Health Care Reform: A Historic Milestone

History was made today. The Senate Health, Education, Labor and Pensions Committee approved comprehensive health care reform legislation, the first Congressional committee to do so in decades. Never mind that the bill is well to the left of the emerging consensus concerning health care reform. Never mind that it passed on a party line 13-10 vote. What is meaningful is that a congressional committee moved comprehensive health care reform forward. Significantly, three House committees are likely to follow suit within the next three-to-four weeks.

The legislation approved by the Senate HELP Committee, which carriers a $600 billion price tag, would require individuals to obtain coverage, employers to help their workers pay for it, and carriers to accept all applicants regardless of their health conditions. Individuals and families earning up to 400 percent of the Federal Poverty Level ($88,000 for a family of four) would be eligible for subsidies. The Associated Press provides additional information and reaction to the Committees vote, but in my mind, the details are secondary. The vote itself is what is significant. Remember, the Clinton Administration health care reform proposal was never voted upon by any Congressional Committee.

The Senate HELP Committee’s action testifies to the tenaciousness of the Committee’s chair, Senator Edward Kennedy, the political skill of Senator Christopher Dodd (who is leading the Committee while Senator Kennedy battles cancer), the political standing of President Barack Obama, and the widely recognized need for meaningful health care reform. Given that Senator Kennedy has been advocating for universal coverage since the 1960s it is fitting that his Committee was the first to act

No doubt there will be some elements of the Senate HELP Committee’s proposal in whatever legislation, if any, eventually emerges from Congress. However, as noted previously here, the Committee’s version of reform is to a large degree a negotiating position for liberals in the Senate. The proposal being written in the House of Representatives will be even more liberal. It is the Senate Finance Committee, where its Chair, Senator Max Baucus and ranking Republican member, Senator Charles Grassley, are seeking to draft legislation that will earn at least some Republican votes, that the outlines of the ultimate health care reform package is taking place.

There are still numerous contentious issues to work through, any of which could derail health care reform altogether. However, there is a surprising amount of common ground coming into view. The  Robert Wood Johnson Foundation recently released a study, Emerging Common Ground? An Analysis of Health Reform Positions, that describes (perhaps overly optimistically) several of these areas of general agreement. Among them:

  1. the nature of private insurance market reforms;
  2. the need for, and the structure of, a health insurance exchange;
  3. whether and how a government-sponsored “public plan” should be created;
  4. how best to leverage Medicaid and/or public programs to expand access;
  5. whether an individual mandate is needed;
  6. the scope and authority of government involvement in comparative effectiveness research;
  7. sequencing and scope of payment reform; and
  8. whether to limit the tax exclusion on employer-based coverage as a reform financing mechanism.

I’m not sure I agree that all of these are settled issues, but the study is worth reading nonetheless.

As I’ve written before, I believe health care reform is coming, but that’s no reason to panic. The status quo, while comforting in its familiarity, is unsustainable. History is the story of change. Health care reform history was made today. But in context it’s only a milestone — a significant milestone, but solely a milestone. Consider it one big step in a long journey toward something truly historic.

5 thoughts on “Health Care Reform: A Historic Milestone

  1. The reform bill that was just introduced by the Senate contains an item that would extend drug patents from 10 years to 12 years!
    What this means is that not only are the senators not recognizing the real crux of the problem, i.e escalating costs, but are promoting even higher costs. They should be proposing REDUCING the patents from 10 years to 5 years in order to reduce Big Pharma’s period of monopolistic pricing, introduce competiton and reduce their prices.
    What this tells me is that Big Pharma’s rich war chest has secured all the senators in their back pockets. They have bought the senators, the FDA, the universities that do medical research, the AMA, the doctors and all the hospitals. They are using their windfall profits to extend their monopolistic pricing over the entire industry. What a racket!
    This bill smells so bad that there should be no chance of it passing.

    • I don’t know whether 5 or 10 or 20 years is the “right” number. Clearly, increasing patent protection duration will increase total expected direct costs. It’s the indirect costs that really concern me. What happens to these drug companies when their patent protection is eroded? How will that affect margins and investment in R&D and how will that ultimately affect innovation and medical advances from new drug discovery? I don’t believe there is a simple solution using patent restrictions. Rather, the market could see far greater impact from efficient use of drugs meaning choosing the least costly effective drug and promoting high compliance with chronic maintenance medications.

  2. Mark, remember leftists are devious. Those underpayments will be cost shifted to the private carriers making them less competitive with the public option. The intent is to ultimately have a single payer system like Canada.

  3. They are expecting to save money therefore reducing costs by reducing Medicare reimbursements. Does this mean seniors will have to dig deeper to cover their out of pocket costs? Does this mean fewer physicians will take Medicare coverage? Expanding Medicaid is troubling since here in California most physicians won’t accept it. Having more people on plans that can’t find treatment doesn’t seem much of a fix.

    I know this isn’t easy and the devil is in the details but so far I don’t see any real solutions.

    • Good point….currently private insurance subsidizes Medicare. If a doctor is making low margins with a Medicare patient he will try to improve his margins with a privately insured patient. That is why the public plan is so corrosive and erode those that are on private plans. There is a saying in Washington:

      If it moves tax it,
      If it continues to move regulate it,
      If it stops moving subsidize it

      This public plan will have the power to set prices across the market. That is the real motivation behind this “reform”. Basic economics, all things being equal lower price equals less supply.

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