Health Care Reform: Getting Ready for Crunch Time

For health care reform, the next few weeks will be critical. Congressional committees are poised to pass legislation (to put this in perspective, this never happened during the Clinton Administration’s reform efforts in 1993-94). President Obama and his aides will become even more engaged concerning the legislative language they would like to see Congress enact. Senate moderates will begin taking sides on critical issues. In short, this is when it all starts coming together. In the next few weeks, it will become clear if Washington will enact health care reform and, if so, what it will look like.

Events will move quickly, so I’m clearing out some short items that have been lingering in my “to blog” folder for awhile. They are a random assortment of items unlikely to become stand-alone posts. Taken as a whole, however, I hope they provide some useful background to the history about to unfold.

  1. Health care reform ideas are flying around the Capital in ever increasing numbers. Keeping track of them all can be a challenge. Good thing there’s the Kaiser Family Foundation’s health care reform proposal comparison tool. It makes comparing the entire plan or just particular issues across the various proposals simple.
  2. One of the plans we have yet to see details on will be presented in the next few days in the Senate Finance Committee. They are working hard to construct a legitimately bi-partisan proposal, which means it has the greatest likelihood of foreshadowing the legislation likely to emerge from Congress. To get an early taste of the coming debate in that committee, check out the dialogue between Senator Charles Grassley and Senator Charles Schumer on CBS’ “Face the Nation.”
  3. I’m a fan of the FiveThirtyEight.com blog. The site applies rigorous math to political topics. Very rigorous math: it’s prediction of election outcomes during the presidential primaries and the general election were eerily accurate. The site has a left-leaning bias on some topics, but overall, its posts are more nerdish than ideological. Recently it did an interesting analysis on how campaign contributions may derail a public option plan. Of course, whether Senators vote a certain way because of the contributions they receive or they receive contributions because of the way they vote is an open issue (which, to his credit, the author acknowledges). But the issue of causality does not change his conclusion: unless the several stars fall into place, a public option is unlikely to be part of the final health care reform package.
  4. Need more evidence a government-run health plan is losing momentum? As noted last week, Democrats on the Senate Health, Education, Labor and Pensions Committee feel the need to dress their public plan proposal in moderate clothing. Then there’s White House Chief of Staff Rahm Emanuel making clear today the Administration is willing to accept legislation without a public plan. According to the Wall Street Journal Mr. Emanuel says “’The goal is to have a means and a mechanism to keep the private insurers honest. The goal is non-negotiable; the path is’ negotiable.”  Mr. Emanuel goes on to say creating a public plan only if the private market proves incapable of offering competition would be one acceptable solution.
  5. Is a government-run plan even needed for health care reform to be meaningful? Uwe Reinhardt, an economics professor at Princeton, uses the German health care system as evidence it is not. This is not to say that the German system is an appropriate model for the United States, but it does undermine the argument that health care reform will only work if the government is both referee and player.
  6. All the health care reform attention is focused on what’s happening in Washington. Some folks think this is a mistake. Instead, the federal government should simply enable states to pass their own reform plans. This would allow solutions to reflect local values and enable the best ideas to emerge over time. I disagree. States lack the levers of power necessary to reform something as complex and critical as health care reform. In a post from 2007 I cited an article by Ezra Klein describing the many failed state health care reform efforts. That doesn’t mean, however, that every health care decision needs to be made at the national level. Meaningful structural change — and the financing required to implement it – requires the federal government. Implementing those changes can be managed and administered at the regional, state or even local level.
  7. The status quo is on life support. Health care costs are rising faster than either general inflation or wages. (To see for yourself, check out Tom’s Inflation Calculator). We have the opportunity today to enact responsible, meaningful reform. Without such intervention, the current system will eventually deteriorate until unwise and extreme proposals make sense. Fortunately, what’s likely to emerge from the current debate will be determined by moderates. This doesn’t mean the reforms won’t be flawed, but it does mean that there’s a chance for responsible reform sooner rather than later.
  8. The advocates of a single payer system know that the status quo is unsustainable. It is why some of them will oppose whatever moderate reforms emerge from the current health care reform debate. They are like a doctor who sees surgery as the solution to every ailment. If the patient takes medication, and it works, they don’t get to cut. Similarly, if reasonable changes increase access to affordable, quality health care coverage and reduces overall spending, the need for a single payer solution vanishes.
  9. Meanwhile, back at FiveThirtyEight, Nate Silver crunches some poll result numbers and points out that moderates are disappointed with President Obama’s handling of health care reform. Whether these results show President Obama needs to get more specific in describing his health care reforms (as Mr. Silver concludes) or whether he needs to focus more on pushing the right health care reform, is something to ponder.

8 thoughts on “Health Care Reform: Getting Ready for Crunch Time

  1. The tone of the current debate in Washington reminds me of the scene in Lawrence of Arabia when the Bedoin tribes try to sit in congress. As each tribal leader advances the narrow interests of his tribe, the whole convention falls into pandemonium.

    True health care reform needs to fix the foundations of the system. Look back to when the system began to fail. If one believes that cost/price is an important function in the efficient allocation of resources in a consumer society, two fndamental true reforms must be accomplished.

    First, the FASB (Financial Accounting Standards Board)must disallow the practice of hospitals keeping two sets of books which allows them to charge nine dollars for a 20 cent aspirin. The accounting rules as they stand lead to two inefficiencies. One, it encourages hospitals to build, build, build. Two it prohibits the consumer from exercising choice on the basis of price because know one knows what they are paying for.

    Pricing transparency also fails at the doctor’s office. It is a monstor the doctors created by joining hands with the insurance industry to maximize their incomes. So, I go to the doctor and I may or may not see what his nominal charge for services is. If I do, I do not know how much my insurance paid compared to another patient’s coverage. Doctors know. It creates an atmosphere of sll patients are equal, but some are more equal than others.

    Reform is only possible if we have transparency in both accounting practices and the pricing of retail services.

    But, if you change the accounting practices alone, the hospitals will be forced to make themselves efficient. The rest will follow.

    • Eldar Bob’s comments are certainly on point. In looking at history, the spiraling cost pattern came about in the early 70’s, when costs became hidden from the average consumer.

      It’s seems hard to believe that we’re willing to spend a trillion dollars to fix a system when the solution is already available under the current laws. We need to re-educate the citizens of America and go back to a system where health insurance is truly that, insurance. Instead of first dollar coverage that has an intrinsic appeal, we need for the public to see the real costs of services to allow them to make responsible choices. This doesn’t mean that we need to leave them financially vulnerable, the saving mechanisms, such as Health Savings Accounts, can provide the protect.

    • Eldar Bob, you make some great points. There are clearly some major inefficiencies in the hospitals that need to be addressed. I’ll give you another example. Why is it that hospitals are allowed non-for-profit status and the associate tax benefits when they consistently rush Medicare, Medicaid and lower income patients out the door for more lucrative private payor patients? The not for profit hospitals here in my market have amasssed gigantic war chests which they have used to purchase many primary care providers who in turn are forced to refer patients to their hospitals. Meanwhile, the county hospital, who truly is deserving of not-for-profit status struggles financially dealing with all of the most critically ill uninsured patients and illegal aliens.

      A point that keeps getting passed over in the focus on the public plan is that insurors, hospitals, pharma all of the various interests stand to profit big-time from the Universal coverage aspect of this reform. I find these offering quite hollow. I agree with Bob that if they are going to benefit from the almost doubling of insureds that Universal coverage offers they should have to address their accounting practices and become much more transparent.

      I look at the Obama’s Adminsitration’s recent savings commitments from Pharma and Hospitals as hollow, in that the savings they are offering will more than be covered by the additional covered belly buttons they will have access to due to through Universal coverage. They won’t truly be stepping up to the plate until accounting practices and Medicare and Medicaid reimbursements are adjusted to reward quality over quantity.

  2. Who wants a public health plan? The majority want it because they think it will be a free ride – which of course it will not. How can the insurance companies compete with an entity that won’t even have to pay taxes and thus has much less overhead? It is most certainly a stalking horse and it’s tough to get behind something that will put you out of business and lead to a single payer system like Medicare. Really, it’s the idea of the administration not being honest about their intentions.

  3. Alan I enjoy reading your blog, and I think you do a nice job of following health reform in general. My only issue with your writing is that sometimes, your personal desire to see the health reform play out in a specific way, sometimes overrides your objectivity. You seem to be a good consultant that understands the business of serving your clients. We get that you don’t want to see a public plan, but according to the latest surveys, that puts you in a minority of the American people. It is my belief that a talented person such as yourself and your services will still be needed even if a public option is a part of the reform process and I question your unwillingness to address it as a possibility. In my opinion, which is supported by the reality of the Democrats owning a majority in both the house and senate, there will be some form of a public option offered. This may take the form of an expanded program similar to Medicare or perhaps even a form of Kent Conrad’s co-op idea. President Obama has tied his legacy to this healthcare reform and I just don’t buy that he and the Dems will let the public option go as easily as you seem to. I think readers would be interested in your insight on what opportunities you may see for your profession if the major components being included in the bills are implemented such as the public option or co-op does transpire, not just talking points on why it won’t.

      • Harris: Thank you for your comment. And you raise a valid point. It’s too early in the process to know what the final outcome will be on most of the specific issues. And you are certainly correct that President Obama has yet to weigh in as heavily as he eventually will on elements of reform that are important to him. So I may be engaging in some wishful thinking on the public plan.

        Then again, I’ve seen the polls and heard the President speak on the topic. But at the end of the day, I believe there’s a group of moderate Democrats who will determine the outcome of the most controversial issues like this one. And I just don’t see them going for a public plan. Instead, and here you and I may agree, I think they’ll opt for providing seed money to non-profit health insurance cooperatives. Although these will be labeled public plans by some, I don’t put them in the same category as what the House or the Senate HELP Committee is likely to pass. They’ll be required (I believe and or hope) to play by the same rules as other carriers and, after the seed money, they’ll need to be self-sufficient.

        At least that’s my guess. And I like your idea about a post on what various reforms would mean to agents. I’ll tackle that one soon. Thanks for the idea and again, thanks for the comment.

  4. Health care reform is issue that has the Health care isurance companies walking on egg shells beause of the overbilling of health care providers. The fraud,waste, experamentation, preventive care ect. We don’t realise that it is the insurance companies are our major tax payers. They are the ones that pays billions in taxes each year to keep this country just above water. Therefore, have to cover their fannies or they will become extinct.

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