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.

Public Health Plan Key to Health Care Reform Compromise

President Barack Obama came to Washington promising a new era of politics where pragmatism trumped partisanship and the search for common ground was more than a prelude to a political rumble. Health care reform will be his opportunity to deliver. Specifically, it will be interesting to see if the Administration is willing to accept meaningful health care reform that does not include the creation of a public health plan to make government sponsored health care coverage available to all Americans.

Whether there should be a government-run health plan to compete with private carriers, even if only in the individual and small group market segments, is shaping up to be the most controversial element of the health care reform debate. Many Democrats and progressives see it as a critical tool for controllingcosts and for maintaining a balance of power between consumers and insurance giants. Many Republicans and conservatives see it as the first step toward a single-payer system. Each side has made clear that they are implacable on this issue.

Except for the Obama Administration. Maybe. It has already indicated a willingness to negotiate how such a public health plan would operate. However, there’s been no sign the President would negotiate away his campaign promise to make available to all Americans health insurance at least as good as members of Congress receive through a government program if that’s what it would take to pass an overall reform package.

Part of the problem is that the President is trying to have it both ways: introduce a government-run health care plan while preserving the private, employer-based system. Today, government-run health plans shift costs to private carriers. No one seriously denies this reality. By setting Medicare and Medicaid reimbursements rates low (sometimes lower than providers actual costs) doctors and hospitals are forced to increase their charges to privately insured patients. This results in higher private insurance premiums. A government-offered alternative to private coverage for all Americans would, in theory, work the same way. As more costs shifted to the private carriers the price differential would increase resulting in more consumers moving to the public plan. Eventually, the public plan would be the only viable alternative in the market.

In suggesting the Administration was open to a compromise on how the public health plan would operate, the Associated Press reported Director of the White House Office on Health Reform, Nancy-Ann DeParle, as suggesting that “the public plan pays hospitals and doctors rates similar to what private insurers pay. That would address fears that government would use its muscle to pay rock-bottom prices for medical services, allowing the public plan to charge discounted premiums that private insurers couldn’t compete with”.

But if they are going to have a cost structure comparable to the private market, why bother? If a goal is to control medical costs, how can a public plan not use it’s clout to negotiate lower charges from providers? Is a government official going to go before the press and say “We could bring down the cost of health care, but we choose not to?” 

If the public health plan is setting reimbursement plans at the same level as private carriers it’s not contributing to cost containment, which is the most powerful rationale for creating a public health plan in the first place. Yet if it creates a public health plan that does impose lower costs, it will eventually drive private carriers out of the market.

It’s too early in the process for President Obama to negotiate away creation of a public health plan. But it may be a compromise he’ll be forced to make, in which case the sooner he cuts the deal the more valuable the bargaining chip will be.  The reason for this calculation is that President Obama may lack the political clout to push through Congress health care reform that includes a government-run health plan competing with private carriers. The political reality is that Republicans are adamantly opposed to the idea and Democrats are not unified on the issue.

Democrats will soon have a (theoretically) filibuster-proof 60-seat majority in the Senate with Pennsylvania Senator Arelen Spector switching parties to become a Democrat, the likely seating — eventually — of Al Franken as a Senat0r from Minnesota, and with two independents caucusing with them. Yet 15 of those Democrats and one of the independents have formed a moderate caucus that has raised questions about the cost of the Administration’s health care reform package and about a government program. Senator Specter is likely to join this group. With 17 votes they would hold the balance of power on key elements of the reform package. If advocates of a public health plan try to ram the idea through Congress without any Republican votes, it may find it lacks the necessary Democratic votes as well.

Then again, they may. President Obama is an adept politician. He may be able to swing enough moderates into support of a government-run health plan. While this certainty remains, the idea of a government-run plan could be the key to achieving a compromise on the overall health care reform package. Assuming Republicans and moderate Democrats are willing to negotiate. If they’re not, the Obama Administration should simply try to get everything it’s seeking rammed through Congress, giving ground on nothing. But if all sides are truly interested in reaching a consensus, the public health plan element is among the most valuable bargaining chips President Obama holds. 

By making clear — at the right time — what he would want in exchange for leaving out the government-run plan, President Obama will be able to gauge how serious Republicans and moderate Democrats are in compromise. And learning that information, in and of itself,  is worth the offer.

Obama Search for a Public Health Plan Compromise a Good Omen

One of the most contentious issues in the current health care reform effort wending its way through Washington, D.C. concerns whether the government should offer a health plan in competition with private carriers. To oversimplify the controversy: supporters argue it will help bring prices down and keep private insurers honest while opponents argue it will unfairly compete, driving private health plans out of business. Both sides are preparing for a no-holds barred fight over the issue. (For more on this topic, please see earlier posts here and here).

The Associated Press is reporting today that President Barack Obama will be seeking a compromise on the issue. The Associated Press describes Nancy-Ann DeParle, director of the White House Office of Health Reform, as stating that “a public plan could be designed to address concerns about the federal government overreaching in its role.” One example given by Ms. DeParle is that “a public plan could pay hospitals and doctors rates that are similar to what private insurers pay — addressing fears that government would use its powers to dictate low rates that private plans can’t compete against.”

Because the government plan could be operated without the need to make a profit and would have lower administrative costs, Ms. DeParle argues such an arrangement could still work to lower the cost of health care coverage. However, there are already non-profits in the health care system. Many Blue Cross Blue Shield plans are non-profit and so is Kaiser Permanente. The Obama administration will need to demonstrate that they will be more non-profit than the other non-profits.

Whether the government can run a health plan more efficiently than private enterprise (whether for-profit or non-profit) has yet to be seen. That didn’t seem to be the case with California’s experiment, the Health Insurance Plan of California. And since government programs tend to look at distribution costs for savings, putting the focus on reducing administration costs doesn’t necessarily bode well for health insurance agents. Whether these savings are real or a mirage will be the topic of much debate. Agents will have a chance to argue their value to the system and statistics of all kinds will be plentiful. But the good news is that there will be a debate.

It’s still early in the debate. What I take away from Ms. DeParle’s comments is that the Obama Administration is aware of the dangers posed by a government-run competitor and are open to a constructive dialogue on the issue. That’s a hopeful sign. In a previous administration (one that rhymes with “Clinton”) there was little talk of compromise. The Obama Administration’s approach doesn’t guarantee common ground will be found, but it’s willingness to try to find it is as significant as it is welcome.