Obama Reiterates Support for Public Insurance Plan, Pushes Affordability

President Barack Obama lined up squarely behind the creation of a government-run health plan today. At the same time the White House has fully engaged on the financing of his health care reform plan.

Whether a public health plan should be created to compete with private sector carriers is among the most controversial issues in the current health care reform debate — and will be one of the most difficult on which to find common ground.  While many Democrats, especially those on the left, are insisting a public plan be a part of whatever reform package emerges from Congress, Republicans are equally firm — and united — in opposing them.

During his campaign for president, then-Senator Obama included a government-run health plan in the health care reform plank of his platform. Lately, however, there were indications there might be flexibility in his position. In a letter sent today to Senators Max Baucus and Edward Kennedy, President Obama removed any doubts as to where he stands. “I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans. This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest.”

Senator Kennedy, Chair of the Senate Health, Education, Labor and Pensions Committee, is a strong advocate of a public plan. Senator Baucus, the Chair of the Senate Finance Committee, has been less supportive. It is these two committees which will draft the Senate version of reform. The House bill is all but certain to call for creating a public plan.

The mere fact that President Obama supports a government-run health plan does not mean it will be in the final bill. Republicans appear to be unanimously opposed to the idea and so are some moderate Democrats. Together they could block passage of legislation unless the public plan is removed. Or there could be a compromise. One possibility being discussed would prevent the entry of a government-run plan into the market unless “triggered” by certain (yet to be determined) events.

The President’s letter to the committee Chairmen also conveyed the Administration’s support for a health insurance exchange to help consumers obtain coverage. “I agree that we should create a health insurance exchange — a market where Americans can one-stop shop for a health care plan, compare benefits and prices, and choose the plan that’s best for them, in the same way that Members of Congress and their families can.” Interestingly, this describes an exchange as an information clearinghouse. This falls short of Senator Kennedy’s call for a gateway that would, among other things, “”… negotiate with insurance companies to keep premiums and copays low….”  The Senator is describing something akin to a purchasing pool.

President Obama’s letter addressed market reform, but concentrated on cost cutting measure. “I want to stress that reform cannot mean focusing on expanded coverage alone. Indeed, without a serious, sustained effort to reduce the growth rate of health care costs, affordable health care coverage will remain out of reach. So we must attack the root causes of the inflation in health care. That means promoting the best practices, not simply the most expensive.”

This is part of an Administration-wide effort to focus on making coverage more affordable. For example, Peter Orszag, the Director of the White House Office of Management and Budget, has written two blog posts on the fiscal effects of health care reform (here and here).  In his most recent post he writes of “game changers” that, while not reducing costs immediately, are critical for long term savings. Among the changes he calls for are “patient-centered quality research and re-orienting financial incentives through bundling and payment for quality rather than quantity of services delivered.” Both the President’s letter and the Director’s postingemphasize the Administration’s desire to make health care reform “deficit neutral even over the next five to 10 years, through scoreable offsets such as savings within Medicare and Medicaid and (as necessary) additional revenue.” (“Scoreable” offsets are those recognized in the federal budget. The Congressional Budget Office recently provided guidelines on how they would go about determining the impact various health care changes will have on the budget.)

I expect we’ll be hearing a lot from the White House on health care reform with greater frequency in the next few weeks. While the Obama Administration has been content to lay out broad principles and let Congress hammer out the details, it cannot afford to be completely hands-off. The President has consistently expressed his hope for bi-partisan legislation, but he has been even more vocal that health care reform needs to happen this Fall. The President will need to spend a great deal of political capital to get a bill on such an expensive and complex issue to his desk for signature. He is clearly willing to make that expenditure.

It would have been foolish for the President to back off or even water down his call for a public plan at this stage. My guess is that he will need to push liberals into accepting a reform package that doesn’t go as far as they would like. By siding with them now he’ll be in a better position to do just that when the time for compromise arrives. We’re not there yet, but we’re getting closer.

Health Care Reform 2009: More Required Reading

There’s a lot of moving pieces to the health care reform process currently underway in Washington, D.C. Politics, policy, and personal interest are all colliding as lawmakers and President Barack Obama Administration try to fix what everyone is calling America’s broken health care system. To put the debate in context it helps to know what the participants are thinking. To understand what they’re thinking it helps to know what their reading and writing.

Earlier this year I put forward a list of required reading for understanding the health care reform debate. Here’s the second installment of what will be a series of such posts. (Note: a third list of required health care reform reading was added August 2, 2009).

1. The Senate Finance Committee, chaired by Senator Max Baucus, will play a major role in determining the health care reform legislation that is likely to arrive on President Barack Obama’s desk this Autumn. And they are taking this role very seriously. The Committee has produced three policy option documents to facilitate their deliberations. The policy papers don’t describe what the Finance Committee will decide upon, but it does provide insight concerning what they will be deciding upon. The option papers are:

2. The Senate Finance Committee isn’t the only one in the upper house with jurisdiction over health care reform. The Senate Health, Education, Labor and Pensions Committee and its chair, Edward Kennedy, will have a great deal to say about the final legislative package as well. The Committee released an outline of its reform plan yesterday. I have yet to get my hands on that document, although I did find a Senate HELP Committee Briefing Paper dated May 21, 2009.  (When I get a copy of the most current outline I’ll post it here). In addition, as I’ve posted previously, Senator Kennedy recently described his vision for health care reform in some detail. The HELP Committee’s plan stakes out the most liberal, yet still politically realistic, proposals (meaning it doesn’t call for a single payer system). Whether Senator Kennedy expects to get much of what’s laid out in the outline into legislation is unknown. At the very least, by providing an anchor on the left his plan will help him keep the final product from moving what he would consider too far to the middle.

3. As members of Congress begin drafting legislation they will be paying close attention to the impact health care reform will have on the federal budget. The analysts they will turn to for answers work in the Congressional Budget Office.  The CBO recently published guidelines explaining how they will evaluate the budget impact of various proposals in the Budgetary Treatment of Proposals to Change the Nation’s Health Insurance System. An added bonus: the director of the CBO, Douglas Elmendorf, posts frequently to the Congressional Budget Office Director’s Blog, providing additional insight into the agency’s thinking.

4. The Emanuel family has hit the trifecta. Their youngest son is a major Hollywood agent. The middle son is a former Congressman and currently the White House Chief of Staff. Their oldest son is a doctor. Not just any doctor. He is the Chair of the Deparment of Bioethics at the Clinical Center of the National Institutes of Health (that must be one huge business card he’s got). But wait, there’s more. Earlier this year, Dr. Ezekiel Emanuel was named a special adviser to the director of the White House Office of Management and Budget for health policy. In other words, he’s pretty close to health care reform’s ground zero in the Obama White House.  (No slight intended of the Director of the White House Office on Health Reform, Nancy-Ann DeParle, who gets to sit on the actual bulls eye — see #5).  How Dr. Emanuel views reform, consequently, matters. He’s thought long and hard on the subject and, fortunately for inquiring minds, he’s written extensively on the topic, including the book Healthcare, Guaranteed: A Simple, Secure Solution for America. Other writings by Dr. Emanuel include a posting he made to The Huffington Post and another he co-wrote for the New America Foundation.

5. As noted in #4, Nancy-Ann Deparle’s is charged with coordinating President Obama’s health care reform efforts. It’s her job to keep the various players and issues in the debate from spinning out-of-control. Like a traffic cop, it’s up to her to keep things moving toward eventual passage of comprehensive legislation. It’s hard to find much on her personal health care reform positions (if anyone out there has links to her writings on the topic, please let me know).  In an April 2009 briefing for reporters sponsored by the Kaiser Family Foundation, Families USA and the National Federation of Independent Businesses, she did define what she means by a “public health plan.”  You can read a transcript or view a video of her presentation to the press on the Kaiser Family Foundation site

6. Everyone knows the key to health care reform is controlling medical costs. You can have all the market reforms Congress can dream up, but if medical inflation continues to outpace general inflation and wage growth at the rate it has been, it will cripple the economy. Even entrenched stakeholders recongize this reality, which is  how the Advanced Medical Technology Association (AdvaMed), America’s Health Insurance Plans (AHIP), American Hospital Association (AHA), American Medical Association (AMA) , the Pharaceutical Research and Manufacturers of America (PhRMA) , and the Service Employees International Union (SEIU) came to publish their medical cost reduction proposals. The document contains cost cutting committments the organizations have made to President Obama.

7. Perhaps the most talked about article on cost containment making the rounds today is a New Yorker article by Dr. Atul Gawande. It is a terrific read that recounts his investigation into why McAllen, Texas is “the most expensive town in the most expensive country for health care in the world.”  It seems MediCare pays twice as much per person in McAllen than it does 800 miles away in El Paso. Dr. Gawande investigates why, offering insights into the health care system that are too rarely considered.

8. It is generally accepted that 30% of health care spending in the united states is unnecessary. That’s $700 billion we’re talking about that could be spent insuring the uninsured, among other uses. Folks like Peter Orszag, the former director of the CBO and currently director of the White House Office of Management and Budget (which makes him Dr. Emanuel’s boss, for those keeping track) often sites this statistic — and its source: Dartmouth University’s  “Atlas of Health Care.”  They have done numerous and extensive studies on the connection (or lack thereof) between medical spending and health outcomes. Their most recent findings, published February 27, 2009, are described in Health Care Spending, Quality, and Outcomes. It’s subtitle: “More Isn’t Always Better,” pretty well sums up the results.

9. A bonus item: For a 3 minute summary of the health care reform debate, presented in a surprisingly entertaining, clear, and balanced way, take a look at the video at myhealthreform.org.  The video is not an in-depth dive into the issue, but rather an informative overview of the topic. If you’ve got friends, clients or colleagues who are looking for a simple explanation of what the debate is all about, it’s a great place to start. (Full disclosure: the site is run by Humana who clearly has a stake in the outcome of health care reform).

There will be more required reading coming soon. For example, we should hear very soon from the  three House Committees with jurisdiction on health care reform with details on their proposals for change. In the meantime, if you come across any articles, books, postings or the like you think belongs on a list of required health care reform reading for 2009, please send them my way.

27 Senators Call for Public Health Insurance Plan

Twentyseven Democratic Senators have signed onto a “sense of the Senate” resolution demanding that a government-run health plan be included in whatever health care reform bill emerges from Congress. Staking out the liberal position for what will be one of the most controversial elements of this year’s health care reform debate, the Senators define a public health insurance option as “essential to reform” according to a report on Politico.com.

Of course, there are government-run plans and then there are government-run plans. As Politico reports, Senator Max Baucus, chair of the Senate Finance Committee, has said that while he expects any comprehensive health care reform legislation emerging from his committee to include a public plan this shouldn’t frighten opponents. “There are says to skin a cat. There are ways to find a solution,” the site quotes him as saying. One option under consideration, for example, is a “‘fallback’ plan, which would trigger a public insurance option if private competition proves inadequate in a geographic region.”

Most Republicans and many moderate Democrats have said they would oppose a health care reform bill if it includes a government-run health plan to compete with private carriers. Whether they would accept the idea of such a plan as a “fallback” is unknown.

Among those co-sponsoring the resolution are several important players in the health care reform debate. For example, Senator Edward Kennedy chairs the Senate Health, Education, Labor and Pensions Committee which will, along with the Senate Finance Committee, is drafting health care reform legislation. And Senators Dick Durbin and Charles Schumer are members of the Democrat’s leadership team in the Senate. Missing from the list are any members of the Moderate Dems Working Group — 18 Democrats (including one independent) who may seek to block inclusion of a government-run plan in health care reform legislation.

The 27 Senators listed by Politico as co-sponsoring the sense of the Senate resolution are:
Jeff Bingaman (D-N.M.)
Barbara Boxer (D-Calif.),
Sherrod Brown (D-Ohio)
Roland W. Burris (D-Ill.)
Benjamin Cardin (D-Md.).
Bob Casey (D-Pa.)
Chris Dodd (D-Conn.)
Dick Durbin (D-Ill.)
Kirsten Gillibrand (D-N.Y.)
Tom Harkin (D-Iowa),
Daniel K. Inouye (D-Hawaii)
Ted Kaufman (D-Del.)
Edward Kennedy (D-Mass.)
Frank R. Lautenberg (D-N.J.)
Patrick Leahy (D-Vt.)
Carl Levin (D-Mich.)
Claire McCaskill (D-Mo.)
Robert Menendez (D-N.J.)
Jeff Merkley (D-Ore.)
Barbara A. Mikulski (D-Md.)
Jack Reed (D-R.I.)
Bernie Sanders (I-Vt. – an independent, Senator Sanders caucuses with Democrats)
Charles E. Schumer (D-N.Y.)
Jeanne Shaheen (D-N.H.)
Debbie Stabenow (D-Mich.)
Tom Udall (D-N.M.)
Sheldon Whitehouse (D-R.I.)

Kennedy Calls for Substantial Government Role in Health Care

In the United States Senate, two committees will play a leading role in drafting health care reform: the Finance Committee chaired by Senator Max Baucus; and the Health, Education, Labor and Pensions (often referred to as the HELP) Committee led by Senator Edward Kennedy. The two chairman have pledged to work together in order to bring one bill to the floor sometime this summer. In the meantime, the committee members are developing policy options, staking out positions, testing the political waters, and all the various other chores required to actually produce legislation.

The Senate Finance Committee has put forward three health care reform option papers. They describe choices the committee will need to make. One option, for example, is to create a government-run health plan to compete with private carriers. Another is to do without a public plan and count on the market to promote competition.

The Senate HELP committee has been taking a less formal approach, but it too has now begun putting its collective thoughts on paper. The Washington Post reports that Senator Kennedy is circulating an outline of the health care reform package his committee is likely to propose. The HELP Committee is traditionally more progressive than the Finance Committee (needing to focus on the cost of things does tend to bring out the pragmatist in most lawmakers) so it’s not surprising that the package, as the Washington Post puts it, “[i]n many respects adopts the most liberal approaches to health reform being discussed in Washington.”

Among other provisions, the Kennedy proposal  would create a government-run plan to compete with private carriers, require individuals to purchase coverage and employers to contribute to the coverage.  According to the Post, the HELP Committee will propose allowing Americans earning up to 500 percent of the federal poverty level ($110,250 for a family of four) to purchase Medicaid (although according to Bloomberg.com the package sets a floor of 150 percent of the federal poverty level for Medicaid eligibility — currently states can set their own financial level for their citizens to qualify for Medicaid).  Bloomberg.com also reports the committee’s proposal would expand eligibility for the State Children’s Health Insurance Program to “children” up to 26 years old.

Inclusion of the public plan will be especially controversial. Most Republicans and many moderate Democrats who have stated an opinion on the topic have said they could not support health care reform legislation that calls for creating a government-run health plan. The fear is that, by underpaying physicians, the plan will force doctors, hospitals and other medical providers to shift costs to the private plans. Since premiums reflect the underlying cost of medical care, the public plan would gain an unfair price advantage. The outcome, over time, would be private carriers would be forced from the market, leaving the public plan as the only option available.

The HELP Committee’s proposal will fuel this fear. Bloomberg.com writes that Kennedy’s proposal would allow the public plan to pay health care providers just 10 percent more than Medicare pays them — which would still be less than the actual costs medical professionals and hospitals incur in treating Medicare patients.

One of the more far reaching ideas Senator Kennedy is calling for are the creation of “gateways” to facilitate the purchase of affordable health insurance. These gateways might at first seem to be similar to the health insurance exchanges many in Congress are calling for, but they go further.  In an opinion piece published by the Boston Globe, Senator Kennedy writes he will seek to create “gateways to better health across America. You can contact the gateways online, by phone, or in person to figure out what policy works for you.”  Going even further, the “gateways would “negotiate with insurance companies to keep premiums and copays low and help you with your premiums if you can’t afford them.”  In this regard, the gateways seem to be a throwback to the Clinton Administration health care reform plan of the 1990s. Central to that effort was the concept of “managed competition” in which purchasing pools would negotiate the cost and coverage of health care available in a community.

While Senator Kennedy repeats the frequently cited mantra of “if you like your current coverage you can keep it,” the elements of his health care reform plan would all but guarantee that your current coverage won’t be around for long.