Hillary Clinton on Health Care Reform: Part II

“We’re going to have universal health care when I’m president — there’s no doubt about that. We’re going to get it done,” said presidential candidate Senator Hillary Clinton in Iowa on March 26th.  Whether this prediction comes true depends on a lot of things, most important among them: will she ever be the president and will she have the political clout to get meaningful reform enacted? As discussed in my last post, her track record on this isn’t so good.

What would Clinton health care reforms look like in a Hillary Clinton administration? She hasn’t yet provided a lot of details, but in the past week she’s at least begun to provide their outline.

Speaking at a Las Vegas candidates forum on March 25th, Clinton noted “fixing” health care would be an incremental process taking two terms of her presidency. “We all are going to try to start as soon as possible.  We can move quickly, but make no mistake, it’s going to be a series of steps.”

Clinton favors “guarantee issue” provisions, which requires insurers to accept all applicants regardless of their health conditions. At least that’s what she implied in Las Vegas. According to the Las Vegas Review Journal, Clinton claimed “Insurance companies make money by spending a lot of money and employing a lot of people to try to avoid insuring you ….” The Review Journal further reports her as calling for “an end to ‘insurance discrimination’ against people with pre-existing medical conditions.”

Let’s hope she’s not considering her home state of New York’s approach to guarantee issue, which is pretty much a disaster. As previously posted in this blog, the New York approach costs its citizens thousands of dollars each year. Consider: the average annual premium for a single New Yorker is $3,743 compared to $1,885 in California. For a family, the average annual premium in New York is $9,696 while a California family pays, on average, $3,972 per year. Given this, one hopes Clinton is considering a more nuanced approach to guarantee issue.

Unlike some of her challengers for the Democratic Party presidential nomination, Clinton seems to reject a single payer system. Here’s a portion of the transcript from the Iowa town hall meeting:  “I think we have to have a uniquely American solution to health care because we’re a different kind of country than anybody else.

“I think we will move toward requiring employers to participate the way Massachusetts does or the way California is considering. … And if you don’t insure your employees you’re going to have to pay some kind of per-employee amount so that everybody can be given insurance.” (Here’s the full transcript of the town hall meeting as posted by ABC News. The health care reform discussion begins on page 2 of the transcript).

While not supporting a single payer approach, Clinton does see the government as being an insurer of last resort for consumers who don’t get coverage from other sources such as their employers. And she would require individuals to buy coverage, presumably through this state program, with costs being borne by employers who don’t purchase coverage. As she notes, this mirrors the health care reform proposals enacted in Massachusetts by then Governor Mitt Romney and proposed in California by Governor Arnold Schwarzenegger.

Clinton is staking out a middle ground on health care reform. She’s going to get tough on insurance companies, but continue to rely on employer sponsored coverage. She’s supporting a government health plan for more Americans, but it won’t be completely government run. This may surprise some, and it should serve as fair warning for all. Remember: even if her presidential bid fails, Senator Clinton will be a powerful voice in the U.S. Senate on any health care reforms the new president has to offer.

Hillary Clinton on Health Care Reform: Part I

The botched attempt to pass comprehensive health care reform remains one of the seminal events of the Clinton Administration. It was the first time a First Lady was given responsibility for passage of such an immense public policy undertaking. Hillary Clinton undertook the responsibility with zeal, deploying a massive task force to thoroughly examine the issues and deliver a solution to the American people.

What they came up with went down in flames.

In part, this stems from the political deafness displayed by now Senator Hillary Clinton and members of her task force. There was the brilliant way they demeaned and ignored members of Congress, the rightousness in which they cloaked their arguments and the arrogance. Oh, the arrogance.

In one memorable instance for insurance agents, Hillary Clinton told Lori Proctor, a broker from Ohio, that there being no role in her plan for agents was OK, because, “… someone as bright as you could find something else to do.” An arrogant response to a legitimate question, made more foolish by making it in front of a Wall Street Journal reporter.

My favorite example of the Clinton Task Force arrogance came from Walter Zelman, formerly a deputy California Insurance Commission under (now Lieutenant Governor) John Garamendi. He explain that when Garamendi tried to remake California’s health care system it required a document of only a couple dozen pages. Now, as a member of the the Clinton Administration, he was pleased they had hundreds of pages worth of reform because that’s what it took to cover all the possible consequences of the Clinton plan. The audacity of believing a group of people could impact one-fifth of the nation’s economy and not come afoul of the law of unintended consequences, struck me as monumental folly — and unmatched arrogance.

I led the National Association of Health Underwriters’ legislative efforts during the Clinton health care debate. At one point I had the priviledge of testifying before four Congressional sub-committees in a single week. What the Clinton forces did manage to do is raise health care reform to the dominate political issue of its time. What they failed to do was accomplish anything, a squandering of an opportunity that impacts the country — and the health care reform debate — to this day.

So now Hillary Clinton is running for president. What would be in store for the country if she were to win? That’s the topic of my next post.

Proof of the Govenor’s Clout

My last post commented on Governor Arnold Schwarzenegger’s political clout and how it will shape the health care reform debate. A recent article provides some proof.

In addition to gloating over the Governor’s seeming inability to get his reform package introduced as legislation (see my previous post), many took glee in the hurdles the Administration faced in obtaining the federal funding he needs to finance his proposal.

No more glee for thee! Mike Leavitt, U.S. Department of Health and Human Services Secretary recently committed the Bush administration to supporting nearly all of the govenor’s $3.7 million request to increase Medi-Cal funding. According to the Sacramento Bee, in an article written by Judy Lin and published on March 15th, the remaining shortfall will be forthcoming once the state submits the proper paperwork. Pretty impressive considering the White House has proposed Medicaid cuts (Medi-Cal is the state’s version of Medicaid).

Maybe any California Governor could have pulled this off. We’ll never know as we only get one governor at a time. At the very least, this breakthrough reinforces the message of my earlier post: it’s not the bills you introduce, it’s the the clout you wield. There’s a long way to go before the end of the health care reform debate in California. With or without legislation embodying his overall plan, the Governor is showing he’s going to shape it.

On Schadenfreude and The Timing of Political Power

There’s a lot of quiet sniping about Governor Arnold Schwarzenegger’s failure to have his administration’s health care reform package introduced as legislation. The smell of schadenfreude is in the air and you almost hear them say, “He may be a movie-star-gazillionaire-governor, but we have a bill and he doesn’t!”

Big deal. What the Governor does have going for him is, well, he’s a movie-star-many-multi-millionaire-governor. Cripes, he even appears on The Apprentice. He has what’s known as clout. The ability to shape debates and influence legislation. He’s above needing a particular bill. He has the power to hijack most any of them.

The fact is, no bill becomes law as introduced. They are shaped by amendements, compromises and, sometimes, the force of powerful individuals. Look at what happened with AB 1672, the small group health insurance reform bill of the 90’s. You can trace it’s genesis back to AB 350, introduced by then Speaker of the Assembly Willie Brown. It would have created a “pay-or-play” system in California. It sparked the reform debate, but never became law. Instead, a conference committee was convened for AB 1672, which as originally introduced dealt with auto insurance, if I’m not mistaken. Stakeholders negotiated for months and the result was a very good piece of legislation.

The moral of the AB 1672 story is, the health care reforms being introduced now are merely the starting point. Eventually real negotiations will start. The political sausage making process will kick in and the political clout the governor enjoys will come into play. It would be fun to watch if the outcome wasn’t so darn important.

The Misguided Health Care Reform Surcharge

The last couple of posts have dealt with the guarantee issue requirements in the individual health insurance market, a central component of several health care reform proposals. What I’ve suggested is that guarantee issue, which simply means health insurance carriers have to accept all applicants regardless of their health risk, if done right can lead to universal coverage, but if done wrong can lead to disaster.

The line between right and wrong in this context concerns requiring consumers to be insured. If it’s required, and that requirement is effective, guarantee issue can work. In systems where consumers can wait until after a need for insurance develops you wind up with a mess. The poster children for disaster are New York and New Jersey. Consider the results of a 2005 study conducted by the America’s Health Insurance Plans (AHIP):

Average Annual Individual Health Insurance Premiums:
                                          New Jersey        New York      California
Single Coverage:                $  6,048               $ 3,743         $ 1,885
Family Coverage:                $14,403               $ 9,696         $ 3,972

New Jersey and New York have guarantee issue (and community rating) without a mandate to purchase coverage. California does not — at least, not yet. The result: a consumer in New Jersey buying coverage just for herself pays surcharge for the state’s misguided health care reform of over $4,100. If she moves to New York, the surcharge falls to approximately $1,850.

Families suffer more when health care reform goes bad. A family in New Jersey buying their own coverage pays over $10,400 more than a California family; New Yorkers pay over $5,700 more.

Think of the impact of a 350% surcharge on a family’s budget — or on a state’s economy. Promoting guarantee issue in the individual market as a key to achieving universal health care coverage is both noble and reasonable — if it’s done right. If done wrong, the state and its citizens will pay the price.

Making Guarantee Issue Work

Yesterday’s post discussed how requiring individual health insurance carriers to issue coverage to all applicants (called “guarantee issue”) was so dangerous if done wrong.  So how can it be done right?

CAHU’s Healthy Solutions health care reform plan has a common sense approach (full disclosure: I helped write it). To oversimplify the proposal, it puts the horse before the cart: before the state creates a mandate to sell, it first must demonstrate it can enforce a mandate to buy.

CAHU calls for guarantee issue in the individual insurance marketplace once 90% of the state’s population has obtained basic health care coverage either through state programs, from their employer, or on their own. CAHU would expand the existing the state’s Major Risk Medical Insurance Program (“MRMIP”) to serve as an insurer of last resort until the threshold is reached. But once the state demonstrates its ability to enforce the mandate to buy, carriers would be obliged to accept everyone applying for coverage.

This doesn’t completely inoculate the system from adverse selection (people waiting until after they need insurance to obtain it). After all, 10% of the state — roughly 3.5 million consumers — would still be uninsured. CAHU’s Healthy Solutions plan is one of the few, if not the only proposal which mitigates the negative impact this population could have on the overall premiums. CAHU enables carriers to increase the rates and exclude preexisting conditions for these late-applicants. The amount of increase and the duration of the exclusion varies with how long the applicant has been uninsured.

Previously Uninsured for:                      Rating Band                  Preexisting Exclusion Period:

More than 24 months:                         +/- 30% for 3 years                36 months
19-to-24 months:                                +/- 25% for 3 years                24 months
13-18 months:                                    +/- 20% for 3 years                18 months   
12 months or less:                               +/- 20% for 2 years                Equal to number of months uninsured

An interesting aspect of the CAHU Healthy Solution health care reform plan is the “right of return” it provides late-applicants. It doesn’t punish people who stayed outside the system until they needed the coverage forever. Just for a time commensurate with their dereliction. Once they’ve done their time, their premiums are reduced and preexisting conditions are covered. The result is a guarantee issue system which can actually work.  

Require Carriers to Sell Coverage to All Who Apply. But Do It Wisely, Please.

 A lot of health care reform proposals require health insurance carriers to accept all applicants, regardless of their current health condition (a practice known as “guarantee issue”). Some would even allow folks to sign up for coverage while they’re in the hospital waiting room. This makes no sense.

Insurance is about spreading risk among a large population. If people could wait to buy auto insurance until after they’ve had an accident, how many would buy coverage before a crash? No one. Which is why, if not done right, guarantee issue leads to something called “adverse selection.” Just ask the residents of New York and New Jersey.

Several health care reform proposals include guarantee issue provisions. Governor Arnold Schwarzenegger’s plan is one of them. But at least he calls for a mandate to buy coverage, too.

The problem is mandates to buy don’t work all that well. In California, 25% of drivers fail to buy required auto insurance. Other states with mandatory auto insurance laws experience roughly the same levels of non-compliance (give or take 5%). That’s why you can still buy uninsured motorist covered in most of these states. But when it comes to health insurance, achieving only 75% compliance in a guarantee issue environment would lead to disaster (again, see New York and New Jersey).

So the key is to first prove that the mandate to buy is working before requiring a mandate to sell. That’s what CAHU’s Healthy Solutions health care reform plan does. And in tomorrow’s post I’ll describe how.

Health Care Costs is the Key, But Few Pay Attention

Daniel Weintraub gets it. He’s a long time political writer for the Sacramento Bee. And when it comes to health care reform, he gets it.

In the February 27, 2007 edition (Editorial Section, page B7 — click here to see the article), Weintraub writes, “Any plan that does not seriously address the underlying costs of health care will only move responsibility for those costs from one place to another.”

He goes on to quote the CEO of the California Health Foundation, Mark Smith, who notes, “Much of the discussion about making health care more affordable … assumes that what we are trying to make more affordable is the insurance policy…. But the insurance policy at some point really just pays for the underlying care, and it’s the underlying care which is too expensive.”

In short, it’s the cost of health care which is behind the cost of health insurance.  The logical conclusion is that our goal should be health care cost reform. Yet the debate seems mired in reforming health care coverage. And I have to confess to being as guilty as the next guy. The CAHU Healthy Solutions plan I helped author is long on reforms to provide access to health care coverage, but short on details for reducing the cost of health care itself.

Why? First, because controlling health care costs is tough. Second, because health care access is where the political action is.

Controlling health care costs is tough, very tough. As an earlier post in this blog points out, medical cost inflation, driven by an aging population, new technologies and increasing customer expectations, greatly outpaces overall inflation. (For a tool that shows just how much of an impact this can have, check out Tom’s Inflation Calculator ).  Several of the health care proposals address the edges of the cost issue. For example, both Governor Arnold Schwarzenegger’s and CAHU’s Healthy Solutions plans advocate wellness and healthy living programs among other ideas. But most of the plans being debated in Sacramento, fail to attack health care costs head on. Even the one that arguably does, Senator Sheila Keuhl’s single payer plan, SB 840, proposes cost control tools which will be costly and complicated to implement and may not work at all, especially on a single-state basis.

With legislative leaders and the Governor focusing on health care access, so do stakeholders like CAHU. All parties know Weintraub is right: controlling health care costs are the key But no one wants to be out doing the hard work of addressing that issue when the governmental process may pass a law that raises your taxes, harms your clients, or destroys your profession.

As a result, the key issue gets neglected. Fortunately, not by everyone. As Weintraub notes in his article, several folks are trying to tackle this issue. Let’s hope they succeed — and they get the attention they deserve.

CAHU’s Healthy Solutions: Workable Health Care Reform

I’ve devoted several posts to criticizing other health care reform proposals. It’s easy to do. There are no perfect answers, only difficult choices. But as Governor Arnold Schwarzenegger said when he introduced his reform proposal, the status quo can no longer be everyone’s second choice. It’s incumbent upon everyone involved in the heatlh care reform debate to offer their solutions and then to work with others toward a package that is workable. As one of my political mentors, Cathy O’Neill, put it: “the issue is not whether a proposal is perfect, it’s whether it makes things better.”

I’ve had the priviledge of late to help the California of Health Underwriters (CAHU) develop their reform proposal. Called Healthy Solutions, it’s a comprehensive reform package that, if implemented, would lead to universal coverage in a responsible, affordable manner. Here’s the proposal: CAHU’s Healthy Solutions

One of things we did with Healthy Solutions is not only lay out our own reform package, but to articulate the elements against which all proposals could and should be measured. These “requirements for reform” are what CAHU believes needs to be the result of new laws:

  • We believe any reform package must ensure that all Californians have basic health care coverage.
  • We believe reform must neither bankrupt families nor the state
  • We believe reform must provide the state’s diverse population with equally diverse health care choices.
  • We believe reform must promote ongoing and long-term innovation and experimentation that enable the state’s health care system to adapt over time to the evolving needs of its citizens.
  • We believe reform must address and constrain skyrocketing medical care costs.
  • We believe reform must provide consumers access to meaningful information and expert advice and counseling from licensed professionals.

There’s a lot to Healthy Solutions and in future posts I’ll expand on several of it’s provisions. For now, I hope you’ll take a moment to review it and let me know what you think.

Thanks.

Single Payer is Back

As expected, California State Senator Sheila Kuehl has reintroduced her single payer proposal, Senate Bill 840. Last year virtually the same legislation was passed by the the Legislature and vetoed by the Governor Arnold Schwarzenegger.  There’s lots of information about the bill and a video of the Senator’s press conference on her web site.

In the interest of full disclosure: I think Senator Kuehl is a terrific person. She was my dean at UCLA (many, many years ago). I contributed to her early campaigns (she was first elected to the State Assembly in 1994). Unlike some politicians who use health care reform as a platform for political advancement, Sheila truly believes the government should provide health care for all its citizens. I disagree with her, but I respect her intellectual honesty and passion for the issue.

It’s Senator Kuehl’s very real commitment to make single payer a reality in California that will lead her to introduce a an initiative for the 2008 ballot — once SB 840 is again passed by the Legislature and vetoed by the Governor. Which is exactly what will happen. After all, Democratic legislators know the Governor won’t let a single payer system come to pass. So why not vote for Senator Kuehl’s bill? The true believers in the Legislature will support it because they are, well, true believers. And for others it’s a risk free way to please the party’s core constituency without harming the state’s economy. It’s no coincidence that single payer bills did not get to the Governor’s desk when a Democrat sat there.

We’ll be dealing with the single payer debate for some time. Fortunately, there’s lots of arguments against a government takeover of the the state’s health care system. And Health Underwriters has made it easy to find and marshall those arguments in conversations with your clients, letters to the editor and presentations to community groups.

In 2006 the California Association of Health Underwrtiers did a study examining — and refuting — some of the financial assumptions underpinning SB 840. You can check it out here.

Meanwhile the National Association of Health Underwriters has an entire tool box of presentations, fact sheets and the like on “The Three Myths of a Single-Payer Health Care Delivery System.”While I’m surpised an organization comprised mostly of sales people would stick a name like that on something so important, it’s very much worth exploring. Especially useful is a PowerPoint Presentation agents can use to talk about the subject in their community.

Also on the NAHU site is a video of one of their members, Reid Rasmussen, giving the presentation at the organization’s recent Capital Conference. It’s long (60 minutes) and huge (141 MB in QuickTime), but again, it’s definitely worth the investment of your time. To download the video, click here and then find the “The Three Single-Payer Myths” headline.

In the months ahead there will be a lot of noise about single payer. Agents need to address the issue, but they can’t lose focus on what’s at stake with the other health care reform plans out there. These proposals can do just as much damage to our client’s health security, and to our profession, than SB 840. What’s worse, however, is that one of them could actually become law. Fortunately, CAHU is coming out with an alternative reform plan, which I’ll discuss in my next post. Please stay tuned.