Burwell hearing: She's not controversial as nominee, but Obamacare still is

Sylvia Mathews Burwell went before a Senate committee Thursday as President Obama's nominee to head Health and Human Services. She did well, but Obamacare had a rough ride.

President Obama has said recently that his health care reforms are working. A Democratic senator says there’s been an “avalanche of good news” about the Affordable Care Act.

But a congressional appearance Thursday by Mr. Obama’s nominee for secretary of the Department of Health and Human Services revealed that the law still faces significant challenges ahead – notably the longstanding problem of rising medical costs – and that partisan debate about Obamacare is far from over.

Sylvia Mathews Burwell stirred little if any controversy for her personal and professional qualifications during questioning by the Senate Committee on Health, Education, Labor and Pensions. All signs point toward an easy confirmation of her nomination to succeed Kathleen Sebelius.

Both Democrats and Republicans on the committee, however, voiced concern about the risk that rising health care costs pose to the economy – despite the word “affordable” in the title of the 2010 insurance reform law.

The recent enrollment of some 8 million Americans in Obamacare marketplaces still leaves a “very, very big issue, which is the cost of the system,” Sen. Sheldon Whitehouse (D) of Rhode Island said at the hearing.

That point was underscored by others in the room and also, separately, by a report analysis released Thursday by Avalere, a health industry consulting firm.

“Double digit premium increases are likely in many markets,” as insurers revise their pricing before a new period of enrollment begins later this year, Avalere predicted.

The good news for Obamacare and its enrollees: This forecast is for big price hikes in “many markets,” not all. And the firm says the cost pressures aren’t driven by the age mix of the enrollment pools in different states. (This, despite the fact that only about 28 percent of enrollees were between 18 and 34 years old, a lower share than the Obama administration had hoped.)

Translation: the Democratic-backed insurance reforms appear to have averted a cost “death spiral” that might have occurred if enrollees were predominantly older or sicker Americans.

Still, it’s not just Avalere that sees costs rising in the health system, following a relatively quiescent period in the past few years.

Senator Whitehouse quoted other experts saying that US health costs are likely “to grow 1.2 percentage points faster than the economy over the next 20 years.”

US health spending is already the highest per person in the world.

Ms. Burwell acknowledged the challenge. She said she’d work with Whitehouse and others – in and out of Congress – to try to improve the quality and lower the cost of care.

She comes to the task with managerial experience in both government and the nonprofit sector, having executive roles at both the Wal-Mart Foundation and the Bill and Melinda Gates Foundation. Most recently, she has been director of the White House Office of Management and Budget.

At the hearing, members of both parties took a favorable view of Burwell as a nominee.

“I will vote for her” when she comes up for a confirmation vote in the Senate Finance Committee, said Sen. Richard Burr (R) of North Carolina. “She comes with a portfolio of experience that would make her a tremendous asset at addressing some of the challenges that that agency specifically and uniquely has.”

She’ll have tasks that ago well beyond implementing Obamacare, running an agency whose operations span from new drug approvals to federally funded medical research and the administration of Medicare for seniors.

Obamacare appears sure to remain a focal point, however.

Looming ahead for the agency and Burwell are implementation issues including finishing the “back end” infrastructure of the website HealthCare.gov, trying to expand enrollment again in 2015, and launching the law’s mandate on firms with 50-plus employees to offer insurance or pay a penalty.

The law promises to remain at the forefront of political debate, too – as was apparent at the hearing.

Sen. Tim Scott (R) of South Carolina voiced worries about the law’s cost and the quality of its insurance plans. “[Despite] the $1.4 trillion price tag,… we'll still have 31 million Americans uninsured by 2024,” he said, citing Congressional Budget Office estimates.

And for individuals who do sign up, Senator Scott said the law’s promise of affordability “seems to be challenged when you think of the … higher deductibles, higher out-of-pocket expenses, a more limited number of doctors to choose from, fewer hospitals in the system, and even fewer specialists.”

At the same time, the signup numbers for 2014 and statements by insurers that 80 percent or more of those enrollees are paying their premiums have made it harder for Republicans to paint the law as a disaster.

Sen. Chris Murphy (D) of Connecticut said: “I think this increasing avalanche of good news and positive data about the implementation of the Affordable Care Act is going to ultimately lead to a much broader public acceptance and support for the law.”

Senator Murphy pointed to a significant decline in the share of Americans who lack insurance coverage, according to new polling.