Obama’s Health Care Speech a Beginning, Not an End

Whether you support President Barack Obama or not, his address tonight on health care reform to a joint session of Congress is a major event. American want reform, but are increasingly wary of the what they are hearing is likely to emerge from Washington. Of course, much of what they hear about what’s being considered is wrong or concern proposals that no one expects to reach the President’s desk, but the public’s unease is troubling for reformers nonetheless.

A well established political law holds that it is easier to attack than to propose and promote change. Reformers, consequently, are always at a disadvantage. The White House has seen the tenor and substance of the debate hijacked by charges both serious and silly. Worse, from their perspective, President Obama is being tied to reform bills he has neither endorsed nor blessed. The media and voters describe Congressional proposals as those of the Administration even though the President has stated only principles for reform, not details.

That changes tonight. Or at least, it starts to change tonight. President Obama is going to step into the health care debate over the next several weeks in a far more forceful fashion than before. While it’s unclear how specific he will get tonight, there is little doubt that he will be very clear about what he wants in a health care reform bill – and what he does not – over the next several days. My guess is he will use the introduction of mark-up of legislation by the Senate Finance Committee, expected to begin as early as next week, as his foundation. But whatever vehicle he commandeers (to mix metaphors), we are very close to moving past accusations concerning what Obamacare is to seeing what actually what the President’s plan actually looks like.

And this process begins with tonight’s speech. The folks over at Politico have a good “what to look for” post. Among the most significant items:

  1. Will President Obama keep it simple – and, consequently, comprehensible?
  2. Who will serve as the President’s foil? (My guess – insurance companies).
  3. Where does President Obama stand on a government-run insurance plan? We know he wants one, but will he threaten to veto a bill without a public plan?

Here’s some other questions to keep in mind while watching the President’s speech:

  1. Is the President specific about ways of reducing medical costs?
    Health insurance premiums reflect the underlying cost of health care. So does the burden of public programs like Medicare and Medicaid. Will President Obama make this clear? And will he have ideas for dealing with them?
  2. How will the President frame the rationing issue?
    The spurious fear mongering around death panels not withstanding, the public has legitimate concerns about what reform will mean to their own access to health care. There is rationing of care under the status quo (based primarily on the quality of one’s health insurance), but it’s mostly hidden and subtle. Every health system rations care in some way. How explicit will the President be about the inevitable rationing resulting from his plan?
  3. What type of Health Care Exchange does the President support?
    Does he see these exchanges as bringing together information or are they actively negotiating with carriers concerning rates and benefits? Will they replace brokers or supplement them?
  4. How does President Obama describe the efforts in the Senate Finance Committee to shape bi-partisan reform?
    Does he describe their efforts as central to health care reform legislation or as just one of many sources? Does he give its chair, Senator Max Baucus, political support and cover or leave him to fend for himself? As regular readers know, I’m one of those who believe the bill the Senate Finance Committee produces will be close to what eventually emerges from Congress. Part of my reasoning has been that President Obama wants reform legislation . Which brings us to …
  5. Does President Obama show more interest in practical results or partisan purity?
    Will he seek to please the liberals or the moderates? Will he show a willingness to accept less than a full loaf or will he insist a host of specific elements be included in the reform bill?
  6. Will President Obama succeed in making the status quo unacceptable?
    The devil known is always more welcome than the unknown variety. Right now those attacking reform have the easier task. The President needs to reverse the argument, putting the burden on his critics to demonstrate that the current system is worth preserving – or that it can be preserved. If he fails, the Administration will remain on the defensive. Not a fatal setback, but a serious problem.

Watching the spin doctors go to work on the speech will be a fascinating lesson in politics. Watching them will also be annoying. One can predict what Fox News and MSNBC will be saying, but they don’t really matter. They preach primarily to established constituencies. The public that still has an open mind on the issue will be tuned to the networks, CNN and waiting for their morning paper.

As you listen to the reaction, keep in mind that tonight’s speech is only the beginning of the Administration’s final push for health care reform.  The game isn’t over tonight. It’s just beginning.

8 thoughts on “Obama’s Health Care Speech a Beginning, Not an End

  1. I promote reforms but not at the expense of the people who are struggling to lead a life. Health Insurance needs to be kept simple and affordable by all. That’s the main thing.

  2. Alan, Thanks for your insight and spot-on predictions.

    The GOP response and Fox commentary continue to ask why Obama’s proposal does not allow or encourage carriers to sell across state lines. This was a core feature of McCain’s proposal when he was campaigning.

    While I generally agree more competition is good for business, I do not see how this helps make health care or insurance more affordable. I also recall how cumbersome and confusing it was 20 years ago when we had this “cross-states” option in California. Consumers (and their insurance agents) were burdened with learning each state’s different mandates and buried in fine-print. In the mid 80’s, there were dozens of carriers who withdrew from California or went broke because they could not figure out how to succeed in this big and complex market.

    Why is this so important and do you think it has merit now?

    • Hello Michael, thanks for your comment. I must confess, I don’t understand why the GOP is so fixated on this approach. For a party that champions state rights, it clearly undermines the ability of states to protect its consumers. The problem with allowing plans to be sold across state lines is that carriers will search out the states with the least amount of regulation (and taxes), establish themselves there, and then sell wherever they please. The only real consumer protections will be that offered by the least protective state in the union.

      Then there’s the unintended consequence you point out: mass confusion. As I posted during the campaign, if Republicans want health insurance plans to be sold across state lines, they should be calling for a federal charter for health plans. This would at least provide for greater consistency and, possibly, stronger consumer protections.

      The only benefit of the proposal is that it allows Republicans to take a stand in favor of competition without embracing a public option. As a fig leaf, the proposal may have merit. As public policy it’s pretty weak, at least in my opinion. If there’s anyone out there with an opposing point of view, I’d be delighted to read it.

      Thanks.

  3. In reading Alan’s commentary, he clearly explains key elements of legislative proposals. While I have not read the legislation, one thing that appears to be missing is any mention on ERISA, and how this affects the dynamics of the health insurance market. All of the proposals to date have increasingly focused on regulations (no medical underwriting, no rating based on health conditions, guaranteed issue) and taxes (funding the uninsured, exchanges, etc.) on health insurers. However, the vast majority of employees covered by large employers are in self insured plans covered under ERISA. The employer or labor union is the health plan, not the insurance company. The insurance company is often just an adminstrator for the employer/union. In many cases, there is no insurance company at all, just third party administrators specializing in claims processing and medical underwriting services. So, if we regulate the insurers, what about all these ERISA plans? They exist outside the proposed scope of these proposals. That is a big hole.

    My sense, is that the exchanges are a great idea. They provide a more understandable market place for consumers to purchase insurance. However, the ERISA plans need to be regulated as any other insurance plan, if not, they can operate outside of the new regulated market and gain significant price advantages by avoiding taxes, selecting on risk, and not being constrained by the regulations.

    More thoughts later.

  4. Seems it cant be said enough so here it is one more time from me. We as a group are so incredibly lucky to benefit from your wisdom and insight. Not to mention the time you put into finding the readings and links to follow. As I watch the entire process unfold I find myself amazed at the accuracy in your predictions of how this will all play out.

    As one of your grateful readers I thank you.

  5. Dear Alan,
    I enjoy reading your well considered blogs about health care reform. I have been a benefits consultant for 20 years working with small and large groups as well as individuals. I respect the fact that insurance must be fairer and more affordable but I am also concerned about reform and the unintended consequences. Since most people do not offer a solution, and yet feel free to criticize any plan on the table, I have taken time to consider a plan.

    Here’s my idea: use the public or non-profit plan as reinsurer or fall-back plan when an individual’s private insurance limits are reached. There are limited benefit plans avialable today offered by the large group marketplace with nothing but bankruptcy and possible Medicaid and poverty to back them up. And yet limited but affordable plans serve many lower income employees fine who only need a few doctors visits and a few prescriptions. Why not allow insureds to choose their lifetime maximum benefit under private insurance($50,000 to $100,000 to even unlimited) that will determine an individual’s premiums. Lifetime limits also allows private insurers to reasonably price insurance, limiting private insurers’ exposure to high claims for chronic or catastrophic illness. The non-profit reinsurance plan can increase the numbers of (salaried) family practitioners, offer cost containment, record sharing and best practices development that along with cost containment, will provide the basis for tort reform in the private sector. Let the reinsurance plan be funded in part with current MediCare tax and a small fee (1-2%) on every American’s premium. Let Americans choose their lifetime limit and encourage health savings accounts. I have more details on this plan and would be happy to email it to you or to anyone who may be interested in this idea. I have sent my idea to my representatives, so I keep hoping our legislators will propose of this type of partnership between the private sector and a non-profit reinsurance plan. Instead of “competition”, I think a private-reinsurer partnership would help us solve our problems of universal access and affordability without fear of losing choice and the high quality of care that is currently avialable to most Americans (but premiums are becoming too expensive).

    • Kristi,

      Forgive me for not being in the insurance industry myself, and finding much of what you propose a little hard to understand.

      But if I am getting any of this right, a person like me could go to an insurer and say, for instance, I want a policy that pays a lifetime benefit of $50,000. The insurer says, okay, that’s not too high, I can afford to sell you a policy for X per month.

      He is safe from “catastrophic claims” from me because his maximum outlay is $50,000. And because his risk is low, he doesn’t have to charge me an arm and a leg, right?

      But I thought the whole POINT of health insurance was to guard against catastrophic claims. And secondarily, having the insurance company force the medical people to take less than they would otherwise charge me as a concession for getting lots of business (i.e., me and all the other covereds with the company.)

      Hell, if I wasn’t scared of getting hit by a bus, or having a stroke, or getting some rare form of cancer requiring a prohibitively expensive drug regimen, I would just pay all my medical bills out of pocket. I would lose out on the arm-twisting the rates down that insurance companies can accomplish much better than uninsured individuals.

      But leaving that aside, I am not sure where exactly your plan is helping anything. I leave with my new policy and get shot in the crossfire by an irate former shareholder of CitiBank who feels he’s been swindled and is going berserk on the streets, I am taken to the hospital, given a couple aspirins and a bandage, and already I’ve used up $25,000 of my lifetime coverage. A day later, when it’s all gone, what happens to me?

      The infinitely more important question, I suspect, from the insurance company’s point of view,is what happens to the insurance company? Or perhaps I should say, the reinsurance company.

      Isn’t it just sticking yet another blood-sucking level of bureaucracy–i.e., the reinsurance company– into a system already so bloated by different hands out for their individual morditas that the carcass is devoid of flesh when everyone gets done with it–isn’t this just, well,making things even more bureaucratically convoluted and dysfunctional?

      In the old days, you had the doctor and the patient.

      Then you had the doctor, and the insurance company, and the patient.

      And now you are proposing the doctor, the insurance company, the reinsurance company, and the patient?

      At what point does madness just totally take over?

      What would you say to me when I say empower the reinsurers to sell credit default swaps to hedge against their liability, and do so at megachurches where the Preachers huckstering the latest variation on Prosperity Gospel Pie in the Sky magical thinking will ensure no shortage of pastoral suckers without money will take out loans to invest?

      I think with the right timing, we can get another generation of patients through the meat grinder before the next bubble explodes.

      You know, Kristi, maybe I was too hasty here. Let me write up a business plan. This idea has IPO written all over it!

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