Senator Invites Carriers to Help with Health Care Reform

A coalition of Senators is waiting to help the next president forge a bi-partisan coalition on health care reform. A leader of the group, Senator Ron Wyden of Oregon, spoke before the America’s Health Insurance Plans 2008 National Policy Forum on March 5th and urged health plans to join the effort, not to fight it.

The 12 Senators, six Democrats and six Republicans, have their own health care reform proposal before Congress, the Healthy Americans Act. None of the Senators support every element of the package. But the mere existence of a bi-partisan coalition surrounding health care reform will give the next president a boost in developing a compromise plan.

In Senator Wyden’s address to AHIP, he said the “success of health care reform hinges to a great extent on how your profession responds to the efforts of a new president and a new Congress.” He warned, however, that if medical carriers spend “millions of dollars fighting to preserve the status quo, you may delay reform for awhile but you will increase the likelihood of a government run health system with no role for the private sector.”

In urging the insurance industry to become a part of fashioning a solution, Senator Wyden noted that in a market in which 20 percent of Americans are uninsured, carriers need to be good avoiding risk. As Senator Wyden put it, “If you don’t excel at shedding risk, you are going to enroll too many people who need too much care.  Enrolling too many people who need too much care means that your costs are going to go through the roof.  When your costs soar this way, the healthy people that you do business with are going to start looking for another insurer whose costs aren’t going through the stratosphere.  In other words they’re going to look for another insurer who does a better job of shedding risk.”

This, according to Senator Wyden, is part of the reason the current health care system is broken. Another reason is that health care in the United States is tied to the employer/employee relationship, which the Senator noted hasn’t changed much since 1948. “But economic challenges for business and workers today are very different then they were in 1948,” he noted.  “Sixty years ago employers weren’t operating in a global marketplace and employees who went to work at twenty stuck around long enough to get a gold watch and a steak dinner for retirement.  Employers need cost-containment and workers need quality health care within a system that is portable – where they can truly take their insurance from job to job.”

As an alternative, Senator Wyden suggested carriers consider a new approach in which “everyone who’s not in the military or on Medicare, has a basic private health insurance policy. Private insurance companies are on the same footing – each must take all comers. Competition would be based on price, benefit and quality.”

This is the underlying approach established by the Healthy Americans Act. In asking his audience to consider supporting the legislation, he cited six reasons why health plans would benefit from this alternative system:

  1. Bringing the 47 million uninsured into the system would greatly expand the private insurance market.
  2. There would be “no competitive disadvantage for carriers doing the right thing” and, with a risk sharing mechanism as part of the package, there would be no need to specialize in risk avoidance.
  3. The legislation supports increased information and transparency in the health marketplace.
  4. By focusing on wellness and preventive programs, carriers would be selling a product people want more of.
  5. Carriers “wouldn’t be the political football any longer.”
  6. More attention could be given to cost containment issues such as reducing needless medical errors.

He concluded his speech with a plea to carriers to be a part of the solution. “I want to ask you to become a part of the Senate’s bipartisan effort to fix American health care. Both Democrats and Republicans in the Senate want to work with you to get health care right in 2009.”

My take on all this is that the stars may be aligning for a health care reform effort that is more consultative than adversarial. Senator Barack Obama has certainly spoken of the need to have everyone, including carriers at the table. Senator Hillary Clinton has also spoken of leading a more open process than she did during her husband’s Administration. Significantly, Senator John Edwards, who promised to exclude the health insurance industry from participating in the health care reform debate, is out of the race.

I also think a move away from employer-provided coverage is likely to be a strong current in future health care reform discussions. Senator John McCain favors this approach as does the bi-partisan coalition of Senators backing the Healthy Americans Act. The business community would love to be relieved of the burden of shouldering the nation’s health care system. In speeches I began giving in 2006 I predicted that health care coverage might follow the path of pensions. Instead of companies running pension plans they moved to simply administering — and contributing to — their employee’s individual retirement plans. Similarly, employers could administer — and contribute to — employee’s individual health plans. Even though the Democratic presidential candidates still embrace an employer-centric system, the support fora more individual-centric model is gaining momentum..

For health plans this could be good news. They would remain a core part of the nation’s health care system. While the nature of their competition would change, it would still likely be a vibrant, primarily private, market.

The role of health insurance agents could change far more dramatically. If consumers are pushed into exchanges, connectors or purchasing pools, the system administrators might assume they can play the role of agents. It will be important for agents to make sure Americans continue to have access to independent advocates and consultants — in other words, to professional insurance agents. That won’t be easy. Many lawmakers — and even more of their staffs — have never worked with an agent and don’t understand the value we bring to the system.

Senator Wyden and others, however, have expressed a willingness to listen to others. That’s an opportunity agents need to seize. Fortunately agents have a compelling story to tell. 

Not That Obama Needs My Advice

Senator Barack Obama got hammered by Senator Hillary Clinton and former Senator John Edwards on his health care reform proposal at their debate earlier this week in South Carolina. Senator Obama’s focus is on making coverage affordable; Senators Clinton and Edwards emphasize universal coverage. If he continues to let his opponents define the debate this way they win and he loses.

For those who might find it interesting, I discuss how what happened in California provides a way for Senator Obama to reframe the Democratic debate on health care reform over at the political blog.

Democrats Debate Access versus Affordability in South Carolina

Health care reform was a hot topic during the presidential candidate’s debate in South Carolina on Tuesday. Senator Hillary Clinton and former Senator John Edwards claimed universal coverage was the most important priority while Senator Barack Obama put affordability at the top of his list. This dichotomy mirrors the debate California experienced with Governor Arnold Schwarzenegger insisting on coverage for all and the legislature’s Democratic leadership questioning the fairness of requiring individuals to buy coverage they couldn’t afford.

I’ve written more about this somewhat strange, but probably not surprising, echo of California’s health care reform debate on the political blog.

New Hampshire Votes: Thoughts on the Democratic Primary

Well, let’s see. I already handed the Comeback Crown to Senator John McCain in the previous post on the Republican New Hampshire primary vote. It seems unfair to deny Senator Hillary Clinton the same honor considering the polls and pundits showed her losing big to Senator Barack Obama there. Yet she defied the surveys and eked a victory, surprising, it seems, even herself.

A week ago, winning New Hampshire by just two percentage points — less than 7,500 votes — would have been proclaimed a disaster by most analysts. Now it’s a major victory and a tremendous shock. Of course, the shock is to those who wrote her off just five days ago.

Which shows how significantly, and inappropriately, Senator Obama’s victory in Iowa last Saturday changed the expectations of the Democratic nomination fight. Prior to those caucuses, Senator Clinton’s campaign focused on the depth of her experience and on the inevitability of her nomination. Then she finished third, losing out to Senator Obama and, barely, to former Senator John Edwards. Both Senators Obama and Edwards had campaigned as change agents. Senator Clinton’s message had failed to resonate and the inevitability of her success was seriously in doubt.

So in New Hampshire, she modified her message slightly, promoting herself as the candidate whose experience made her most capable of achieving change. The message seemed to reinforce the opinion of those who had supported her before the Iowa and may have been strengthened by New Hampshire voters’ penchant for thumbing their noses at expectations. According to the CNN exit poll, thirty four percent of the voters said they had made up their minds at least a month ago and Senator Clinton garnered 48 percent of their votes while Senator Obama received 31 percent.

What this says to me is that the Iowa bump for Senator Obama was in the eyes of the pundits, not among voters.

The New Hampshire results does seem to have accomplished three things. First, it put to rest talk of inevitability concerning any candidate.  Second, it confirmed the old cliche that the only poll that matters is the one on election day. Voter surveys as recent as yesterday projected a decisive win for Senator Obama. But it’s who shows up at the polls that matter, and the Clinton campaign got their voters out. I also think the polls may have worked against Senator Obama as New Hampshire voters seem to dislike being told what to do.

Third, the New Hampshire results have all but reduced the primary trail to a two person race, sending Senator Edwards on a downward spiral from which he is unlikely to recover while limiting Governor Bill Richardson to showcasing his Vice Presidential credentials and seeking favorite-son status from New Mexico.

Senator Edwards’ post-Iowa strategy was to convince voters — and the media — that the campaign was about change and Senator Clinton was incapable of delivering it. He then believed his more aggressive and partisan approach to transforming America would win out over the more conciliatory style of the Senator from Illinois.

It didn’t turn out that way. Senator Edwards received only 17 percent in the New Hampshire primary, less than half of what Senator Obama earned. Perhaps even more disastrous, polls show Senator Edwards to be even further behind Senators Clinton and Obama in the upcoming South Carolina primary, the only state he won in his unsuccessful presidential bid in 2004. As a southerner, if Senator Edwards can’t win there, it will be tough for him convince anyone he can win anywhere.

Senator Edward’s downfall stems, at least in my opinion, from his extremely partisan stance. He positioned himself as a fighter, but too much so. For example, after castigating insurance executives as greedy and accusing them of valuing profits over human life, Senator Edwards proclaimed, “And people say to me that as president of the United States, they want me to sit at a table and negotiate with these people? Never. It will never happen.’”

Now, contrast this with Senator Obama’s approach. In his concession speech tonight he promised supporters he would tell insurance and drug companies that “while they get a seat at the table, they don’t get to buy every chair. Not this time. Not now.” (This can be viwed about five minutes into the clip).  Senator Obama’s rejection of Senator Edward’s contention-as-usual politics was explicit, describing his supporters as a new majority “who are tired of the division and distraction that has clouded Whasington, who know we can disagree without being disagreeable.” (About four minutes into his speech).

Senator Edward promises a new agenda, but the same ugly, tired politics of division. Senator Obama promises changes in policy and in politics. Senator Obama finished a close second. Senator Edwards finished a distant third and, while he retains enough support and money to to continue to slog ahead, at least until February 5th when the bulk of delegates will be selected, he’s likely to be increasingly marginalized over the next four weeks.

Meanwhile, attention on the Democratic side turns to the Nevada Caucuses and the South Carolina primary (Michigan will hold a primary on January 15th, but neither Senators Obama’s or Edwards’ name is on the ballot). Senator Clinton and Obama will be seeking momentum prior to Super Duper Tuesday when California and 21 other states caucus or vote. Which means by February 6th one of the two may have emerged as unbeatable.

Which one? The odds are, marginally, favoring Senator Clinton. According to the CNN exit poll, she out-polled Senator Obama among Democratic voters 45 percent to 33 percent. It was independent voters participating in the Democratic primary that kept the Illinois Senator close with 41 percent of them supporting Senator Obama and 30 percent voting for Senator Clinton (in New Hampshire, independents can choose to cast either a Democratic or Republican ballot) .

However, not all states allow non-Democrats to vote in their primaries. Of those that do, independents comprise less of the electorate than in New Hampshire where they represent about 45 percent of all voters.

Before proclaiming Senator Clinton as the inevitable winner, however, keep in mind that in California voters registered as Decline to State  — about 19 percent of the electorate — can cast a Democratic ballot (but not a Republican one). Senator Obama’s broader appeal should serve him well here. And on February 5th, California is the biggest prize of all.

Close Votes in Reader Presidential Survey Results

The polls are open in New Hampshire, but they’ve closed on the first Alan Katz Health Care Reform Blog Unscientific Presidential Survey (the AKHCRBUPS, for short). And while we won’t know who won in the Granite state for awhile, we can now report on the winners, and losers, among this blog’s readers.

Republicans: Respondents gave a plurality of their first place votes to former-Mayor Rudy Giuliani takes the top spot followed closely by Senator John McCain who, in turn, was just ahead of former Governor Mike Huckabee. Former front-runner and former Governor Mitt Romney finished a distant fourth.

The survey asked participants to list their second and third choice. Weighting the results (first place = 3, second place =2 and third place =1), however, doesn’t change the order of the finish, although Governor Romney does move closer to the pack as does former Senator Fred Thomas. 

The comments provided by respondents showed some Republicans displeased with their choices this election cycle. As one Republican put it, “It just might be the first time I won’t go to the polls during the primary season.”

Republicans were asked whether they “would be willing to support a Democratic candidate in the general election” and, if so, which one. A majority said no. But of those who said yes, Senator Barack Obama was their top choice, followed by former Senator John Edwards.

Democrats: Senator Hillary Clinton would be the Comeback Kid of 2008 if New Hampshire follows the AKHCRBUPS results. She tied Senator Obama for the top spot as the first choice among Democrats. Yep, tied. (They were right, every vote does count!) Senator Edwards was a distant third.

When second and third choice votes are taken into account, Senator Obama squeaks out a win over Senator Clinton. Senator Edwards and Governor Bill Richardson makes strong moves, however, with Senator Edwards coming in just ahead of the Governor. Governor Richardson seems to impress more people than are voting for him. One supporter of Senator Clinton said, “I think Richardson is being overlooked. His … national experience would be a BIG help should he be elected.” Is this the start of a Clinton/Richardson boomlet? (Probably not, but I though it was interesting.)

Good news for the GOP: When asked if, and who, Democrats would support among the Republicans, the majority said yes. Of these, Senator McCain edges out Mayor Giuliani followed, at a distance, by Representative Ron Paul.

Independents: Those who identified with neither major party got to select their preferences among all the GOP and Democratic candidates. Senator Obama was the clear winner here.

The Issues: When asked what “the two most important issues you will consider in determining which candidate to support for president,” survey participants cited the Economy as their most important issue, followed by Health Care Reform and Terrorism/National Security and then Tax Policy. Iraq was on the list, but not as high as in national polls, not suurprising given the subject matter of this blog. When second choices taken into account, the standings don’t change, but the Economy moves even further ahead while Iraq gets closer to the pack. Yet, the comments would indicate that all of these issues matter. As one respondent put it, “So which one do you pick? Holy cow!! Most all of them are crucial.”

My thanks to all of you who participated n this survey. We’ll do at least one more as the vote in California approaches.  These polls may not be scientific, but they’re fun!

Iowa Speaks!

The voters of Iowa have spoken. What they have to say may not mean much to you, but they certainly mattered to the candidates who spent months and millions trying to persuade voters not only to support them, but to brave the cold and stand around for hours in dozens of town hall like caucus meetings.

For Senator Barack Obama and former Governor Mike Huckabee it was a good day. Coming in first, by definition, is a good thing.

The key message for Democrats is that their constituency wants change. For Senator John Edwards it had to be frustrating to position yourself as the fighter for change and then to watch Senator Obama claim the change crown. But that’s what happened according to the CNN entrance survey of participants in the Democratic caucuses, 51 percent of those who stated the quality they were most looking for in a candidate was the ability to bring about change voted for Senator Obama. My guess is that Senator Edward’s extreme rhetoric worked against him and for Senator Obama.

Many voters are tired of the attack politics that is business as usual in Washington. It’s one of the reasons Congress is held in even lower esteem than President George W. Bush. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid promised to change the tenor of the debate in Washington. They failed.

I believe most Americans want leaders who will build solutions, not tear down opponents. Seeking the mantle of Change Agent in Chief while promising to make Washington even more partisan and vicious, as Senator Edwards did, is counterproductive — at best. All he did was emphasize how much of a change the more open and inclusive style of Senator Obama would be. No wonder Senator Edwards earned only 20 percent of the vote from those whose top concern was bringing about change.

Senator Hillary Clinton had a rough night, too. Now she has to pivot from a campaign based on the inevitability of her nomination to demonstrating that she has the experience to implement the change that Senator Obama promises. Not an easy sell, but her campaign is very capable. It’s far too early to count her out.

By the way, expect both Senators Clinton and Edwards to claim second place. According to CNN, when the dust settles, Senator Edwards will have gotten a few more votes, but Senator Clinton will get 15 delegates to his 14 — compared to Senator Obama’s 16.

When asked by CNN for their top issue, health care was cited by 27 percent of those attending the Democratic caucuses, behind the war in Iraq and the economy (each mentioned by 35 percent of the voters).  Of those citing health care as their top issue, 34 percent said they were voting for Senator Obama, 30 percent for Senator Clinton and 27 percent for Senator Edwards. These numbers are so close it’s unlikely to have made much difference in the outcome. These results also reflect the narrow differences in the health care reform plans offered by the three front runners.

The CNN survey of Republican caucus goers indicate a different dynamic was at work there. First, the candidate leading in national polls, former New York mayor Rudy Giuliani didn’t campaign in Iowa. This left the field to former Governors Mitt Romney and Mike Huckabee with former Senator Fred Thompson and Senator John McCain fighting it out for a relatively distant third place finish (and it looks like Senator Thompson won the consolation prize by a hair).

The candidates views on God seemed to be the big issue for those showing up at the GOP caucuses. According to the CNN’s entrance poll,  77 percent of those attending the Republican caucus stated that the religious belief of the candidates mattered a great deal (36 percent) or somewhat (31 percent) in their decision. Only 15 percent of Republican caucus participants said the candidate’s religion didn’t matter at all. Of those who said it mattered a great deal, 56 percent said they’d be supporting Governor Huckabee. Only 11 percent said they’d be supporting Governor Romney — the same percentage that professed support for Senators McCain and Thompson.

When it came to specific issues, the top issue for 33 percent of the Republicans was illegal immigration, followed by the economy (26 percent), terrorism (21 percent) and the war in Iraq (17 percent). Health care reform didn’t make the list. A plurality of the voters citing each of these four issues as the most important to them said they’d be supporting Governor Huckabee.

What to make of the Iowa results?

  1. The expectation for Governor Huckabee and Senator Obama going into New Hampshire’s January 8th primary have gone up considerably. And it’s always a bad thing when a candidate fails to meet expectations.
  2. Coming in first in Iowa will give their war chests a nearly immediate infusion of cash (actually, credit card and Paypal donations). The Internet enables candidates to harvest contributions at speeds unfathomable in prior elections. More money will make it a bit easier for them to meet expectations. But as Governor Huckabee demonstrated to Govenor Romney, money doesn’t always translate into votes.
  3. Iowa will become yesterday’s news as soon as the New Hampshire polls close. Whatever happens there will serve as the context for the next news cycle.
  4. Perhaps most meaningful to regular readers of this blog, and as predicted here earlier, health care reform is unlikely to be a decisive factor in the primaries.

Roughly 340,000 residents of Iowa have now shaped the 2008 presidential election (that’s roughly the size of the city of Santa Ana). Now you can, too, by participating in the Alan Katz Health Care Reform Blog Unscientific Presidential Survey #1. I hope you’ll take a couple of minutes and participate. 

John Edwards’ Dangerous Rhetoric

Former Senator John Edwards talks often about two America’s: “The America of the privileged and the wealthy, and the America of those who live from paycheck to paycheck.” His populist message resonates well within the Democratic party and it has kept him among the top three candidates in most every survey taken. Usually, however, he’s in third place, and that makes everything from raising money to garnering endorsements to recruiting volunteers a bit harder. That’s why the Iowa caucuses are so critical for Senator Edwards. He needs to finish at least second to claim momentum. A third place finish merely confirms he’s behind Senators Hillary Clinton and Barack Obama. Fourth place or lower and it’s back to North Carolina.

Perhaps that explains why Senator Edwards has taken his populist message to a new and dangerous extreme. Senator Edwards is seizing on the recent tragedy of a teenage girl in California to demonize health insurance carriers and their executives. Late last month, Cigna denied Nataline Sarkisyan a liver transplant on the grounds it was experimental and, consequently, not covered. Without the assurance of being paid by the carrier, Ms. Sarkisyan’s doctors would not perform the transplant. After public pressure, including pickets at their office, Cigna relented. Unfortunately, Ms. Sarkisyan died before the procedure could begin.

The story is sad and complex. It’s easy, and lazy, to simplify what happened and ignore the subtleties. Should, for example, the doctors have performed the surgery and then worried about the money? Should they have recommended a treatment that only had a 65 percent chance of keeping the patient alive for six months? The Los Angeles Times, in its extensive coverage of the case, has done a good job of presenting these nuances. Senator Edwards has not.

Senator Edwards could have used the incident to define the difficulty of creating meaningful health care reform. Because as the Sacramento Bee’s Daniel has pointed out, Medicare and Medicaid might have made the same decision as Cigna — obtaining experimental treatment is always a judgement call whether the decision is made by a private company or a governmental agency.

Instead, Senator Edwards chose to use the tragedy as political fodder, employer language that would make the Association of Demagogues proud. According to the Des Moines Register, Senator Edwards is using the incident to ostracize the insurance industry from civil society. Here’s how the Register reports Senator Edwards as describing what happened:  “The doctors pleaded, the nurses pleaded, and finally, Americans started literally picketing and walking outside their offices…. And they finally gave in, and notified the family that they’d pay for it. But then a few hours later, she died. Because it was too late.”

This over-simplified description of what happened makes all insurance executives “Untouchables” in the mind Senator Edwards. Again from the Register: “The candidate paused for a second to let this sink in. Then his voice rose in indignation. ‘And people say to me that as president of the United States, they want me to sit at a table and negotiate with these people? Never. It will never happen.'”

I understand politics. I was Deputy Campaign Director for Tom Bradley in 1982 and worked alongside Joe Trippi, a Senior Adviser in Senator Edward’s campaign who has a significant impact on the Senator’s strategy and message (and who is someone for whom I have great respect). I understand the pressure to create an “us” versus “them” mentality in a tight election.

But Senator Edwards has stepped over a very important line. It’s one thing to debate the role of profits in America’s health care system. It’s fine to debate whether there should be private health insurance companies. Those are legitimate issues. But defining insurance executives — or anyone else — as unworthy to be in the presence of the president of the United States and, by implication, all right thinking people, that’s not legitimate. Once insurance executives are ostracized, who is next? Which executives or interest group is unworthy? Does the list continue to grow as the campaign heats up? Does the Senator’s enemies list include anyone who disagrees with him? This is a country built on tolerance of people and ideas. In descending into inappropriate rhetoric and a Nixonian mindset, Senator Edwards shows himself to be a politician who fails to grasp this vital aspect of America.

Maybe I’m being hypersensitive. But I’ve seen the “these people” used too often in the context of bigotry and stereotyping. (In addition to political work I’ve held leadership positions in organizations like the American Jewish Congress and the Westside Fair Housing Council). So I hope Mr. Trippi is not responsible for Senator Edward’s descent into this kind of de-humanizing rhetoric. I know him to be better than that. I don’t know Senator Edwards, but I hope he returns soon to the realm of civil discourse.

Senator Edwards is desperate to do well in Iowa. If this demagoguery is any indication, however, he’s doesn’t deserve to.

California Health Care Reform Debate: Lesson for the Nation?

California enjoy their image of national trendsetters. Advocates on all sides of the health care reform debate in California are fond of claiming that what happens here will set in motion a reform movement that will alter the course of the presidential primaries and health care of the country.

I’m not so sure the specific elements of the health care reform package, passed by the assembly and to be taken up by the State Senate, is really going to alter the debate. Heck, I’m not sure it will even pass the State Senate. Assuming it does, what’s the lesson of Assembly Bill X1-1? That purchasing pools are the solution? They’ve been around, and failing, for over a decade. That $1.75 is the appropriate amount for a cigarette tax increase? That carriers must accept all applicants? That too has been around, and increasing premiums, for years. Tying guarantee issue of products to a requirement that all residents have coverage might be the element of ABX1-1 that most qualifies it as a model for the rest of the nation.  But I think the lesson California has to offer is more one of process than specifics. And the lesson is the need for a less partisan approach to the effort.

Health care touches everyone. It’s more than a political issue, it’s a deeply personal one. At the same time it has a tremendous impact on the big picture. It’s over 15 percent of the nation’s economy. It affects the fiscal stability of government, the competitiveness of businesses, and the financial security of families. There are few issues that influences both society and everyday lives as much as health care. Consequently, there are few issues with so many stakeholders as health care.

Getting buy-in for a health care reform package is, not surprisingly, a challenge. Policy makers have two choices: ram a partisan “solution” down the throats of the opposition or engage in a dialogue with them.

The former is tempting. In many ways it’s easier because it’s more about politics than public policy. Which elements of your constituency needs what provisions? Cobble them all together and slam the package through.

A nonpartisan approach is much more painful. There’s still a heavy dose of politics involved, but the resulting package needs to be able to stand up to the rigors of questioning and debate from a broad spectrum. The package –in total — needs to have a good chance of actually working. And it’s more likely to because it reflects ideas and input from a variety of viewpoints. It’s a slower process than a partisan effort. It’s a frustrating process. But in the end, the results are usually better.

The California’s health care reform debate illustrate this point.

To the extent ABX1-1, the Health Care Security and Cost Reduction Act, has any chance of passing, it’s because technically it is a bi-partisan bill. Governor Arnold Schwarzenegger is, after all,  a Republican. Senate President Pro Tem Don Perata and Assembly Speaker Fabian Nunez are Democrats. If the Democratic Legislative Leaders had a soul mate in the Governor’s office, the bill would have looked far different. The views of the business community and others would probably not have been ignored, but they would have been much further from the center of the debate. If the result wasn’t a single-payer solution it probably would have looked a lot more like Assembly Bill 8, the reform package passed by the legislature last year during the regular session, than ABX1-1. And regardless of whether one supports ABX1-1 or not, it’s a much better piece of legislation than either AB 8 or Senate Bill 840, the single-payer bill.

So California serves as evidence of the benefits of a bi-partisan approach.

However, ABX1-1 is only technically bi-partisan. Republicans in the legislature have been totally absent from the deliberations. To a large extent, this was their own choice. By refusing to accept any new taxes they made themselves irrelevant to the process, except as an obstacle to a purely legislative solution. Without the two-thirds votes necessary to create new taxes the Governor and the Democratic Leadership are turning to the ballot to fund the $14 billion health care reform plan.

Leaving Governor Schwarzenegger as the only Republican in the room is not a good way to insert the perspective of the Republican party into the debate. Even he refers to himself as being “post-partisan” and few would suggest he speaks for the core beliefs of the GOP. As a result, key elements of the bill did not get the full benefit of a truly bi-partisan debate. Would this have eliminated problem areas in the bill, such as the unlevel playing field created in favor of the purchasing pool? That’s a question California “nearly non-partisan” process can’t answer.

The partisan versus non-partisan approach to health care reform is already a part of the presidential campaign debate, at least on the Democratic side. Senator Barack Obama believes in the wisdom of bi-partisanship. According to the Boston Globe,“To Obama, Democrats have been unable to make progress on core concerns like universal healthcare because of a selfish Beltway political culture that puts partisanship ahead of the national interest; electing Clinton, he said, would perpetuate the existing ‘Washington game with the same Washington players.’

“‘You know that we can’t afford four more years of the same divisive food fight in Washington that’s about scoring political points instead of solving problems – that’s about tearing your opponents down instead of lifting this country up,’ Obama said last week.”

Former-Senator John Edwards, however, champions a more partisan approach. “‘You better send a fighter [to Washington]’, he told voters Friday night in Davenport. But politicians are not his main targets: Special interests are the force that must be quelled.

“‘Corporate greed has infiltrated everything that is happening in this country,’ Edwards said.” Hardly an invitation for all sides to participate in the discussion.

This is where the California experience can educate the national debate — even if ABX1-1 never makes it past the Senate. It shows that even a “nearly bi-partisan” approach resulted in a better bill, one that had the best chance of any of the available alternatives to become law.

Clinton Unveils Her Health Plan

That was then. This is now.

Then was when, as first lady, Hillary Clinton led the charge for health care reform. Her proposal was so unwieldy,  politically naive and arrogantly promoted that it helped Republicans take over control of Congress for the first time in over 40 years and set back the cause of health care reform by over a decade.

Now is when, as presidential candidate, Senator Hillary Clinton needs to put that history behind her and talk to the future. Which is what she did in Iowa today, unveiling the 2007 version of her health care reform plan.

Her approach this time is to be less original, less ambitious and less arrogant. Instead her new plan shares much in common with several other proposals making the rounds — including those of her rivals for the Democratic presidential nomination. This isn’t a bad thing; quite the contrary. It not only lends her plan credibility, but it provides political cover when it comes under attack.

So, for example, she shares with Governor Bill Richardson the concept that if people are satisfied with their existing coverage, they can keep it. She borrows from both Governor Richardson and Senator Barack Obama the idea of using refundable tax credits to help lower income Americans pay for their coverage. And, like Governor Richardson and former-Senator John Edwards she incorporates the idea of a requirement that all Americans obtain health care coverage and expanding MediCare eligibility.

Like many health care reform proposals — at least Democratic reform proposals — Senator Clinton would require insurers to accept all applicants without regard to their risk profile. As previously noted, she wisely balances this with a requirement that all Americans obtain coverage. What’s unclear is how she would enforce this requirement. Poor compliance by consumers would lead to the burden Senator Clinton’s state of New York bears: average insurance premiums roughly 350 percent higher than those in California.

Senator Clinton makes a major point out of avoiding the creation of new bureaucracies (another approach she shares with Governor Richardson). However, there’s something a bit disingenuous about this claim. True, instead of creating a new government health care program she would open up the Federal Employee Health Benefit Program to all Americans. However, the expansion required of the FEHBP to manage such growth would be the actuarial equivalent of creating a new bureaucracy. But with the added downside of probably disrupting the agency’s current mission.

As with all the health care reform plans put forward by presidential candidates, Senator Clinton’s proposal is more a window into her thinking than a blue print for reform. The new president will need to work with Congress to fashion a detailed reform structure. There will be plenty of debate and shaping of ideas in that process. The outcome may resemble what’s being described today, but then again, it may not.

Yet this glimpse into the approach of Senator Clinton is illuminating. By avoiding a single payer approach she demonstrates her willingness to take on the most liberal elements of her party. By imposing requirements on both corporations and individual she invites attacks from conservatives concerning a heavy-handed government approach to health care. In short, given the context of the health care reform debate as it exists today, Senator Clinton’s package is somewhere in the middle (ok, maybe a bit left of the middle, but close enough for government work). This positioning might be expected in the general election, but its a risky move in the primaries. However, it also demonstrates that Senator Clinton learned something then and she’s applying those lessons now.

Motley Fool versus Administrative Cost Caps

It’s kind of surprising for me to be bringing a column from the Motley Fool web site concerning a fairly arcane aspect of the health care reform debate: requiring carriers to spend at least 85% of premium dollars they receive on medical costs. This approach to tamping down escalating health insurance premiums is advocated by Governor Arnold Schwarzenegger, leading Democrats in the state legislature and, on the national front, by former Senator John Edwards.

It was Senator Edward’s recent speech calling for a 15% administrative cost cap which caught the eye Motley Fool writer Rich Smith. In an online column entitled “John Edwards’ Fuzzy Insurance Math,” Smith takes the Senator to task for proposing a reform which simply doesn’t add up.

Senator Edwards claimed health insurers currently spend 30% of premiums on administrative costs and profits. The Senator believes, as does the Governor and others, that no more than 15% of premiums should be spent on such things. In questioning the presidential candidate’s proposal (a candidacy the reporter claims to support) Mr. Smith cites statistics showing the actual number is closer to 21%.

But he goes on to say that a 15% cap would risk putting the insurers out of business, citing the margins enjoyed by some of the leading health insurance carriers:

    Gross Margin    
    Operating Margin    
    Net Margin    
Aetna

30%

11%

7%

Cigna

43%

11%

6%

Coventry Health Care

29%

10%

7%

Humana

18%

3%

2%

UnitedHealth Group

25%

10%

6%

 WellPoint

25%

9%

5%

Margins are trailing-12-months.

Since none of these major health plans currently enjoy the 15% operating margin necessary to fund Senator Edward’s 15-point reduction in margins, Mr. Smith notes that each of these currently profitable companies would begin losing money.

Mr. Smith notes this would encourage the carriers to achieve one of Senator Edward’s goal for his proposal: to make the insurance companies operate more efficiently. However, Mr. Smith also notes that when a company is forced to quickly become more efficient, it “automates some functions, outsources others, and lays off employees in droves.”

Of course, there’s another way for carriers to address a mandated percentage. It seems that every factor has a numerator and denomenator. So forced to achieve a medical cost ratio of 85%, carriers could eliminate disease management programs, reduce customer service staffs, fire some attorneys and reduce commissions. That would address the numerator. But they could also address the denominator by increasing premiums — or eliminating low cost plans. After all, the greater their premium the more they have to spend on operations. This approach isn’t what advocates of the administrative cost cap are seeking to accomplish, but it is a likely result of this approach.

So it’s not just fuzzy math reformers need to guard against. It’s also unintended consequences they should avoid. And they don’t have to take my word for it. They can listen to any ol’ motley fool.