2009 versus 1993 Health Care Reform: The Difference is Consensus

Politically, 2009 and 1993 will share some similarities.  A new Democratic President takes over after years of a Republican White House. The new president will be able to work with a Congress firmly in Democratic control. Both soon-to-be President Barack Obama and then President Bill Clinton entered office during difficult economic times. And as candidates both made health care reform a top issue in their successful campaigns.

But 2009 is far different from 1993 in many ways. Concerning health care reform the political environment are strikingly different.  In 1993 President Clinton asked First Lady Hillary Clinton to take the lead. As I’ve noted previously, her insular and heavy handed approach helped doom that effort. But she had lots of help. There was broad disagreement about the nature of the problem, let alone the solution. Interest groups fought the Clinton Administration reforms vigorously and effectively. Given the lack of consensus and clumsy politics, it’s eventual defeat, in retrospect, seems inevitable. 

In 2009, the political environment will be far different. That there is a crisis in America’s health care system is broadly accepted. Out-of-control medical costs, and the ever increasing health insurance premiums they cause, are harming the financial security of families and the economic viability of companies. Tolerance for the large number of uninsured in the country is near an end.

There’s not only wide agreement that there is a problem, there’s a growing consensus on what the solution might be. The several proposals already circulating in Washington overlap with one another and the approach advocated by Candidate Obama. Interest groups and academics who waged pitched battles in 1983 are finding common ground as 2009 approaches.

This was strikingly clear in a recent broadcast of NPR’s To The Point. Host Warren Olney interviewed representatives from Families USA (generally considered a liberal health care reform advocacy group, America’s Health Insurance Plans (the carrier’s trade association),  the United States Chamber of Commerce and an academic from UC Berkeley. Their perspectives differed, but what was striking was the amount of agreement they expressed. True, there were no representatives of medical care providers on the show, but the common ground expressed by these four may not have been possible in 1993. And, as is usual when Mr. Olney is conducting the interviews, the show was very informative. (I recommend making the time to listen to this episode, entitled “Barack Obama and ‘Universal’ Healthcare Reform“).

Consensus in December 2008 does not guarantee a smooth and easy process to enacting comprehensive health care reform in 2009. The debate will be vigorous and heated. There will be winners and losers — and the losers will not take their lumps quietly. But unlike in 1993, when the top priority of many stakeholders was to stop health care reform, in 2009 their approach will be to help develop the right reform. Now that is a big difference.

Obama Health Care Reform: Early Tea Leaves

As President-elect Barack Obama’s administration takes shape some hints as to the direction health care reform will play out are beginning to drop. While the clues are preliminary and a lot can change in the 47 days before the inauguration. But it’s never too early to read tea leaves. Who knows, some of these predictions might actually be right. Among those tea leaves:

Health care reform will be addressed sooner rather than later. The issue was too central to the President-elect Obama’s campaign to be put off for long. And there’s too much pent up demand for change to delay. Plus there’s a host of reform proposals already, or soon to be, in play. Some are plans bi-partisan, some are being offered by Congressional heavyweights like Senators Max Baucus and Ted Kennedy. All of these proposals have a lot in common, which means health care reform 2009-style will be off to a much better start than the Clinton Administration effort (fiasco?) in 1993.

Former Senator Tom Daschle will play a major role in fashioning health care reform. Although his nomination to be Secretary of Health and Human Services isn’t yet official, it’s received the controlled leak treatment that has presaged every other nomination. Senator Daschle has spent much of his time since losing his Senate seat in 2004 thinking and writing about health care reform.  That thinking has led him to argue, according to Time magazine, that health care reform is essential to dealing with the nation’s financial woes and that delay in implementing reforms is unacceptable.

As a Senior Fellow at the liberal Center for American Progress has described the current health care system as seriously broken. Writing in an undated statement on the Center’s site, Senator Dashcle claims “Efforts to reform our health care system have been undercut by myths that hide the weaknesses of our current system and overstate the challenges of reform. One myth is that the United States has the best health care system in the world. There is no doubt that some Americans have access to the best care anywhere, but not all care is excellent.”

He continued, “We need to move beyond ideology and partisanship and meet our common health care system challenges with commonsense answers to provide affordable, quality health care to everyone in this great nation. This is not a weak alternative; it is the only one.”

These statements summarized the findings in a white paper on health care reform entitled, “Paying More but Getting Less: Myths and the Global Case for U.S. Health Reform.” The reforms called for in the white paper overlap those advocated by candidate Obama during the campaign. One encouraging note: Senator Daschle spends considerable time in his analysis on the need to control health care costs. This means he should find an ally with the new Director of Office of Management and Budget, Peter Orszag.

Controlling costs will be central to Obama’s health care reform plan.Although it got fewer headlines than the debate over whether his proposal would lead to universal coverage or not, candidate Obama focused more than most of his opponents on the need to restrain skyrocketing medical costs. As a candidate, President-elect Obama’s proposals were, to put it kindly, somewhat general in scope. Yet he’s bringing on board people who clearly get the importance of this task. As noted, Senator Daschle is one. Incoming Director of the Office of Management and Budget, Peter Orszag is another. In his current job as Director of the Congressional Budget Office, Director Orszag has long called for a focus on controlling medical costs. At the CBO Director Orszag pushed for evidence based assessments of new technologies and expansion of research into the effectiveness of treatment. He also called for new incentives in order to change provider and consumer behavior. His move down Pennsylvania Avenue from Congress to the White House is unlikely to change this emphasis. And given the impact health care reform will have on the economy (and thus the nation’s budget) his will be a loud and attended-to voice in the debate.

Emanuel may have a lot to say, too. Incoming White House Chief of Staff Rahm Emanuel will no doubt weigh in on health care reform, but he’s not the Emanuel I’m referring to. The one to keep an eye on is his brother, Ezekiel Emanuel, currently Director of the Clinical Bioethics Department at the National Institute of Health. Dr. Emanuel is a strong advocate of a voucher system. His proposal has gained significant attention, if not support. But with his brother holding the door open it’s highly likely the doctor will have a voice in shaping the Administration’s health care reform plan.

Reforming America’s health care system won’t be easy. The need for comprehensive health care reform is widely shared across the political spectrum. And as the Los Angeles Times, recently reported, there’s a growing consensus supporting universal coverage that includes business, unions, doctors, hospitals and insurance companies. Yet sharing a goal is a far cry from agreeing on solutions. As history has shown, once details emerge, so do objections. I believe health care reform is coming, but there will be vigorous debate and substantial compromises along the way.

A Single Payer system will be part of the debate, but not the solution. Supporters of a single payer system have a nearly religious zeal for their approach. They speak in terms of the morality of covering everyone and throwing those earning profits from the health care system. A government-run system accessible to all and paid through taxes is the salvation they preach. Advocates of a single payer system will not go away and they have many supporters in Congress. Yet, their chance of success has not been this bleak in years. The consensus building in Washington focuses on an employer-centric system. While expanding government health insurance programs is explicitly supported, all the major proposals currently gaining traction implicitly reject a single payer system. There will be sound and fury around this approach, but as a solution, it’s a virtual non-starter. This doesn’t mean that what emerges from the coming health care reform debate isn’t dangerous to health insurance agents and others important to the current system. It just means the truck heading our way is not being driven by Michael Moore.

Change is coming. Stay tuned. For those who care about America’s health care system, 2009 will be a watershed year. Something is coming. It’s broad outlines are becoming more clear as the new year draws closer. But the system won’t be changed by generalities. It’s the specifics that matter. And it’s time that is required to shape those details into reforms that make the system better, not worse, for the effort. The opportunity for meaningful, positive reform has never been greater. While there are risks to current stakeholders, there’s a good chance they may emerge stronger from the process. What’s clear is that the process will take months, maybe even years, before the coming change arrives. And make no mistake, change is coming. No tea leaves are required for that prediction.

Baucus Health Care Reform Plan an Interesting Start

Comprehensive national health care reform is coming. The only question is when and what wil it look like. There will be many reform plans put forward during this process. Some will have more substance than others. Some will be more credible than others. Some may even be practical. And a few might make America’s health care system better, not worse, than it is today.

One thing we know pretty much for certain is that a true single payer system is not coming any time soon. President-elect Barack Obama made comprehensive health care reform a central theme to his campaign. it clear throughout his campaign that he saw an important role for the private sector in the country’s future health care system. The Democratic National Platform made this approach explicit. (Irrelevant factoid: this post could well be the one and only time you ever read anyone referring to a party platform — until 2012).

What’s less certain is whether health care reform will be taken up by the Obama White House and/or Congress in the first few months of the new Administration. There are certainly a lot of influential lawmakers seeking to make health care reform an initial priority, including Senator Max Baucus, Chair of the Senate Finance Committee, and Senator Ted Kennedy, Chair of the Senate’s Health, Education, Labor and Pensions Committee. There’s more already entered in this particular derby and many more to come.

Senator Baucus’ health care reform plan is interesting for several reasons. First, any reform package will need to pass through his Finance Committee. Whether it’s his bill or another’s, Senator Baucus will have the ability to influence the final package. Understanding his starting point, consequently, takes on special significance.

Second, Senator Baucus’ plan, which he notes is not intended to be a legislative proposal, but rather a blueprint describing his vision for health care reform, devotes considerable attention to the need to reduce the underlying cost of medical care at great length. Even his discussion of wellness, preventive care, transparency, and reducing waste — standard components of any credible reform plan — goes well beyond the normal discussion. Most significantly, he goes beyond the low hanging fruit to address more controversial approaches. For example, he calls for financial incentives for primary care providers in the Medicare system and suggests funding them by reducing payments to specialists. He also endorses using medicare to test other primary care models especially those that “promote comprehensive care management and coordination, particularly for the chronically ill.”

Third, while the market reforms included in Senator Baucus’ plan should be no surprise to anyone who listened to Senator Obama during the presidential campaign, it does provide more specificity than was offered during the election. So while it contains the expected laundry list of proposals (tax credits, guarantee issue, etc.) it’s the additional details he provides that are significant.

For example, most insurance agents who read this blog will want to know what role, if any, they will have in the government-run Health Insurance Exchange Senator Baucus would create to compete with private sector offerings. A hint is all he provides, but it’s an encouraging one. In the discussion of the proposed purchasing pool, the document states “Plans participating in the Exchange would be subject to oversight by states with regard to consumer protections (e.g., grievance procedures, external review, oversight of agent practices and training, market conduct). ” italics added.

States are to regulate agent practices in connection with the pool. That must mean Senator Baucus envisions some role for agents in connection with the pool. As noted, it’s only a hint, but it’s a welcome one.

During the debate over Assembly Bill X1-1 earlier this year, carriers and agents were able to insert language in the legislation to allow, but not require, agents to sell products offered through the purchasing pool it would have created. Whether agents can educate lawmakers at the national level that the services we provide are worth including and protecting in whatever reforms eventually emerge will be challenging. But it appears Senator Baucus, at least, is open to the idea. And the experience agents have gained in California and elsewhere should aid in this effort.

No one, not even Senator Baucus, assumes his blueprint will be adopted as is. There will be a long and contentious health care reform debate before any kind of consensus emerges. Senator Baucus’ proposal is an important contribution to the stew of ideas that is simmering in the nation’s Capital. It’s an interesting start. But only a start.

Roundup: McCain and Obama Health Plans

As a quick search will reveal, I’ve expressed my vieaw of the presidential candidates’ health care reform plans in several posts over the past few months. Put simply, my belief is that the proposals by Senator John McCain and Senator Barack Obama are both grievously flawed. The winner on November 4th would be far better served repositioning their ideas as a statement of philosophy, principles and concepts rather than a blue print for change. The incoming president should then start with a blank slate and come up with something that might actually to more good than harm.

But that’s just my take on their plans. I thought it might be interesting to pull together in one post links to what others are saying about the plans. I’ve tried to find opinions and blogs from across the political and policy spectrums, but if you think I missed an important perspective, please let me know by writing a comment and providing links of your own.

To get things started, here’s a quick comparison of the McCain and Obama health care reform plans. The Commonwealth Fund offers a more detailed review.

  • John Goodman takes both plans to task (my thanks to Ron Masters for bringing this one to my attention).
  • This post on the Harvard Kennedy School’s site, describes all things wonderful about Senator Obama’s proposal.
  • The PatientAssistanceblog finds things to like in Senator McCain’s plan.
  • The American magazineaccuses Senator Obama of seeking to end private health insurance.
  • The Lewin Group prices out the costs of both plans (such estimates should be taken with huge quantities of salt as another, equally respected group can come up with far different results. It’s sort of similar to why polls differ to much. It’s all in the assumptions.)
  • The Physicians for a National Health Program are advocates of a single-payer health care system. They don’t like either proposal.
  • Voters desire for significant health care reform is noted over at MedPage Today.
  • Richard Locker of the Commercial Appeal (a paper in Memphis) agrees with me that the candidate’s proposals are merely starting points expressing their attitudes toward health care reform. He also explains why many think substantial change is unlikely to emerge from Washington any time soon.

This is far from being an exhaustive list. I’ll probably add more between now and election day and, again, I hope you’ll add to the list by leaving a comment, too.

Obama Must Do Better on Health Care Reform

In his stump speech, during the presidential debates, highlighted in his 30 minute commercial, Senator Barack Obama has made clear that, were he elected president, health care reform will be near the top of his priorities. It’s viewed as a critical component in fixing the nation’s faltering economy, ranking alongside energy independence and a middle class tax cut at the top of his domestic agenda.

Senator Obama’s commitment to the issue is more than ideological, although he does see health care coverage as a right of all Americans. It is also highly personal. Senator Obama described the roots of his committment to health care reform in Sarasota, Florida yesterday this way: “And as somebody who watched his own mother lying on a hospital bed at the end of her life because they had cancer. The insurance companies were saying this was a pre-existing condition, maybe we don’t have to pay for your treatment, I know what it’s like to see a loved one suffer not just because they’re sick but because of a broken health care system.”

This combination of ideology, politics and the personal will assure that health care reform would be taken up early in an Obama Administration. Given his passion for the issue, the state of the economy and the real need to address serious problems in the current health care system, the odds are extremely high a comprehensive reform package will emerge sometime in his first term. Whether these reforms will be similar to what Senator Obama describes on the campaign trail, however, is, fortunately, both uncertain and unlikely.

One reason is because Senator Obama’s health care reform plan is seriously flawed. To cite just one example, a core attribute of his proposal is to require carriers to except all applicants for coverage without regard to their medical condition. As he put it in Sarasota, “… when I am president, we will end discrimination by insurance companies to the sick and those who need care the most.” This is a noble purpose, but if done wrong, it can lead to a health care reform surcharge that would increase the number of uninsured in the country while increasing costs in the system. The “wrong” way is require carriers to sell coverage without requiring consumers to purchase it. This, in essence, is how non-employer sponsored coverage works in New York and New Jersey. Average premiums in those states are more than twice what they are in California

The need for matching mandates, was integral to Senator Hillary Clinton’s health care reform plan. She perceived it more as a means to universal coverage, but also acknowledged that “adverse selection” is a real, proven phenomena. Imagine the premiums auto insurance companies would need to charge if drivers could wait until after an accident to buy automobile insurance. That is adverse selection and it is exactly what Senator Obama is proposing.

Another reason Senator Obama’s health care reform proposalis unlikely to survive the legislative process intact is it will need to compete with a host of other plans. Senator Ron Wyden (a Democrat) and Senator Bob Bennett (a Republican) have brought together a bipartisan coalition of Senators behind the “Healthy Americans Act.” Then there’s the proposal by Dr. Ezekiel Emanuel, Director of the Clinical Bioethics Department at the National Institute of Health, who proposes a voucher system financed by a Value Added Tax and shares some elements of the Wyden-Bennett proposal. Senator Ed Kennedy is talking to Senators and policy mavens from across the political spectrum to develop a reform package he hopes to introduce in January. Republicans, too, have a host of ideas for reforming the nation’s health care system. Some might even look similar to the health care reform package advocated by Senator John McCain during this presidential campaign.

In short, there will be no dirth of ideas when Washington begins to address health care reform in 2009. Hopefully a coherent, workable plan will arise from this stew of policies and concepts. Senator Obama speaks of being open to other approaches. As he put it when speaking at a Families USA forum in January 2007, “… affordable, universal health care for every single American must not be a question of whether, it must be a question of how. We have the ideas, we have the resources, and we will have universal health care in this country by the end of the next president’s first term.”

As president, Senator Obama would do well to remember these words. There will be pressure to pass something and pass something quickly. The “First 100 Days” nonsense will be pushed forward as his only window for pushing through comprehensive reform. This is silly. It’s far more important to get health care reform done right than according to an arbitrary timetable.

Instead of rushing reform, President Obama should demand that all the “hows” be on the table. He should require participants to leave their egos and pride of authorship at the door. He should demand an honest appraisal and accounting of both what’s working and what’s not working in the current system. He should set forth the principles he expects to achieve in the process. Then and only then should the hard work of building a new, better system, one that will provide “affordable, universal health care for every single American” begin.

Yes It’s the Economy, But It’s Health Care Reform, Too

In 1992, James Carville wrote down the key messages then Governor Bill Clinton’s campaign had to focus on in order to win.

  1. Change versus more of the same
  2. The economy, stupid
  3. Don’t forget health care

Throw in a cup of national security and you’ve got the same recipe for presidential success in 2008. Anyone listening to a speech by Senator John McCain or Senator Barack Obama will appreciate that their campaigns understand this reality. And given the recent credit crisis and financial maelstrom, the economy has become an even more central part of this election. In interpreting the public’s demand for change, however, the dominant position of economic issues should not hide the fact that voters want health care reform, too.

According to the October Kaiser Health Tracking Poll, no surprise here, the economy is overwhelmingly, the most dominant issue in this year’s campaign. 62 percent of the survey’s respondent’s listed the economy as “the single most important issue in [their] vote for president.” 13 percent of the respondents cited Iraq while 12 percent named health care.

Economic concerns emerged as the key issue long before the current financial crisis, however. In the December 2007 poll, Iraq was the top issue, with 30 percent of the respondents listing it as the most important issue. It was followed by the economy at 23 percent and health care at 21 percent.

In February 2008, the economy had moved into first place, having been named by 43 percent of respondents. The percentage name Iraq and health care as the most important issues remained constant at 29% and 21 percent, respectively.

By August 2008 49 percent of respondents were citing the economy as their top issue while Irag had dropped to 25 percent and health care to 16 percent. The Kaiser survey interviewed “likely voters” by phone between October 8th and October 13th, well after the economic crisis had set in, making the big change in the results understandable.

One might conclude from this that health care reform is moving off the public’s radar as a salient issue. That would be a mistake. The Kaiser survey shows that 75 percent of Democrats and 61 percent of independents believe “it is more important than ever to take on healthcare reform.” Even 42 percent of Republicans agreed with this statement. What it shows is that health care reform and economic security are intertwined and inseparabe. A key aspect of “fixing” the economy will involve “fixing” health care.

According to the Kaiser study, 35 percent of respondents themselves or a family member had put off getting health care they needed because of the economy. 31 percent said they skipped recommended medical tests or treatment and 27 percent said they didn’t fill a prescription. 28 percent of the respondents reported they had problems paying for health care and health insurance as a result of recent changes in the economy.

Restoring consumer confidence is a substantial part of recovering from economic set backs. So it is significant that half of the respondents (51 percent) said that “lower prices for health care and insurance would make a big difference in their family’s financial situation.” That’s more than the 45 percent who said a rebound in the stock market would make a big difference in their situation.

Senator Obama has cited health care reform as one of the top three issues he’ll address as president. There are numerous plans already circulating in Congress to jump start the reform process, including a bipartisan health care reform package backed by 12 Senators, six from each party. Senator Ted Kennedy, who is at home battling brain cancer, is talking with lobbyists, policy mavens and lawmakers from both parties to develop a framework for health care reform for the new president. Senator Kennedy intends to introduce his legislation as soon as the new Congress convenes.

So yes, the economy will be the dominant issue between now and election day. And it will dominate the president-elect’s wait to move into the White House and it will dominate his first months — perhaps his first term — in the oval office. The economy will dominate, but it won’t eliminate other issues. The American people expect health care reform to be among those other issues — and it will be.

What may surprise some is how quickly the health care reform effort will get underway. My guess is the new president will give a major address on the issue before inauguration day. Health care reform is simply too tied to the reality and perception of Americans’ economic security. It’s too important to Senator Kennedy. It’s too important to helping businesses recover and grow. The American people want the new president to address health care reform. And the new president will need to.

McCain’s and Obama’s Inconsistent Health Care Reform Principles

Picking inconsistencies in the positions politicians take is too easy to qualify as a sport. They have to take stands on such a wide variety of issues it’s asking too much for all of them to fit into a consistent and persistent political philosophy. Pointing out the contradictions can thus be seen as a cheap shot. Then again, Lou Dobbs has made a career out of cheap shots, so what who am I not to play the game? Fittingly for this blog, there were two examples of this consistency that become apparent when you examine their their positions on health care reform.

1. McCain’s Anti-Federalist Health Care Reform Plan

Senator John McCain described himself as a “Federalist” last night. This was in the context of his explaining that the Supreme Court should reverse Roe v. Wade and leave it to each state to determine how abortion will be treated within their own boundaries. Federalism emphasizes the portion of the United States Constitution that reserves to the states powers not specifically assigned to the central government. It reflects the belief that, because voters are closer to their own state governments than to the federal government in Washington, the state is best positioned to reflect their will and protect their interests.

How surprising then that a core plank in Senator McCain’s health care reform plan is to allow health insurance companies to sell in every state benefit packages approved in one state. The result will be a rush by carriers to file their plans in the least regulated, most insurer-favored state. And it won’t take them long to identify this lowest common denominator jurisdiction. I give it three days max.

Here’s how Senator McCain’s free-for-all approach to regulation would work. Consumers in, say, California could purchase health plans approved by the Arizona Department of Insurance. I’m sure the regulators in Arizona are fine, upstanding defenders of consumers interests. But California voters had no say in who they were or what laws they enforce. A true Federalist would defend the right of Californians to create their own health care system. A false Federalist would call for Californians to accept whatever system any of the other states happens to come up with.

In many ways, this is worse than a nationalized health care system. At least Californians have representation in Washington. They have some influence on what happens there. California voters have no representation in Phoenix.

2. Obama Attacks a Progressive Health Care Subsidy

Senator Barack Obama took a lot of heat for saying he wanted a tax system that “spreads the wealth” during the debate. Yet, that’s the nature of America’s tax system: it taxes wealthier people more than poorer people. This system is called progressive. A regressive tax system puts a greater burden on lower income families than on the well off ones. In many ways, President George W. Bush’s cuts over the past eight years eased the tax burden more for those earning more than $250,000 than it did for those making less. A core plank in Senator Obama’s platform is to reverse that situation and make the tax system more progressive.

One of the least progressive portions of the tax code concern the treatment of employer sponsored health insurance. That’s because the value of these medical plans (the portion of the premium paid by the employer) is not considered taxable income. This makes employer-sponsored coverage a great deal for employees at all income levels, but it’s a regressive benefit from a tax stand point.

Take the case of Acme Widgets. It currently pays $10,000 a year on each employee’s health insurance plan. The CEO of Acme makes a ton of money and is in the 35 percent tax bracket. This means America’s taxpayers are subsiding her health care to the tune of $3,500. Her assistant makes a lot less and is taxed at a 15 percent rate, resulting in a tax subsidy of $1,500. The receptionist makes the least of all, pays no taxes and receives no tax subsidy. When the rich get more than their lower income colleagues, the tax structure is regressive.

Under Senator McCain’s proposal, the value of health insurance would be considered taxable income. He offsets this lost take home pay with a $2,500 per person ($5,000 per family) refundable tax credit. (Refundable means you get the credit even if you don’t pay taxes.) Senator Obama hammers his opponent for this “gimmickry.” But let’s see how it plays out with our friends at Acme Widgets).

The CEO’s family pays $3,500 more in taxes and gets $5,000 in a health care tax credit for a net of $1,500. The assistant’s family pays $1,500 more in taxes, receives a $5,000 credit and nets $3,500. The receptionist’s family still pays no taxes, but after the credit comes out $5,000 ahead. The well off pay more in taxes than the less well off. That’s a progressive tax system. That’s spreading the wealth.

Having It Both Ways

Senator McCain can’t have it both ways. He can’t be a Federalist when it comes to abortion and a Lowest Common Denominator-ist on health care. Well, actually he can, but he shouldn’t be able to have it both ways.

Senator Obama can’t have it both ways. He can’t be for a progressive income tax system and then attack a proposal to make the treatment of employer sponsored health insurance more progressive. Well, actually he can, but he shouldn’t be able to have it both ways.

Inconsistencies is as common in politics as false smiles and bad coffee. It’s a human undertaking and, by definition, humans tend to be inconsistent. But it is fun to point them out.

Questions McCain and Obama Should Answer on Health Care Reform

Senators John McCain and Barack Obama final debate tonight at Hofstra University will cover a host of issues. Health care reform is should be a major topic of discussion. The financial insecurity Americans feel in the face of the current economic crisis is exacerbated by concerns over health insurance. Can they afford the coverage they have? Will they be uninsured — and uninsurable — if they lose their job?

How the candidates approach health care reform says a great deal about their approach to governing. Senator McCain’s plan is primarily market-driven and uses the regulatory powers of government lightly. Senator Obama’s approach relies more heavily on government intervention and more dramatically regulates carriers, pharmacies and health care providers.

Neither of their health care reform plans are very detailed. And I’ve written before, they demonstrate the candidate’s attitudes and principles towards reform mor than dogmatic policy; they are a starting point for debate rather than specific legislative demands. I’ve also pointed out that both reform packages contain serious flaws. So the two Senators have a lot of explaining to do. Here’s a few questions that would be a good start:

Senator McCain would allow benefit plans approved for sale in any state to be sold in every state. This would lead to a rush to the bottom as carriers file their plans in the most lenient state they can find. It would mean that voters in a state would have no say in how health plans sold to them are regulated. How would Senator McCain mitigate these inevitable outcomes? Does he think states have no right to regulate health insurance sold to its citizens?

Senator Obama would require carriers to sell policies to anyone applying for coverage and prevent them from excluding pre-existing conditions. Yet he does not require adults to buy coverage. They could simply wait until the need for medical care arises and then buy insurance. It’s the equivalent of waiting until after your car hits a tree to buy auto insurance. New York and New Jersey have similar rules. It’s no surprise that the average cost of individual coverage in those states is twice that in California. Senator Obama claims his top priority is to make health care coverage more affordable. How does he reconcile this contradiction?

Senator McCain wants to treat the value of health insurance as taxable income to workers and replace this with a tax credit of $2,500 for an individual and $5,000 for a family. In many ways this would be a more fair and progressive use of the tax code than the status quo. After all, higher paid executives are in higher tax brackets, and consequently receive a bigger tax deduction, than their lower paid colleagues. This would change under Senator McCain’s plan. Executives would be hit with a bigger tax bill, but receive tax credit as everyone else. Given a more progressive system, why does Senator Obama reject this approach?

The tax credit in Senator McCain’s plan is supposed to make buying coverage affordable for America’s families. However, medical inflation increases at a far greater rate than general inflation. Senator McCain’s tax credits don’t increase with inflation at all. Since the cost of medical care is the primary driver of health insurance premiums, the tax credits will cover a smaller percentage of premiums over time. Eventually, the tax credits won’t offset enough of the cost (let alone offset the impact of losing the tax deduction). How would Senator McCain deal with this problem?

Speaking of health care costs, how do Senators McCain and Obama intend to tame that beast? Yes, they both support a greater emphasis on prevention and leveraging technology. Everyone does — and these steps will have an impact. However, an aging population demanding the latest technology for an increasing number of ailments will soon overwhelm this benefit. So, beyond the obvious and widely shared solutions, does either candidate offer any unique approach to controlling rising medical costs?

Senator McCain’s tax credits would allow individuals to purchase coverage in the marketplace; Senator Obma would drive consumers into a government-run “exchange.” What do they like about the other’s approach? What don’t they like about it?

And wouldn’t it be fun to hear them talk about consolidation among hospitals, which in some communities have created health care monopolies? Or discuss whether for-profit health insurance companies have any place in America’s health care system?

The odds of any of these questions being addressed is small. Really, really small. Intead, all we’re likely to get from the debate tonight are snippets of their stump speeches. These will express their mutual desire to  make health care coverage accessible and affordable. Then they’ll attack the other’s approach as “the same deregulation that got us into the banking mess” or “a big step down the road to socialized medicine.”

We deserve to hear more about their health care reform plans. Even a little in-depth dialogue on the subject would be nice. Unlikely, but nice.

The Flawed Health Care Reform Plans of McCain and Obama

Both Republican Senator John McCain and Democratic Senator Barack Obama have put forward substantial healthcare reform plans. They both seek substantial changes in the current system. That they take starkly different approaches reveals a great deal about how their view of the current system and what they perceive the role of government to be in overcoming them. That both health care reform plans are dramatically flawed would seem to be of great concern, but probably isn’t. After all, these are just starting points and whatever new health care system emerges from Washington in the next few years is likely to be significantly different than either of these plans regardless of which candidate is elected.

As I’ve noted previously, the two plans are campaign promises, meaning they are more an expression of the candidates’ attitudes towards reforms than a blue print for legislation. That both starting points are flawed should be of concern, but is neither fatal nor devastating. They are, after all, just starting points.

Interestingly, the biggest flaw in each plan is the mirror image of the other. Senator McCain would encourage consumers to buy coverage in the individual market, assuming their employer isn’t providing health insurance, by offering tax credits — $2,500 for an individual and $5,000 for a family. While this would help many Americans buy coverage, there’s no requirement imposed on health plans to accept them for coverage (although there might be high risk pools under his plan for those turned down by carriers). Senator Obama, on the other hand, requires health plans to accept all applicants, but he fails to require everyone to purchase medical insurance. As has been demonstrated time and again, this is a sure path to higher premiums. Just look at New York and New Jersey where carriers must sell, but consumers need not buy, coverage. The premiums there are twice that in California.

Each health plan has other problems. Senator McCain would allow carriers to shop for the most lenient jurisdiction in which to file their plans, then impose this lack of regulation on other states. It’s competition without representation that is sure to result in consumer distress, political shenanigans that would embarrass an earmark addict, and undermine the credibility of the system.

Senator Obama, on the other hand, wants to create a government-run health care program to compete with private plans. The idea is to increase fair competition, but the result will be anything but fair. When the umpire picks up a bat, he’s rarely called out on strikes. Similarly, when the government competes in a market it regulates, the playing field is invariably tilted in favor of the government. The danger inherent in Senator Obama’s approach is that the government program, given unfair advantages, will squeeze out the private sector. The result will be a government-run system imposed on the nation without the accompanying debate such a policy shift warrants.

At Tuesday’s presidential debate in Tennessee expect to hear a great deal about their health plans. They’ll both be eager to dive into specifics about their own program — and to describe the failings of the other side’s plans. There will be heated exchanges concerning taxes and government takeovers. There will be fierce arguments over regulation versus goverment getting out of the way. As you watch, keep one thing in mind: none of it matters all that much.

Come November 4th one of these candidates will win. Come January 20, 2009 the winner will be sworn in as President of the United States. Unless there’s a miracle, the economic situation will push back meaningful efforts on healthcare reform for at least a few months. Yes, there will be a team put in place with orders to produce a meaningful plan within, let’s say, 100 days. But the real work of shaping the reforms could be delayed several months or a couple of years depending on the nation’s economic health.

Most importantly, once the plan is put forward, it will be changed profoundly by Congress and the new Administration as they respond to the public policy advice and political pressure of the nation. Some form of health care reform is likely to emerge before the next presidential election. Hopefully the major flaws in what’s currently on the table will be addressed — ideally without introducing new and bigger problems.

Do Schwarzenegger Vetoes Signal a Push for Comprehensive Reform in 2009?

Governor Arnold Schwarzenegger vetoed a host of health care reform bills on Tuesday. Some of them were to be expected. For example, he struck down Senate Bill 840, Senator Sheila Keuhl’s attempt to create a government-run, single payer system in the state. The Governor has been on record as opposing this approach for years and has vetoed the concept in the past. His vetoes of several bills requiring medical plans to include coverage for certain conditions is also consistent with his previously stated opposition to coverage mandates.

But there were lots of surprises on the list, too. Governor Schwarzenegger vetoed legislation that would have made it far more difficult for carriers to insurance companies to rescind an insured once they’ve accepted an application for individual or family coverage (Assembly Bill 1945 by Assemblyman Hector De La Torre. No carrier practice has garnered more negative press — and bigger fines — than rescission. From a political point of view, AB 1945 was a soft ball. Yet Governor Schwarzenegger struck it down.

He vetoed legislation (Senate Bill 1440 by Senator Keuhl) to compel carriers to spend 85 percent of the premium they take in on medical care — even though this concept was contained in the unsuccessful comprehensive health care reform package the Governor was pushing for last year. The same fate befell Senate Bill 973 by Senator Joe Simitian that would have created a statewide public insurer to link together existing regional and county-based health plans even though it too was similar to a portion of the Governor’s own reform plan.

Governor Schwarzenegger’s veto of Assembly Bill 2 by Assemblyman Mervyn Dymally was especially surprising. It would have expanded the ability of the state’s existing high risk pool to help more Californians unable to qualify for coverage in the private marketplace due to pre-existing health conditions.  The program needs significant help to continue to meet its mission. He also vetoed Senate Bill 981 by Senate President Pro Tem Don Perata which would have prohibited “balance billing” by doctors and other care providers.

The Governor had his reasons for keeping these bills from becoming law. His veto message concerning AB 1945 deplored the practice of unfair rescission and listed consumer-protection provisions he would want to see in legislation dealing with the issue. But he noted that AB 1945 was “written by the attorneys that stand to benefit from its provisions” and would lead to unwarranted litigation. Similarly, he preferred a different solution to the problem of balance billing than the approach embodied in SB 981.

Vetoes of this type, over approaches to solving problems, are common. They represent legitimate policy and political differences. The Legislature, for example, considered several bills addressing recission. They could have worked with the Governor’s office to fashion a compromise that he would sign. That didn’t happen. The veto did.

But it’s Governor Schwarzenegger’s rationale for vetoing AB 2, SB 1440, and SB 973 that best illuminates what’s in store for California concerning heatlh care reform. In all three of his veto messages, Governor Schwarzenegger made clear he wants comprehensive health care reform. Piecemeal and incremental changes are unacceptable.

I’ve written previously about why state health care reform efforts usually fail. In my mind, meaningful and comprehensive reform will need to come from Washington. And while enacting such reform has been greatly complicated by the current financial crisis, it still remains near the top of the domestic agendas for both Senator John McCain and Senator Barack Obama.

If the new Congress and the next Administration succeed in enacting dramatic health care reforms, it could preempt laws and regulations at the state level. To me, this suggests the efforts of California’s leaders might best be spent in helping to shape what happens in Washington, DC. Governor Schwarzenegger apparently disagrees.

Governor Schwarzenegger’s vetoes make clear he intends to pursue a California solution. It’s not just what the veto messages say, it’s their political impact that is important. They keep pressure on lawmakers to enact substantial reform. His opponents, for example, will be unable to call for a “time out” on further changes to the system while the new laws are given a chance to work. His allies, while angry at the vetoes, will work all the harder to get their pet reforms enacted.

In some significant ways, the potential for success is greater in 2009 than it was in 2008. Governor Schwarzenegger will be negotiating with a new cast of Legislative Leaders.  He will will be working with a relatively new Legislature, many of whom will have no scars with from his previous effort. Yet, unlike in 2007 when he launched the Year of Health Care Reform, a year in which, for most of it, the Governor offered only general principals, in 2009 he can use his defeated reform legislation, Assembly Bill X1-1, as a detailed starting point.

Certainly, the task won’t be easy. It may even be impossible. The state’s finances are in shambles and health care reform is expensive.

But there’s a legacy to be attended to. Plus, the Governor does not like to lose and the defeat of ABX1-1 was both visible and painful. His vetoes are a clear signal of where he’s headed. Expect 2009 to be the Year of Health Care Reform. Again.