate versions, Kassebaum-Kennedy included the long-sought tax deduction for long-term care insurance and expenses, placing employer contributions for nursing home benefits in the same status as employer contributions for other types of health insurance.

Admittedly, national trends toward reduced employer health benefits weaken the hope that the new tax status of long-term care insurance will transform the revenue base for nursing homes. Other provisions, though, of Kassebaum-Kennedy will make the purchase of long-term care policies more attractive to the individual consumer. These provisions include a dramatic increase in tax deductibility of health insurance for self-employed individuals and the elimination of taxes on the benefits from early termination of life insurance to pay for terminal illness care.

The thaw continued through April, as Congress and the White House suddenly ended months of stalemate over the federal budget and enacted a bill that funds Medicare, Medicaid, veterans health care and all other remaining federal programs through September. This was particularly important for nursing homes because the level of funding for Medicaid had been one of the biggest obstacles to an agreement over the budget. Despite claims by House Speaker Newt Gingrich that the omnibus budget bill was a "remarkable achievement" for the Republican Congress, the agreement erased most of the changes enacted by the House of Representatives last fall, leaving Medicaid and Medicare nearly unchanged from the Clinton Administration's budget request.

A third piece of legislation affecting nursing home operations that emerged in the productive spring on Capitol Hill was the movement to raise the federal minimum wage from $4.25 per hour. Although the Republican leadership seized on the idea of offering an increase in the Earned Income Tax Credit for low-wage workers with children, Democratic and moderate Republican advocates of a higher minimum wage subjected this to merciless ridicule. Congressman Pat Williams (D-Montana) depicted the proposal as encouraging the working poor to beg alms from Congress rather than receiving an adequate wage from their employers. By the end of April, even Republicans had to admit that members of their party were willing to support a minimum wage increase.

Why did all of this legislation affecting the nursing home industry suddenly erupt from Congress? The simple answer appears to be that Republicans became aware that their first term of being the majority party on Capitol Hill was scheduled to end in roughly 90 days with almost no significant achievements. Worse, with a presidential nominee running far behind the Democratic incumbent in public opinion polls, Republicans in swing districts badly needed a legislative history that would appeal to moderate voters in November. The result was unprecedented pressure by moderate Republicans to enact legislation that benefits average Americans, even if it meant massive retreats from the House of Representatives' austere budget guidelines.

Kassebaum-Kennedy is a good example of the process. The bill had been blocked for months in both the House of Representatives and in the Senate Finance Committee, largely due to delay tactics by the chair of the Senate Finance Committee's subcommittee on Medicare and long-term care, Presidential hopeful Bob Dole. According to a staff member in Senator Kassebaum's office, Dole's staff "suddenly" found time to negotiate provisions on long-term care that previously had been seen as an unacceptable drain on the federal treasury. The objections of southern Republicans that Kassebaum-Kennedy represented a federal intrusion into the rights of state insurance commissions also evaporated, and the bill sailed through the Senate on a remarkable 100-0 vote.

Even though the spring thaw affected the nursing home industry in several ways, the results still fall far short of a comprehensive reform to replace the cumbersome Medicaid-centered financing system. With control of the White House, the Senate, the House and three dozen state governments open to change in November, this year looks like any other year of late: one in which major policy decisions on health care for the elderly continue to wither on the vine.