History Will Ignore Much of Today’s Health Care Reform Headlines

Living through historical moments can seem far less grandiose than reading about it. In the day-to-day grind of making history the big picture can get lost. Little issues take on huge proportions while overarching themes are hidden in the maelstrom. Historians get to step back, find the threads that build tension, create a narrative, and set-up the pay-off.

So it is – and will be – with health care reform. There have been a lot of distractions. For instance, critics of the Obama Administration have been pounding away at HR 3200, the House version of health care reform legislation. That legislation makes great fodder for 24-hour news channels and partisans across the spectrum. The bill offers something for everyone to demagogue. The fact that, in the end, HR 3200 – America’s Affordable Health Choices Act of 2009 – won’t have served as anything more than a lightening rod hardly matters.

The same can be said of the Senate Health, Education, Labor and Pensions Committee’s proposal. The Senate HELP Committee’s and the House health care plans gave liberals something to cheer about and conservatives something to attack. My guess is history will show that was its greatest contribution to the debate. Yes, elements of these bills will be included in the legislation that will be signed into law by President Barack Obama later this year. But that’s because there’s always been a broad consensus concerning health care reform. It’s the 25 percent or so of the issue on which there is disagreement that is causing all the ruckus. And at the end of the day, I’ve longed believed it will be moderates who resolve the contentious health care reform issues.

And those moderates are almost ready to make their positions known. Senate Finance Committee Chair Max Baucus has promised to unveil a formal proposal Tuesday or Wednesday. While it’s not certain that any Republican Senators will sign-on to the proposal, what Senator Baucus will propose will be far more moderate than the current alternatives. According to the Associated Press, Senator Baucus and the other five Senators negotiating a bi-partisan bill have made progress on several controversial items, “including health insurance for the poor, restrictions on federal funding for abortions, a verification system to prevent illegal immigrants from getting benefits, and ways to encourage alternatives to malpractice law suits.”

If compromises have been reached on these issues, HR 3200 and the Senate HELP Committee’s proposal will have played an important role. By being the most extreme bill available to critics during August it flushed out their attacks. This, in turn, made it easier for moderates to indentify the hot buttons they needed to address. A Washington Post story describing some of the solutions being developed by the Senate Finance Committee’s so-called “Gang of Six” underscores this. (The Gang of Six are Democratic Senators Baucus, Jeff Bingaman, and Kent Conrad along with Republicans Mike Enzi, Charles Grassley and Olympia Snowe). For example, illegal immigrants will be specifically prevented from obtaining any benefits from the insurance exchanges being contemplated. A government-run health plan – the means leading to a government takeover of health care according to critics – will not be missing from the proposal.

For the past few weeks, Republicans have associated President Obama with HR 3200 and the liberal Senate HELP Committee proposal. Yet he has embraced neither. Instead, he is has set the stage for circling the wagons around whatever moderate proposal emerges from the Senate Finance Committee. And Senator Baucus and the others are working hard to make that possible. For example, President Obama embraced a Bush Administration proposal to permit states to test approaches to medical malpractice reform. According to the Washington Post article, such a provision will be in the Senate Finance Committee’s bill.

Liberal critics of President Obama will accuse him of capitulating to conservatives on many of these issues, especially abandonment of a public option. Conservatives will say he’s proven himself to be a liberal tax-and-spender and government-expander (the proposal is expected to cost around $880 billion over 10 years). In the short term there will be much sound and fury over such issues by both sides. If the compromise health care reform solution put forward by Senator Baucus and his colleagues becomes law, however, history will little note nor long remember such histrionics. (Which, for those paying attention to the clichés in this paragraph would tend to prove that Abraham Lincoln trumps William Shakespeare).

So long as the outcome meets President Obama’s general principles for the health care reform the White House will declare victory. History will relegate talk of death panels, cries of socialism, and demands that government get out of Medicare (along with other government-sponsored programs) to footnotes, if that.

As with any major reforms, history will also likely show that the historic health care bill to come will accomplish less than its critics fear or than its advocates claim while at the same time bringing forward unintended consequences of significant proportion. But those problems will be a challenge for a future Congress and Administration. History, after all, is made one step at a time.

Health Care Reform: A Historic Milestone

History was made today. The Senate Health, Education, Labor and Pensions Committee approved comprehensive health care reform legislation, the first Congressional committee to do so in decades. Never mind that the bill is well to the left of the emerging consensus concerning health care reform. Never mind that it passed on a party line 13-10 vote. What is meaningful is that a congressional committee moved comprehensive health care reform forward. Significantly, three House committees are likely to follow suit within the next three-to-four weeks.

The legislation approved by the Senate HELP Committee, which carriers a $600 billion price tag, would require individuals to obtain coverage, employers to help their workers pay for it, and carriers to accept all applicants regardless of their health conditions. Individuals and families earning up to 400 percent of the Federal Poverty Level ($88,000 for a family of four) would be eligible for subsidies. The Associated Press provides additional information and reaction to the Committees vote, but in my mind, the details are secondary. The vote itself is what is significant. Remember, the Clinton Administration health care reform proposal was never voted upon by any Congressional Committee.

The Senate HELP Committee’s action testifies to the tenaciousness of the Committee’s chair, Senator Edward Kennedy, the political skill of Senator Christopher Dodd (who is leading the Committee while Senator Kennedy battles cancer), the political standing of President Barack Obama, and the widely recognized need for meaningful health care reform. Given that Senator Kennedy has been advocating for universal coverage since the 1960s it is fitting that his Committee was the first to act

No doubt there will be some elements of the Senate HELP Committee’s proposal in whatever legislation, if any, eventually emerges from Congress. However, as noted previously here, the Committee’s version of reform is to a large degree a negotiating position for liberals in the Senate. The proposal being written in the House of Representatives will be even more liberal. It is the Senate Finance Committee, where its Chair, Senator Max Baucus and ranking Republican member, Senator Charles Grassley, are seeking to draft legislation that will earn at least some Republican votes, that the outlines of the ultimate health care reform package is taking place.

There are still numerous contentious issues to work through, any of which could derail health care reform altogether. However, there is a surprising amount of common ground coming into view. The  Robert Wood Johnson Foundation recently released a study, Emerging Common Ground? An Analysis of Health Reform Positions, that describes (perhaps overly optimistically) several of these areas of general agreement. Among them:

  1. the nature of private insurance market reforms;
  2. the need for, and the structure of, a health insurance exchange;
  3. whether and how a government-sponsored “public plan” should be created;
  4. how best to leverage Medicaid and/or public programs to expand access;
  5. whether an individual mandate is needed;
  6. the scope and authority of government involvement in comparative effectiveness research;
  7. sequencing and scope of payment reform; and
  8. whether to limit the tax exclusion on employer-based coverage as a reform financing mechanism.

I’m not sure I agree that all of these are settled issues, but the study is worth reading nonetheless.

As I’ve written before, I believe health care reform is coming, but that’s no reason to panic. The status quo, while comforting in its familiarity, is unsustainable. History is the story of change. Health care reform history was made today. But in context it’s only a milestone — a significant milestone, but solely a milestone. Consider it one big step in a long journey toward something truly historic.

Health Care Reform Common Ground Meets Reality

So much for common ground on health care reform in the United States Senate. It wasn’t that long ago, May 30th to be exact, that Senate Finance Committee Chair Max Baucus and Senate Health Education Labor and Pensions Committee Chair Edward Kennedy issued a joint statement that read, “”For both of us, reforming the nation’s health care system to cut cost, improve quality and provide affordable coverage remains the top priority on our two committees.  We have worked together closely over many months and will continue to do so.  We intend to ensure that our committees report similar and complementary legislation that can be quickly merged into one bill for consideration on the Senate floor before the August recess.”

That was then. This is now: The Associated Press is reporting that the Senate HELP Committee is moving forward with legislation to create a government-run insurance plan to compete with private carriers. This provision, along with one imposing a $750 per worker annual fee on large employers who fail to offer health care coverage to workers, guarantees the legislation will pass through the committee with only Democratic votes. As I described in yesterday’s post, the committee has tried to position their public plan as more innocuous than was originally contemplated. It is not.

Meanwhile the Senate Finance Committee continues to seek a bipartisan health care reform package. The Associated Press story notes that, “As a result, a government-run option for coverage is unlikely to be included. Negotiations are centered on a proposal for a nonprofit cooperative to sell insurance as a competitor to private companies.” Co-ops can be considered public plans, but unlike the version proposed by the Senate HELP Committee, it is far more likely health insurance cooperatives will result in a more fair marketplace. The devil dwells in the details and we have not seen those yet. But if Senator Baucus is sincerely seeking GOP votes, and it appears he is, his committee will avoid a result that would eventually lead to a single, government-run carrier.

(Democrats on the House side of the Capital also pledged to work together — and they are doing so. The three committees with jurisdiction in that chamber are all working from the Tri-Committee Health Reform Draft Proposal. They expect to have their work done by the end of July. Like the Senate HELP Committee, their plan will include a robust government-run health plan.)

What’s significant about the divergence in approaches by the Senate HELP and Senate Finance Committee is that it makes responsible compromise more likely. Senator Kennedy and House Democrats are providing a haven for liberals in the debate. If liberals had 60 votes in the Senate, or even 50 for that matter, their legislative versions would foreshadow the final package. But as I noted yesterday, the fact that the Senate HELP Committee needed to dress their public plan in fig leaves of compromise is evidence they do not have the votes. Moderates will dictate what health care reform legislation passes Congress.

The Senate Finance Committee recognizes this reality. Heck, they are this reality. Which is why what this committee proposes concerning a host of controversial issues — requirements for individuals and/or companies to buy health care coverage, the structure, purpose and powers of an Exchange to present coverage options to individuals and small businesses, cost containment provisions such as turning to comparative effectiveness research for treatment guidelines — is so important.

It is not the common ground between the Senate Finance and Senate HELP committees that matters. It is the compromises reached within Senate Finance that will foreshadow the health care reform bill that winds up on President Barack Obama’s desk for his signature.

Obama Administration Showing Flexibility on Public Health Insurance Plan

President Barack Obama wants health care reform. He sincerely believes we need to fix what’s broken in the current system because it is the right thing to do and as a necessary step to get America’s economy moving forward again. He has put forward what elements he wants to see as part of comprehensive reform package, but instead of plopping a finished product in the lap of Congress (as the Clinton Administration did during their botched health care reform effort), he is asking Congress to take the lead in developing legislation (imagine that, letting legislators legislate). He and his allies have made clear they are willing to discuss almost any idea. The mantra they repeat often is that “everything is on the table.”

Almost. President Obama has also repeatedly made clear that acceptable health  care reform must adhere to three core principles. As they are described on his Organizing for Health Care web site, reform must:

  • Reduce Costs — Rising health care costs are crushing the budgets of governments, businesses, individuals and families and they must be brought under control
  • Guarantee Choice — Americans must have the freedom to keep whatever doctor and health care plan they have, or to select a new doctor or health care plan if they choose
  • Ensure Affordable Care for All — All Americans must have quality and affordable health care

Don’t misunderstand. He has clear ideas on how these principles should be achieved, but he is not insisting Congress do things his way, only that they do them.  This approach was clear in President Obama’s Tuesday press conference when he was asked about the health care reform. His response to the first question on health care reform laid out his approach to the issue.

He began by emphasizing the need for reform. “So the notion that somehow we can just keep on doing what we’re doing, and that’s OK, that’s just not true. We have a long-standing critical problem in our health care system that is pulling down our economy. It’s burdening families. It’s burdening businesses. And it is the primary driver of our federal deficits.”

President Obama then focused on the need to control costs. “It means that we look at the kinds of incentives that exist, what our delivery system is like, why it is that some communities are spending 30 percent less than other communities, but getting better health care outcomes, and figuring out how can we make sure that everybody is benefiting from lower costs and better quality by improving practices. It means health  I.T. It means prevention. So all of these things are the starting point, I think, for reform. And I’ve said very clearly, if any bill arrives from Congress that is not controlling costs, that’s not a bill I can support. It’s going to have to control costs. It’s going to have to be paid for.”

President Obama next turned to the need to expand coverage to more Americans. “[W]hile we are in the process of dealing with the cost issue, I think it’s also wise policy and the right thing to do to start providing coverage for people who don’t have health insurance or are underinsured ….”

He then went on to describe the rationale for including a public health plan as one of the health plans available to American consumers. “As one of those options, for us to be able to say, here’s a public option that’s not profit-driven, that can keep down administrative costs, and that provides you good, quality care for a reasonable price as one of the options for you to choose, I think that makes sense.”

The President explicitly rejected the complaints of health insurance carriers who claim a public plan will drive them out of business. “But just conceptually, the notion that all these insurance companies who say they’re giving consumers the best possible deal, if they can’t compete against a public plan as one option, with consumers making the decision what’s the best deal, that defies logic, which is why I think you’ve seen in the polling data overwhelming support for a public plan.”

President Obama’s answer makes sense if the public health plan were just another non-profit competitor. In many parts of America for-profit health insurers compete vigorously with non-profit carriers. Sometimes they win. Sometimes they lose. But the competition between them is fair.

What the president’s answer ignores is the possibility — indeed, the likelihood — that competition between private for-profit and non-profit insurance carriers on one side and a government-run health plan on the other will not be a fair contest. The government, which would both regulates the market and,  under several proposals being promoted in Congress, run the public plan, might tilt the playing field in its own favor (take, for example, the Affordable Health Choices Act introduced by Senator Edward Kennedy and other Democrats on the Senate Health, Education, Labor and Pensions Committee.)

What is nice to see is that President Obama seems to appreciate the balance that must be struck if a public plan is not to undermine the private market. “So there are going to be some ground rules that are going to apply to all insurance companies,” he said. “I take those advocates of the free market to heart when they say that, you know, the free market is innovative and is going to compete on service and is going to compete on, you know, their ability to deliver good care to families. And if that’s the case, then this just becomes one more option.”

Interestingly, the President was not the only Administration member speaking about health care reform on Tuesday. Peter Orszag, the Director of the White House Office of Management and Budget appeared on the Diane Rehm show on National Public Radio. In responding to a question about health insurance profits, he observed that “One of the questions that will be in play during the reform process is whether additional competition, for example, through a public plan option, or a co-op or a non-profit, would be beneficial.”  (For those listening to the podcast, this comments begins at about the 29 minute, 18 second mark). He then goes on to say that co-ops could address a lack of competition in “a growing number of local markets.” (emphasis added).

This is an very significant statement. The health insurance co-ops being discussed in Washington are not government-run. The government provides seed money, either in the form of grants or loans, but once it’s up and running, the co-op is owned and operated by its members. They would be community based and would have to abide by the health insurance laws of their state.  Here is a senior official of the Obama Administration, one of its leading voices on health care reform, describing health insurance co-ops as comparable to a government-run public plan when it comes to providing competition.

Taken together, the President and his OMB Director are saying:

  • Competition in the health insurance marketplace should be preserved as it is beneficial.
  • The purpose of a public health plan is to increase competition in the health insurance marketplace.
  • Health insurance co-ops increase competition as much as a government-run plan.

For those who care about fair competition, please note that it is far more likely co-ops will compete on a level playing field than a government-run plan would — especially if co-ops are concentrated in local markets that need a new competitor.

None of this is to say that a government-run health plan will not be part of the final health care reform package. It does, however, underscore the point I tried to make in my previous post: the final outcome of the health care reform debate is far from settled. The Obama Administration is showing flexibility — and will need to in order to get comprehensive legislation passed. Now is not the time to panic. Now is the time to get involved.

Kennedy Health Care Reform Bill Launches New Phase of Debate

The health care reform debate moved to a new phase Senator Edward Kennedy and his fellow Democrats on the Senate Health, Education, Labor, and Pensions Committee (HELP) introduced sweeping legislation. Senator Kennedy is Chair of the ccommittee. What is significant is not what is in the bill — it’s general outline has been known for awhile — but the publication of the bill itself. It marks the beginning of the move from discussions on generalities to negotiations on specifics.

The HELP Committee Legislation is entitled the “Affordable  Health Choices Act.” (Virtually every piece of health care reform legislation will include the word “choice” as the lack of choice — see as evidence The Patients’ Choice Act four Republican lawmakers are planning to introduce. The reason is that many in Washington believe opponents framing of the Clinton Administration’s health care reform plan as limiting choice was a leading contributor to it’s downfall.) The HELP Committee press release proclaims the legislation “reduces health care costs, allows Americans to keep the coverage they have if they want it, and makes health insurance affordable to those who do not have it today.”

That remains to be seen. The 615 page draft health care reform bill covers a lot of territory and it will take some time to sort through its many provisions. A quick skim, however, indicates that it generally hews to the outlines Senator Kennedy has been talking about in recent days. It would create state gateways through which individuals and some businesses could purchase coverage and a government-run carrier would compete with private carriers  Individuals earning up to 150 percent of the Federal Poverty Level ($16,245 for an individual in 2009) will be eligible for Medicaid. Insurance premiums for those earning up to 500 percent of the federal poverty level (currently $110,250 for a family of four) so their payments do not exceed 10 percent of their gross adjusted income.

At this stage, the details actually are not all that important. Discussions among the HELP Committee’s Democrats and Republicans continue (now those would be interesting to watch). And several other bills by different committees in both the House and the Senate are due. All will wind up in the sausage making process. What any one draft contains is not necessarily what will emerge at the end.

For now, Senator Kennedy is anchoring the left in the debate. (Anchoring a position is done by both liberals and conservatives. It is a negotiating tool in which the anchor calls for extreme provisions in the hopes of having any compromise which emerges from moving too far toward the other side). I don’t mean this cynically. Senator Kennedy is no doubt sincere in supporting the provisions of his committee’s legislation. However, he is a practical policitian and knows compromise is inevitable. Being the first Congressional committee to issue a draft, there is no need for him to introduce a watered down bill. After all, he would be foolish to negotiate with himself. Better to stake out his ideal position and see what the other committees produce.

A public hearing on the HELP Committee bill is scheduled for June 11, 2009 and the committee will begin editing the bill at a June 16, 2009 meeting. The Democrat’s press release emphasized that negotiations with GOP members of the committee are ongoing so it will be interesting to see what changes emerge  once mark-up begins.

All this is important and interesting. But again, the details of the Affordable Health Choices Act are less important than the existence of the Affordable Health Choices Act. A new phase of the journey toward comprehensive health care reform has begun. The debate continues.

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.