Friday, February 20, 2009

“Leading Figures in the Nation’s Long-Running Health Care Debate…Appear To Be Inching Toward a Consensus”

Robert Pear, in the New York Times, is reporting that, “leading figures in the nation’s long-running health care debate…appear to be inching toward a consensus that could reshape the debate.”

He goes on to write, “While not all industry groups are in complete agreement, there is enough of a consensus, according to people who have attended the meetings, that they have begun to tackle the next steps: how to enforce the requirement for everyone to have health insurance; how to make insurance affordable to the uninsured; and whether to require employers to help buy coverage for their employees.”

Without a doubt whether or how to mandate everyone buy health insurance is a very big and contentious issue.

The problem is that it is only one of a very long list of big and contentious issues.

Getting the key stakeholders to agree on how to deal with the individual mandate issue will be very important—health reform cannot move forward without agreement on this.

But this is tantamount to agreeing the car should have wheels—critical but hardly the whole product.

Actually, getting agreement on an individual mandate is not the most problematic of the issues. Getting employers, who already pay for coverage and would like a level playing field, and insurers, who would like the law to require everyone buy their product, to agree to a mandate is hardly news.

According to the report there is yet no agreement over whether employers should be required to provide health insurance or whether the longstanding tax treatment for employer-provided benefits should change—a big deal to unions who don’t want their benefit franchise to disappear if an individual model of insurance were to be used.

Given that the Democrats won a big election victory last fall, it should be no surprise that their employer-based model for reform will ultimately carry the day—reports indicate Republicans are not taking part in the talks.

The really tough issues that will determine whether the key stakeholders can come to agreement will be on the cost issues and how we pay for it all.

Today, we also received news that the Obama administration is going to submit a budget that will have a deficit $2.7 trillion higher over the next decade because, among other things, they will provide an honest accounting of just what the current level of Medicare physician payments will have on future spending—Obama won’t make the Bush budget assumption that the future physician fee cuts under the Sustainable Growth Rate formula will happen. Of course, they never were implemented in the Bush years.

I applaud the Obama administration’s honesty in portraying just how bad the health care entitlement mess really is—sounds like an Orszag to me.

To achieve health care reform will require tackling both the real cost of the old and the new entitlements. As the President has said, “We can’t kick this can down the road any longer.”

That—in how much we spend and how we pay for it—is where the real consensus will have to emerge. That will require some big cuts to what beneficiaries and providers would have otherwise received over the years.

Every one of those “stakeholders” in that room hasn’t given up one thing yet!

Agreeing to the mandate—which hasn’t yet been accomplished—is chump change compared to who will pay the big bills in the future and who will suffer the unavoidable cuts.
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