27 Senators Call for Public Health Insurance Plan

Twentyseven Democratic Senators have signed onto a “sense of the Senate” resolution demanding that a government-run health plan be included in whatever health care reform bill emerges from Congress. Staking out the liberal position for what will be one of the most controversial elements of this year’s health care reform debate, the Senators define a public health insurance option as “essential to reform” according to a report on Politico.com.

Of course, there are government-run plans and then there are government-run plans. As Politico reports, Senator Max Baucus, chair of the Senate Finance Committee, has said that while he expects any comprehensive health care reform legislation emerging from his committee to include a public plan this shouldn’t frighten opponents. “There are says to skin a cat. There are ways to find a solution,” the site quotes him as saying. One option under consideration, for example, is a “‘fallback’ plan, which would trigger a public insurance option if private competition proves inadequate in a geographic region.”

Most Republicans and many moderate Democrats have said they would oppose a health care reform bill if it includes a government-run health plan to compete with private carriers. Whether they would accept the idea of such a plan as a “fallback” is unknown.

Among those co-sponsoring the resolution are several important players in the health care reform debate. For example, Senator Edward Kennedy chairs the Senate Health, Education, Labor and Pensions Committee which will, along with the Senate Finance Committee, is drafting health care reform legislation. And Senators Dick Durbin and Charles Schumer are members of the Democrat’s leadership team in the Senate. Missing from the list are any members of the Moderate Dems Working Group — 18 Democrats (including one independent) who may seek to block inclusion of a government-run plan in health care reform legislation.

The 27 Senators listed by Politico as co-sponsoring the sense of the Senate resolution are:
Jeff Bingaman (D-N.M.)
Barbara Boxer (D-Calif.),
Sherrod Brown (D-Ohio)
Roland W. Burris (D-Ill.)
Benjamin Cardin (D-Md.).
Bob Casey (D-Pa.)
Chris Dodd (D-Conn.)
Dick Durbin (D-Ill.)
Kirsten Gillibrand (D-N.Y.)
Tom Harkin (D-Iowa),
Daniel K. Inouye (D-Hawaii)
Ted Kaufman (D-Del.)
Edward Kennedy (D-Mass.)
Frank R. Lautenberg (D-N.J.)
Patrick Leahy (D-Vt.)
Carl Levin (D-Mich.)
Claire McCaskill (D-Mo.)
Robert Menendez (D-N.J.)
Jeff Merkley (D-Ore.)
Barbara A. Mikulski (D-Md.)
Jack Reed (D-R.I.)
Bernie Sanders (I-Vt. – an independent, Senator Sanders caucuses with Democrats)
Charles E. Schumer (D-N.Y.)
Jeanne Shaheen (D-N.H.)
Debbie Stabenow (D-Mich.)
Tom Udall (D-N.M.)
Sheldon Whitehouse (D-R.I.)

Kennedy Calls for Substantial Government Role in Health Care

In the United States Senate, two committees will play a leading role in drafting health care reform: the Finance Committee chaired by Senator Max Baucus; and the Health, Education, Labor and Pensions (often referred to as the HELP) Committee led by Senator Edward Kennedy. The two chairman have pledged to work together in order to bring one bill to the floor sometime this summer. In the meantime, the committee members are developing policy options, staking out positions, testing the political waters, and all the various other chores required to actually produce legislation.

The Senate Finance Committee has put forward three health care reform option papers. They describe choices the committee will need to make. One option, for example, is to create a government-run health plan to compete with private carriers. Another is to do without a public plan and count on the market to promote competition.

The Senate HELP committee has been taking a less formal approach, but it too has now begun putting its collective thoughts on paper. The Washington Post reports that Senator Kennedy is circulating an outline of the health care reform package his committee is likely to propose. The HELP Committee is traditionally more progressive than the Finance Committee (needing to focus on the cost of things does tend to bring out the pragmatist in most lawmakers) so it’s not surprising that the package, as the Washington Post puts it, “[i]n many respects adopts the most liberal approaches to health reform being discussed in Washington.”

Among other provisions, the Kennedy proposal  would create a government-run plan to compete with private carriers, require individuals to purchase coverage and employers to contribute to the coverage.  According to the Post, the HELP Committee will propose allowing Americans earning up to 500 percent of the federal poverty level ($110,250 for a family of four) to purchase Medicaid (although according to Bloomberg.com the package sets a floor of 150 percent of the federal poverty level for Medicaid eligibility — currently states can set their own financial level for their citizens to qualify for Medicaid).  Bloomberg.com also reports the committee’s proposal would expand eligibility for the State Children’s Health Insurance Program to “children” up to 26 years old.

Inclusion of the public plan will be especially controversial. Most Republicans and many moderate Democrats who have stated an opinion on the topic have said they could not support health care reform legislation that calls for creating a government-run health plan. The fear is that, by underpaying physicians, the plan will force doctors, hospitals and other medical providers to shift costs to the private plans. Since premiums reflect the underlying cost of medical care, the public plan would gain an unfair price advantage. The outcome, over time, would be private carriers would be forced from the market, leaving the public plan as the only option available.

The HELP Committee’s proposal will fuel this fear. Bloomberg.com writes that Kennedy’s proposal would allow the public plan to pay health care providers just 10 percent more than Medicare pays them — which would still be less than the actual costs medical professionals and hospitals incur in treating Medicare patients.

One of the more far reaching ideas Senator Kennedy is calling for are the creation of “gateways” to facilitate the purchase of affordable health insurance. These gateways might at first seem to be similar to the health insurance exchanges many in Congress are calling for, but they go further.  In an opinion piece published by the Boston Globe, Senator Kennedy writes he will seek to create “gateways to better health across America. You can contact the gateways online, by phone, or in person to figure out what policy works for you.”  Going even further, the “gateways would “negotiate with insurance companies to keep premiums and copays low and help you with your premiums if you can’t afford them.”  In this regard, the gateways seem to be a throwback to the Clinton Administration health care reform plan of the 1990s. Central to that effort was the concept of “managed competition” in which purchasing pools would negotiate the cost and coverage of health care available in a community.

While Senator Kennedy repeats the frequently cited mantra of “if you like your current coverage you can keep it,” the elements of his health care reform plan would all but guarantee that your current coverage won’t be around for long.

CBO: Light Regulation of Private Market Reduces Budget Impact

Whether comprehensive health care reform is enacted this year rests to a substantial extent on its impact on the federal budget. To be sure, federal lawmakers can do what they want to the budget. Unlike families, businesses and state governments, the feds can literally print money. But there’s an economic and political cost to this. For example, President Barack Obama’s economic recovery efforts are already hampered by the deficit spending involved.  Opponents to his health care reform would seize any negative budgetary impacts stemming from his reform as a heavy club useful for bashing the Administration’s plan.

Even the Administration’s allies are concerned about the impact of health care reform on the government’s finances. In an email I received from Senator Diane Feinstein she writes, “I believe that there is much room for improvement in our nation’s healthcare system. However, I believe that health care reform should not increase the federal deficit.”

Which is why what the Congressional Budget Office considers “in the budget” or “outside” of it is so critical. The Clinton Administration’s health care plan was dealt a serious blow when, in 1994, the CBO determined that the employer mandate and the purchasing pools, both central  to the reform package, be considered a form of taxation, expanding the federal government. As the Washington Post notes, the “decision was one of several by the CBO that fueled Republican attacks and helped torpedo [the Clinton] reform efforts.” As a result, lawmakers this time around are “treading carefully around the role of government.”

Which makes a recent issues brief published by the CBO especially important. Entitled The Budgetary Treatment of Proposals to Change the Nation’s Health Insurance System especially important. The brief  provide guidance to the careful treading of legislators. At this stage the CBO is reacting to health care reform concepts, not legislation. As with most things, especially things issuing from Washington, D.C., the devil parties in the details.  Nonetheless, the CBO laid out very clearly what factors it would consider in making a determination.

For example, it noted that some determinations will be fairly straightforward. These are items involving cash moving in and out of federal coffers or of entities acting on behalf of the government. “Such transactions include the provision of subsidies for some people and businesses; the income and expenditures of a public health insurance plan; the gov­ernment’s receipts from “play-or-pay” requirements and from penalties imposed on individuals who fail to comply with a health insurance mandate; and “risk adjustment” transactions of the government that shift funds from insurers with lower-risk enrollees to those with higher-risk enrollees.”

Other provisions, for instance those related to requiring individuals to purchase health insurance coverage or the operation of health insurance exchanges through which individuals, small businesses and maybe larger corporations could purchase coverage, are more nuanced. Much will depend on how they are structured.

For example, concerning the individual mandate, the CBO’s determination will hinge on three factors:

  • Is the consumer likely to be able to choose among a number of insurance plans with differing degrees of comprehensiveness?
  • If there are plans with different levels of coverage, will they cover a broad enough range to offer consumers a meaningful choice?
  • Is the consumer likely to be able to choose among several different insurance companies competing on price?

It’s easy to see how complicated this can get. How many choices must consumers have for it to be meaingful choice? What if the minimum benefit package is so rich there’s no meaningful range of benefits? The mere existence of a mandate nor the imposition of federal oversight on the market will not be enough to require resulting premiums and subsidies to be considered part of the federal budget. Instead, it is “a combination of the two—a mandate and tight federal control over how that mandate can be met—[that] is necessary and sufficient to justify recording the affected private-sector transactions in the federal budget.”

How premiums (and expenses) flowing through health insurance exchanges are treated in relation to the federal budget is also far from clear-cut. Factors taken into account will be the nature of the exchange: is it a purchaser of coverage on behalf of its members or simply an information clearinghouse? To what extent are exchanges federal entities under government control? What it comes down to is the degree of federal government control of the exchanges, their powers, and their purpose.

 Douglas Elmendorf, the Director of the Congressional Budget Office, in his blog summarizes the CBO’s guidance to Congress:

  • “Premium income—for a public plan (or plans) and for insurance purchased through exchanges or in the private market—should be classified as federal revenues if there is an individual mandate and tight government control of the insurance market. The corresponding expenditures should also be recorded as outlays in the budget. Similarly, if there is an individual mandate and a dominant public plan available to some segments of the insurance market, premiums and outlays for those segments of the market should appear in the budget and the premium income should be classified as revenues.
  • Premium income should be classified as an offset on the outlay side of the budget—along with the corresponding spending counted as outlays—if:
    • Premiums are collected for a public plan but there is no mandate, or
    • There is an individual mandate in conjunction with an active, loosely restricted private market, and premiums are collected for a public plan or by governmental exchanges. 
  • Outlays for premiums and income from the receipt of those premiums should not appear in the federal budget if:
    • There is no mandate and no public plan, or
    • There is an individual mandate and an active, loosely restricted private market, and if premiums are paid through nongovernmental exchanges or directly to insurers. “

The Obama Administration and Democrats in Congress will try their best to keep revenue and expenses related to health care reform off the budget. They’ll only go so far, however. At some point the calculation as whether the public policy benefit of a provision (in their view) outweighs the political cost comes out on the side of the public policy.

Yet President Obama has made crystal clear his desire for bi-partisan health care reform. For Republicans to sign on to a package they’ll need the political cover keeping as much of the financial impact of the package off the budget as possible.  This, in turn, inserts the CBO guidelines squarely into the debate. And the message is clear: the looser government’s hand grips the new health care system the smaller its budgetary impact.

Health Insurance Brokers to the GOP: “Et Tu?”

Health insurance brokers are appropriately worried about the impact health care reform will have on their livelihood. That’s human nature. Politics is about the management of self-interest. When it comes to health care reform, the list of concerned onlookers is long. Patients, doctors, hospitals, carriers, government bureaucrats, health insurance agents, employers, lawyers, dentists, chiropractors, pharmaceuticalfirms and, well, you get the idea.  Anymeaningful change is going to require sacrifice by most all of these stakeholders. 

When it comes to balancing all these competing interests, the partisan nature of American politics usually comes into play. Public policy flowing from the Democratic party tends to benefit some at the expense of others. The same holds true with the Republican party.

Health insurance brokers, for example, tend to rely on the GOP to promote policies supportive of their profession. One reason for this connection is political. I’ve no empirical data, but long experience in working with health insurance brokers leads me to believe that the majority vote Republican. Another reason, however, is ideological. Republicans tend to support market-based health care reform solutions  and brokers are integral to making the market work. Brokers take competing health plans and interpret them to their prospects and clients. One method they use is to take the different explanations of benefits used by different competitors and put them into a consistent template. They serve as consumer’s advisers and, when needed, their advocates to assure they get full value from their health plans.

As President Barack Obama’s Administration works with the Democratic majority in Congress to fashion health care reform, many brokers are relying on Republicans in Congress to stand firm against a public plan (which most brokers believe would eventually drive private plans out of existence — and take brokers down the drain with them). And they are trusting Republicans will make the case for the value brokers add to the system.

This trust may be misplaced.

Last week four leading Republicans put forward “The Patients’ Choice Act.” The Act is their call to action for fixing what they refer to as America’s broken health care system while at the same time seeking to preserve much of the current market driven arrangement. The authors of the proposal, Senators Tom Coburn and Richard Burr and by Congressmen Paul Ryan and Devin Nunes, are leading voices within their party on health care reform. It’s not clear whether the Patients’ Choice Act is the official position of the Republican caucuses in Congress, but no other proposal has been forth by the GOP. And the media is certainly treating it as the “Republican health care reform plan.”

Not suprisingly, the GOP lawmakers explicitly reject a public health program. Indeed, while acknowledging other factors leading to runaway costs (new technology, an aging population) their document proclaims the primary reason America’s health care system fails so many patients is “government intervention.”

Nonetheless, there are several elements of the Patients’ Choice Act which occupy common ground with Democrats (more on these in a future post). Some of what’s in The Patients’ Choice Act summary is, suprising and even amusing. For example, Republicans have taken to accusing Democrats of seeking to move America to “European-style socialism.” Yet, in justifying some of their ideas the sponsors of the Act turn to similar programs working in — wait for it — Europe.

Some elements of the reform package are just foolish. For example, under the Patients’ Choice Act carriers to accept all applicants regardless of their health condition (often referred to as “guarantee issue”). However, explicitly reject requiring individuals to obtain coverage stating that “if individuals do not want health insurance, they will not be forced to have it.” In fact, they go so far as to suggest that individuals be able to purchase coverage at any time “through places of employment, emergency rooms, the DMV, etc.”

In taking this position it appears the the Republicans have adopted the greatest flaw in then candidate-Obama’s health care reform plan — and made it worse. Why would anyone purchase coverage before they need it? Any reasonable person would wait until they’re on their way to the doctor, stop by the DMV and purchase coverage. In case of an accident, all they would need to do is go to the emergency room (the most expensive place to receive care), sign up at the receiving desk and enter the facility as a fully insured patient. As soon as they’ve recovered, it would be safe to drop the coverage.

(I find it hard to believe the Republicans are taking such a naive view of insurance. And, to be fair, the Patients’ Choice Act is somewhat lacking in details. However, what I’ve described comes from the Republican lawmakers’ own document. If they are creating safeguards to prevent such gaming of the system, there’s no evidence of it yet.)

As with any health care reform proposal, there’s elements to like and to dislike in the the Patients’ Choice Act. What will be most troubling for brokers, however, is the GOP’s call for creating state-based exchanges. The benefits of such exchanges includes a “one-stop marketplace for health insurance. Individuals would get a hassle-free opportunity to choose the plan that best meets their needs through an Exchange.” Most brokers believe that’s their role in the current system. To have Republicans propose a state agency to take on this responsibility is disconcerting at best; a betrayal at worst.

Then there’s the “auto-enrollment” feature touted by the Republicans allowing individuals to obtain health insurance at the DMV and other locations. Apparently the GOP sees little value in having consumers work with licensed, regulated agents and brokers, not when there’s a clerk at the DMV available.

To be fair, the Republicans are not explicitly excluding brokers from their version of a new health care system. In fact, they are expected to remain a part of the system. In the GOP’s “Patients’ Choice Act Q&As they write, “Whether an individual uses an insurance broker, an internet [sic] comparison page, or calls a toll free number, individuals are provided the information needed to choose a plan tailored to their individuals [sic] needs.” This basically equates the knowledge, skills and expertise of  independent brokers to what can be delivered by an Internet site or a customer service rep at the state Exchange. How comforting.  Perhaps they are relying on the Exchange to standardize health insurance so much that professional guidance is no longer required. Although if coverage is that standardized, then perhaps calling their proposal the Patients’ Choice Act might be somewhat misleading.

The National Association of Health Underwriters, the primary professional organization for health insurance brokers, is working hard to educate lawmakers concerning the value independent brokers add to the system — value which should be preserved in whatever reform package emerges from Washington.  To the extent the Patients’ Choice Act represents Republican thinking on health care reform, relying on the GOP as an ally in this effort could be a painful path to disappointment.

Making Health Care Cost Reduction Promises Real

Representatives from insurance companies, doctor groups, hospital organizations and the pharmaceutical industry had their moment in the presidential sun on May 11th promising to slow down how quickly medical care costs increase. Their promise: $2 trillion in savings over 10 years. That would not only make it more affordable to provide coverage for the uninsured, it would be a huge boost the economy and to the financial condition of state governments.

In a letter signed by, among others, the American Medical Association, the American Hospital Association, the Pharmaceutical Research and Manufacturers of America, America’s Health Insurance Plans and the Service Employees International Union, which, as the Los Angeles Times described it “shepherded the agreement.” The unprecedented agreement among these health care stakeholders is meaningful for two reasons. First, these organizations were among the leading opponents of the Clinton Administration’s failed health care reform effort in the 1990s. Second, if it’s real, we’re talking about serious money.

And there’s the rub: is it real? President Obama is trying to find out. He’s instructed the organizations to come back to White House with specifics on how it will make this pledge real. As the Administration has demonstrated with the business plans demanded of the auto industry, the White House will hold these interest groups to a high standard. Which it should. The political stakes are high. If the cost cutting plans lack credibility President Obama will look, as the Associated Press noted, he “will be seen as naive for entertaining such promises.”  By holding them to a high standard, however, President Obama also has the power to undercut the industries’ opposition to his health care reform plan. Accusing them of insincere promises and inadequate commitment to cost cutting would bolster those who seek a bigger role for government in any new health care system.

The stakeholders have an equally important political task. By coming forward with voluntary, credible proposals for cutting costs, they provide political cover for those opposing the expansion of the government’s involvement in the system. If their proposals pass muster they will have gone a long way toward morphing from being a target of reform to being a part of the solution.  Their specifics for cutting costs will be part of the health care reform legislation Congress will produce this summer, which means they’ll have to live with them. But if that means the forthcoming legislation is a bit friendlier to their interests, that’s a reasonable price to pay.

Fortunately, the target, while a stretch, is eminently doable. Researchers at Dartmouth University have done several studies over the years that demonstrate that high costs for medical care do not correlate with better outcomes. As the Associated Press reports, they found that “as much as 30 cents of the U.S. health care dollar could be going for tests and procedures of little or no value to patients.”

One person who paid attention to this finding is Peter Orszag, Director of the Office of Management and Budget. As I wrote in 2007, when he was Director of the Congressional Budget Office, Mr. Orszag was “pushing for more evidence based assessments of new technologies and the need to expand research on comparative effectiveness. They key, Mr. Orszag indicated, is to provide new incentives in the system aimed at changing provider and consumer behavior.” His goal: to eliminate the $600 billion in “wasteful or low-value services” currently in the system.

If health care reform is going to work, squeezing this $600 billion out of the system is crucial. The associations’ efforts are an important first step. According to the Associated Press article, the groups are focusing on different aspects of the problem. Insurers, for example, are looking at reducing administrative costs by, among other initiatives, establishing a common, shared on-line claim form doctors and patients could use. Doctors are looking at establishing guidelines for medical practice. Improving information on drug interactions and reducing hospital readmissions are also part of the mix.

Most experts agree that the savings are there to be found. Identifying the savings will require political will and a willingness to change “business as usual” in the medical, pharmaceutical and insurance industries. Whether they pass the test will be determined by President Obama. Having shared the stage with him to make the promise, the price of failure will be extremely high.

Health Care Reform: The Power of Stories

Facts are facts. Logic is logic. When it comes to health care reform, both are critical, vital elements of informed decision making. At the end of the day, however, facts are only facts and logic is only logic. What moves people are emotions and empathy. And what elicits emotions and empathy are stories. Stories are what enables people to connect data and logic with real, meaningful situations and they are what drives people to take action.

Chip and Dan Heath make this point in their book Made to Stick: Why Some Ideas Survive and Others Die. They point out that “stories have the amazing dual power to simulate and to inspire.”  By simulate they mean to describe reality and, consequently, convey knowledge.

Politicians understand this. So do successful sales people. A white paper is a great way to set forth a policy. A brochure may be just the ticket for describing an item. But it’s the stories that politicians and sales people use that connects those facts to people in a way the moves them to act.  President Ronald Reagan was a master of this. His reputation as the Great Communicator rests in large part on his ability to shape stories that inspired and moved his audiences. President Barack Obama shares this gift.

So it’s not surprising that President Obama is soliciting stories to post on his Organizing for Health Care site (which is a part of his grass roots organization, Organizing for America). It’s part of his effort to build grass roots support for his health care reform initiative. The email went to supporters of his campaign and others who have signed up at Organizing for America. It reads, in part: “As we know, challenging the status quo will not be easy. Its defenders will claim our goals are too big, that we should once again settle for half measures and empty talk. Left unanswered, these voices of doubt might yet again derail the comprehensive reform we so badly need. That’s where you come in.” It then asks his supporters to share “your personal story about the importance of health care reform in your life, and the lives of those you love.”

President Obama promises to personally read some of the stories submitted and he clearly intends to make use of them in the coming fight over health care reform. As he notes, “I know personal stories can drive that change, because I know how my mother’s experience continues to drive me. She passed away from ovarian cancer a little over a decade ago. And in the last weeks of her life, when she was coming to grips with her own mortality and showing extraordinary courage just to get through each day, she was spending too much time worrying about whether her health insurance would cover her bills. She deserved better. Every American deserves better. And that’s why I will not rest until the dream of health care reform is finally achieved in the United States of America.”

Facts and logic will play a major role in health care reform. But what ultimately will carry the day are stories like those of the President and his mother. Which is why others are also gathering stories.

As I mentioned in a previous post, the value professional, independent brokers add to the health care system is too often overlooked. The National Association of Health Underwriters, the nation’s largest organization of health insurance brokers and related professionals, is working hard to change that. In addition to attending endless meetings and submitting volumes of testimony and comments to Congress, NAHU is very appropriately gathering stories.

NAHU has created a web site, Brokers Making a Difference, to house the stories it has gathered. And more are coming in from NAHU members and the clients they serve. They tell stories of brokers going the extra mile for their clients when they needed help the most, after a serious illness or accident. They tell of brokers doing the straightforward work of being a counselor and advocate, helping their clients to find affordable health care coverage that meets their unique situation. They tell of brokers going beyond the call of duty and of those fulfilling their responsibilities as professionals.

For brokers these stories are critical. It’s one thing to talk about helping individuals or businesses through the health insurance maze. It’s another, altogether more powerful thing, to describe what that means in action. Stories of coming to the hospital to help a new mother whose baby was undergoing surgery to provide comfort, support, and, as important, assistance in dealing with the paper work have an impact. Stories of bringing together hospital and carrier administrators to get their clients out of the waiting room and into surgery have impact.

Brokers play a critical role in helping people maneuver through the health care system in this country. Health care reform is likely to become a reality this year. The stories President Obama is gathering will help see to that. It is the stories being collected by NAHU that will help assure brokers are able to continue to help their clients in whatever changed system emerges.

Obama Health Care Reform Strategy Sidesteps Clinton’s Missteps

The number of mistakes made by the Clinton Administration in pushing for health care reform in 1993 are embarrassingly numerous.  One of the most damning was their heavy handed approach with Congress. Instead of engaging with lawmakers from the beginning, the task force led by then First Lady Hillary Clinton worked behind closed doors. Democratic Congressional Members were pushed out of the loop and expected, I assume, to fall in line with their Democratic President because, well, he was their Democratic President. Oh, and of course because the health care reform package developed by the task force was so obviously wonderful.

Leaving aside the lack of wonderfulness in the plan they developed, this approach was nothing short of political malpractice. The president may propose, but it’s Congress that enacts legislation. Any effort to dramatically change something as expensive and personal as health care will generate opposition. Some of that opposition is based on sincere differences of opinion concerning public policy. Some emerges from economic or political agendas threatened by the changes. In either event, it’s important to have a strong base with a unified message to withstand the inevitable attacks. The Clinton Administration’s approach — imposing their viewpoint on Congress — meant they had few supporters when and where they needed them most. The result was a political rout that helped open the way to a Republican takeover of Congress in 1994.

Whether based on temperament or wisdom earned at the Clinton presidency’s expense, President Barack Obama and his team are approaching health care reform in a far different manner. Their outreach to Congress has been extraordinary. They are not only working with Congressional leaders to design the plan, but are helping to create a unified message as well.

The Associated Press reported on a meeting today between several Democratic Senators and White House political advisor David Axelrod. Their goal, according to Senator Dick Durbin, was to “coordinate our messaging so we present a health care reform effort that the American people trust.”

The meeting was, in part, a response to advice circulated among Republicans by Dr. Frank Luntz outlining ways to attack the Democratic proposal. Dr. Luntz is a highly regarded GOP consultant and an expert on political messaging, the author of Words That Work: It’s Not What You Say, It’s What People Hear. He urged Republicans to be “on the side of reform.” while attacking the Administration’s proposal as leading “to the government setting standards of care, instead of doctors” and “to the government rationing care.”

The 26-page report has caused quite a stir on Capital Hill. Democrats in Congress wanted to make sure they were prepared to withstand the suggested assault. The meeting today with Senators and with House Leaders yesterday were designed to do just that. It was reinforced by a message to the grass roots following President Obama developed during the campaign that now operates as Organizing for America.

What was agreed to was a three-pronged message: medical costs must be lowered, people must have choice in their health care coverage, and care must be affordable for everyone. How these principles are put into action has yet to be determined. No legislation has yet emerged from the numerous Congressional hearings underway.

It’s the lack of explicit information that makes framing the reform effort so important. Until there’s actual legislation to read, all the public has to go on is the general policy positions pronounced by various parties. Eventually, we’ll see a bill, but how the public reacts to it will be influenced to some degree by the spinning that occurs before its release.

By involving Democrats in Congress early in the process of developing the legislative language and working with them to shape a unified message, the Obama Administration is sidestepping one of the most damaging missteps of the Clinton Administration. Ultimately what will matter is the legislation itself. But the mere fact that President Obama and his team are avoiding the mistakes made 16 years ago, is an indication of how different the battle will be this time.

Public Health Plan – Tea Leaves

President Barack Obama’s stated goal is to pass comprehensive health care reform by the end of this year. With a Democratic Congress and muted opposition (relative to those that opposed President Bill Clinton’s similar effort) President Obama has a good chance of succeeding. It won’t be easy, especially given the cost and the state of the economy, but the stars seem to be aligning.

Consider: Health care costs are a huge burden on America’s struggling manufacturing base. Health care reform would ease this burden. The public supports substantive change. Previous opponents to reform (doctors, hospitals, drug companies, insurance plans and the like) have lined up to promise to reduce health care costs by $2 trillion dollars by 2019. Voluntarily. Harry and Louise would be so proud. And President Obama has perhaps the most potent grass roots political organization ever assembled.

Hold that last thought.

One of the most controversial elements of the President’s health care reform package is the creation of a government-run health plan to compete with private carriers in the traditional market place. I’ve written on the controversy several times, so to oversimplify: liberals tend to think a public plan is essential to assure fair competition in the marketplace. Conservatives see it as the first step toward a single payer system. Many moderates, including centrist Democrats who appear to hold the balance of power on health care reform plan, seem skeptical about the idea.

Then candidate Obama campaigned strongly on the need for a public health plan. While he’s always expressed a willingness to compromise on the issue, in the past it has usually been about how a public plan would operate, not whether there would be one.

Hold this thought, too.

Now, let’s bring those two held thoughts together. Ben Smith over at Politico.com is reporting on an email sent out by President Obama’s grass roots organization, Organizing for America, on the issue.  The letter urges supporters of the President to pledge to support three broad principles for health care reform. These principles are:

  1. reduce costs;
  2. guarantee choice; and
  3. ensure all Americans have quality affordable health care.

That’s it (the full email is printed on Mr. Smith’s blog). No mention of a public health plan. Zip. None.

Organizing for America’s call to action is focused on the right principles, too. Some of commented that the Administration’s emphasis seems to be more focused on health insurance reforms than on containing medical costs. I confess, I write more about the former than the latter, but that’s in part due to the nature of this blog and it’s because market reforms have been more controversial — so far. The reality is that President Obama has consistently worked to emphasize the need to rein in the escalating cost of health care in this country. In many ways he’s been successful in gaining consensus on those aspects of his plan.

Which means the question becomes whether he’ll fight to keep a government-run health plan in the mix even if it means jeopardizing the progress he’s made along other fronts. I don’t want to read too much into one email. But the fact that Organizing for America’s call to arms doesn’t mention public health plans may, just maybe, mean the Administration is willing to deal on the issue — or may be recognizing that the votes for a public plan just aren’t there. It’s too early to tell.

But look at it the other way: if the email had included the creation of a public health plan as a core principle, it would be very hard for the Administration to later back down on the issue. By side-stepping the opportunity to make such a plan a core principle of reform, at the very least President Obama is leaving the door open on whether a public plan needs to be part of the final package.

That’s the kind of flexibility he’ll need to pass comprehensive health care reform. And it’s why I personally believe meaningful reform is indeed likely to pass this year.

Health Care Reform And The Value of Brokers

There are a lot of stakeholders in the health care reform debate. Patients. Doctors, hospitals and other providers. Insurers. Employers. And  so on. One often overlooked group with a great deal at stake in the current reform effort are health insurance brokers, especially those whose practices focus in the individual and small employer market segments. Today they provide some of the services expected of an exchange, helping to translate benefit plans into understandable options. Professional brokers go further, helping health care coverage shoppers find the plans that best fit their unique needs and then assisting them in gaining the benefits they’ve paid for.

The bad news is the media all but ignores the role of agents in the system. They focus on how confusing health care coverage can be (and it certainly can be opaque) and how consumers are at a disadvantage when dealing with their insurers (and they are) without once mentioning the counselors and advocates available to them: professional brokers. (Note added 5/9/09: An Associated Press article published today proves the point: it looked at the positions of the “10 groups with the mostinfluence, or most at stake, in the health debate…” Health insurance brokers were not mentioned.)

The good news is that lawmakers involved in drafting health care reform legislation are aware of brokers and what we do. They’ve sought out the National Association of Health Underwriters (the primary professional organization representing health insurance brokers) for testimony and input.

A seat at the table is great, but eventually brokers needs to justify their value to the system to those who live and work beyond the Beltway. If the media and public are unaware of what brokers do lawmakers can ignore agents with impunity. Which is why NAHU is launching a grassroots campaign to educate decision makers and opinion leaders to show why brokers “can’t be replaced by a government-run call center.”  Core to this intitiative is a white paper focused on the value of licensed producers. Titled “Americans Deserve Access to Professionally Licensed and Trained Health Insurance Agents, Brokers and Consultants,” the report describes the various services producers provide to consumers and how they compare to alternatives such as government call centers.

The challenge facing brokers is that we are, at the end of the day, overhead. We don’t heal the sick. We don’t deliver medication. But that doesn’t mean professional producers aren’t valuable. Whether health care in America is managed by private enterprises or government agencies, there’s more to health care than stethoscopes and MRIs.

The NAHU white paper does an excellent job of laying out the important role producers play in helping Americans get the most out of their health care coverage. For instance, it cites a study by the Center for Studying Health System Change that noted “In contrast to the notion that brokers merely make insurance more costly, these findings suggest brokers can provide important benefits to small employers, plans and policy makers.”

This sentiment is echoed by the Congressional Budget Office, cited in the NAHU report, which concluded that, especially in the individual and small group market segments, producers “handle the responsibilities that larger firms generally delegate to their human resources departments — such as finding plans and negotiating premiums, providing information about the selected plans, and processing enrollees.” In fact, the CBO recommends that “because many small firms and individuals may find brokers’ services valuable, policymakers might consider allowing such services to be used in conjunction with [a buy-in option to FEHBP].”

Too often those policymakers look at health care too narrowly. The technology sector shows how misguided this can be. In his book Marketing High Technology, venture capitalist William Davidow describes the difference between a “device” and a “product.”  A device, in an IT context, is a piece of code or some hardware. It’s what is invented in the laboratory. Products, however, goes beyond that. “A product is the totality of what a customer buys,” writes Mr. Davidow. “It is the … service from which the customer gets direct utility plus a number of other factors, services , or perceptions, which makes the product useful …” (emphasis added).

Medical care is obviously the core service (the equivalent of the “device”) when it comes to health care. Staying healthy or getting well is the ultimate goal. But the health care system is about far more than what happens in the doctors office or a hospital. It’s the development of new medications and devices, it’s healthy living education, and it’s the expertise provided by professional health insurance agents, brokers and consultants.

Health care reform is coming. That’s a good thing. In shaping what that reform accomplishes, lawmakers would do well to look at the system holistically — as a product, not just a device. That includes, as the NAHU white paper shows, acknowledging and preserving the value brokers provide to their clients.

Compromise on Public Health Plan Not Easy to Find

If Congress is to enact comprehensive health care reform on anything approaching a bi-partisan basis, Democrats are either going to have to jettison their calls for creating a public health care plan to compete with private insurers or fashion a compromise that makes such a government-run plan acceptable. This won’t be easy.

Last week, 17 Senators  signed a letter to Senate Finance Committee Chair Max Baucus and Health, Education, Labor and Pensions Committee Chair Edward Kennedy insisting that a public health plan needed to be a part of any health care reform package.  The 16 Democrats and one independent argued that “There is no reason to believe that private insurers alone will meet the public purpose of ensuring coverage for all Americans at affordable prices for taxpayers.” According to The Hill, the originator of the letter, Senator Sherrod Brown, told reporters that “A public plan option ‘would provide competition to the sometimes dysfunctional private insurance market.'”

Seventeen Senators is a significant block of votes, especially when they’re expressing the position of the Obama Administration as well. Yet Republicans are, thus far, united in their opposition to a government-run plan.  And not all Democrats are sold on the idea, either. The New York Times counts Democratic Senators Ben Nelson and Arlen Specter as among those expressing “reservations about a public plan.” If these and other moderate Senators object to the public plan, their liberal colleagues will be faced with the need to either give in on the issue or give up on comprehensive health care reform.

Thus the search for common ground.

The New York Times reports Senator Charles Schumer is attempting to do just that. The article  is indispensible reading as Senator Schumer’s was asked to search for a compromise by Finance Chair Baucus. Senator Schumer identified four principles that might make a public health insurance plan acceptable to moderates:

  • “The public plan must be self-sustaining. It should pay claims with money raised from premiums and co-payments. It should not receive tax revenue or appropriations from the government.
  • “The public plan should pay doctors and hospitals more than what Medicare pays. Medicare rates, set by law and regulation, are often lower than what private insurers pay.
  • “The government should not compel doctors and hospitals to participate in a public plan just because they participate in Medicare.
  • “To prevent the government from serving as both “player and umpire,” the officials who manage a public plan should be different from those who regulate the insurance market.”

This approach was echoed, with less specificity, during testimony before the House Ways and Means Committee by the new Secretary of Health and Human Services, Kathleen Sabelius. According to The Wall Street Journal, she told a Congressional  Committee, “What I can assure is that it can be done as a level playing field.” The key, she went on to say, is how the program is set up. “It is about the rules that are established at the beginning.”

But there’s the rub. The rules in the beginning are not necessarily those that apply long term. California had a government managed health plan competing with private carriers in the small group market not all that long ago. The Health Insurance Plan of California (HIPC) was created by AB 1672 as part of a comprehensive small group health care reform package. The HIPC operated under many of the prinicples put forward by Senator Schumer. Ultimately the HIPC, which was spun off from the government and became the PacAdvantage, failed.

Yet almost immediately after it’s creation, legislators from both sides of the aisle put forward proposals to buttress the plan by giving it special status. Government, regardless of the party in charge, when seeking to build new programs, tends to look to existing programs as a foundation. Which means the level playing field promised by Secretary Sabelius may not last long. The principles enunciated by Senator Schumer may not last. As with any public program, once a government run health plan is in place, the rules that apply can be changed at any time. And someone is likely to try.

This doesn’t mean the search for a compromise shouldn’t continue, but  it highlights the difficulty involved. Unless the restrictions on the public plan aimed at preventing it from gaining an unfair advantage in the market are strong and long lasting, any compromise will simply be a milestone on an inevitable journey.