How New Health Care Reforms Make Single Payer Less Likely

There are those who view the Patient Protection and Affordable Care Act, the health care reform legislation signed into law by President Barack Obama, as the first step toward a complete government takeover of America’s health care system. While I don’t agree with their arguments, they do have a case to make. That is:

  • because the reforms fail to restrain the out-of-control growth of medical costs, insurance premiums will continue to rise
  • because the reforms place constraints on health insurance companies, the private sector will be squeezed between increases in the underlying cost of care and their ability to charge adequate premiums to cover those costs
  • meanwhile the government-run health insurance exchanges, to be operational by 2014, which is also when Medicaid is set to dramatically expand, increases the percentage of health care coverage provided or made accessible by governments

Throw in a few other provisions (elements of the reform some say will undermine Medicare Advantage, the new taxes imposed on health insurance carriers and others), season to taste with paranoia and the belief that the recently passed health care reforms is merely the first steps down a path leading to a single payer system gains significant heft.

Given this scenario, one might expect folks on the left to be gleeful with the reforms. Many liberals publicly and fervently support a government-run health plan that would completely remove private health insurance companies from the marketplace. If they believed what emerged from Washington moved that goal closer, you’d expect them to celebrate, at least a little.

If so, the folks at Consumer Watchdog failed to get the memo. This group, led by Jerry Flanagan, considers health insurance companies to be the manifestation of evil in our plane of reality. OK, I’m paraphrasing here, but you get the idea. They are unabashed advocates of a single payer system for California and the nation.

On April 8th, wrote a letter to President Obama, Secretary of Health and Human Services Kathleen Sebelius, and members of Congress identifying what it calls loopholes in the newly enacted health care reform bill. (Consumer Watchdog Letter on Health Care Reform Loopholes). Among the group’s concerns is that the minimum benefit requirements to be proposed by HHS will preempt stronger minimum benefit standards at the state level, that its approach to Medicare Advantage could “push traditional Medicare into an economic death spiral,” that the law fails to attack recent price hikes by pharmaceutical companies, and that carriers will continue to be permitted to rescind coverage for intentional misrepresentation, without creating new regulatory oversight to ensure that exception is not abused by health plans.

Most interesting, however, is Consumer Watchdog’s fear that the new health care reform bill will prevent states from adopting a single payer system at least until 2017. Under the heading “States Rights to Innovate,” the letter states, “Under the current law, states must wait until 2017 for waivers from the federal government to use federal Medicaid, Medicare, tax subsidies
and other funds to support state alternatives to the private insurance market, whether that
be by adopting a state single-payer model or a state ‘public option.’”

Since states can’t divert funds from existing public programs to new government programs, the new health care reform law blocks initiatives to create single payer systems at the state level. In fact, the new reforms block states from creating a health plan to compete with private carriers (unless it can do so without federal funds, tax subsidies and the like).

I suppose what this proves is there is a balance in the universe. The same legislation some fear will inevitably lead to a single payer system is the same legislation that prevents states from creating a single payer system.

Of course some will argue that this simply delays the coming of a single payer system to 2017. However, think about the recent reform package. The Patient Protection and Affordable Care Act. It was passed by the slimmest of margins and only after intense debate and adroit legislative maneuvering. It’s passage was possible only because Democrats occupy the White House and have substantial majorities in both chambers of Congress. Yet the legislation has no public option and is built around private health insurance. Nonetheless it is criticized as “socialism” by some and a “government takeover” by others.

Does anyone realistically believe the country is going to move further to the left in future elections? That’s one of the reasons the Administration pushed so hard to pass health care reform in 2009. The party occupying the White House nearly always loses seats in mid-term elections. They knew the Democratic majorities resulting from the 2006 and 2008 elections were the high watermark for Democrats in Congress. Long before the tea party started brewing the Administration understood the 2010 elections would reduce their working majorities in Congress. Why would anyone think future Congresses would be even more liberal than this one?

That’s why Consumer Watchdog is concerned about the new health care reform package. It prevents them from moving forward with a state public option or single payer system until 2017. And by then, given the pendulum that is American politics, the odds of a government takeover of health care is likely to be slimmer than it is today.

Why Liberals Won’t Kill Health Care Reform

For those opposed to the current versions of health care reform moving through Congress it might be enjoyable to see the Democrat versus Democrat circus currently underway in Washington. Both parties are susceptible to the joys of circular firing squads, but the Democrats are embracing the concept with exceptional glee of late as liberals and moderates in the Democratic caucus brawl over the shape of health care reform legislation. But at the end of the day there’s several reasons why it’s highly likely all 60 members of the Democratic caucus will vote to move the bill forward.

  1. The Senate is not voting on a final health care bill. Yes, passage of health care reform by the U.S. Senate would be a historic milestone, but just a milestone. What emerges from the Senate will go to a conference committee where the final health care reform bill will be drafted. This makes it easier for Senate Majority Leader Harry Reid to muster the necessary votes. For example, Senator Ben Nelson who is threatening to vote against allowing a vote on the legislation unless it’s abortion language is modified, can make it clear he’ll vote “aye” now to keep the health care bill alive, but he’ll vote against it if the conference committee doesn’t address his concerns. The liberals who are claiming the legislation is a bail-out of the insurance industry can make the same claim: “I’ll vote for it now, but it needs to get better in conference.”
  2. Liberals opposing the bill don’t vote. With the exception of Senator Bernie Sanders, an Independent who caucuses with the Democrats, most of the complaints have come from liberals outside of the Senate. Former Governor Howard Dean was the first well-known liberal to call for defeating the Senate health care reform bill. he was soon joined by Keith Olbermann of MSNBC and folks at the Daily Kos blog. The AFL-CIO and SEIU are also making noises about killing the bill and starting over. But killing the bill would require liberals to tell millions of Americans that preventing health insurance companies from denying them coverage isn’t adequately progressive. Or that preventing carriers from dropping insureds when they get sick isn’t sufficiently liberal. Or that eliminating annual and lifetime caps on insurance coverage is unimportant to liberals. Or that making health insurance accessible and affordable (through subsidies) for millions of the currently uninsured fails to meet the definition of “good enough.” Liberals will complain. They’ll whine and threaten. At the end of the day, however, it’s unlikely any liberal wants to go down in history as the vote that postponed health care reform for a generation (see reason #4, below). Mr. Olbermann gets paid to talk so the commercials on his Countdown show don’t run together. He doesn’t have vote in Congress. Neither does Governor Dean. What they say matters only within the bubble known as cable news. Having a vote in Congress is a responsibility the pundits lack, but lawmakers take very seriously – seriously enough to keep health care reform legislation moving forward.
  3. Liberals are upset over more than just the public option. While dropping a “robust” public option from the Senate health care bill is generating the most recent complaints from the left, threats to defeat the bill result from several disappointments. Many liberals support a single payer system and see a government-run health plan as a compromise. They look at the requirement for everyone to purchase health insurance and ask a reasonable question: what is to stop carriers from gouging the public? (Hence proposals for requiring high medical loss ratios). Then there’s efforts by anti-abortion groups to use health care reform to insert language that goes beyond the current status quo embodied by the Hyde amendment. Some progressives also are upset pure community rating is absent from the bill and the fact Health Savings Accounts will survive the reform effort. As the end game approaches, it’s not surprising that passions rise and frustration bubbles over. Especially for liberals about to vote for what they consider disappointing legislation, venting their displeasure is to be expected. Venting displeasure, however, is not the same as blocking health care reform.
  4. Liberals won’t get a better bill any time soon. Progressives were understandably delighted by the 2008 election results. President Barack Obama had a demonstrably liberal voting record and still won in what can legitimately be called a landslide. Democrats had substantial majorities in both houses of Congress. What was overlooked is that the Democratic Party (and the president) is more centrist than true liberals like to believe. In fact, nearly one-third of the Democratic Caucus are also members of the Senate Moderate Dems Working Group. Anyone not trying to sell Viagra and auto insurance (which leaves out Mr. Olbermann) has known for months that health care reform would be shaped by these moderate Democrats Senators. And if liberals think they’ll be replacing these moderates with more liberal Democrats they’re spending too much time in a different space-time continuum than the rest of us. The chances of liberals taking the seats of Senators Blanche Lincoln and Mark Pryor (Arkansas), Evan Bayh (Indiana), Ben Nelson (Nebraska), Mary Landrieu (Louisiana), Kay Hagan (North Carolina), or Clare McCaskill (Missouri) any time soon are extremely slight. The reality is that Republicans are likely to pick up several seats in the Senate and House in 2010. Historically, the mid-term elections go poorly for the party in the White House. What this means is that for liberals, the current Congress is as good as it gets. Starting over would likely result in reforms even more moderate than what’s being considered today. That’s why Republicans are doing everything they can to slow down the health care reform process. They know the longer the process takes the more likely health care reform is likely to fail and that future attempts will be more to their liking. Liberals in the Senate know this. The Governor Deans of the world can ignore this fact, but lawmakers have to deal with reality, not the fantasies of ideologues.
  5. There’s always tomorrow. To think that whatever health care reform legislation President Barack signs into law health care reform legislation early next year will end debate on the issue for the rest of his Administration is naive. As Republicans gain strength they’ll seek to modify whatever is enacted. Democrats will attempt to expand reforms through more targeted legislation. Whatever health care reform bill emerges from Congress this session should be viewed as a foundation for future political fights, not the end of them.

Could health care reform fail because of attacks from both the left and the right? Yes. Is it likely to fail because liberals join Republicans in torpedoing health care reform? Not really. I don’t envy Senate Majority Leader Reid his task, but my guess is he’ll soon have the 60 votes needed to bring health care reform legislation to the floor of the Senate. Then if some of the liberals want to make a symbolic vote against the reform package they can go right ahead. Once the bill is brought before the Senate It only take 51 votes to move the legislation forward to the conference committee.

Of course, whether whatever health care reform legislation the conference committee can draft will secure enough votes is still very uncertain. But we will have the chance to find out.

New Elements Added to Health Care Reform Debate

I haven’t been writing much of late. The Senate debate has simply been too predictable to merit much comment. The partisan attacks could have been scripted months ago. The votes unsurprising, and the difficulty Democratic Leaders face in fashioning a 60-vote majority is to be expected.

Consider: Republicans charge the Democrats will destroy Medicare. The fact that not long ago it was the GOP wanting to eliminate waste and abuse from the program seems to be forgotten. Democrats, meanwhile, seem incapable of understanding the relationship between medical costs and insurance costs. Listening to their claims that cracking down on evil insurance companies will lower health care spending is disappointing. It would be nice if now and then a Senator would acknowledge that medical costs drives up premiums and not vice versa – a wish not likely to be realized any time soon.  I heard on the radio last week (sorry, not sure what station) a lawmaker complaining that health insurance companies use actuaries, an unfair advantage they wield to the detriment of consumers.

But in the past few days some ideas seem to be gaining traction that could mix things up considerably. One proposal is to allow 55 through 64 year olds to buy into Medicare. The Washington Post’s Ezra Klein seems to be the first blogger to report the Medicare buy-in proposal is “attracting the most interest” as an alternative to creating a new government-run health plan to compete with private carriers. The under 65 cohort would not get basic Medicare coverage for free nor does it look like this approach includes subsidies not already on the table. It simply is a way to create access for some Americans to a public health plan without creating a new public health plan. And as with the public option, participation by 55 year olds would be voluntary.

That the idea of a Medicare buy-in option is gaining traction would seem to indicate that chances for a “true public option” are diminishing. Even liberal bloggers like AntonRobb at Benzinga.com are reaching this conclusion. “… proponents of the public option may be compelled to get behind this plan as an alternative. The severeley (sic) comprised … versions of the public option that have any chance of passing … would probably be worthless and probably do more damage politically to the Dems than good,” he writes.

The other interesting idea to emerge is to, as CBS News describes it, “establish national health insurance options, which would be administered by the Office of Personnel Management (OPM) but operated by private, nonprofit insurers ….” Since the OPM already administers the Federal Employees Health Benefit Program (FEHBP), which insures members of Congress and their staffs among others, this alternative to a public option is being viewed as the equivalent of opening up the FEHBP to non-government workers. (Incidentally, although the CBS reports implies the plans would be administered only by nonprofit carriers, this is far from certain. None of the other news reports mentioned this restriction – and there are for-profit carriers participating in the FEHBP.)

The “what’s good for Congress is good for the public” approach seems to appeal to moderate and conservative Democrats who have been objecting to the creation of a new government-run health plan run by the Department of Health and Human Services. As CBS notes, Senators like Ben Nelson describes this proposal as an alternative to, not a version of, a public option.

The import of these proposals go beyond the fact that new ideas are on the table. It also shows the influence likely to be wielded by the “gang of 10” Senators formed over the weekend. These 10 Senators, five liberals and five moderates, are charged with hammering out a compromise on the public option, according to MSNBC. While focused on the public option, it is likely this group of lawmakers will be called on to bridge the chasm that separates liberal Democratic Senators from their moderate and conservative colleagues. Remember, liberals have long claimed that health care reform without a public option is no reform at all. So if the gang of 10 manages to find a way to remove a government-run health plan from the legislation while still keeping liberals on board, they will position themselves to fashion compromises on other divisive issues as well.

(For those interested, the gang of 10 is comprised of Senators Sherrod Brown, Russ Feingold, Tom Harkin, Jay Rockefeller, and Charles Schumer from the liberal wing of the party and moderate Democratic Senators Tom Carper, Mary Landrieu, Blanche Lincoln, Ben Nelson and Mark Pryor).

As noted above, the momentum building behind the Medicare buy-in and an FEHBP-type proposal is that the public option is not going to make it into the Senate bill. Not with a trigger. Not with an opt-out. Instead it appears the public option won’t be in the legislation at all. This should mollify Senator Joe Lieberman who has promised to vote with Republicans against bringing a health care reform bill to the floor if it contains a public option.

All of this also makes clear the strong desire of Democrats, regardless of their ideology, to pass health care reform. The New York Times reports on various lawmakers’ description of President Barack Obama’s message to Senate Democrats on Sunday. “He reminded us why we are here. He reminded us why we run for office. And he reminded us how many people are counting on us to come through.” “Decades from now this will be the kind of vote you remember. It will be written in the faces of children and families who are relieved of the burden of anxiety and sorrow.”

Democrats consider this a historic moment. While grasping it carries political risk in the upcoming 2010 elections, failing to seize the opportunity poses even greater dangers. And the crushing of a dream many of these lawmakers have held for decades.

There are still controversies that could scuttle health care reform. And there will enough political charges and counter-charges bandied about to satiate even the most verbose pundits. But Senators are serious about finding a path to passage and it is increasingly likely they will pass some version of health care reform before years-end. Of course, this will only set the stage for the real work to begin: the House-Senate Conference Committee likely to convene shortly after New Year’s Day.

House and Senate Health Care Reform Bills Mark the Beginning of the Endgame

Senate Majority Leader Harry Reid is unveiling his health care reform plan after it received passing grades from the Congressional Budget Office. Whether he has the 60 votes he needs to bring the bill to the floor is still an open question, but odds are he’ll have the votes when he needs it, perhaps by this weekend.

Then the fun begins. Senators will debate the bill, offer amendments, vote on those changes, and finally craft a bill. If Senator Reid and his allies play their cards well, they’ll have the 60 votes needed to allow a vote on the legislation. (Yes, before there’s a vote there’s a vote on whether to have a vote – you’ve gotta love democracy). Only then will the Senate make history and pass health care reform.

Of course, what the Senate passes and what becomes law are two different things. Just as passage by the House of Representatives of HR 3962 was only a prelude to what will be the act of drafting the “real” health care reform bill.

Many have tried, but only President Barack Obama, Speaker Nancy Pelosi and Senate Majority Leader Harry Reid have gotten this far with health care reform. What they’ve accomplished is historic and Herculean. Whether you support or oppose their bills, respect for their accomplishment is appropriate. But getting this far is not the end. Well, it’s the end of the beginning. And it brings us closer to the beginning of the endgame.

The legislative process involves several stages. In the beginning there’s a lot of sincere questions being asked as lawmakers seek information, float trial balloons, and generally get a lay of the political landscape and the issues. During this phase there are a lot of options on the tables, including the most extreme positions (e.g., do nothing or enact a single payer system).

This phase was also when it became clear that, for the most part, Republicans were as interested in defeating “Obamacare” as they were in reforming the health care system. By publicly declaring so early in the process they would oppose any legislation containing provisions dear to the Democrats, the GOP effectively removed themselves from the deliberations. Why, after all, would Democrats negotiate with a party that had made clear they would oppose anything other than their own proposals?

Of course, Republicans could ask the same question of the Democrats (and do). The difference is that Democrats are in the majority in Congress. So if the two parties go their separate ways, the Democrats could still, under the right circumstances, pass a bill. In other words, it’s their bat and ball, so if the Republicans stalk off the field, the game continues.

In the second legislative phase the House and Senate committees with jurisdiction on health care weighed in. General concepts became legislative language. Lawmaker’s inclinations became public votes. Options feel by the wayside. (This is the phase in which the possibility of enacting a single payer system was formally laid to rest).

What the committees produced generated a lot of concern, anger and raucous  objections. Apparently some folks thought someone in Washington really thought these bills would become law. Nope. What the committees were producing were negotiating positions, not laws. Everyone had their eye on the main battle to come in the fourth phase. They were setting up their arguments, gathering their support for the real showdown.

Before the showdown, however, we have to get through the current phase, phase three. In this portion of our program, ideology and public policy take a back seat to a very practical concern: what needs to be in the bill – and what needs to stay out of the legislation – in order to get enough votes to pass it.

Senate Majority Leader Tom Daschle describes this process as shoveling frogs into a wheelbarrow. Speaker Nancy Pelosi’s job: craft a bill that could get 218 members of the House into her wheelbarrow. She succeeded by cobbling together legislation that is an abomination to many of the House Members who voted for it.

Senator Reid’s task: to get 60 Senators into his wheelbarrow. To do that he’s pared back provisions (such as on a government-run plan) in ways that only three weeks ago liberals would have labeled a betrayal (and some still do. Of course, those progressives complaining about the compromises Senator Reid has made tend not be in the Senate. Because liberal Senators understand the process. If they need to accept a weakened public insurance program to help Senator Reid keep 60 frogs in the wheelbarrow, so be it.

Why do liberal House members vote for a bill they consider an abomination and progressive Senators accept compromises that were absolutely unacceptable a few weeks ago? Because this is the phase where it’s about getting something passed, not public policy.

If the Senate passes Senator Reid’s health care reform legislation, the fourth phase begins. A conference committee will be created made up of members of the House and Senate. Their task: to meld together the House and Senate proposals into a single bill for which Speaker Pelosi and Senator Reid can shovel enough frogs into their respective wheelbarrows to pass.

Think about that challenge. A single bill that can get majorities in both chambers. That won’t be easy. The process won’t be pretty. Decisions will be made based on factors outside of health care reform.

Take Senator Joe Lieberman. He’s on record declaring his opposition to a government-run health plan is a matter of conscience. His history makes clear he loves being Chair of the Senate Homeland Security and Governmental Affairs Committee. Keeping the chairmanship he loves may require him to bend his conscience a bit. Yes, who chairs a particular committee has nothing to do with the substance of health care reform. But it has everything to do with the politics of health care reform.

(By the way, I’m not saying Senator Lieberman has been threatened with losing his chairmanship unless he agrees to let health care reform come to a vote in the Senate. But if it turns out he was, no one should be surprised. Hardball is a sport played by both parties. And  the higher the stakes, the harder the ball.)

Given the nature of the issue and the politics, the conference committee will forgo public policy debates and focus on fashioning a compromise that majorities of the frogs – I mean, lawmakers – in each chamber can support. This means what the House passed and what the Senate may pass are now the extremes in the health care reform debate. Compromises, after all, tend to wind up in the middle of two poles. The Congressional leaders making up the conference committee will try to establish a middle ground on which their needed majorities can stand. Their building blocks will be what it takes to get the bill passed. That the result may be messy, perhaps even unworkable is of less concern. There will be time enough to fix those problems.

Getting reform right was for an earlier phase in the process. And by eliminating some of the more extreme ideas, by establishing the boundaries of reform, those phases assured that public policy considerations would have an impact on the final legislation. But that was then. In this final phase of the legislative process it’s is about getting reform. Period.

In short, the health care reform process to date has been fascinating and important, but it’s main purpose has been to define negotiating positions. We’ll see the end of the beginning of health care reform if and when the Senate enacts its version of reform.

Only when the conference committee convenes, however, do we move into the beginning of the endgame, the point where the drafting process of health care reform begins in earnest.

Liberal’s Approach to Health Care Reform Made Abortion Controversy Inevitable

Democrats paid a heavy toll to keep health care reform moving forward. They were forced to accept substantial and virtually unprecedented limits on abortion coverage in order to get the Affordable Health Care for America Act through the House of Representatives. This result should awaken them to the need to rethink their approach, but it assumes they learned the key lesson: where government goes, ideology follows.

Speaker Nancy Pelosi needed 218 votes to make history: passage by the House of the Affordable Health Care for America Act. Liberals got her most of the way there, but to get across the finish line Speaker Pelosi needed support from moderates and conservatives. This meant cutting a deal with the pro-life caucus. The result: HR 3962 prohibits the government-run medical plan and coverage offered through the health insurance exchanges the bill would create from covering elective abortion procedures. Liberals are furious, but to pass health care reform they had to accept this restriction as part of the package.

This post is not about the politics or morality of abortions. Readers of this blog are on both sides of this issue. This blog is about health care reform and what happened to HR 3962 concerning abortion highlights one of the greatest pitfalls in Democrats approach to reform. If they continue down the road they are on, increasing the amount of America’s health care system government directly controls and manages, the party is guaranteeing that similar defeats on similar public policy issues is all but a certainty. The issue today is abortion. In the future it could be access to birth control. Or making coverage available to domestic partners. The fact is, government-run health care does not and cannot exist in a vacuum. Politics and ideology inevitably come along for the ride.

The final health care reform bill may loosen the prohibition on abortion coverage contained in the House bill. But if the restrictions are diminished, it will be because Democrats led by Speaker Pelosi and Senate Majority Leader Harry Reid are in control of Congress and President Barack Obama occupies the Oval Office.

For now.

Eventually conservatives will be in power again. No party or ideology dominates America’s politics forever. And a conservative government will not hesitate to use the tools given to it by Democrats to push forward their agenda merely because those tools were created by liberals. 

No one should be surprised about this political reality. In a post back in August 2007 I warned single payer advocates that a government takeover of health insurance would open the door to ideology meddling by conservatives. And in August of this year I reminded liberals that while Democrats are ascendant today, politics, like a pendulum, eventually changes direction. “In 2001 the President was George W. Bush, the Senate Majority Leader was Trent Lott and the House Speaker was Dennis Hastert (just two years earlier it had been Newt Gingrich). Their view of how a public health plan should work – what it covers and who it benefits – varies considerably from the Obama/Reid/Pelosi view. Yet the greater the role liberals give the government over health care, the more control over issues like abortion conservatives like Bush/Lott/Hastert will have when they take power again – and eventually, they will.”  And I’m hardly the only observer to state this reality.

So Democrats face a critical choice. They can pursue their health care reform goals care by increasing government’s direct participation in the market or by looking to the regulations the government imposes on the market.  One opens the door wide to groups of lawmakers holding health care reform hostage to unrelated public policy issues; the other narrows this opening.

For example, lawmakers want to prohibit carriers from denying consumers coverage because of their current or previous health conditions. Creating a health insurance exchange is one method of achieving this goal, but it is not the only way. And alternatives limit the opportunity for ideological meddling in Americans’ lives.

Yes, a public plan would increase competition in the market (a primary justification for a government-run plan), but so would health insurance co-operatives. And as non-government entities, co-operatives would be less susceptible to partisan interference.

By focusing on their goals and being careful of their methodology for achieving them, Democrats can have their health care reform and limit the price they’ll pay on other issues. Or they can continue down a road in which accepting limits on abortion coverage is merely the first of many heavy and painful tolls they will pay.

House Health Care Reform Bill: Some Varied Perspectives

One person’s socialism is another’s sellout. At least that’s the way it seems to go when it comes to health care reform. And it certainly must appear that way to House Speaker Nancy Pelosi who today unveiled the Affordable Health Care for America Act. HR 3926 blends together provisions from the three House Committees that have produced health care reform legislation: the Ways & Means Committee; the Education & Labor Committee; and the Energy & Commerce Committee. The result is not as liberal as some on the left called for and is too radical for those on the right.

As CBS News reported, those on the left are upset that the bill would create a government-run insurance plan that would be required to negotiate rates with providers much as private carriers do. This angers liberals who want the public health plan to set rates that providers would have to accept, much as is done with Medicare and Medicaid.

Meanwhile, back on the Hill, conservatives attacked the House health care reform bill in no uncertain terms. “It will raise the cost of Americans’ health insurance premiums; it will kill jobs with tax hikes and new mandates, and it will cut seniors’ Medicare benefits,” proclaimed House Minority Leader John Boehner.

Is it socialism? A sellout? A good idea or a bad idea? Most readers of this blog can guess my answers (for those interested, my view of it is at the end of this post). Here’s how others are discussing the legislation:

The National Underwriter does a great job of identifying where some of the controversial provisions in the bill can be found. While the publication is a bit too fixated with the number of pages in the House health care reform bill (1,990), it’s still a good starting point for understanding the legislation. And it points out that the bill does nothing to prevent brokers to sell products within the Exchange, so it offers a bit of a reassuring start, too.

The Congressional Budget Office is highly regarded by lawmakers on both side of the partisan divide for its objective analysis of the budget impact of legislation– unless, of course, they don’t like the analysis. The CBO’s analysis of HR 3926 indicates it will reduce the deficit over the next 10 years by $104 billion, insure 96 percent of non-elderly legal residents in the country (18 million people).  The CBO’s director, Douglas Elmendorf, maintains a blog and summarizes the analysis in his post today. he notes that the findings of the CBO are “subject to substantial uncertainty.”

The Christian Science Monitor’s story reports on the how the liberals may call for a floor vote on a more robust public option than is in the bill in order to put Democratic and Republican members on record as to where they stand on a government-run health plan.

The Associated Press focuses on the CBO’s conclusion that the public option might actually cost consumers more than private coverage. It also notes that while Speaker Pelosi compromised on the powers of the government-run health plan to appease the more moderate members of her caucus, many of those moderates remain concerned about the overall cost.

A BusinessWeek article zeroes in on some of the taxes the House health care reform legislation would impose and how they differ from the taxes likely to be in the Senate reform bill.

Reimbursing doctors for providing end-of-life counseling remains in the House health care reform bill. Given that some conservatives described this provision as creating “death panels,” preserving this element of the bill can be viewed as an act of political courage. As I’ve posted before, the death panel claim was more of a cruel hoax on the American people than an insightful read of the legislation. But the passions and paranoia surrounding the provision was so vociferous, the easy course would have been to simply drop it from the bill – as was done in the Senate. The Oregon Congressman, Earl Blumeauer, who championed inclusion of the counseling provision in the health care reform package, says he was motivated by a talk with a Southern Minister who told him ‘It’s very important for those of us in the clergy that this provision be kept, cos’ we see situations where families don’t get the help they need, and we have to try to counsel them through.”

For those interested in reading the bill, here’s a link to HR 3926 – the Affordable Health Care for America Act. As noted, it’s 1990 pages, but there’s a lot of white space on most of the pages.

My take on the House health care reform bill is that it’s not socialism nor a sellout. It is a politically necessary step down a long road. As regular blog reader Alison noted in her comment on an earlier post concerning Senate Majority Leader Harry Reid’s efforts to forge health care reform legislation that can muster 60 votes in the Senate, “… if you start off extreme then there is more room for negotiation to where he (Senator Reid) most likely anticipates its going anyway. If you give away the farm at first you have nothing left in your hand to negotiate with. I do not believe he anticipated this to fly at all but rather offers it as a calculated starting point.”

Alison’s point applies equally as well to Speaker Pelosi’s health care reform bill.

Health care reform is a process. First there was the pre-legislation discussion of what health care reform should do. Then there were the debates in various committees in which those intentions were put into bill form. Now the leadership of each chamber are blending the work of their committees into single bills. Next will come a conference committee tasked with combining the two bills that emerge from the Senate and the House of Representatives into a single bill. At each step along the way positions harden, the rhetoric (hard to believe it’s possible) becomes even more shrill, and the compromises more plentiful. But at each stage, the final legislation becomes more clear. After all, if the House Leadership is going to push moderate Democrats to vote for a public option of any kind, a vote those moderates will need to defend at election time, they must believe it is going to be a part of the final reform package. (At least those moderate Democrats hope so).

The Affordable Health Care for America Act will look more like whatever finally emerges from Congress than the bills passed by the three House Committees. But it’s not the last word. The blended Senate bill has been described, but not seen. Both the House and Senate proposals will be evolve. We’re several weeks away from seeing the legislation that will emerge from the conference committee.

The worthiness of the result, as always, will be in the eye of the beholder.

Public Option Compromises Gain Traction

President Barack Obama wants a public insurance plan to compete with private carriers. Democrats in the House of Representatives want a government-run plan. Apparently so do a majority of Democrats in the Senate. However, as of now there’s enough Democrats in the Senate opposed to the idea to keep the support below the 60 votes needed to pass health care reform legislation. A compromise being considered in the Senate, however, could change the math, creating the potential government health plans will be part of the health care reform package ultimately enacted by lawmakers.

Advocates for public plans were set back when the Senate Finance Committee defeated amendments to add a government medical plan to the health care reform bill its writing. But liberals immediately pledged to keep pushing for the public option and many claim a public option is critical to meaningful reform. Whether progressives would defeat health care reform which doesn’t include a public health insurance plan is uncertain, but it is possible.

Enter Senator Tom Carper from Delaware. Senator Carper is a thoughtful moderate who voted against one of the public option amendments in the Senate Finance Committee, but voted for another. He is floating a compromise that not only may appeal to liberals, but to moderate Democrats and, conceivably, to Republican Senator Olympia Snowe, the only member of her party considered likely to support a Democratic version of health care reform.

Politico.com reports that Senator Carper proposal would give “states the option of creating a competitor to private insurers, (these competitors could be) a government plan, a network of co-ops, or a large purchasing pool modeled after the revered Federal Employees health Benefits Plan.” Unlike a compromise suggested by Senator Snowe which would create a national government-run plan only if private carriers failed to offer affordable coverage to at least 95 percent of the population, Senator Carper’s plan envisions only state (and, perhaps, regional) public plans and permits states to move forward, according to another Politico.com posting, “if affordable insurance is not widely available or the insurance market is dominated by only one or two players.” (It should be noted Senator Snowe has not sought a vote on her idea by the Senate Finance Committee)

Brian Beutler, writing on the Talking Points Memo blog, predicts Senator Carper’s idea may fail to gain support from either liberals or conservatives. He writes, “Liberal critics will charge that, while the plan doesn’t involve triggers, it does lack the heft that a plan organized at the national level would have to bargain down prices with providers” while conservatives will reject it as the first step toward a single payer system. “

Mr. Beutler may be right, but I think a compromise along the lines of Senator Carper’s proposal will gain traction. According to a second Politico.com posting, lawmakers, both public option supporters and opponents, are speaking positively about Senator Carper’s compromise.

The political reality is that there probably will not be enough votes to pass the “pure” public option desired by liberals. So they will face a choice: no government-run plan at all, a host of state-run insurance plans, or no health care reform. To reject health care reform because the public plans competing with private carriers are not controlled by the federal government is a political argument few liberals will want to make.

At the same time moderate Democrats may see the compromise as a way to push the entire public plan controversy to the states. This would allow them to escape the intense pressure they are under from party activists (and, perhaps soon, the White House) without personally voting for a government-run plan. State’s rights are usually championed by moderates and conservatives. It is certainly reasonable for a lawmaker to conclude that the public option is an appropriate decision for states and not the federal government. It is interesting to note that one of the three Democrats on the Senate Finance Committee to vote against both attempts to add a public option, Senator Kent Conrad described Senator Carper’s plan as a “very constructive option,” according to Politico.

What the effort to construct a workable public health insurance option overlooks is that it is virtually impossible to create a government-run plan that will both lower medical costs and compete fairly with the private marketplace. A public plan can lower health care spending only by imposing (not negotiating) low reimbursement rates on doctors and hospitals, most likely by tying them to other government programs such as Medicare. (It is important to note that Medicare often pays providers less than their actual costs). But imposing rates, something only monopolies and governments can do, is unfair competition (which is why we have laws against monopolies). But a public plan that merely negotiates rates with doctors and hospitals like any other health plan does is unlikely to be effective in reducing costs.

I’ve long predicted the health care reform legislation eventually enacted this year will not include a government-run health plan. Now, however, I have to recognize the possibility that a compromise along the lines of those proposed by Senator Carper or Senator Snowe might make it into the final package. It’s far from certain, but it is a possibility.

Senate Finance Committee Rejects Government-run Health Insurance Plan

The Senate Finance Committee continues to refine its health care reform legislation. Today it broke ranks with other Congressional committees with jurisdiction over health care reform by defeating amendments to create a government-run health plan. The debate was passionate, but ultimately enough Democrats joined with Republican Senators to defeat two attempts by the panel’s more liberal members to insert public option language into the bill.

Keeping the public option out of the bill was a major victory for Senator Max Baucus, chair of the Finance Committee. While acknowledging that a public option would “hold insurance companies’ feet to the fire,” his opposition was based on the goal of enacting health care reform this year. According to ABC News Senator Baucus believes health care reform including a government-run program cannot pass the Senate.

Senator Jay Rockefeller insisted, however, that a public health insurance plan was absolutely essential to meaningful reform. Failure to to create a public, non-profit plan to compete with private carriers, the Associated Press reports the West Virginia Democrat as saying, “was a virtual invitation to insurance companies to continue placing profits over people, and he predicted they would raise their premiums substantially once the legislation went into effect.”

Senator Baucus countered that the legislation being developed by the Senate Finance Committee includes numerous consumer protections, including a provision to prevent insurance companies denying coverage based on pre-existing conditions. None of the lawmakers on either side of the aisle spent much effort in defending the behavior of private insurance companies. Senator Baucus said he agreed with the intent of the Rockefeller Amendment to “hold the insurance industry’s feet to the fire,” according to the Washington Post. The Associated Press quotes Senator Jim Bunning as observing that “the private sector is not doing exactly what it should do with medical services.”

Republican members of the committee were unanimous in their opposition to public options. The Washington Post quotes the ranking GOP member of the panel, Senator Charles Grassley, as warning that a government plan “will ultimately force private insurers out of business” and that “The government is not a fair competitor. It’s a predator.”

The first public option amendment, offered by Senator Rockefeller, would have permitted the government-run plan to set reimbursements to medical providers at levels paid by Medicare for the first two years. (After that period, I believe the Senators proposal would have permitted the public medical plan to, like Medicare, impose rates on providers). It should be noted, Medicare often pays doctors and hospitals less than the cost they incur providing services. The five Democrats joining with Republican committee members to defeat this amendment were Senators Baucus, Thomas Carper, Kent Conrad, Blanche Lincoln, and Bill Nelson.

Senator Charles Schumer then proposed an amendment that would have required the public plan to negotiate reimbursement rates with providers, much as private carriers do today. Three Democrats – Senators Baucus, Conrad and Lincoln – voted against accepting this amendment.

I’ve maintained for some time that a government-run health plan was unlikely to be part the health care reform plan passed by Congress. The Senate Finance Committee’s rejection of this provision increases the likelihood of this outcome, but the debate will continue. Senator Schumer, for one, pledged to continue the fight. 

"’The present system is broken’" the Washington Post reports him as saying. “He said he was pushing for a public option not for ideological or symbolic reasons but because ‘costs are going through the roof.’ And he expressed confidence that, ‘with some work and some compromise,’  proponents of the provision eventually could get 60 votes on the Senate floor. ‘We are going to get at this, and at this, and at this, until we succeed, because we believe in it so strongly.’"

With polls showing 65 percent of the public support a government-run health plan operating like Medicare to compete with private health insurance plans, President Barack Obama continuing to argue for a public option, and Speaker Nancy Pelosi claiming the House was unlikely the House would pass health care reform that did not include a public option, this debate is far from over. Assuming the Senate Finance Committee moves forward a reform package this week, the next step will be for it to be integrated into the bill passed by the Senate Health, Education and Pensions Committee – legislation that does include a public option.

Getting health care reform is a long hike. Today’s vote in the Senate Finance Committee is a step along the way – albeit a very significant step indeed.

Obama Speech Accomplishes Much, But It’s Only a Start

Agree with him or not, President Barack Obama knows how to deliver a speech. Anyone free of Pavlovian conditioning against the man would admit his address to Congress Wednesday night was powerful and at times moving. The question is, of course, what does it mean? (For those interested in reading along, here is the prepared text of President Obama’s health care reform speech).

First, it signals President Obama’s intent to shape not just the Congressional and public debate, but health care reform legislation itself. He repeatedly sprinkled variations of “under my plan” when discussing proposals. Whereas in the past he was content to lay out general principles to guide the reform process, this phrasing signals he is now taking ownership of the legislation. That alone will change the course of the legislative process.

Second, he gave Senator Max Baucus and the Gang of Six the cover they need to negotiate bi-partisan health care reform. As discussed in earlier posts, the Senate Finance Committee Senator Baucus chairs will take up legislation next week. The path they are headed down, as outlined in the Framework for Comprehensive Health Reform, disappoints many liberals. President Obama could have left them out on a political limb. Instead he embraced several of their proposals and, by refraining from declaring a government-run health plan a necessary component of reform, gave the negotiators the space they need to deliver a moderate package. Based on the President’s speech, there is little if anything in the Framework he would not accept. What this means is that the legislation produced by the Senate Finance Committee could serve as the foundation upon which the President can build his own, detailed proposal.

Third, the President, after the requisite insurance industry bashing, focused on constraining health care costs. Whether his proposals go far enough to “bend the cost curve” as the Administration is fond of saying, is open to legitimate challenge. But by elevating the need for controlling medical costs to the top of the health care reform discussion, the President makes it more likely cost containment will be part of the final package.

Fourth, President Obama made clear he would no longer tolerate lies and half-truths about his health care reform package. He called those who claim he would establish death panels liars. He rebuked those who claim illegal aliens would be eligible for federal premium subsidies. He rejected charges that he would be cutting back on Medicare benefits. There are those who will continue to make these charges, but the President made clear their claims would be repudiated quickly, loudly and sharply.

Fifth, President Obama called for a more robust Health Insurance Exchange than some moderates have been considering. He noted an exchange available to individuals and small businesses would mean “these customers will have greater leverage to bargain with the insurance companies for better prices and quality coverage. the same clout large employers enjoy when negotiating rates.” This implies the exchange would do more than simply present information to consumers, but would define benefits and seek bids from carriers wishing access to these markets. Whether or not such an exchange would be successful is open to debate. A similar approach was taken in California as part of its small group reform in the 1990’s. That legislation, AB 1672 is generally considered to have been very successful. The purchasing pool it created, however, has long been out-of-business, unable to compete with the private market.

Sixth, the President put forward his pragmatic side. He wants a government-run health plan to compete with private carriers, but he didn’t declare such a public plan was critical. Instead he said, the impact of a public option “shouldn’t be exaggerated – by the left or the right or the media. It is only one part of my plan ….” In other words, it’s a part of his plan he’d like to see in whatever legislation passes Congress, but it’s not an absolute requirement. Another example of his pragmatism trumping partisan ideology: the President reached out to Republicans by adopting some of their proposals, including those concerning malpractice reform. Yes, there was red meat for liberals, but there was plenty for moderates and even some conservatives to cheer about in his speech.

Seventh, President Obama’s speech was, well, presidential. Republican behavior was a bit childish. When President Obama stated that “the reforms I’m proposing would not apply to those who are here illegally” Representative Joe Wilson achieved a new low in politics by shouting out “You lie!” Even when President Bush was arguably shredding the Constitution and, intentionally or not, misstating the facts, Democrats still treated him with respect when he appeared before Congress. Many Americans will see Representative Wilson’s outburst as a sign of partisan passions coming to rule the GOP. (Representative Wilson later apologized for his “lack of civility,” but the damage was done). Meanwhile, Republican House members were shown on television waiving paper at the President. Apparently these were copies of the GOP health care reform plan and their presence at the speech was meant to demonstrate that the Republicans were more than just the party of “no.” Unfortunately, the television audience wasn’t in on the symbolism. It just looked strange and undignified. Again, like Representative Wilson’s behavior, these antics may play well to the base, but it does nothing to expand that base.

Eighth, the President made clear the status quo is untenable. However, this message was simply part of a 45 minute presentation, dampening the impact. Change scares people. President Obama needs to prove his message that change is needed. If the Administration wants to reposition the debate to require opponents of health care reform to defend the status quo, he will need to devote at least one political event to this topic.

President Obama accomplished a great deal in his address to Congress, but at the end of the day, it was just one speech. Now comes the tough part, tying together the elements of a package that can make it’s way through Congress, while at the same time justifying the reform effort. Given the passions surrounding the health care reform issue, this will be no easy task.

A Public Health Plan and Competition

The purpose of a public plan, according to its advocates, is to assure a competitive marketplace. The result will be lower costs, they argue, because a government-run health plan will keep private carriers honest.

Senator Charles Schumer, speaking at a rally sponsored by Health Care for America Now!, put it this way, “A public health insurance option is critical to ensure the greatest amount of choice possible for consumers. We believe that it is fully possible to create a public health insurance plan that delivers all the benefit of increased competition without relying on unfair, built in advantages.”

If  a public plan is to provide competition, the question is: what does a competitive market look like? Is it three carriers slugging it out? Six? Ten? A report by the folks at Health Care for America Now! says the “U.S. Justice Department considers a market ‘highly concentrated’ if one company holds more than a 42 percent share of that market.”  But “highly concentrated” does not automatically result in anti-trust objections by the federal government. It’s a factor, but it’s not a determinative factor.

Competition is lacking in some states. The Government Accountability Office has tried to determine the competitive landscape in the small group market (not an easy task given differing definitions and variations in reporting methodologies). In a letter to several Senators on the subject of “Private Health Insurance: 2008 Survey Results on Number and Market Share of Carriers in the Small Group Health Insurance Market” the GAO reported that while there were, on average, 27 licensed carriers in a state, the median market share of the largest carrier was about 47 percent. Further it found that the combined market share of the five largest carriers in a market was 75 percent or greater in at least 34 states and was over 90 percent in 23 of these states (only 39 states provide sufficient information to determine the market share of its top five plans, so the actual number of states in these categories could be higher). The lowest combined percentage of market share held by the five largest carriers was 56 percent in Wisconsin according to the GAO.

The disparity among the states was substantial. The GAO study found that in Arizona the largest carrier has a market share of about 21 percent; in Alabama the leading carrier controlled 96 percent of the small group market. Even the most ardent capitalist should admit that Alabama is not a competitive market

The American Medical Association does. They publish competitive information on the commercial health-insurance market. I was unable  to find a description of the methodology to use this determination, and the AMA study includes large businesses, unlike the GAO study that focused on small groups). The AMA study found a paucity of competition. As reported by Business Week, the AMA claims that “in 15 states one insurer has 50% or more of the entire market.”  In a somewhat confusing statement, Business Week, reports the AMA as claiming that “out of 314 metropolitan markets, 94% are controlled by one or two companies, or fewer.” (I’m not sure what’s fewer than “one or two companies” — what does a half company look like? )

The AMA concludes that this means there’s no competition among health carriers, a somewhat predictable determination given their relationship with the carrier community. “These findings, coupled with higher insurance premiums, higher profits, lower scope of benefits and high barriers to entry, leads to the conclusion that health insurers are exercising market power in many parts of the country.”

Thus, claim public plan proponents, arises the need for government-run health insurance plan. But will the mere presence of a public plan increase competition. In Alabama, the answer is no doubt “yes.” With one small group carrier enjoying 90 percent market share the entry of a new player would certainly bring greater competition. In Wisconsin, where five carriers split 56 of the market and the largest carrier has a 32 percent market share, a public plan would be just one more choice among many.

The problem with the “public plan ensures competition” argument, in my view, is that it applies a national solution to regional problems. In some states and regions more competition is needed. In others where four or five carriers are already slugging it out, the public plan — if it competes on a level-playing field as lawmakers promise — contributes little.

Some government-run medical plan advocates claim the difference will be that a public plan will lack the profit motive of existing carriers. But there are already non-profit competitors in the small group market. In California, two of the top four competitors are non-profits. The addition of another is unlikely to change much.

It is true that premiums have skyrocketed in recent years. The Business Week article notes that, according to the Kaiser Family Foundation has found that health insurance premiums have increased 120 percent in the past 10 years. General inflation increased by 44 percent during that period. The AMA concludes this is the result of anti-competitive actions taken by carriers.

Another likely reason, as pointed out in the article, is that hospitals and other health care providers have commensurate power. “A 2006 study found that one or two hospitals controlled the market in 88% of the nation’s large metropolitan areas.” It goes on to quote Karen Davis, president of the Commonwealth Fund, as saying “’You’ve got a dominant insurer up against a dominant health-care provider … That just doesn’t work out well for lowering costs.’”

What this suggests is the most effective way for a public plan to lower medical costs is to impose MediCare-type pricing on doctors and hospitals. This, however, would violate the pledge of lawmakers to maintain a level-playing field between the public plan and private carriers.

Why this matters is that MediCare pays less than the actual cost of many medical services. Hospitals and doctors shift this shortfall to commercial carriers. If the government-run health plan did the same the cost shift would be brutal, driving many of those carriers out of the market — not because they couldn’t compete on a level playing field, but because the playing field was not level.

The messy legislative process is moving toward a solution that addresses the competition issue without incurring the consequence of additional government coverage cost shifting. The consensus is Congress is moving toward the idea of regional health insurance co-operatives (albeit not without loud cries of anger from liberal and other supporters of a government plan). An advantage of co-ops is that they can more easily address disparities in competition across the country as opposed to a national health plan that would treat the country as a whole. Based on the GAO report, for example, one might expect co-ops to do well in Alabama, but have a much tougher time getting established in Wisconsin where the need for them appears to be less.

The debate over a public insurance plan would be more straightforward if it focused on the real issue: should the government offer coverage at lower prices resulting from imposing reimbursement fee schedules on doctors and hospitals. That’s unlikely to happen, however. When it comes to health care reform the public trusts doctors and hospitals and they don’t trust insurance companies. Consequently, ignoring the fact that a lack of competition among carriers is a local, not a national, problem is good politics. But it makes for an awkward public policy debate.