Comprehensive Health Care Reform and Massachusetts--Are We On Our Way To a Very Different Debate?

The Massachusetts health care reform law appears on its way to:

• Covering two-thirds of those who did not have health insurance on the day it was enacted--about 400,000 people by the end of 2009.
• Covering most of those who were uninsured in households with incomes below 300% of the federal poverty level--below which the plan pays all or most health insurance premiums.
• Offering health insurance plans to middle-income people that are still largely unaffordable for those families making less than $110,000 a year––people for whom the state has generally canceled the individual mandate that they must buy coverage.
• Racking up costs well above what was first estimated. The plan looks to be coming in 38% higher than originally estimated for its first year and the Governor is now estimating second year costs 50% higher than the original estimate––from $725 million to $1.1 billion for the 2008-2009 fiscal year.
• Developing an annual cost trend for the program's insurance programs, Commonwealth Care and Commonwealth Choice, in the 10% to 15% range.

So, lots more people, particularly lower-income residents, are covered but the program's costs are unsustainable.

Massachusetts was a bold and very difficult piece of legislation to accomplish. It has often been described as an experiment. The greatest contribution experiments make is to tell us a lot about what works and what doesn't so we can move on successfully from there.

Massachusetts policymakers will now work to improve the plan. But without a major cost containment effort--way beyond anything they are even talking about now--they won't make much progress.

Whatever happens next in Massachusetts, this plan's results, a plan that closely parallels Barack Obama and Hillary Clinton's national health reform plans, will likely now undermine both state and federal attempts to copy it. Neither the Congress or any state legislature is going to embark on a plan whose costs have quickly become so problematic for such an incomplete result.

Now before all my readers in the Bay State quickly complain I'm deriding the Massachusetts plan again, let me be clear that this is not a bad outcome. If there has been one primary frustration in the health care debate since the 1960s it's that we too often just debate things, never try anything, and never build on our successes and failures.

The Massachusetts health reform law is valuable because it tells us so much.

My primary takeaway from the Massachusetts health reform law is that attempts to incrementally deal with access first, while avoiding a major restructuring of the system to simultaneously deal with costs, will only lead to an incomplete result in improving access and costs that cannot be sustained.

What Massachusetts has accomplished in passing this law is the most any state or Congress could have done--or ever did. As I have said many times on this blog, the political leverage just hasn't been available to do the job in full. That was true in 2006 when this law was passed and it's true even today.

But in the coming months, results from the Massachusetts health care experiment are going to become well known.

While many will say, "Look at that cost mess let's forget major health care reform," I would hope more people would say it is clear we are going to have to take a more fundamental look at real health care reform that cuts across both the access and cost containment lines.

Even bolder plans, that everyone says are politically impossible today, just may take on a new life because it will be clear the Massachusetts outline isn't going to do much more than bust the budget for an incomplete result. Moving the debate to a more viable place would be a very worthwhile contribution for Massachusetts to make.

A few weeks ago, I said watch the Wyden-Bennett health care plan. It combines many of the things conservatives want--a decoupling from the employer-based system using an individual defined contribution model--with many of the things liberals want--adequate premium support for consumers and open access for everyone. The fact that the CBO rated Wyden-Bennett revenue neutral early in the game also looks pretty good in light of what's happening in Mass.

Other fresh ideas are on the table. Ezekiel Emanuel's health plan, for example, that also decouples health care from the employer, puts private health insurance in the hands of the consumer, and substitutes the many ways we pay for health care today with a single VAT tax that automatically creates a national budget for health care expenditures, has also gained lots of attention.

The National Leadership Coalition on Health has had a comprehensive plan on the table for sometime. Its bipartisan approach and many supporters from a broad cross section of the stakeholders also makes it a serious proposal that could now get more attention.

To me progress is a matter of keeping the debate moving forward toward a successful outcome by building on valuable experiences.

That, I will suggest, is what the Massachusetts experiment can now become. It is not something to be dismissed--nor is it something to defend for the sake of just defending it.

Related posts:

First Year Results in Massachusetts' Health Care Reform Undercut Barack Obama's Health Care Reform Strategy

John McCain's Health Care Plan and the Uninsurable--There Are Better Fixes Than the Ones He's Proposed

First Year Results in Massachusetts' Health Care Reform Undercut Barack Obama's Health Care Reform Strategy

The Massachusetts health care reform plan is coming up on its first anniversary.

Its costs are now officially out of control.

Those of you who regularly read this blog know that I have been particularly critical lately of what I see as a lack of sophistication in McCain's market-based health insurance proposals.

But with this news, Obama will have some big health care policy questions of his own to answer.

The 2006 Massachusetts Health Insurance Law is looking to be little more than an expensive expansion of Medicaid and that does not bode well for Barack Obama who has used the Massachusetts health reform law as the template for much of his own health care reform plan––as did all major Democratic candidates including Hillary Clinton.

The good news is that the plan, which began on July 1, 2007, has covered 340,000 people who were not insured a year ago––out of around 600,000 when the program started.

Almost all of those people have incomes below 300% of the federal poverty level and are eligible for full or substantial government subsidies to pay for their new health insurance.

The state has seen a gain of only 18,000 Massachusetts residents with incomes above 300% of the poverty level in the Commonwealth Choice plan. That's because it costs $7,000 - 12,000 a year for a family of four to buy the baseline health plan that includes a $2,000 single/$4,000 family deductible before most benefits are available. A family of four with an income of at least $61,000 (300% of the federal poverty level) would not qualify for a subsidy.

Commonwealth Care, the program covering uninsured workers under 300% of poverty, and available at little or no cost to residents, had 176,000 new enrollees as of May 1st and is projected to grow to 255,000 by July of next year--many more than the 136,000 that were estimated for the first year when the law was passed.

It is a good thing that there are 340,000 fewer uninsured in Massachusetts than there were a a year ago and Mass appears on its way to covering about 400,000 of the 600,000 that were uninsured when the program began.

But the Massachusetts Health Insurance Law is doing almost nothing for the middleclass because people can't afford the premiums––leading the state to also back-off on the individual mandate for these people. For example, almost all families would need an income of at least $110,000 a year in order for the mandate to apply to them.

So, Obama is right––you can't enforce an individual health insurance mandate if the coverage isn't affordable.

But that is about the only thing Senator Obama can be happy about when it comes to the state health reform plan that looks a lot like his plan for national reform.

With little or no cost containment in the program, the cost of Massachusetts Health Insurance Law really is out of control.

The cost for the program in its first year––July 1, 2007 to July 1, 2008––was first estimated to come in at $472 million when the bill was passed in 2006. However, that assumed there would be 136,000 low-income residents in Commonwealth Care. Instead, the state now projects that there will be 180,000 in the plan by the end of the fiscal year on June 30th driving first year costs up by 38% to $650 million.

When the law was passed in the spring of 2006, it was estimated that the second year’s costs––2008 to 2009––would increase to $725 million as the enrollment ramped up.

This past March, Governor Patrick provided an updated estimate of $869 million for next year––fiscal year 2008 to 2009––saying enrollment was higher than expected.

Just a month later, in April, the Governor revised that estimate upward by an additional $100 million to $969 million.

Now, in May, in a statement to bond rating agencies, the Governor has estimated that the fiscal year 2008-2009 costs will be more like $1.1 billion––a 50% increase over the original estimate from less than two years ago!

These costs may themselves be understated because health insurers are saying they are losing money on the program and are charging insufficient premiums that will ultimately have to rise. The Commonwealth Care insurers (100% to 300% of poverty) originally asked for a 15% increase for next year and settled at 10%.

The Commonwealth Choice insurers (over 300% of poverty and also available to small groups) are seeing a 10% trend rate and are being pressured to limit their increases to 5%--which they will do with more benefit reductions and cost sharing making these plans even more unaffordable for the benefits they provide.

It is clear that the Massachusetts Health Insurance Law is not sustainable for the state--and wouldn't be sustainable for the nation.

Until policymakers are ready to have a serious discussion about cost containment, health care reform is an unrealistic objective.

Prior posts on the Mass Health Care Plan from March 2007:
The Massachusetts Health Plan Will Turn Out to Be Little More Than a Fancy Expansion of Medicaid--Bids Come In At $250 Per Person Per Month

The Massachusets Health Plan's Inability to Offer Affordable Health Insurance Premiums Will Stall-Out Other State's Efforts in Health Reform

"Blendon, Laszewski, And Rovner On Health Care Reform In The Election"

Earlier this week I was part of conference call organized by the new Health Affairs editor-in-chief, Susan Dentzer, on the topic of health reform in the presidential election.

The call, and subsequent posting of the transcript by Chris Fleming on the Health Affairs blog, was in connection with the thematic issue of health reform in the May/June Health Affairs.

First, congratulations to Susan on taking over at Health Affairs. They couldn't be in better hands and this issue concentrating on health reform proves it.

My colleagues made a number of really good points.

Bob Blendon, the guy with his "finger on the pulse of the American public" from his perch as director of the Harvard Program on Public Opinion and Health and Social Policy:

• In the eyes of voters the health policy struggle between Clinton and Obama is not about the details but about who can follow through and get it done.
• The health care issue is going to be "bigger than people think."
• Comparing McCain to the Democrat over health care will be about "very big differences in values and beliefs."
• McCain has framed this in a way that people can make choices--Employer or individual?--Do you want something done about the uninsured or not?
• "The differences are so wide that it's going to be easier for people to be interested in the [health care] debate."

Julie Rovner, health policy correspondent from NPR:

• Health care is not wavering as an election-year issue but it is more integrated in the overall concern about the economy--don't write if off as a major issue.
• The idea that the Democrats can pay for their big health care plans by "simply letting the Bush tax cuts expire does not hold up."
• The Wyden-Bennett bill is "the stealth bill." The recent CBO scoring that found it likely to be revenue-neutral very early in its proposed implementation was very significant and the bill bears watching.

There is lots more good stuff in their comments and you can read the whole conversation here: Blendon, Laszewski, And Rovner On Health Reform In The 2008 Election

Health Care Reform Will Be a Long Shot in 2009

Many people, me included, have compared the recent resurgence in calls for health care reform with the big debate we had in 1993 and 1994 and the expectation back then that we would see major health care reform. Of course, all of that focus on the issue ended with the failed Clinton Health Care Plan derailing health reform for at least 15 years--and counting.

Each of the remaining candidates for president--Clinton, Obama, and McCain--have major health reform proposals. Health care continues to register as one of the major issues voters want addressed and expectations are rising again.

But the chance for major health care reform in 2009--or 2010--is a long shot.

The problem is that the country is divided right down the middle on which very different direction to go on the issue. As high as health insurance costs are and as dissatisfied as consumers are with the system there is no consensus on what should change and no real willingness for any of the major stakeholders to compromise.

I don't know who will be elected president in November. But I am confident that whoever it is the vote will be another very close election with about half of the people on one side and half on the other. While the Congress will probably continue to be Democrat controlled, there will be no big majority wanting to take the country in one health care reform direction over another.

Something as big as health care reform requires a clear consensus--among voters and therefore in the Congress. We have nothing close to that today irrespective of the apparently strong commitment to health care change among the candidates for even incremental health care reform.

Jay Rockefeller is a Senate Democrat that has been working on health care reform for 20 years and he's an Obama supporter. About the $100 billion both Democratic candidates want to spend on health reform he says, "We all know there is not enough money to do all this stuff. What they are doing is...laying out their ambitions."

No one is a bigger supporter of Hillary Clinton than fellow New York Senator Chuck Schumer. He doesn't see any consensus on how to get health reform done either saying he's "not sure we have the big plan on health care." He goes on, "Health care I feel strongly about, but I'm not sure we're ready for a major national health care plan."

The next Congress, and likely the new President, will be ready to deal with a permanent extension and expansion of the State Children's Health Insurance Program (SCHIP) and they will be forced to make some necessary decisions about how Medicare pays physicians and potential cuts to private Medicare plans to pay for them. But the $100 billion expansion of health care Obama and Clinton want, or the abandonment of the longtime employer tax exemption and new emphasis on the individual market that McCain wants, are way beyond any kind of consensus we have among voters and in the Congress.

As bad as things are, they aren't bad enough.

Detailed analysis each of the candidates health care reform plans:

An Analysis of Senator Hillary Clinton's Health Plan Proposal

An Analysis of Senator John McCain's Health Care Reform Plan

A Detailed Analysis of Barack Obama's Health Care Reform Plan

Hillary Clinton Criticizes Barack Obama's Health Care Plan Saying It Would Not Cover Everyone--Is She Right?

This is a repost of an original that addresses Hillary Clinton's claim, repeated in this week's Texas debate, that only her health plan accomplishes universal coverage because it has a individual mandate and Barak Obama's does not. Senator Clinton goes so far as to say she would garnish wages to enforce her mandate that everyone buy health insurance.

Hillary Clinton has gone on the attack in recent days criticizing Barack Obama's health care plan. She charges that his plan would not cover everyone and hers would.

Is she right?

Senator Clinton has an individual mandate in her plan. That means that everyone would be required to purchase coverage or suffer a penalty she hasn't defined. Senator Obama does not have an individual mandate in his plan although he would require all children to be covered. Both candidates would require employers to cover their employees.

She points to studies that show without a mandate there would still be 15 million people uninsured.

In the sense that the Clinton plan requires everyone to be covered, one could argue that she covers more people. But I will suggest it is not that simple.

The new Massachusetts health plan is really the outline upon which both the Obama and Clinton plans are based. Mass has an individual mandate. But the problem is people still can't afford to buy insurance. Mass is doing a great job getting people covered with incomes so low that they have their health insurance fully paid for. But, for those families who make too much for a subsidy that pays less than the full cost--or none of the cost--the Mass program is faltering. Only a few thousand uninsured Mass residents whose incomes are above the lowest levels have signed up for the mandated coverage.

For example, a family of three making $50,000 gets no subsidy and the cost of a $2,000 deductible plan is in the $7,000 to $9,000 range. Mass has a law that says they must purchase coverage but how, with such high costs, can they really be expected to?

So, there is a mandate and you can say we are covering everyone because they have to be covered but in fact the mandate is a hollow provision if people can't afford it.

So, when the day is done, I don't see much real difference here.

The real issue is how each of the candidates would make premium affordable in the first place.

When I look at Senator Obama's 12 page health care plan, I see a number of proposals to reduce cost including investment in health information technology, improving prevention and management of chronic conditions, providing reinsurance for big costs, making care universal to reduce uncompensated care, simplifying paperwork, making insurance portable, improving quality of care through disease management, integrated care, and better transparency about costs.

When I look at Senator Clinton's 12 page plan, I see virtually the same things not only on cost containment but everything else.

Senator Clinton would limit premium payments to a percentage of income, "This guarantee will be be achieved through a premium affordability tax credit that ensures that health premiums will never rise above a certain percentage of family income."

But Obama says that, "Individuals and families who do not qualify for Medicaid and SCHIP but still need assistance will receive income-related federal subsidies to keep health insurance premiums affordable."

Both candidates seem to be offering the same cost containment strategies.

Both candidates are offering a vague guarantee that everyone will have access to "affordable" health insurance premiums.

I don't see a difference between them here.

When the day is done, as Massachusetts is showing us, a mandate does nothing if people don't have affordable premiums.

They both claim they are going to give us affordable premiums and would go about it in a very similar way.

I worry that both of them have cost containment strategies that would do little more then dent the continued escalation in health care costs and undermine both of their guarantees for affordable coverage. You can learn more about that by reading my posts on their respective health plans that can be found in the index to the right.

See my earlier posts:
When it Comes To Health Care Policy It Really Doesn't Matter Which Democrat Or Which Republican Wins Their Nomination

Massachusetts Expected to Further Backpedal on its Individual Mandate

California Health Care Reform—An Individual Mandate is Nowhere Near as Important as Affordable Health Insurance

Haley Barbour or Hillary Clinton?

Here's a test.

Who just proposed the following, Hillary Clinton or Haley Barbour:

• A government authorized health insurance purchasing exchange program for the purpose of marketing health insurance
  
• Run as a not-for-profit clearing house from which consumers could purchase health insurance
• Target the uninsured
• Available to workers in small businesses
• Designed to reduce the overhead costs of small group health insurance policies
• Policies would be portable

Mississippi Governor Haley Barbour, and the former Republican National Chairman, just made this proposal in his state and Mississippi lawmakers are starting work on it.

Senator Clinton, as part of her 2008 health care reform plan, has proposed a "Health Choices Menu" which would provide people an optional FEHBP-like menu of private health plan choices. She would use the purchasing power of the many to improve the options and prices in the plan. Mrs. Clinton's plan would also set a very high minimum benefit requirement. Obama has a similar idea.

Senator McCain, apparently to the more conservative side of all of the above, has no such government insurance exchange idea. McCain would encourage trade association health plans.

It's certainly likely that Barbour's plan would be more market oriented than regulated and mandate-heavy but the broad overview of both approaches is strikingly similar.

One small place for both sides to begin to work together?

When it Comes To Health Care Policy It Really Doesn't Matter Which Democrat Or Which Republican Wins Their Nomination

With "Super Tuesday" upon us, I am once again bringing back a post that argues there is little difference among the candidates in each of their respective parties.

My suggestion is that you not cast your caucus or primary vote for a candidate based upon their health care reform plan.

From “thirty thousand feet” the leading Republicans are offering much the same health care policy ideas—a more vibrant market serving a more responsible consumer who would control his health care choices in a system that doesn’t need to spend more money.

And, from that same "thirty thousand feet," the two remaining Democrats are all offering about the same thing--$100 billion+ in new annual spending to guarantee access for virtually all Americans to existing public and private health plan options as well as some new ones created by the government.

Republicans support an open market—no mandates and less insurance regulation—believing that the market must first get costs under control by developing new and more efficient offerings for people in the private market based on consumer-driven principles and new and more efficient and appealing options for people who have public coverage as well.

Democrats call for shared responsibility—often mandating employers and consumers to participate in their near universal system made up of Medicare, Medicaid, SCHIP, private individual coverage offered through government-run marketing structures, a Medicare-like government plan option for those under age-65, and existing employer plans.

I hate to say that it doesn’t really matter which of the Democrats, or Republicans, wins their separate primary battles. But in terms of the nits health care policy it really doesn’t.

Sure there are differences in their health care policy proposals. Among the Democrats, Obama doesn't have an individual mandate to buy coverage while Clinton does. Among the Republicans, McCain uses a tax credit to help people buy coverage while Romney talks about tax deductions.

But remember, these are political proposals--generally just a few pages long. The real health reform process will eventually have to go through the legislative "sausage factory" that is Congress and I will suggest that the starting point from one Democrat compared to another, or one Republican compared to another, is hardly material.

As you prepare to vote in your state's caucus or primary, I would recommend that you focus on the other issues that are important to you, the "electability" of each of the candidates, and perhaps most importantly on the issue of health care, which of these candidates can finally break the health care reform logjam and get something done.

Whoever the eventual nominee is in each of the parties, we will have a Democrat and a Republican offering a dramatically different approach to American health care security.

The general election is where the big decision will be made on health care--and everything else.

You can see my analysis of each of the candidates plans by using the index in the right column.

An Analysis of Senator Hillary Clinton's Health Plan Proposal

A Detailed Point by Point Analysis of Senator Clinton's Health Reform Plan

This is a repost of my October analysis of Senator Clinton's health care reform plan.

This is nothing like the Clinton Health Plan from 1993.

Senator Clinton has so far been running a smart campaign for President and her health care reform strategy is no exception.

She waited until after all of the leading Democratic, and most Republican, candidates had announced their plans and then stuck her plan right in the ideological middle of where her Democratic opponents put theirs. It also looks a great deal like a bipartisan plan enacted in Massachusetts and a bipartisan compromise in the works in California. So on the day it was released, it was correctly identified as being relatively “centrist.”

Predictably, Republicans tried to wrap 1993 and her failed health care reform effort around her new offering. But their attempts to resurrect memories of her catastrophic policy failure fell flat more often than not.

Former Massachusetts Governor Mitt Romney is a case in point. Before the day was up, Romney was on camera calling her new health plan, “Hillary Care.” But Senator Clinton’s plan is a virtual clone of the new Massachusetts health care law then Governor Romney signed and that he continues to say he is “proud of.”

So, Mrs. Clinton is out with a plan that looks very much like the new reform effort a leading Republican candidate signed into law.

Not something that would have occurred in 1993.

Reaction in the business community was also encouraging for Senator Clinton. The National Federation of Independent Businesses (NFIB) was an organization that had an outsized impact on defeating the 1993 effort because of the small business mandate that plan included.

Mrs. Clinton learned from that lesson—this time not including a small business mandate to buy insurance for their employees but including a very generous tax credit for those who do. As a result, an NFIB spokesman responded to the new Clinton plan release about as enthusiastically as the Clinton camp could have hoped for, “One of the standout features of this is it specifically looks to help small business owners, and that’s a good thing.” Now that’s a 360-degree turnaround from the group whose grass roots lobbying against the 1993 Clinton Health Plan was nothing less than devastating.

Even the health insurance industry trade association responsible for those famous “Harry and Louise” ads, also seen as key to defeating the 1993 plan, was cautiously supportive. The AHIP CEO said, “The new Clinton plan includes important ideas to make coverage more affordable.” But there was also a reference to all the very anti-insurance company rhetoric we have been hearing from Senator Clinton recently, “unfortunately some of the divisive rhetoric seems reminiscent of 1993.”

Many worry that this is just the old Clinton Health Plan and the old Hillary Clinton in election-year “sheep’s clothing.” There is some reason to worry about that.

In 1992, Bill Clinton’s campaign health plan drew from the pro-market “Managed Competition” proposals that mixed government incentives with free market health care that built on the private insurance markets.

But within days of taking office, President Bill Clinton announced that Hillary Clinton would chair a health care task force that ended up crafting a 1,400 page plan developed in secret that looked nothing like his campaign platform.

This one-and-a-half page Clinton Health Plan is clearly nothing more than a campaign-year outline of principles. By itself, that is generally what campaign-year policy proposals are.

Any piece of legislation reflecting this outline would run into the hundreds of pages—so there are lots of details left to be filled in.

On the one hand, that gives a new Clinton Administration lots of opportunity for mischief.

However, one of the very big lessons an inexperienced Mrs. Clinton came away with from 1993 was that you couldn’t craft a comprehensive piece of legislation at the White House and simply deliver it to the Congress.

Every successful President has learned that the best way to do policy is to stand for a clear set of principles, use the “bully pulpit” of the presidency to create the political imperative for action, and then stand back and let the Congress do the details of crafting the legislation.

Mrs. Clinton is not running for emperor. She won’t be the one doing the details in any successful health care reform effort—it will be the Congress with all of its checks and balances and special interest influence. It will be the “sausage factory,” not the White House that will fill in all the blanks.

But Mrs. Clinton has proposed an outline for reform that has a great deal of centrist support in the country.

While the Republican candidates for president have a different approach—one that builds on a more vibrant health care and health insurance market—that philosophy’s time seems to have passed. President Bush had six years with a Republican Congress. While he scored impressive private market victories with the Medicare Modernization Act of 2003—which created Part D and Medicare Advantage—as well as health savings account legislation (HSAs), that purely private market approach now appears to have given way to the approach that was enacted in Massachusetts and a number of states are now considering—not the least of which is California.

If a Republican is elected president next year, he will likely face a Congress more interested in the approach Senator Clinton favors than expanding HSAs further.

Only if Republicans regain both the White House and the Congress will the market-based approach most Republicans favor have a chance of going any further. It doesn’t look like a Republican sweep is in the offing.

Let’s take a closer look at Senator’s Clinton’s $110 billion health care plan (her estimate) using her campaign’s outline—keeping in mind that the details of any final bill would eventually be filled in more by Congress than the White House:

1. Offer New Coverage Choices for the Insured and Uninsured: The American Health Choices Plan gives Americans the choice to preserve their existing coverage, while offering new choices to those with insurance, to the 47 million people in the United States without insurance, and the tens of millions more at risk of losing coverage.

• The Same Choice of Health Plan Options that Members of Congress Receive: Americans can keep their existing coverage or access the same menu of quality private insurance options that their Members of Congress receive through a new Health Choices Menu, established without any new bureaucracy as part of the Federal Employee Health Benefit Program (FEHBP). In addition to the broad array of private options that Americans can choose from, they will be offered the choice of a public plan option similar to Medicare.
• A Guarantee of Quality Coverage: The new array of choices offered in the Menu will provide benefits at least as good as the typical plan offered to Members of Congress, which includes mental health parity and usually dental coverage.

This is the “something for everybody” section.

Her plan would put the federal government in the health plan marketing business by creating a new version of the FEHBP menu of options that would be available in the private market. This would also be very similar to the Massachusetts “Connector” that takes bids from health plans that must qualify with the regulator and offer minimum benefits.

It is also clear that she would set a comprehensive minimum benefit threshold in the FEHBP-like program equal to the level of benefits offered in the existing FEHBP program—that does include an HSA program.

While it appears that the individual market would continue, and people who have individual coverage could keep it, this would put the FEHBP-like program in direct competition with that market segment. It would appear that consumers could continue to purchase limited or high deductible plans on their own in the individual market. However, she is also proposing an individual mandate, which will have to set a minimum benefit level. In Massachusetts that provision disqualified 150,000 existing policies—many because of high deductibles.

This provision vaguely resembles the Health Insurance Purchasing Cooperative (HIPCs) of the 1993 plan where Mrs. Clinton called for far reaching regulation over how health plans were sold, how they were priced, and what they looked like. She has carefully steered clear of so far reaching a proposal this time and it is doubtful that the Congress would make this version anything close to that failed model.

Mrs. Clinton would also put the federal government in direct competition with private health insurance industry by creating a Medicare-like government-run plan.

This provision gives all sides in the debate something. The single-payer advocates get a Medicare-like plan in direct competition with the private market and a chance to push the private plans out of existence. Those that favor a vibrant private market full of choices arguably get that.

Just where the balance is ultimately struck between government-run health insurance and free market health insurance, depends heavily on the details. For example, would the government plan have the power to unilaterally set provider prices—including drugs?

As long as it’s a fair competition, neither side should have anything to complain about—but then gaining an advantage for their clients is what lobbyists do for a living.

If nothing else, there would be a direct competition between a Medicare-like plan and the private market. So long as that turned out to be a fair head-to-head competition it would tell us a lot about which is the best track to follow and one, public or private, might eventually come to dominate the other.

2. Lower Premiums and Increase Security: Americans who are satisfied with the coverage they have today can keep it, while benefiting from lower premiums and higher quality.

• Reducing Costs: By removing hidden taxes, stressing prevention and a focus on efficiency and modernization, the plan will improve quality and lower costs.
• Strengthening Security: The plan ensures that job loss or family illnesses will never lead to a loss of coverage or exorbitant costs.
• End to Unfair Health Insurance Discrimination: By creating a level-playing field of insurance rules across states and markets, the plan ensures that no American is denied coverage, refused renewal, unfairly priced out of the market, or forced to pay excessive insurance company premiums.

Presumably the “hidden taxes” are the administration costs she would hope to cut by simplifying the sale and underwriting of health insurance as well as moving the system toward a greater use of information technology—including a patient medical record and investing in disease prevention. While it is likely these steps can save money, the market has been moving to improve health information technology for years and has found that process slow going and very expensive in the short term. The market has also invested heavily in wellness and disease management programs over the past 20 years with only modest success toward controlling healthcare costs.

By mandating that all Americans have coverage, Mrs. Clinton hopes to have virtually everyone in the insurance pool. By doing that, she would eliminate the need to have the barriers to coverage that currently exist to protect the insurer against anti-selection and those now uninsured would get the treatments and preventive services that are necessary to keep costs down over the long run.

But this is also the place reality may have to confront hope.

We cannot have everyone in the pool if it is not affordable upfront for people to buy in.

Massachusetts started out with an individual mandate but quickly backed off on it when it was clear the program could not provide affordable coverage for everyone—particularly those who make too much money to qualify for a subsidy (or an adequate subsidy) and too little to afford family health insurance costs that still run in the $7,000 to $9,000 range for a family policy with a $2,000 deductible.

It all comes apart if the subsidies are not adequate to make it affordable for people to buy coverage. How do you mandate a family to do something they just don’t have the money for?

She did not address the status that illegal aliens would have in her system—a highly contentious issue.

3. Promote Shared Responsibility: Relying on consumers or the government alone to fix the system has unintended consequences, like scaled-back coverage or limited choices. This plan ensures that all who benefit from the system share in the responsibility to fix its shortcomings.

• Insurance and Drug Companies: insurance companies will end discrimination based on pre-existing conditions or expectations of illness and ensure high value for every premium dollar; while drug companies will offer fair prices and accurate information.
• Individuals: will be responsible for getting and keeping insurance in a system where insurance is affordable and accessible.
• Providers: will work collaboratively with patients and businesses to deliver high-quality, affordable care.
• Employers: will help finance the system; large employers will be expected to provide health insurance or contribute to the cost of coverage; small businesses will receive a tax credit to continue or begin to offer coverage.
• Government: will ensure that health insurance is always affordable and never a crushing burden on any family and will implement reforms to improve quality and lower cost.

This section is probably the lynchpin in her plan’s ability to succeed.

Insurance companies will gladly drop all of the front-end underwriting activity in exchange for a guarantee that everyone will be in the pool. This makes one wonder why Senator Clinton feels the need to continue demonizing the insurance industry. Her plan gives the private health insurers the potential to sign-up 47 million more customers in a market where they can’t be selected against.

Her comments about the pharmaceutical industry need a lot of clarification. Just what does she mean by “fair prices.” She has previously come out in favor of the federal government directly negotiating Medicare Part D drug prices and drug “reimportation.”

Her statement that individuals will have to buy health insurance because her plan will have made it affordable is probably the biggest challenge. How will she be able to mandate affordable health insurance costs when the average cost of employer-sponsored family coverage is already up to $12,000 per year? Aligning adequate subsidies with the mandate to buy coverage is the big one. If the plan fails to do that, we will still have plenty of uninsured, continued cost shifting, and presumably people who can’t get coverage when they get sick because they didn’t buy when it was first available to them.

This one takes the prize for the most naïve line in the plan: “Providers: will work collaboratively with patients and businesses to deliver high-quality, affordable care.” Oh really? Just what makes her think the biggest challenge in the health care system, aligning provider and payer interests, is suddenly going to be a snap?

The employer mandate has been much more carefully crafted this time. It is not clear where the small employer versus large employer break comes but comments from her campaign indicate that it is at 25 employees. So, all employers with, presumably, more than 25 employees will have to “play or pay.”

We also don’t yet know what businesses that don’t provide coverage will have to pay. In the California plan just passed by their legislature, those employers who do not provide coverage would be required to pay a 7.5% payroll tax.

While most large employers already offer coverage and will welcome other employers having to pay their share of these costs, setting the cut-off line at 25 employees may still be problematic for many small companies that have more that 25 workers.

But, by exempting small employers, she has effectively neutralized the small business lobby that had such a major role in killing her plan last time. The subsidies she would also offer these small employers have also helped with that special interest group. However, there is no information on just how helpful these subsidies would be. But give Mrs. Clinton credit for recognizing that small employers, a powerful engine in economic growth, can’t be mandated to pay these costs.

Her line, government “will ensure that health insurance is always affordable” may be more hope than anything.

I would label her plan access heavy and light on cost containment. To contain costs, she would focus on prevention, health information technology, care for the chronically ill, ending the cost shift from the uninsured, saving on insurance administrative costs by improving marketing and cutting underwriting expenses, creating a “best practices institute” to reduce wasteful medical spending, and implementing “common sense” (read that trial bar friendly) medical malpractice reform.

These high-level cost containment proposals are all good ideas. But almost all of them have been underway in the health insurance markets for two decades now and they have not more than blunted health insurance costs that have grown at three to four times the country’s economic growth over the last 20 years.

The biggest issue this plan faces is creating affordable health insurance/affordable care. Without that, we will just have the problems that Massachusetts is facing today as it falls far short of universal access.

How do you enforce a mandate if comprehensive family health insurance costs $12,000 a year? If you think that number is too high for a reformed system, just take a look at Massachusetts or current FEHBP coverage. You can’t mandate comprehensive coverage along the lines of the FEHBP plan and expect that the costs are going to be anything less than what the typical FEHBP plan offering costs today--an FEHBP that already have guaranteed insurability and the more efficient distribution model Mrs. Clinton is proposing.

But then maybe Mrs. Clinton already knows that. I have long believed that fundamental American health care reform will come in two parts. Access first, then when everyone is in an unsustainable and unaffordable system, it will create the political imperative for real cost control in a second phase a few years down the line.

4. Ensure Affordable Health Coverage for All: Senator Clinton’s plan will:

• Provide Tax Relief to Ensure Affordability: Working families will receive a refundable tax credit to help them afford high-quality health coverage.
• Limit Premium Payments to a Percentage of Income: The refundable tax credit will be designed to prevent premiums from exceeding a percentage of family income, while maintaining consumer price consciousness in choosing health plans.
• Create a New Small Business Tax Credit: To make it easier—not harder—for small businesses to create new jobs with health coverage, a new health care tax credit for small businesses will provide an incentive for job-based coverage.
• Strengthen Medicaid and SCHIP: The Plan will fix the holes in the safety net to ensure that the most vulnerable populations receive affordable, quality care.
• Launch a Retiree Health Legacy Initiative: A new tax credit for qualifying private and public retiree health plans will offset a significant portion of catastrophic expenditures, so long as savings are dedicated to workers and competitiveness.

Senator Clinton defines affordability in political terms—the upfront cost of the insurance plan to the voter. Real affordability is the underlying cost of any insurance plan, of health care generally, and her cost containment strategy falls well short on what it will take to accomplish that.

In her plan with something for everyone, she picks up on the idea of creating a refundable tax credit, popular among Republicans, to make it possible for families to be able to afford health insurance. Here again, the "devil is in the details." As we are seeing in Massachusetts, the subsides are nowhere near good enough for those between 200% of the poverty level and those rich enough to pay the prices.

She also makes Republicans happy with her line, “while maintaining consumer price consciousness” when a health plan is chosen. While vague, this is a concession to those favoring a defined contribution approach to personal responsibility.

With health care costs growing at two to three times the growth in our economy, and likely to continue to grow at close to those levels given her light approach to cost containment, how long will it be before health insurance costs outstrip any subsidy program?

Her scheme to subsidize health insurance costs (limiting premiums as a percentage of income) is a great way to assure consumers that they will have affordability. The bigger question is just how much money will she need on day one to do that and how will she be able to sustain that strategy with such a light cost containment program?

Her “Retiree Health Legacy” proposal will come as welcome news to America’s legacy industries, and state and local governments, that cannot afford to keep their retiree health promises. Labor unions will love the requirement that any benefit from government help has to find its way to workers. This proposal recognizes the enormous cost to bail out the unfunded retiree health care liability that is crippling American industry in global markets. But again, there is no “free lunch” here. To make any bailout affordable, even the federal government can’t continue to subsidize these incredibly rich benefits at current levels. That Mrs. Clinton does not deal with.

5. A Fiscally Responsible Plan that Honors our Priorities:

• Most Savings Come Through Lowering Spending Due to Quality and Modernization: Over half the savings come from the public savings generated from Hillary Clinton’s broader agenda to modernize the health systems and reduce wasteful health spending.
• A Net Tax Cut for American Taxpayers: The plan offers tens of millions of Americans a new tax credit to make premiums affordable—which more than offsets the increased revenues from the Plan’s provisions to limit the employer tax exclusion for healthcare and discontinue portions of the Bush tax cuts for those making over $250,000. Thus, the plan provides a net tax cut for American taxpayers.
• Making the Employer Tax Exclusion for Healthcare Fairer: The plan protects the current exclusion from taxes of employer-provided health premiums, but limits the exclusion for the high-end portion of very generous plans for those making over $250,000.

“Most savings come through lowering spending due to quality and modernization.” That is her most dangerous assumption.

This is a political proposal after all. And like any good political proposal, it is careful not to “gore” any political “oxen.” Her cost containment program is cost containment light because she fears alienating any key stakeholders—like the providers. You can’t lower, or even stabilize costs, without key players getting less than they would have had.

But real cost control might doom her plan. That’s why I continue to believe any successful health reform plan will come in those two parts: Access first, and when the new access skyrockets costs even further, cost containment next.

Her promise for fundamental reform without pain continues in her assertion that only the rich are going to have to pay for this. Dream on.

Finally, she picks up on another Republican idea (choice, consumerism, tax credits being others) to limit the employer tax exclusion on health insurance costs but she only applies it to those who make more than $250,000 a year. By doing so, she is giving a nod to conservatives who argue that the present system of tax exclusions on health insurance have encouraged health plans to provide rich benefits that have contributed to high health care inflation.

But by changing the exclusion only for the those making more than $250,000 a year, she has bowed to labor pressure not to break the employer/employee compact on health care benefits for everyone else.

Good Politics and Centrist Health Care Policy
The other day I referred to Mrs. Clinton’s new health plan as centrist. A long-time Hillary Clinton critic was indignant that I would label Mrs. Clinton a centrist.

I pointed out that I wasn’t referring to Mrs. Clinton generally—I was referring to her health plan. I’ll leave the rest of that to your judgment.

The center in American health care politics has moved since 1993. With average costs up to $12,000 a year for an employer family plan, people are really worried not just about access but also about health care costs. They see the system as close to crashing and they’re worried.

Centrist voters will generally find this proposal as reasonable.

Those on the right of center will continue to see it as just more government intervention in health care—“Hillary Care.”

Those on the left will say she caved-in to special interests giving stakeholders like the health insurance industry too much--which may explain her anti-insurance rhetoric, that is so much worse than her policy proposal, as a way of deflecting that criticism.

American elections are won in the middle. She wasn’t ever going to get those on the right to vote for her. Who else will those on the left have to vote for?

The polls universally tell us that health care is the top domestic issue.

Politically, if she wanted to come out solidly where the middle is today on a critical issue, tackling what is possible, it looks like she got it about right.

But, this is a political proposal. As policy, it is a page-and-a-half that creates more questions then it answers.

For the Republicans to take the high ground here, they are going to need to do more then walk into a room and yell, “Hillary Care”––expecting that everyone is going to run from the room in terror.

Whatever she may be thinking deep down in her psyche, she is clearly not acting like the Hillary Clinton of 1993.

Must be driving her enemies nuts.

Related posts:

Hillary Clinton Criticizes Barack Obama's Health Care Plan Saying It Would Not Cover Everyone--Is She Right?

A Detailed Analysis of Barack Obama's Health Care Reform Plan

An Analysis of Senator John McCain's Health Care Reform Plan

Poll Shows Democratic Presidential Candidates Attracting Independents and Moderates With Their Health Reform Plans

I was struck by this conclusion in today's Los Angeles Times regarding their recent voter survey:

"In one of the most politically significant results, the poll finds that independents and moderates were generally lining up with Democrats in the healthcare debate.

"The survey also suggested an explanation for the emerging alignment: Independents were most likely to complain about "job lock" -- the view that they are stuck in jobs they don't like solely because of health benefits.

"In all, 20% of independents said they or someone in their household were forced to stay in a job because it provided healthcare, compared with 13% of Democrats and 5% of Republicans.

"Independents are more insecure in terms of the issue of 'job lock,' which causes them to lean more toward Democrats on the healthcare issue than Republicans, said Robert Blendon, a public opinion expert at the Harvard School of Public Health."

As I have said in earlier posts regarding the Republicans' health reform proposals, their positions may look good in the primaries where they must please only conservative Republican voters, but they risk losing the middle of the country if they don't get a lot more serious about health care reform.

Hillary Clinton's Health Plan

Here is an excerpt from the Clinton campaign's press release outlining her $110 billion a year health care reform plan:


FOR IMMEDIATE RELEASE
September 17, 2007

The American Health Choices Plan:

Ensuring Affordable, Quality Health Care for All Americans

Hillary Clinton unveiled the third part of her plan today to ensure that all Americans have affordable, quality health insurance. Building on her proposals to rein in costs and to insist on value and quality, her American Health Choices Plan will secure, simplify and ensure choice in health coverage for every American.

Specifically, her American Health Choices Plan will:

Offer New Coverage Choices for the Insured and Uninsured: The American Health Choices Plan gives Americans the choice to preserve their existing coverage, while offering new choices to those with insurance, to the 47 million people in the United States without insurance, and the tens of millions more at risk of losing coverage.

• The Same Choice of Health Plan Options that Members of Congress Receive: Americans can keep their existing coverage or access the same menu of quality private insurance options that their Members of Congress receive through a new Health Choices Menu, established without any new bureaucracy as part of the Federal Employee Health Benefit Program (FEHBP). In addition to the broad array of private options that Americans can choose from, they will be offered the choice of a public plan option similar to Medicare.
• A Guarantee of Quality Coverage: The new array of choices offered in the Menu will provide benefits at least as good as the typical plan offered to Members of Congress, which includes mental health parity and usually dental coverage.

Lower Premiums and Increase Security: Americans who are satisfied with the coverage they have today can keep it, while benefiting from lower premiums and higher quality.

• Reducing Costs: By removing hidden taxes, stressing prevention and a focus on efficiency and modernization, the plan will improve quality and lower costs.
• Strengthening Security: The plan ensures that job loss or family illnesses will never lead to a loss of coverage or exorbitant costs.
• End to Unfair Health Insurance Discrimination: By creating a level-playing field of insurance rules across states and markets, the plan ensures that no American is denied coverage, refused renewal, unfairly priced out of the market, or forced to pay excessive insurance company premiums.

Promote Shared Responsibility: Relying on consumers or the government alone to fix the system has unintended consequences, like scaled-back coverage or limited choices. This plan ensures that all who benefit from the system share in the responsibility to fix its shortcomings.

• Insurance and Drug Companies: insurance companies will end discrimination based on pre-existing conditions or expectations of illness and ensure high value for every premium dollar; while drug companies will offer fair prices and accurate information.
• Individuals: will be responsible for getting and keeping insurance in a system where insurance is affordable and accessible.
• Providers: will work collaboratively with patients and businesses to deliver high-quality, affordable care.
• Employers: will help finance the system; large employers will be expected to provide health insurance or contribute to the cost of coverage; small businesses will receive a tax credit to continue or begin to offer coverage.
• Government: will ensure that health insurance is always affordable and never a crushing burden on any family and will implement reforms to improve quality and lower cost.

Ensure Affordable Health Coverage for All: Senator Clinton’s plan will:

• Provide Tax Relief to Ensure Affordability: Working families will receive a refundable tax credit to help them afford high-quality health coverage.
• Limit Premium Payments to a Percentage of Income: The refundable tax credit will be designed to prevent premiums from exceeding a percentage of family income, while maintaining consumer price consciousness in choosing health plans.
• Create a New Small Business Tax Credit: To make it easier—not harder—for small businesses to create new jobs with health coverage, a new health care tax credit for small businesses will provide an incentive for job-based coverage.
• Strengthen Medicaid and SCHIP: The Plan will fix the holes in the safety net to ensure that the most vulnerable populations receive affordable, quality care.
• Launch a Retiree Health Legacy Initiative: A new tax credit for qualifying private and public retiree health plans will offset a significant portion of catastrophic expenditures, so long as savings are dedicated to workers and competitiveness.

A Fiscally Responsible Plan that Honors our Priorities:

• Most Savings Come Through Lowering Spending Due to Quality and Modernization: Over half the savings come from the public savings generated from Hillary Clinton’s broader agenda to modernize the heath systems and reduce wasteful health spending.
• A Net Tax Cut for American Taxpayers: The plan offers tens of millions of Americans a new tax credit to make premiums affordable—which more than offsets the increased revenues from the Plan’s provisions to limit the employer tax exclusion for healthcare and discontinue portions of the Bush tax cuts for those making over $250,000. Thus, the plan provides a net tax cut for American taxpayers.
• Making the Employer Tax Exclusion for Healthcare Fairer: The plan protects the current exclusion from taxes of employer-provided health premiums, but limits the exclusion for the high-end portion of very generous plans for those making over $250,000.

Read my detailed analysis of Senator Clinton's health plan.
You can also see my analysis of each of the major candidate's plans by going to the index to the right.

Hillary Clinton's Health Plan--the Republicans Better Take it Seriously

Sometimes I think that all the Republican candidates for president think they need do is go into a crowded room and yell, "Hillary Care," and all of the voters will run for the exits in terror.

This is not 1993 and this is not the inexperienced Hillary Clinton who tried to drop her drafted-in-secret 1,400 page health care proposal on us all in one "take it or leave it" roll out.

She has changed since 1993 and so have American voters.

Today, health care is the number-two issue--behind Iraq--and it is the number-one domestic issue.

Last week, the Kaiser Family Foundation told us that the average cost of employer-provided family health insurance is $12,000 a year. Today, the UAW and Detroit are in negotiations over the auto companies walking away from their retiree health obligations for 60-70 cents on the dollar.

Mrs. Clinton has come to the center with her plan and we've all gotten a lot more worried about health care and are ready to go a lot farther than we would have almost 15 years ago.

Mrs. Clinton recognizes that. Lots of voters know it.

But the Republican candidates seem to think rolling out the "Harry and Louise" ads, talking about tax exemptions, and giving us all HRAs will do the trick.

It might in a conservative Republican primary. But that is not where the center of American politics is these days and it is the center that it will take to win the 2008 presidential election.

And by the way, the next time you hear Mitt Romney yell, "Hillary Care," ask him just how her plan differs from the one he signed into law in Massachusetts. I do health plan analysis for a living and it looks to me like they are kissin' cousins.

The Republicans would do well to get serious about health care before, instead of getting themselves a repeat of 1993 when Mrs. Clinton's first plan went down to a crushing defeat, they get themselves a repeat of 1992 when Bill Clinton won the presidency in part because he was a lot more serous about health care than his Republican opponent!

Hillary Clinton to Outline Her Health Plan on Monday--She Will Target Insurers as the Bad Guys

Senator Clinton will unveil her health plan in Des Moines on Monday. The heavy betting is that it will look a lot like the general Democratic health reform template that draws on the recently enacted Massachusetts health reform law.

We do know this, she will do what she did in 1993 and 1994 and demonize the insurance industry. On Wednesday she said, "I intend to dramatically rein in the influence of the insurance companies because frankly I think they have worked to the detriment of our economy and our health care system."

That tack backfired big time in 1994 when the insurance industry, who took her rhetoric seriously and concluded it had nothing to lose, spent huge amounts of money countering her plan with the now famous "Harry and Louise" ads.

Would she be "dumb" enough to make the same mistake twice?

But Hillary Clinton is a smart lady and has one heck of a #1 political adviser. Her campaign so far has been a flawless political tour de force.

Underestimating her would be a mistake.

Frankly, I wish she would at least try to bring everyone under the same health care reform tent. I am sure she sincerely believes the industry deserves her treatment. But then, which of the for-profit stakeholders in this $2 trillion system is in a position to throw the first stone?

We desperately need health care reform. Why increase the already tough odds of getting anything done by going out of your way to make enemies who have incredible amounts of money and who you put in a position of having nothing to lose?

It should be interesting.

Leading Democratic Presidential Candidates Comment on Health Care This Week

Joe Paduda, over at Managed Care Matters, is attending the "Take Back America" conference in DC this week. Joe has been posting a review on his site of each of the Democratic candidates comments on health care.

Comments include a review of Clinton, Edwards, Obama, and Richardson.

Wall Street Journal Sends Shockwaves Through the Health Insurance Markets With the Headline "Health Savings Plans Start to Falter"

It's the kind of headline I would have expected to see in the New York Times instead of the Wall Street Journal but there it was in Tuesday's edition.

Vanessa Fuhrmans' article seems to have unleashed some pent-up frustration in the health benefits market on the subject of health savings accounts (HSAs) specifically and consumer-driven care generally. It is as if it represents a turning point for how health savings accounts (HSAs) and consumer-driven care are going to be seen by the benefits market from this point forward.

The article points out that HSA growth may have stalled--the number of workers enrolled in HSAs through work grew only slightly, from 2.4 million in 2005 to 2.7 million in 2006. When employees had a choice of plan type, only 19% picked an HSA. The surveys also show low satisfaction rates for these plans. The managing director of Towers Perrin's health care practice: "If I were a product manager in any other industry and saw the scores this low in customer satisfaction and understanding, I'd be thinking of pulling that product from the shelves and retooling it."

Just to get my own bias on this issue out in the open, I have never believed that consumer-driven health care was any kind of silver bullet for solving America's health care problems. That said, I don't see much harm in making these plans available--particularly to consumers who can afford the extra financial risks they can create. These plans enjoy better consumer acceptance in the individual health market--particularly among higher paid consumers because they are a fantastic tax preference and a great way to fund the high deductible plans this higher-earning market tends to want anyway.

But HSAs as a health policy tool to fix the American health care system? Give me a break.

Consumer-driven care is a concept built on a free market foundation. And that foundation is turning out to be one that is pretty weak.

• First, for people to act in an efficient way, they have to have information. They have to know their options and be able to assess the options. The medical directors of the leading health plans can hardly manage care optimally. How did we ever expect regular folks to figure it out. The information just doesn't exist--beyond some marketing brochures.
• Second, the consumer-driven movement assumed that patients would want to take more control of their health care challenges if there was a financial incentive for them to do it. We are finding that the opposite is true. The health care delivery system is a hugely complex tangle and consumers are more interested in finding providers and/or insurers they can trust to guide them through it than thinking this needs to be their preoccupation. Ask anyone who has had a serious illness, or managed one for a close relative, and they will recount one nightmare after another about trying to get the best care and their frustration in trying to untangle bills and insurance documents. Who would actually want to do this?
• Third, and you have all heard this a million times but we have to keep it on the list, 75% of all health care costs are incurred by the 15% sickest people. Look at all the consumer-driven financial incentives and you will find they are first-dollar oriented. Those people with all the high health care claims, and most of the costs, blow through those corridors very quickly and into full-pay areas where they no longer have financial incentives to better manage care--if they wanted to and could.

More information, price transparency, incentives to be better health care consumers, are all great ideas. Clearly, these concepts are responsible for the much better take-up rate for generic drugs and the huge savings there. The $5 co-pay and $100 deductible were around way too long. But the consumer's ability to be buy serious health care like he would buy a set of tires was a silly idea in the first place. This idea was pushed by the same "geniuses" who today write books about how we will save the U.S. health care system with new technology as the next "silver-bullet." All true to some extent but far more a sign of just how naive they are about the down-to-earth challenges we face.

We are at an interesting place in the national health policy debate.

One Democrat after another--so far Obama and Edwards--is proposing comprehensive health reform built around the Massachusetts health reform plan. That plan now has its challenges in getting off the ground and proving-out its proponents' ideas.

On the Republican side, we already have two candidates--Giuliani and McCain--who have said they want to work toward a more market-driven health care system with the consumer-driven concepts and HSAs at its core. But now even the Wall Street Journal is challenging the bottom line in that health care philosophy.

We have two big competing health reform ideas--one Democratic and one Republican--facing off in the upcoming national election just as real life results from both of these models are becoming available.

The candidates had better be careful to connect their rhetoric to the reality.