Clarifying the Individual Mandate Alternative

In a recent post I suggested that President Barack Obama should abandon the individual mandate contained in the Patient Protection and Affordable Care Act. My theory is that the uncertainty surrounding the constitutionality of imposing a fine on Americans who fail to obtain health care coverage starting in 2014 is both a political and public policy risk that is simply not worth taking – especially since the penalty for failing to be insured is unlikely to achieve its public policy purpose.

I’ve received several questions about how this would impact the PPACA. Questioners have asked whether, without an individual mandate, the PPACA collapse? Does the reform law mean anything without a mandate? Would the exchanges be necessary without the mandate? That kind of thing.

So, to clarify.

Perhaps the title of my post, “President Obama Should Jettison the Individual Mandate.”  is causing some confusion. What I was addressing was the individual mandate as defined in the PPACA. The law includes one approach to encouraging individuals to take the responsibility for obtaining and maintaining health insurance. I was not suggesting that the President strip this individual accountability provisions from the health care reform law. Quite the contrary, I was suggesting he replace the current, government-enforced mandate with a privately enforced version.

The PPACA imposes a fee (or a tax, depending on whom you ask and when) if an individual fails to obtain health insurance. This is the constitutional weak-link in the law. Those asking the courts to overturn the law describe this approach as Congress forcing Americans to engage in an economic activity or pay the equivalent of a fine to the government.

Instead of this government-centric approach, I proposed replacing the fine with alternatives enabling carriers to protect themselves from consumers who have waited until they are on their way to a hospital before seeking coverage. As has happened in New York and New Jersey, without such protections premiums skyrocket even faster and higher than medical inflation would normally require. Creating an open enrollment period (perhaps the applicant’s birth month) would counteract this dynamic. Allowing carriers to set premiums higher for those who have gone without coverage and to exclude pre-existing condition for some period of time, would help keep the cost of insurance lower, too. (These are financial disincentives imposed on individuals who fail to maintain medical insurance. Fairness would dictate that these disincentives should be commensurate with how long the individual went without coverage, thus the limited time during which a premium surcharge or benefit exclusion would be permitted).

Carriers would not be obliged to impose these penalties. If they were commanded to do so by law some would argue they are simply agents of the government and the Administration would be back defending the constitutionality of a government-imposed individual mandate. By allowing, but not forcing, carriers to use an open enrollment period, increase premiums, or exclude coverage for existing conditions, the government is out of the equation. And so are constitutional challenges – at least to this provision.

The impact of this approach on other provisions of the Patient Protection and Affordable Care Act is minimal. In fact, by shifting the enforcement of personal responsibility from the IRS to private carriers this alternative might even save money overall.

Nor would removal of the individual mandate as currently defined in the law mean the rest of the PPACA would collapse – even if it were not replaced by an alternative. For example, exchanges can (and do) exist without an individual mandate. In fact, many Republicans and conservatives who are ardent supporters of exchanges oppose requiring all Americans to obtain coverage. They, like Democrats supporting the exchanges, believe a primary benefit of exchanges are to allow individuals to aggregate their purchasing power to obtain better pricing from carriers just as large employers do today. Exchanges and the individual mandate are aimed at two different policy goals and each can survive without the other. (This is not to say there’s not plenty of reasons to oppose exchanges or to seek changes to how they’re envisioned in the PPACA).

Without an individual mandate, but with a requirement that carriers accept all applicants for coverage, premiums will rise substantially. However, it is possible (if unwise) to have the one without the other (as is the case in New York and New Jersey). Nor would would the PPACA collapse if the individual mandate was removed and not replaced by something along the lines I’m suggesting? The PPACA is about a lot more than the individual mandate. The law creates exchanges, enables co-ops, imposes limits on carriers’ administrative expenses, establishes market reforms (such as requiring carriers to keep dependent children on their parent’s policies until age 26), changes rating practices (eliminating premium variations based on gender), creates new taxes, provides for premium subsidies, launches demonstration projects in an attempt to lower medical costs, expands Medicaid, reduces out-of-pocket expenses for some Medicare beneficiaries, and a whole lot more. The individual mandate is one part of a much larger whole.

All of which makes the risk that the individual mandate could lead the Supreme Court to find the entire PPACA unconstitutional an even greater incentive for President Obama to change the way individual responsibility is encouraged (or, more accurately, enforced).  That the President should seek a different approach to individual responsibility is both good public policy and smart politics. Whether Congress and the White House could agree on what those changes should be an altogether different question.

Why President Obama Should Jettison the Individual Mandate

Two key elements of the Patient Protection and Affordable Care Act are the requirement that health insurance carriers accept all applicants (what’s called guarantee issue) matched by a requirement that individuals obtain health care coverage or face a penalty (referred to as an individual mandate). The PPACA was not the first bill take this approach to move toward more universal coverage. In response to then President Bill Clinton’s health care reform proposal, 19 Republican Senators joined by two Democrats, put forward the Health Equity and Access Reform Today Act of 1993. Central to the proposed legislation was an individual mandate.

That was then.

Now Republicans cite the individual mandate as a key flaw of the Patient Protection and Affordable Care Act. Recently a Federal Judge in Florida declared the individual mandate contained in the the PPACA was unconstitutional and, as a result, the law itself was unconstitutional. Eventually the Supreme Court will rule on whether the individual mandate in particular and the health care reform law in general can stand. Their decision will hinge on how they interpret the Commerce Clause of the US Constitution.

This is not a clear-cut, black-or-white issue and the Court could go either way on the issue. The Commerce Clause has evolved considerably since the Constitution was adopted. That legal scholars and judges reach different conclusions when applying it is not surprising. Consider: to date, two Federal District Court Judges have rejected claims the individual mandate exceeds Congress’ powers under the Commerce Clause while two others determined it does. For those interested, NPR’s The Diane Rehm Show aired one of the most informative, clear and helpful discussions of the legal issues surrounding the PPACA I’ve come across. (The entire 51 minutes segment is well worth a listen, however, much of the key legal explanation takes place between the 8 minute and 28 minute marks).

Unless the Supreme Court accelerates the process, they will probably hear appeals of lower court decisions after they convene their next term in October of this year, with a decision likely to be published in the Spring of 2012. Take note of that timing – as we’ll see it matters.

The question is, should President Barack Obama even let the individual mandate reach the Supreme Court? An argument can be made that the President and his signature domestic legislative accomplishment would be better off abandoning the individual mandate as it exists and replacing it with a different approach. Here’s my version of the argument:

Requiring carriers to accept all applicants without a provision requiring consumers to obtain coverage is a recipe for disaster. The average premium for individual coverage (insurance purchased without a contribution from an employer) in New York and New Jersey are more than twice the average premium for similar coverage in California in large part because New York and New Jersey law requires guarantee issue, but lack an individual mandate. . Consumers there take the economically smart course of waiting until they are sick or have an accident before obtaining coverage. To cover the inevitable losses, carriers set high premiums.

This is why Democrats included an individual mandate in the PPACA. Unfortunately, it isn’t much of a mandate. Individuals who fail to obtain coverage, unless excused from the requirement on religious grounds, will be required to pay a penalty. In 2014 this fine is the greater of $95 or 1% of income; by 2016 $695 or 2.5% of income, whichever is greater. Given that the CBO estimates that individual premiums for the lowest level of benefits available to most Americans under the PPACA will average between $4,500 and $5,000 (that’s for the Bronze level of benefits for those keeping track) the economic calculation is pretty straightforward. $4,500 is 2.5% of $180,000. So anyone with a taxable income of $180,000 is arguably better off going without coverage until they need it – give or take risk tolerance.

The PPACA’s individual mandate may be lightweight, but the political cost has been heavy Jettisoning the individual mandate as it currently exists would neuter one of the Republicans core attacks against President Obama and the PPACA – that this provision exemplifies an abusive expansion of the federal government at the expense of individual liberty. (That the IRS will need to hire additional staff to enforce the penalties only makes the situation politically worse for the Administration). Democrats may describe the individual mandate as a call for individual responsibility, but they’re losing the debate – as the election results of 2010 underscores.

Replacing the PPACA’s individual mandate with something different, something that more directly speaks to personal responsibility – without involving the IRS – and that is more effective in accomplishing the goal of the individual mandate, is a winning public policy and political strategy.

Fortunately for the Administration, there are viable alternatives. For example, a year ago I suggested allowing carriers to exclude coverage for pre-existing health conditions and impose a premium surcharge on individuals who go without medical coverage for a specified period of time. Others are suggesting creating a limited open enrollment period during which uninsured individuals can apply for coverage on a guaranteed issue basis.

There’s another very practical reason for the President to seek a different approach to getting individuals to obtain coverage before they are sick or injured. Whether the Supreme Court will rule the PPACA’s individual mandate as unconstitutional is a great unknown. Legal decisions are hard to predict and given the makeup of the current Court, their decision on this matter will likely be close.

And the result could be devastating to the Administration. If the Court were to strike down the individual mandate in the Spring of 2012 the Administration would be forced to find a replacement in the heat of a presidential election campaign. How likely are Republicans to cooperate with the White House just weeks before their nominating convention? Worse, the Supreme Court could find that since the individual mandate is unconstitutional the entire health care reform law is nullified.

Imagine the chaos. Would 26 year olds insured under their parents’ policies suddenly be dropped? Would seniors be required to reimburse the government for checks they’ve received to close the donut hole in their Medicare prescription coverage? This is not what the President wants dominating the news during his re-election campaign.

The political and societal risk can be minimized to nearly zero simply by eliminating the element of the PPACA most open to challenge: the individual mandate. After all, the Supreme Court can’t declare unconstitutional a provision already removed from the law.

Republicans say they want to do away with the individual mandate. The President should let them do so. Yes, the GOP will claim victory. For the Obama Administration, giving Republicans bragging rights is a small price to pay for improving the PPACA, demonstrating his openness to bipartisan solutions, and avoiding a political nightmare of apocalyptic proportions.

This is one situation in President Obama should embrace the call to “repeal and replace.” Doing so is in his own – and more importantly, the American people’s – best interest.

Coming Soon: The Inevitable Revision of the Patient Protection and Affordable Care Act

Health care reform legislation may have been signed into law on March 23, 2010, but the issue is not going away. Anyone watching the election campaigns playing out across the country can attest to that. Republicans have made the  “repeal and replace” of health care reform a key promise in their "A Pledge to America" campaign document. While some Democratic candidates are touting their support of the Patient Protection and Affordable Care Act, others are bragging about their opposition to it. And others, like West Virginia Governor and Senate candidate Joe Manchin have talked about “repealing the things that are bad in the bill.”

Then there’s the impact on polling. Now, some readers of this blog get vehemently angry that Congress and President Barack Obama would dare pass legislation opposed by the public. I disagree. Political leaders have a job to lead, to make tough choices, to examine the facts, their constituents’ interests and then to cast their votes in accordance with their beliefs and conscience. I do not think politicians who flip-flop in whatever direction the polls show is popular at the moment are worth a lot. If politicians are simply to reflect the majority of opinion we could replace Congress with online survey software and be done with it. Also, consider this: if politicians only voted as the polls dictate there would have been no Civil Rights Act in 1964. American troops would have been out of Iraq during the Bush Administration. Whether liberal or conservative, there are numerous examples of legislation passing in spite of polls showing a majority of Americans opposing the new law that you are likely to applaud – and decry.

Nonetheless, polls do and should be a factor in the deliberations of politicians. They indicate when problems have reached a critical point where a solution is demanded. And they can serve to help shape and influence the likely outcome. Some polls of late have shown that a plurality of Americans – and perhaps more important given that election day is near at hand, likely voters – have an unfavorable opinion of the PPACA. But if polling is to influence decision making, then it’s important to dive a bit deeper into the numbers.

A recent Associated Press-GfK poll shows why. This survey shows that only 15 percent of likely voters support leaving the new health care reform law as is while 85 percent want the PPACA changed in some manner. However, that 85 percent is far from monolithic. 37 percent of likely voters surveyed said they wanted to repeal the Patient Protection and Affordable Care Act completely. Another 10 percent wanted changes to the law that would narrow its scope, but did not call for repeal. And 36 percent, a nearly identical number to those supporting repeal, want the law expanded. I couldn’t find a copy of the poll itself, but I assume this latter group includes those who support a single payer system or at least a public option, who want greater regulation on insurance carriers and/or who want greater cost controls included in the legislation. However, one could easily assume a single payer advocate, for example, might simply state they want the new law repealed.

My point here is that advocates on the right and the left will be seeking changes to the PPACA. The basic law may have passed in 2010, but it will evolve over the next few years. Some of the likely battles:

  • Repealing the requirement that businesses issue 1099s to any corporation or individual to which they pay $600 in a year. Democrats and Republicans alike support changing this provision. Whether it’s repealed or greatly revised is the only open question. Similarly, requirements for including health insurance premiums paid on behalf of employees on W-2s (which is optional in 2011) create a burden on businesses, especially small ones, that will necessitate changes.
  • There will be an effort to revive the idea of creating public run health plans (the so-called “public option”). Given the firestorm of opposition to the federal government expanding its role in America’s health care system, however, I don’t see the votes being there for this approach – especially in a Congress with small majorities in each House.
  • I expect, although it may be more of a hope, that there will be a push to allow premium subsidies to Americans earning less than 400 percent of the Federal Poverty Level to use those subsidies outside the exchanges being set up under the PPACA. This would allow those receiving the premium support greater choice and force the exchanges to compete with the outside market on a more level playing field. The exchanges are unlikely to go away: both Democrats and Republicans support them. But taking away arbitrary advantages will result in greater and more fair competition in the marketplace. Let the best offerings win.
  • There will be proposals to do away with the mandate that all Americans obtain health care coverage. While there are law suits seeking this result, I personally don’t think they’ll prevail. But Republicans (and some Democrats) will see a benefit to championing the repeal of an individual mandate. Neither party, however, is likely to seek a repeal of the requirement that carriers accept all applicants, regardless of their health conditions. As I’ve written before, a mandate on carriers to sell health insurance absent a mandate on individuals to buy imposes a horrific surcharge on health insurance premiums. I would hope this effort fails, but fortunately, if it succeeds, there are other ways to reduce the inevitable adverse selection that would follow (impose limited open enrollment periods, increase premiums or impose pre-existing conditions when consumers buy coverage after going uninsured for a specified period of time, etc.)
  • And maybe Congress and the Administration will focus attention on the biggest driver of increasing medical insurance premiums – the skyrocketing cost of medical care. The PPACA has some meaningful cost containment ideas hidden away in its 300,000+ words, more than the new health care reform is given credit for  (the topic of a future post). But even so, there’s a lot more to do. Lawmakers know they need to confront this issue eventually. Eventually they will.

We all have a tendency to draw straight lines from current data. That’s how bubbles happen. Stocks are going up and they’ll continue to do so. Gold is at a record high it’ll continue going higher. Tulip prices are skyrocketing and they’ll do so forever.

The same phenomenon occurs in connection to laws and regulations. A law passes and humans have a tendency to accept that that’s that. Now that the law is in cement nothing will change. But laws evolve. They are molded by regulators. They are shaped by the people who live under them. And sooner or later they are revised by the legislative body that passed the new law in the first place.

When thinking about the Patient Protection and Affordable Care Act, intense revision was, and is, inevitable. No law seeking to reshape America’s health care system would get it right on the first try. Politicians may proclaim “Mission Accomplished” when speaking of legislation (and wars), but the reality is the goal is never achieved perfectly and refinement is always needed Usually there’s a passage of some time before the first attempt to address a problem and subsequent efforts. Changes to the Patient Protection and Affordable Care Act are likely to start much sooner. I’m thinking early January 2011.

Change is Hard

Change is hard. Change imposed is even harder. Change that is convoluted, inartful, at times misguided, uncertain, and coming fast is beyond hard. This kind  of change is disruptive, frightening and disheartening.

That brokers feel the coming health care reform will shunt them aside, destroy their careers, and shutter their businesses is, consequently, neither surprising nor without basis. Add to the mix the fact that we’re still in the tea leaf reading stage of how health care reform will play out and the outcome can be a poisonous brew of anger, anxiety and paranoia.

Given this reality recently posted comments are well considered, well reasoned and, to a greater extent than should be expected, objective. (My thanks to all for sharing their thoughts and insights with readers of this blog). That the expressed concerns and conclusions are rational and reasonable, however, does not mean they are accurate or certain. Indeed, I think they’re wrong and in the next few posts I’ll try to explain why.

First a reality check: my perspectives on the impact of reform, how carriers, lawmakers, regulators and consumers will react, and what all this means for brokers is no better than anyone else’s opinions on these topics. As mentioned, all we have now are tea leaves. Yes, the law has been passed, but this only creates a framework for reform, not the details. Think of the Patient Protection and Affordable Care Act as a 2,000-page blueprint. Future legislation, regulations and the actions of real people dealing with it all represents the actual building process – the framing, laying pipes and wiring, painting and additional hard work required to actually create a usable building. The blueprint will give a good idea of what the structure is supposed to look like, but it’s what the carpenters, plumbers, electricians and others that determine what the structure will look like.

Which leads us to Katz’s Two Laws on Laws. The first is the Law of Regulatory Change. It holds that “there is what the law says. Then there is what a regulator says the law says. And what the regulator says the law says is what the law says unless a judge says the laws says otherwise.”

Take the issue of the provision of the health care reform law that prohibits carriers from applying pre-existing conditions on insured children. There’s nothing in the law that says carriers have to accept all children applying for coverage (what’s called “guarantee issue”), only that if a child is accepted for coverage excluding pre-existing conditions is not permitted. Yet President Barack Obama and others talked about the law as if insurers did have to cover children. And preventing exclusion off pre-existing conditions for children doesn’t accomplish much if carriers can simply deny kids insurance in the first place. So regulators (in this case the Department of Health and Human Services) simply declared that health plans did have to accept children on a guaranteed issue basis. And unless a judge says otherwise, that’s the way it is.

The second Law on Laws is the Law of Implementation. This one holds that “there is what the law says and what regulators say the law says. Then there is what carriers say the law says. And what carriers say the law says is what the law says unless a judge or regulator say the law says otherwise” (other industries should feel free to replace “carrier” with a more appropriate implementer).

HHS’s requirement put carriers in a bind. If they are required to guarantee issue coverage to children, what’s  to prevent parents from waiting until their kids are sick or injured before purchasing a policy? This is the functional equivalent of allowing folks to buy homeowners insurance from the firefighters dousing flames or to buy auto insurance from the driver towing their battered car away. The result of such an arrangement inevitably and substantially increases the cost of coverage. Some carriers (as noted by the commentators mentioned above) have responded by dropping children-only coverage. Others are deciding to guarantee issue coverage only on a plan’s anniversary date or during a child’s birth month. And until a judge or regulator says otherwise, that’s what they’re going to do.

While we’re on the topic of laws on laws, here’s another for you, the Law of Unintended Consequences. My definition for this phenomena, which is as certain as the law of gravity, is that “a law may or may not do what it seeks to do, but it will always do some things it did not intend to do.” Congress did not intend to stop health insurance carriers from dropping children-only offerings, but that’s reportedly what’s happening. (And yes, an argument can be – and often is – made that the goal of the PPACA is to drive medical insurers out of business altogether, but that’s not what we’re discussing here. I raise the point here only as a no doubt vain attempt to forestall comments on this post from veering off in that direction).

This examples of how the laws on laws plays out only deals with one small part of the health care reform legislation. It is and will be repeated on provision after provision after provision. Which brings us back to our reality check: predicting what the new law will mean for brokers (or insurers, consumers, businesses, medical professionals or anyone else) is a tricky and maybe futile endeavor.

Then there’s the fact that while I’m a broker, my work day is, to say the least, diversified. Which makes my (relative) optimism (relatively) easier. On the other hand, when you’ve spent your career building financial security around a product that legislation might eliminate, seeing things through very dark colored glasses is more likely and understandable. My point is that one’s stake in the outcome doesn’t determine the validity of one’s predictions (another long shot attempt to keep comments on point).

Because the pessimism of professionals facing this possibility is understandable does not make dour predictions right. It just makes them, well,  understandable.

In future posts, as I’ve done in past writings, I’ll offer my thoughts on why health insurance brokers are unlikely to go the way of travel agents (of which, by the way, there are still tens of thousands in this country). And why I think brokers will need to adapt – and will be able to adapt – to a new reality.

Even if I’m right (and I’m offering no guarantees, just educated guesses) this won’t make dealing with the changes to our industry and profession any easier, but it may mean making such changes is worthwhile.

New York Shows Perils of Imbalanced Health Care Reform

One area of agreement likely to be quickly identified at President Barack Obama’s bi-partisan health care reform summit on Thursday is the principal that carriers should be required to accept all applicants for coverage regardless of their health status. This concept, known as “guarantee issue,”  is high on the wish list of Republicans and Democrats alike. What will be far more divisive is whether a requirement that carriers sell health insurance coverage to all consumers should be balanced against a requirement that all consumers buy health insurance coverage.

The issue has both a political and a substantive component. Politically Republicans, and some Democrats, consider forcing individuals to purchase coverage to be overly paternalistic, unfair, a tax-by-another-name, and/or yet another step toward socialism.

From a public policy point of view, it’s hard to see how a system can work without a balance between the requirement to sell and to buy coverage. Otherwise people will wait until they need the insurance before they obtain it. It’s the equivalent of allowing motorists to buy auto insurance from the tow truck driver who shows up at a car wreck. Why buy it before you need it?

Noam Levey, in a thorough article running in the Los Angeles Times describes the costly mistake New York made when it required carriers to sell coverage to all applicants without mandating that individuals purchase coverage. After nearly two decades of this situation health insurance premiums in New York “are now the highest in the nation by some measures, with individual health coverage costing about $9,000 a year on average. And nearly one in seven New Yorkers still lacks health coverage, a greater proportion than before the law was passed.” In some New York counties, Mr. Levey reports “it is impossible to buy an individual plan for less than $12,000 a year.” For some older residents in other states, premiums of $1,000 per month may be close to what they’re paying now. But because New York has pure community rating (meaning all insureds pay the same premium regardless of their age) $12,000 is the premium facing 24 year olds, not just 64 year olds.

I’ve written about this health care reform surcharge frequently and for a long time. The Los Angeles Times article does a great job of showing why New York should serve as a case study on the issue for negotiators at the health care reform summit in Washington. The message is simple.  Mark Hall, a Wake Forest University economist who has studied New York’s experience, summarizes it well in the Los Angeles Times article: “You basically can’t have a functioning insurance market if people can buy insurance on the way to the hospital.”

If those at the summit are serious about solving problems they’ll recognize this reality. However, even folks who should know better, by which I mean anyone with an insurance license, condemn requiring individuals to obtain coverage as un-American in some way. (Never mind the various other duties we impose on citizens in this country.)  The Administration and Republicans are likely to reach an impasse on this issue.

There is at least one other way to balance guarantee issue with the need to prevent gaming with the system. As I’ve suggested before, the solution is to allow carriers to exclude coverage for existing health conditions and to impose a premium surcharge on those applying for coverage who have gone without health insurance for a significant period of time.  The premium surcharge and pre-existing exclusion period could vary depending on how long the individual went without coverage. This approach is a part of the California Association of Health Underwriter’s Healthy Solutions health care reform plan.

Yes, premium subsidies would be required to help lower income Americans purchase the coverage. Republicans have supported refundable tax credits for this purpose in the past while Democrats have put forward direct subsidies. At the end of the day, however, both parties recognize the need to provide premium support. The debate is only over methodology.

The problem with this compromise is that “pre-existing conditions” have become a blasphemous word in Washington, at least among Democrats. Whether they would allow carriers to impose restrictions on existing health problems as an alternative means of encouraging (if not requiring) all consumers to obtain health insurance is unlikely. This is where presidential leadership could make the difference. If President Obama wants bi-partisan health care reform legislation — and, a big if here, the Republicans are willing to negotiate in good faith — the Healthy Solutions method of balancing the need to balance a requirement to sell health insurance with a requirement that consumers obtain it makes sense.

 The health care and health insurance status quo in this country can not long stand. Health care reform is needed. Democrats and Republicans can insist on the purity of their positions. But if they are sincere about solving problems, there are ways to get the job done. The question is, whether there’s the will.

Massachusetts Offers Both Parties a Window of Opportunity for Health Care Reform

Not that anyone asked, but here’s some free advice to both Democrats and Republicans in Washington: don’t over think what’s happened in Massachusetts. There are as many interpretations of the “meaning,” “message” and “impact” of state Senator Scott Brown’s victory Tuesday night as there are television pundits. And just like paranoids noodling with a conspiracy theory, the facts can be manipulated to prove anything (I’ve heard all of these in the past 24 hours or so): President Barack Obama was too liberal; he tried too hard to be bi-partisan; he didn’t move fast enough on health care reform; he moved too fast on health care reform.

Or that the special election results prove that the Republican strategy of non-cooperation with Democrats is working; that the Republican establishment is out of step with Republican grass roots; that the country is irretrievably locked into blue/red gridlock; that the Republicans are branding themselves up as barriers to progress.

Or that Attorney General Martha Coakley defeat reflects voters feelings about the two candidates; what they think about President Obama, Speaker Nancy Pelosi and/or Senate Majority Leader Harry Reid; that Republicans are assured of victory in November; that Democrats have had a wakeup call and will rebound; or that the results reflect the skill (or lack thereof) of the candidates and their campaigns.

Yeah, yeah, yeah. One could argue that it means all those things and more. Usually, however, the simplest interpretation is usually closest to the truth: voters rejected Republicans last year because they were fed up with political games, hypocrisy and ineptitude. They are rejecting Democrats this year because they are fed up with political games, hypocrisy and ineptitude. The reality is that both parties have shown a remarkable inability to govern this complicated country let alone unify its diverse political viewpoints.

So instead of wasting time trying to squeeze every nuance out of the Boston-brewed tea leaves, my advice to both parties is to take advantage of the window of opportunity that election created between now and President Obama’s State of the Union Address to reinvent yourselves. Because let’s face it, voters don’t like either Democrats or Republicans. And why should they? Democrats lost sight of the reality that this is a centrist country. And Republicans have lost sight of the need to stand for something besides “we’re not those guys.”

Not surprisingly, given the topic of this blog, I think health care reform provides both parties with the chance to prove they deserve votes for something other than being the best of two evils.

Democrats have to stop acting like every member of their party thinks alike. Liberals seemed to think that with 60 votes in the Senate they’d quickly adopt the Progressive Caucus’ wish list. If they’d looked past their own hubris they’d have noticed that some of the folks in their caucus room were pretty darn moderate – heck, some are downright conservative. And they were elected as Democrats, too. Which means their views and votes are just as “Democratic” as those of liberals.

Given that the liberal agenda was never within reach and now is even more remote, think carefully about what you do next. Pass health care reform through some political legerdemain and you’ll only confirm to independent voters that you’re more interested in political games than acceptable public policy. (And remember, it’s independents that will determine the make-up of Congress. Consider: there are perhaps only 50-75 House seats winnable by either party – most Congressional seats are so solidly in one camp the seats are safe for the party who holds them now, assuming the incumbent avoids scandal or indictment).

Instead of passing health care reform in the next 24 hours, promise to take a step back and reconsider some of its elements. Then streamline the bill down to the essentials. What really matters when it comes to health care reform?

  • Restraining costs. There’s some interesting cost containment ideas buried in the current health care reform proposals. Paring the legislation down to its essentials will allow Democrats to make these ideas more prominent. Add some stronger malpractice reform language for good measure. Sure defensive medicine’s impact on costs is perceived as being far greater than it is, but let’s face it, Democrats have a perception problem. Pushing malpractice reform takes a talking point away from Republicans, shows independents that Democrats can stand up to trial lawyers, and can become a symbol for how serious Dems are to tackle runaway medical costs.
  • Unshackle Consumers with Pre-Existing Conditions. In America today, if you don’t get coverage through your employer and you have an existing medical condition, you’re out of luck. You may want to buy health insurance. You might be able to afford health insurance. But if you don’t already have coverage, you’re not going to get it. And if you do have coverage you’re stuck with it. Carriers can raise the rates, lower the benefits or both and you’ve got nowhere else to go. Most voters know someone in this predicament. Many voters are in it themselves. Require carriers to accept all applicants (what’s called “guarantee issue.”) But do so responsibly. Either require everyone to buy health insurance (called an “individual mandate”) or impose a meaningful penalty for failing to do so. Otherwise, costs will skyrocket as everyone waits until they need coverage before they purchase it – the equivalent of buying auto coverage from the tow truck driver hoisting your car after an accident (what’s called “adverse selection”). The problem is that Republicans have painted individual mandates as the devil’s work, forcing consumers to buy policies they may not want. So let the carriers provide the discipline: if a consumer fails to purchase coverage within a specified period of time after becoming eligible for it (for example by becoming too old to be covered as a dependent on their parent’s policy or losing employer-sponsored coverage) allow carriers to exclude pre-existing conditions for 12 months and to charge a 10 percent higher premium for two years. This makes those who choose to self-insure accountable for their decision while still allowing themselves a path back to responsibility.
  • Reduce the Number of Uninsured and Underinsured. Most Americans acknowledge there’s something wrong with America’s high number of uninsured. Whether the actual number is 47 million uninsured (greater than the population of California) or some lower number, the fact is it’s too many. Those with coverage pay a tax to support the uninsured, estimated at roughly $1,000 per year in higher insurance premiums. So expand Medicaid. Close the doughnut hole in Medicare prescription benefits. Offer subsidies to Americans who cannot afford premiums, but fail to qualify for government programs. Just don’t create new bureaucracies to do it. Voters know new agencies generally do more harm than good. Why feed the suspicion?
  • Reduce the Cost of Health Care Reform. If a reform package sets in motion medical cost containment, makes coverage portable, and reduces the number of uninsured – and that’s about it, the cost will be far less than what’s currently contemplated. Put on the table a tax on the wealthiest Americans (removing the tax cut President George Bush gave those earning more than $1 million per year. Then offer to replace the tax with revenue provisions Republicans offer. If they object to any revenue increases of any kind, then they will have fully embraced their branding as the do nothing party.  That’s a recipe for turning their current momentum into failure.

Which brings me to advice for Republicans. Waving a sheaf of paper at a presidential address on the floor of Congress is not proof of a Republican plan. Introduce a plan that the Republican caucus in both the Senate and the House can support. Submit it to the CBO for scoring. Treat it like a real bill. Demand hearings. Declare it a starting point for negotiations and then set up a time and place for a meeting to negotiate. If Democrats don’t show up Republicans will have enough political fodder to last two, maybe three, election cycles.

Sure, Rush Limbaugh won’t like it. He wants President Obama to fail and wants Republicans to fight every step he tries to take. But independent voters want America to succeed. They don’t care about who gets the credit, but they do care about appropriate progress. And they know achieving this means legislation that both President Obama and Republicans consider acceptable. So put together something that can gain votes beyond a Chamber of Commerce luncheon (see the above for some ideas). Remember, obstinacy is not a rallying cry. And if the GOP is not not careful, someone will remind voters that Republicans controlled Congress and the White House for six years, but never even considered meaningful health care reform. Voters don’t want the wrong health care reform, but that does not mean they don’t want any health care reform. The status quo is imposing hardship on more and more Americans. They need and deserve help. If Republicans want voters to return them to power in 10 months, they need to demonstrate leadership today.

As far as changes go, please get real. Allowing plans to sell across state lines undermines state’s rights. Republicans are for state’s rights, remember? Telling voters in California that policy makers in South Dakota will determine what’s adequate consumers protections when it comes to health insurance is lousy public policy. Republicans should go through their various proposals and cobble together a coherent package. And they should make it clear they want to pass some kind of health care reform. Proclaiming the status quo as adequate is unlikely to fly as a platform for very long.

The Massachusetts Senate race is the story of the week – and then some. Yes, it will have long term political ramifications, but eventually it will be yesterday’s news. Some other issue, scandal, disaster or discovery will take its place. For now, however, Senator-elect Brown’s upset gives both Democrats and Republicans a chance to prove they’re the party of the future, not the party of the left or of no or of, worst of all, the recent past. Whether either will choose to seize the opportunity is anyone’s guess. What’s yours?

Of course, what’s significant about the Massachusetts special election is not what I think it should mean, but what the actual impact it has on health care reform. Which I’ll be writing about as soon as the crystal ball clears a bit.

Health Care Reform 2009 Style

When it comes to health care reform 2009 has been an interesting year. And while comprehensive health care reform legislation will not be arriving on President Barack Obama’s desk this year, it is all but certain that will happen early in 2010. Getting to this penultimate moment has, to put it mildly, taken some doing. And the process says a lot about America and its leaders.

Health Care Reform Activity

President Obama had made clear throughout his campaign for the presidency that health care reform would be a top priority of his new administration. He lost no time making his promise real after his inauguration. Expansion of the State Children’s Health Insurance Plan, a proposal twice vetoed by then President George Bush, along with significant funding for medical technology, were a part of Administration’s economic stimulus package.

President Obama’s health care reform efforts took a serious blow in February when former Senate Majority Leader Tom Daschle was forced to withdraw his nomination as Secretary of Health and Human Services and as Director of the White House Office on Health Reform due to problems with his past tax returns. Senator Daschle is a political pragmatist who is highly regarded by lawmakers from both parties. Would the health care reform debate have been more civil had Senator Daschle led the White House reform effort? We’ll never know. What we do know is that civility quickly left the room as the House and Senate Committees with jurisdiction on the matter began their deliberations. The health care reform debate was passionate, raucous and partisan to the extreme. Neither party and no ideology is blameless for this descent into the dark side of politics. Both have benefited from it (although none as much as the 24 hour cable news channels) and both have sullied their standing with the public as a result.

Given what’s at stake when 1/6th of the nation’s economy is subjected to the legislative process, there may have been no avoiding an ugly health care reform debate. President Obama made clear in a speech in February that he wanted health care reform passed quickly. Many Republicans (and their talk show host allies) made it clear they’d rather see no health care reform rather than anything along the lines being proposed by – or that would politically benefit – President Obama. Meanwhile, the House Ways and Means, House Education and Labor and the Senate Health, Education, Labor and Pensions Committees pushed through liberal bills; anchors on the left in anticipation of the negotiations to follow. The resulting climate promoted intense partisanship.

Eventually more conservative Democrats forced the House Energy and Commerce Committee to slow done and moderate the legislation, although what they passed would still be considered “liberal” by most definitions.  All the House bills passed out of the committees without a single Republican vote. Meanwhile Senator Max Baucus was trying to fashion legislation that might gain the support of at least three GOP members of the Senate Finance Committee. (He would eventually manage to get the support of only one GOP Senator).

The difficulty of finding common ground between liberals and conservatives on health care reform was made abundantly clear during the summer of 2009. The disruption of lawmaker’s town hall meetings were reminiscent of the anti-Viet Nam War protests of the 1960’s. (I suppose it’s ironic that many of those shutting down the town hall meetings had participated in the anti-war protests more than 40 years earlier). The passion and concern of the health care reform protests were as sincere as some of the rhetoric and actions were unfortunate and despicable (death threats and swastikas are inherently contemptible and disgraceful). The protests did assure, however, that Republicans would remain united against the kind of reforms being pushed by the Administration.

Reform was being pushed by the White House even if the Administration was declining to define reform. Instead the White House broadly described the key elements they’d like to see in a reform bill. President Obama’s three core principles for health care reform called for reducing costs, guaranteeing choice and ensuring quality care for all. He would later add other conditions (e.g., reform could not add to the deficit), but the details of the bill were being hashed out in Congress by Democratic lawmakers. The result, much to the chagrin of liberals, was that over time the legislation became increasingly moderate culminating in the legislation passed out of the Senate Finance Committee with the support of only one Republican, Senator Olympia Snowe.

With all the committees of jurisdiction having staked out their positions it was time for Speaker Nancy Pelosi and Senate Majority Leader Harry Reid to pull together the pieces into bills that could pass their respective chambers. Speaker Pelosi succeeded first with the House passing a health care reform in November. The price of passage was high: liberals had to accept language dealing with abortions that sparked outrage in the pro-choice community.  It took the Senate more than a month to follow suit, but eventually they did. Now it’s up to a conference committee to pull the pieces together into one bill that can pass both the House and the Senate. Not an easy task, but with the finish line in sight it’s very doubtful lawmakers will falter now.

The Public Policy Dimension

While the activity swirling around health care reform has been … interesting, the evolution of the substance of the legislation has been even more fascinating. Not all that long ago liberal lawmakers were claiming a health care reform bill lacking a government-run health plan was no health care reform at all. They seemed to believe that a public health plan was the magic wand that would remake America’s health care system into something fair, competitive and wonderful. Or maybe they just thought the public option was a way station on the path to their promised land: a single payer system. While the House bill would create a new government health plan, the Senate legislation rejected the public option. While liberals outside of Congress continue to attack reform without a public option, liberals lawmakers seem to accept the inevitable. What emerges from the conference committee will no doubt lack a public option and liberal lawmakers will still support the reform package.

While liberals were losing a public option an unlikely coalition of conservatives and liberals were also watering down a requirement that all Americans purchase coverage. Conservatives dislike the idea as a restriction on the freedom of people to have their health care reform subsidized by higher health insurance premiums for everyone else. Liberals don’t like it because, apparently, the result is a windfall for evil health insurance companies. (OK, they offer more substantive public policy arguments against the individual mandate, but the rhetoric focuses on freedom and windfalls). Never mind that requiring health plans to sell coverage without requiring individuals to buy coverage before they incur claims is a recipe for higher insurance costs or that many states require drivers to buy auto insurance. As the legislation has moved through Congress the penalty for failing to purchase coverage has drifted toward a slap on the wrist end of the spectrum.

Other issues have taken interesting turns as well. Reimbursing doctors for counseling to seniors concerning living wills and the like was removed from the bill once the discussions were labeled “death panels.” What taxes will be imposed to pay for health care reform is still uncertain. Anti-abortion advocates have done a masterful job of inserting abortion into the debate. Both the House and Senate bills contained provisions that could “bend the cost curve” (which is apparently the new articulation of what was once called cost containment). If all the cost cutting provisions in the current bills were moved into separate legislation it would actually look like a serious effort. Mixed in with the health insurance reform dominating the current versions, however, the provisions appear weak and almost an afterthought.

Health Care Reform 2009: The Human Factor

So what to make of health care reform 2009 style?

First, that the legislative process is messy and can be downright uninspiring. Second, that tackling an issue as important and complicated as health care reform cannot overcome the need for partisans of both parties to put aside the public good for their political stratagems. Third, that the health care reform package that finally passes will be far more moderate than might have been apparent earlier this year. Fourth, criticism that Congress is moving too fast on reform are really complaints that Congress is not doing what critics leveling this charge want them to do. The health care reform bill that will find its way to President Obama’s desk in 2010 will be over a year in the making. Longer if you count the debate on health care held during the 2008 presidential election. Longer still if you include the previous health care reform efforts undertaken over the past several decades.

We elect politicians to hold office because they promise to address problems. No one has ever won a campaign on the promise to do nothing if elected. In 2008 Democrats won, and won handily, in part on a promise to solve the problems posed by America’s current health care system. They are fulfilling that promise. In the process they will create new problems.

Because the fact is we humans rarely solve problems. Instead we tend to replace existing problems with new ones. And if the 2009 health care reform process has taught us anything, it’s that the people who make up the Administration and Congress (and the general public) are only human. Anyone looking at the health care reform package emerging from Congress would find evidence of that reality.

Health Care Reform Makes It Clear: Howard Dean is No Ted Kennedy

Dr. Howard Dean was governor of Vermont for 12 years. He was a front runner briefly during the 2004 presidential campaign. He became chair of the Democratic National Committee. And now he is demonstrating why he failed for Governor and why Democrat are better off having him as the “former” chair of their party.

As Democrats in the Senate struggle to cobble together a super-majority in support of health care reform, Governor Dean is busy throwing bricks into the room. Upset that the legislation likely to emerge from the Senate will contain neither a government-run health plan nor the ability for 55-to-64 year olds to buy-in to Medicare, Governor Dean is urging defeat of the bill. The reason, according to a report by the Associated Press, the Senate health care reform bill is “an insurance company’s dream.” Which is malarkey. I don’t know any insurance carriers happy with the direction of health care reform in Washington. As the AP reports White House spokesman Robert Gibbs putting it, “If this is an insurance company’s dream, I don’t think the insurance companies have gotten the memo.”

Governor Dean asserts that “You will be forced to buy insurance. If you don’t you’ll pay a fine.” True enough, although in the Senate bill the fine is $750, far less than the cost of coverage. Then he goes on to assert that insurance companies would not be prohibited from denying coverage for preexisting conditions. And that older Americans would pay more than their younger neighbors for coverage.

Let’s look at the substance of the Governor’s complaints. Does he seriously believe that whatever health care reform bill emerges from Congress will allow health insurance companies to deny applicants for coverage? If so, he’s the only pundit in the country who does. Even Republicans support guarantee issue of health insurance coverage.

As for older people paying more for coverage than younger people, he’s right. Both legislation passed by the House and being considered in the Senate allow carriers some flexibility in setting rates by age. But both bills substantially reduce the differential that exists today. In California, for example, a 64 year old can expect to pay six times more than a 19 year old for the same coverage. (Anthem Blue Cross offers a $3500 deductible PPO that costs a single 19 year old in Los Angeles $110 per month and his 64 year old neighbor $664 a month). Under the legislation being considered in the Senate, the ratio would could be no more than 3-to-1. The House bill limits the differential to 2-to-1. Governor Dean never complained about this premium spread before. Now that the public option is likely to be cut from the Senate bill, a 3-to-1 limit on premiums becomes a decisive factor for him?

Governor Dean’s attack on the Senate bill is a loud reminder of how much Senator Edward Kennedy is missed in Washington. Senator Kennedy was as liberal, if not more liberal, than Governor Dean. The difference is that Senator Kennedy accomplished a great many things on the national stage. Governor Dean has accomplished nothing nationally. Senator Kennedy was successful in large part because he recognized the need to seize progress when and where he could. He knew there would be future opportunities. Even more importantly, he understood that, in broad terms, America becomes more progressive over time. Consider: it wasn’t that long ago that the fight was over whether the government should provide a medical safety net for older citizens. Republicans called Medicare socialism. Now they defend the program.

There’s a lot in the current health care reform bill I don’t like. There’s a lot about the status quo I don’t like either. What is infuriating about Governor Dean’s attack on the bill is that it is as nonsensical as those of the right. His “insurance company dream” is to the left what former-Governor Sarah Palin’s “death panels” are to the right – ideology masquerading as dire warnings.

Liberals in Congress will probably come around to supporting what they consider a watered down, insufficient health care reform bill. Liberals outside of Congress, like the former Governor from Vermont, will call on them to defeat the bill and start over. Underlying their logic is apparantly the belief that it’s possible to pass an even more liberal Congress.

What liberals like Governor Dean need to realize is that moderate Senators like Ben Nelson and Blanche Lincoln are just a part of the party as liberals like Senators Jay Rockefeller and Charles Schumer. I suppose Governor Dean could recruit liberals to run for the Senate in Nebraska, Arkansas, Indiana, Louisiana and other states from which moderate Democrats hail. There’s only one problem. Liberals don’t get elected to the Senate from those states. Not in 2010.

Members of Congress understand the need for compromise. They may not like it, but they accept that their less-than-liberal colleagues represent their constituencies. Those on the sidelines have the freedom to ignore such realities and to throw bricks with abandon. These ideologues won’t solve many problems, but I guess the brick throwing makes them feel better.

Senator Kennedy understood the need to work with those less liberal than himself, to keep issues alive by passing significant reforms that may not be all he wanted to achieve, but laid the groundwork for future efforts. Governor Dean is blind to this approach. But then, Howard Dean is no Ted Kennedy. Never was. Never will be.

Which Health Care Reform Provisions are Ready for 2010 Debut?

Most of the major provisions of the health care reform proposals circulating through the halls of Congress won’t take effect until 2013 or later (the major exception being some of the taxes created by the reforms). There’s a huge political problem with that: opponents of the reform will throw every rock, pebble and boulder they can find at the reform package. If voters have to wait three or four years to see any of the benefits of the reforms lawmakers are taking the better part of a year to resolve, they’re going to be sorely disappointed. In fact, a Kaiser Family Foundation poll indicates that nearly half of the respondents expect to see insurance company reforms take effect within a year.

So it’s not surprising Democrats are searching for ways to implement elements of their reform package as soon as possible – preferably before the November 2010 elections. As Carrier Budoff Brown puts it in a posting on Politico.com, “Democrats are pushing Senate leaders and the White House to speed up key benefits in the health reform bill to 2010, eager to give the party something to show taxpayers for their $900 billion investment in an election year.”

What matters, of course, is what parts of the bill are implemented sooner than later. Starting the taxes right away is critical for making the financial numbers work. Yet they are likely to increase medical costs (and, consequently, insurance premiums) in the near term. Some provisions, like requiring carriers to allow families to cover young adults until they reach age 26 offer little downside. The same with creating a fund to cover catastrophic claims of early retirees (those aged 55-through-64) who receive coverage their employer. Requiring health care companies (for example insurers and hospitals) to be more transparent in reporting their costs may embarrass some companies and force them to quickly set up reporting processes, but are won’t harm the system overall. These are some of the items the Politico.com post identifies as under consideration.

What would be damaging is requiring carriers to guarantee issue individual health insurance coverage (accept all applicants regardless of their health conditions) in 2010 while delaying the mandate on individuals to obtain coverage. As I’ve written about frequently, an imbalance between requiring carriers to sell and consumers to buy health insurance will price the cost of health insurance beyond the means of many Americans.

Moving the benefits of health care reform forward makes political sense without abusing common sense. If it’s done the right way. Whether lawmakers will have the patience to find that way, is still uncertain, but they appear to be making the effort.

Health Care Reform Odds & Ends

When it comes to health care reform, to maul Dickens: It is the busiest of times. It is the calmest of times. Or as general agent Michael Traynor put it, “These are interesting times when talk of exchanges and pre-existing exclusions have bumped Paris Hilton and Lindsay Lohan from the news.”

This coming week it will be even harder on E! News and the like. Sure, Hollywood has the Emmys, but Washington has the debate in the Senate Finance Committee over America’s Healthy Future Act of 2009. Not a contest. Add to the mix President Barack Obama’s five appearances on Sunday morning television shows (plus his stint Monday night as David Letterman’s guest) and these are strange days, indeed. 

There’s several items in the mix I wanted to comment upon, but none of them really warranted their own post. So here they are, mashed together into a single article. Think of it as clearing the deck in anticipation of all the fun news coming out of Washington in the next few days. 

1. Excluding Pre-Existing Conditions

Yes, it’s true, health insurance companies exclude individuals with pre-existing conditions. When they can carriers refuse to offer coverage to those likely to use that coverage. According to some politicians and pundits of all political stripes, instead of being a legitimate business practice, this process (called “underwriting”) is evidence of the evil nature of health insurance carriers and their executives. 

Under today’s rules, however, underwriting is necessary to keep the cost of coverage from going even higher than it is today. Imagine permitting people to buy auto insurance from the tow truck driver at the scene of an accident. Or picture homeowners buying fire insurance after the flood waters recede. The cost of these policies would be astronomical. Why would anyone buy auto or homeowners coverage before they need it if they can buy the same policy after an accident or disaster? The cost of insurance in this environment would be the cost of the claim (plus administrative expenses). Have $1,000 in damage after that wreck? The cost of the policy sold by the tow truck driver would need to be more than $1,000 because no one else’s premium would be available to cover any of the cost.

The same applies to health insurance.  Allow individuals to purchase coverage on their way to the hospital and costs will skyrocket. (Don’t laugh, one of the GOP proposals would allow consumers to buy coverage in the emergency room). In New York and New Jersey, where there’s a mandate to sell individual health insurance but no mandate to buy it, premiums are three-times higher than in California.

Which illustrates the only way to resolve this situation: require everyone to obtain medical coverage. Without this balance (both a mandate for carriers to sell and for consumers to buy coverage) premiums quickly become unaffordable. Lawmakers who propose guarantee issue without a mandate to buy – and they exist on both sides of the aisle – are either grandstanding, mathematically challenged or ill-informed.

2. Losing Coverage When You Need It

The other popular market reform concerns carriers cancelling coverage after claims are incurred by policy holders, a practice called “rescission.” Much of the furor over rescissions in Washington and elsewhere are legitimate, the result of carrier’s tone deaf, heavy-handed, and inept approach to a reasonable concern: preventing fraud. So long as health insurance is voluntary, carriers need to protect their members from being gamed by those who would intentionally abuse the system. To hear some talk about the problem, however, you’d think every claim submission is answered by a termination notice. Estimating the total number of rescissions is difficult due to disparate reporting requirements around the country. Yet in testimony before Congress three of the largest carriers claimed to have canceled about 20,000 health insurance policies over five years. Four thousand annual rescissions sounds like a lot, but it’s a small fraction of the millions of policies sold and maintained by those carriers each year.

Because the number of terminations is small does not excuse the health plans from abusing their rescission power. Change in this area is needed to restrict rescissions to only intentional misrepresentation of medical conditions. In the meantime, overstating the severity of the problem may be good politics, but it is misleading. (Of course, if underwriting is eliminated, this problem goes away: if carriers cannot charge premiums based on pre-existing conditions there’s no reason to even ask about prior medical conditions.)

3. Non-Profit Doesn’t Mean Cheaper

Liberals demanding that reform legislation include a government-run health plan usually claim it will reduce the cost of coverage by introducing a non-profit health plan into the market. Here’s how Senator Jay Rockefeller put it on MSNBC, “There’s got to be some discipline to other insurance companies, that make them take seriously, not just competing with each other, but competing with somebody who because they are non-profit … and don’t have to please their shareholders because they don’t have any, that they can offer premiums at lower prices” (this sound bite begins at about the 2:35 mark). Yet there are already non-profits operating in most states. In California, for example, Kaiser Permanente and Blue Shield of California are two. In some parts of the state, these plans do offer the most affordable plans; in other regions the lowest cost plans are available from their for-profit competitors. Experience indicates little correlation between a carrier having shareholders and their premiums. Claiming it does may sound good, but anyone taking the time to see what’s happening in the real world will realize this is a false argument.

4. Ugly Language is Dangerous.

House Speaker Nancy Pelosi raised the possibility that the angry rhetoric prominent in the health care reform debate could turn violent, comparing it to the situation in San Francisco over gay rights in the 1970s. The link between the anti-gay rhetoric and the murder of Mayor George Moscone and Supervisor Harvey Milk is legitimate. So is the Speaker’s concern. Words can motivate. Passions can lead to horrendous acts – from terrorist bombings to the murder of doctors who perform abortions.

What’s hypocritical about Speaker Pelosi’s comment, however, is that she has contributed to tenor of the debate. When Speaker Pelosi, the individual third-in-line to the presidency calls opponents “immoral” and describes them as”the villains” in America’s health care reform system she loses the ability to complain when others claim her policies are socialist. The fact that Speaker Pelosi is guilty of what she rails against should not mean her warning is ignored. America’s health care system will be reformed by thoughtful deliberation. Depicting President Obama as Hitler, painting swastikas on the offices of lawmakers, pastors praying for the death of President Obama, or calling opponents “traitors” inspires ugly emotions and provides cover for crazies who take the law (both governmental and ecclesiastic) into their own hands.

Speaker Pelosi hopes for a more responsible tone in the health care reform debate. Her greatest contribution to achieving this goal would be to moderate her own rhetoric.