Getting a Health Bill Done—Special Interest Politics Versus Public Support

It is becoming more and more clear to me that the White House health care strategy this fall is based upon a belief they have been very successful in neutralizing the health care special interests and have therefore prepared the way to a legislative victory.

Each of the key stakeholders—doctors, hospitals, drug companies, device makers, and insurers are in a terrific place should any of the health care bills pass without a public option.

Each has put a fairly small amount of “savings” on the table that amounts to only about 1% of what the group, as a whole, would have received over the next ten years.

In simple math, any of the Democratic health care bills will increase the aggregate revenue of the key stakeholders by almost twice what they would give up.

In the Baucus Senate Finance bill for example, there would be $463 billion in new spending on insurance subsidies and $287 billion for Medicaid. Another $24 billion would go to small businesses so they could buy insurance. That is a total of $774 billion in new revenue for the big stakeholders.

Health care reform will be very good for the health care business. Insurance companies would benefit from all of the new premiums and even some of the Medicaid money in states where they provide those benefits. Health care providers would receive most of this money as it was passed through by private insurance and Medicaid to pay the providers.

In turn, health care providers and insurers would give up $409 billion in Medicare and Medicaid savings. Insurance companies, drug companies, labs, and device makers would pay $88 billion in new taxes. Insurers would pay excise taxes on high cost health plans which would raise another $215 billion. Both the excise tax and stakeholder taxes would almost certainly be passed on to the customer as new premium or sales taxes. Penalties for employers who did not offer health insurance, and penalties for individuals who did not buy insurance, would add another $47 billion in federal revenue.

So, under the Finance draft, hospitals, doctors, drug companies, and medical device makers would benefit from $774 billion in new spending (less insurance company and Medicaid overhead) and only lose $409 billion in Medicare and Medicaid cuts.

Insurers would lose about $130 billion in “extra” Medicare Advantage payments but would gain $463 billion in new insurance business from federal premium subsidies, likely more than $100 billion from new premiums paid out of the pockets of these new customers now required to buy insurance, and some share in the new Medicaid expansion. Even in the Baucus bill, insurers would stand to gain something beyond $500 billion net of their Medicare Advantage cuts.

You have to give the White House and Democratic Congressional leaders credit—they have neutralized the powerful health care stakeholders.

This has to be a textbook example of smart special interest politics!

But the special interest deals had already been cut before the August recess and the uneasy public reaction to the Democratic health care bills. Those deals clearly didn’t help the Democrats last August.

The White House may have the big health care special interests onside but they cannot ram through anything so big as health care without public support.

It is clear that the recent Obama health care offensive has been aimed at turning around the public perception of the Democratic health care plans and lining up that support.

The problem the White House now has is that it is not working. While the snap polls in the wake of the speech to Congress looked good, they have not held.

As one person told me this week, “The President keeps saying the same things he’s been telling us all along as if we weren’t smart enough to get it the first one, two, or three times.”

In fact, the President’s approval ratings on health care are as bad as they have been all summer.

This from Thursday’s (September 17) Rasmussen Health Care Tracking Poll:

Just before President Obama gave his speech to Congress last week, 44% of voters nationwide supported his health care reform proposal and 53% were opposed. Today, eight days after the speech and a brief bounce, a new Rasmussen Reports national telephone survey finds that 44% support the health care plan and 53% are opposed. Absolutely no change.

It’s worth noting that support and opposition were at precisely the same levels in mid-July. In fact, other than brief blips following a nationally televised press conference by the president and his recent speech to Congress, opposition to the plan has been stable at 53% throughout July and August and now into September.

The latest figures show that 25% Strongly Favor the plan and 43% are Strongly Opposed. In late August, those figures were 23% and 43% respectively.

This suggests public opinion is hardening when it comes to the plan proposed by the president and congressional Democrats that is currently working its way through Congress.

The President and Democratic leaders have done a masterful job of managing special interest politics.

But they may have overlooked, or taken for granted, the most important special interest of all—the voter/patient.

Whether the Democrats can pass a bill or not will depend on whether wavering Democrats ultimately see voters back home for or against all of this.

One more time: You can’t ram anything through as important as health care with a 44% approval rating.

Health Care Outlook Not Improving

The next big test for a health care bill in 2009 (notice that I did not call it health care reform) will come in Senate Finance.

The final vote in that committee will tell us a lot about whether the Democrats have any chance for 60 votes in the full Senate. So far, it does not look good.

I have the greatest respect for Senators Baucus and Grassley and their good faith efforts to find a bipartisan health care solution. But I also think their efforts were fatally flawed from the beginning.

I think the problem is that Baucus and Grassley were trying to bridge the wide chasm between liberal and conservative ideas. Finding the fine balance necessary has created an unwieldy compromise—no one is happy. Most striking, the compromise reached between cost and premium subsidies has yielded an $880 billion bill that requires middle class people to buy health insurance they will in no way will be able to afford. On top of that, the policies have big deductibles and out-of-pocket costs.

As I have said on this blog before, we cannot do something as big as health care reform without bipartisanship. The American people will never be comfortable with one side’s proposals so long as the other side is taking shots.

Any successful health care effort will need political cover from at least some respected members of the minority party.

This health care effort has occurred on one side of the political spectrum. Grassley and Baucus tried to bridge a wide chasm between the conservative side and the liberal side and were only able to build a rickety bridge across it that, it would appear, Grassley can’t even sign onto.

To get this done, we will need to build a consensus on health care from the middle and then build out. We need to start with the things everyone can agree on and then push simultaneously as far right and left as we can go and still hold a consensus.

I know I have said this a few dozen times before on this blog, but Wyden-Bennett is an example of that middle-out model.

You might respond that Wyden-Bennett is off the table.

Have you noticed recently the growing number of times that name keeps coming up in media reports?

Recent post: "Please Don't Call It Health Reform"

The Proposed Health Insurance Company Taxes To Pay for Health Care––You Really Need to Know What “Loadings Available” Means

The Congress has investigated about every conceivable way to tax people to pay for the health care proposals—a millionaire’s tax, bigger taxes on home mortgages and charitable contributions, and a couple of dozen more ideas.

Now Congress looks to be the most interested in taxing insurance companies to pay for a big chunk of their health care proposals. The new taxes would come in two parts––a 35% excise tax on any health benefit cost above an $8,000 single and $21,000 family annual premium as well as a flat $6 billion annual tax on the industry to be allocated among the companies proportionate to their premium.

There is certain logic to this. Taxing high priced benefits could help deflate the health care economy. Taxing all of the health insurance companies that stand to get more than a $1 trillion in new business—most of it in the from new private insurance and Medicaid subsidies and the rest from the consumer’s share of those new private plan premiums—seems fair at one level.

Calling for a tax on that big rich insurance company also sounds a lot better to the politicians than looking voters straight in the eye and raising their taxes directly.

But what is really going on here is that proponents of these insurance company taxes would just turn the health insurance industry into a new division of the Internal Revenue Service.

To paraphrase Leona Helmsley, insurance companies don’t pay taxes—at least taxes that are directly related to their health insurance policies, as these would be.

I have run a health insurance business. The insurance companies already pay taxes much like the ones being proposed. They are called state premium taxes. They tend to run about 2% of premium on fully insured business.

Do you know what the insurance companies do with these taxes? Since they are tied to premiums they pass them through directly to the policyholder who pays these premiums.

And, speaking of Ms. Hemsley's famous statement that, "the rich do not pay taxes," I doubt this tax would ever be collected on the high-end benefits at places like the Wall Street firms the proponents talk about. If it became law, I can see the big Wall Street firms, and the like, going to their partners and telling them that because of the new tax partner benefits would be terminated and converted to cash, and the partners should then go to the market to buy their "gold plated policies." They would get away with that because, as it is now drafted, this tax would not apply to individual coverage and any existing individual policy would be grandfathered.

Will the 35% premium tax on high priced benefits apply only to very expensive policies? It will today but the caps would grow with inflation while health care premiums have been growing at about three times that. There is a reason this scheme develops far more revenue in the out-years—because more consumers will be trapped in the new tax not unlike what has happened to the Alternative Minimum Tax (AMT) over the years.

At any rate, whatever the tax, it will be passed through to those who pay the premiums. This is not a theoretical exercise. Taxes like this are what we call a premium load. You can load these costs as long as there are premiums available to load—loadings available.

What’s an “available loading?”

You.

You are available, as the customer, to have these costs passed right straight through as a load on the premiums you already pay. And, that is what the insurance industry has been doing with premium taxes for decades.

And, that is what insurers would do with these taxes. Not like insurance premiums are affordable in the first place.

If this scheme survives, the insurance industry would be a very valuable division of the IRS!

What Voters Really Think About Evidence-Based Health Care

I want to call you attention to an important survey done by the California-based Campaign for Effective Care. They surveyed California voters on their understanding of evidence-based medicine.

The bad news is that patients think their health care treatment is generally evidence-based even though that assumption is highly questionable. The good news is that patients want it to be evidence-based.

At a time when we hear anecdotal evidence, particularly from town hall meetings, that people don't want any "interference" between them and their doctors they do seem to appreciate the need to get all of the facts when making a treatment decision.

Here is the survey summary. You can access all of it here.

Quick Summary of Evidence-Based Medicine Poll Results

A Summer 2009 Lake Research Partners poll of 800 California voters released by the Campaign for Effective Patient Care brings a fresh perspective to the health care debate raging across the country.

Voter opinions about evidence-based medicine could not be more timely. The under- and over-use ofmedical treatment threatens patients’ well-being and wastes lives and resources. The prestigious Institute of Medicine reports that only about half of doctors’ treatment decisions are based on evidence.

The poll of California voter attitudes offers three important insights for policymakers:

Voters know that medical treatment should be based on solid evidence and they mistakenly believe that most of the care they are receiving is evidence based.

• Most voters assume that medical decisions are guided by evidence. A larger percentage feels this way about their own treatment than about everyone else’s (65% vs. 51%).

• 84% of voters are confident that they get the information they need to make informed medical decisions and are overly optimistic about the ability of the current system to put new evidence into practice.

When voters are educated about the failures in our system, they want reform.

• 79% of voters believe that it is a serious problem when doctors fail to provide necessary treatment; 80% feel it is a serious problem when doctors provide unneeded medical treatment, and; 80% are more likely to support reforms when they learn about failures of the current system.

Voters are astute. They support specific and sensible evidence-based health-care reforms.

• 88% of voters strongly support ensuring that doctors have access to scientific evidence.

• 92% of those polled would require doctors to disclose the existence of scientific evidence supporting effective treatment. 90% would require disclosure of the absence of such evidence.

• Additionally, 72% of voters want health care reform that ensures doctors are paid based on whether their treatment is supported by scientific evidence, and not solely on how much treatment doctors provide.

"Please Don't Call It Health Reform"

Readers of this blog already know of my disappointment in what the White House and many in Congress are calling "health care reform."

So, I was happy to see Alain Enthoven's recent KHN op-ed.

Here is a small portion of it:

"Once again the President did not put forth serious proposals to reduce the growth rate in health expenditures in his speech last night. Obama likes to talk about the iconic systems: Mayo, Intermountain, Kaiser Permanente, and Geisinger, but the Democratic bills do practically nothing to promote their growth or systems like them.

"The House Tri-Committee and Senate HELP Committee bills offer none of the fundamental reforms that would be likely to change the system or significantly slow growth in expenditures. Rather, what they offer is continuation of our present traditional employer-based, non-competitive fee-for- service system. They don’t respond to the President’s call for reforms that would lower the growth trajectory, or even that would not add to the fiscal deficit."

I highly recommend your reading all of it here.

Curb Your Enthusiasm! Health Care Will Still Be Very Hard to Do

I guess all of us in the health care debate are a bit bipolar. From lots of folks thinking health care reform was in critical condition a couple weeks ago we’ve now gone to lots of reports extolling a newfound optimism in the wake of the President’s impressive speech this week.

Don’t interpret this post as my thinking health care reform is something we should be putting off—it’s already 20 years overdue.

But, I will suggest, we can’t begin to presume anything will be easier after a speech.

I thought Ceci Connolly’s article in today’s Washington Post set the proper tone:

"One day after President Obama pitched his plan for comprehensive health-care reform to a joint session of Congress, administration officials struggled Thursday to detail how he would achieve his goal of extending coverage to tens of millions of uninsured Americans without increasing the deficit.

"The 10-year, $900 billion proposal Obama envisions borrows heavily from concepts circulating on Capitol Hill, but there was little evidence that the broad ideas are sufficient to break a congressional logjam."

The issues ahead are still daunting. In health care, lofty rhetoric and big concepts have always been a lot easier than the thousand pages of detail that follow.

Let me give you an example.

The President said in his speech that his goal was a bill costing about $900 billion. Obviously, he is trying to keep the cost down under a trillion dollars. But to do so, lots of trade-offs have to be made—the old health care push it in here and it pops out there problem.

The recent Baucus Senate Finance draft also aims at a cost of between $800 billion and $900 billion. But to hit that number the authors have had to slim down the subsidies the uninsured would get and the value of the policy.

The Baucus draft would extend insurance subsidies (on a sliding scale) up to 300% of poverty—that is $66,150 for a family of four. The draft also says a family at 300% of poverty would be required to pay up to 13% of their income toward the cost of a policy—that would be $8,600 a year.

If they either lost their current employer coverage or didn’t have any in the first place, this family would be mandated to buy health insurance. If they did not, the fine would be $3,800 if their income was over 300% of poverty and $1,500 if it were below.

So, a middleclass family heard the President say that his plan would provide them with health care security. Under the Baucus plan, that means they would be expected to spend $8,600 for a health insurance plan that would likely have a $2,000 deducible. If they didn't buy it, they would have to pay a fine of $3,800.

Do you know many families making $66,000 a year that have an extra $8,600 in their checking account--much less for a health policy with big deductibles and out-of-pocket costs?

Explain this one to Harry and Louise.

The House bill isn’t much better in this regard.

Under the House Energy bill, a family making 250% of poverty ($55,125) would be required to pay 8% of their income up to $4,416 a year for a policy that could have a deductible of $1,000 and a $7,450 out-of-pocket cap.

At 300% of poverty ($66,150), the House Energy bill would limit a family’s insurance costs to $6,612 a year with a deductible of up to $2,400 and an annual cap of $8,520 in our-of-pocket costs.

A family making 400% of poverty ($88,200) would be expected to pay as much $10,584 a year for their insurance that could have a $3,000 deductible and a $10,000 annual out-of-pocket cap.

These are the kinds of details that inevitably follow the elegant rhetoric in health care.

Would access to insurance be a big improvement over what we have today. You bet.

Is this health care "security?" Ask Harry and Louise.

The Kaiser Health News website has a comprehensive article reviewing expected premiums and out-of-pocket costs for the House bills here.

The Obama Administration––What Will They Do Next?

How’d you like to be a fly on the wall in those White House health care meetings this week?

It looks to me like they have two choices—neither attractive to them:

1. Full Speed Ahead, Damn the Torpedoes – This might also be called the Pelosi Option for the Speaker’s intransigence for compromise. Just keep driving the existing Democratic bills through. This has the advantage of keeping the liberal wing of the Democratic Party happy but has some pretty tough potential negative consequences.

With a health care approval rating in the low 40s, this invites the continued strong opposition on the right and lots of continued middle-America nervousness over a “government takeover of the health care system” and “spending another trillion dollars when we can’t afford it.” Even if the public option is ditched, that means continuing to push a thousand page health care bill in an environment when the health care reform well has likely been poisoned.

This option includes the threats for using reconciliation rules. As I have said before, you don’t ram anything through with a 41% health care approval rating. And that presumes the reconciliation idea makes sense in the first place. I don’t think it does:

• The Republicans have a ton of parliamentary maneuvers they can use to tie things up indefinitely.
• The suggestion to “split” the bills into one unpopular bill and one popular bill––presuming moderate Democrats and some Republicans might be dumb enough to vote for one and pretend that second bill had nothing to do with the more problematic first one––is foolishness.

IF any of this did work and result in a very controversial bill you have to wonder just what the consequences would be come November 2010—or even 2012. You also have to wonder what the consequences would be for simply trying it.

2. Scale Health Care Reform Down to Something at Least Moderates in Both Parties Can Live With––This sounds easier than it really is.

As I have posted before, doing just health insurance reform would cost something close to a trillion dollars. Getting rid of pre-existing conditions provisions and medical underwriting requires getting about everyone in the health insurance pool to avoid the insurers getting stuck with only the sick. Health insurance subsidies to accomplish this are by far the most expensive part of the existing bills. In the House bills, the insurance subsides are worth almost $775 billion and the Medicaid expansion is worth almost $450 billion more. Scale those subsidies back and you are still in the $800 billion to $1 trillion range.

A bill that costs that much still scares those worried that this kind of entitlement expansion is too costly—particularly because the bills on the table so far have had little in the way of real cost containment.

An even more modest bill would likely be necessary to get moderates onside.

You could probably get a smaller cost bill—perhaps $250 billion over ten years—by targeting subsidies on the small employer market. Dollars could be targeted, limited in scope, and make a “down payment” toward covering at least a few million people. A targeted expansion of Medicaid could be part of such a package but nowhere near the 130% target in existing bills.

This has the advantage of creating a bill you could likely get moderate Democrats and even a lot of Republicans to support. It would settle down voter opposition.

But it would also constitute a “huge missed opportunity” to really create a universal health insurance system. Liberals would likely go ballistic believing the White House has abandoned the signature domestic promise of the campaign.
***

The Democrats are in a hell of a health care political hole.

Neither of these options is politically attractive--each has both extreme opportunity and consequences.

Sort of reminds me of what Stan told Ollie: “Well, here’s another nice [health care reform] mess you’ve gotten me into.”

Or, you could just hope for a miracle phone call:

Earlier post: There Will Not Be Health Care Reform in 2009 Without Republican Leadership

Will Republicans Be Spoilers Or Problem Solvers on Health Care Reform?

by BRIAN KLEPPER and DAVID C. KIBBE

In theory Congress' return next week from recess could offer a new beginning to the health care reform process, giving everyone a chance to take a deep breath and recalibrate the components of change.

Nine months into the wrangling around a new Administration, the talk-show right has seemingly hijacked the discussion on health care, Democrats' signature issue, with the standard tools that demagogues have always used: leveraging popular prejudices with oversimplification, hyperbole, and distortion. The die-hard GOP faithful's leaders - Gingrich, Palin and others (see this off-the-deep-end speech by Rep. Mike Rogers (R-Mich)) - are of course playing spoilers, independent of the cost. They hope to goad centrist voters into abandoning the Democrats so they can retake power. Witness South Carolina Republican Jim DeMint's comment, "If we're able to defeat Obama on this, it will be his Waterloo. It will break him."

The problem with this approach is that we're still early on in our national discussion about change and about health care. An increasing number of Americans may be frustrated with Democrats, but after 10 years of Republican rule, few Americans see them as a party of fresh ideas or having an interest in helping anyone but the wealthy and powerful. Americans may have short memories, but they likely still recall that Republicans were just thrown out for a multitude of significant sins. So if everyone you know sends around Obama-as-Hitler arguments, heckling and hoping the Dems will quickly self-destruct may seem like a reasonable strategy. It is doubtful, however, that the other 75 percent of us buy that thinking.

Of course, the Democrats' health care reform offerings haven't particularly helped. As we recently pointed out, now that they're in power the Democrats have taken enormous contributions from the industry, and their health care proposals show it, dramatically expanding entitlements but conspicuously doing little to drive out waste and cost.

This has alarmed some influential groups that otherwise might be supportive. For example, the non-partisan Committee for Economic Development, a business collaboration focused on social issues, issued this July 20th press release excoriating the bills:

"The House of Representatives and the Senate HELP Committee proposals are unacceptable. They would expand coverage without controlling costs, leaving future generations with a system even worse than what we have today. We cannot afford the government and the health-care system we have now, much less this bloated alternative. Lawmakers have bowed to political pressure at the expense of sensible policy. The business and policy community cannot stand behind these bills," said W. Bowman Cutter, Managing Director, Warburg Pincus.

And the Mayo Clinic, often cited by President Obama as a national model for higher quality, more efficient care, issued this strongly-worded response* to the House Tri-Committee Bill:

Although there are some positive provisions in the current House Tri-Committee bill – including insurance for all and payment reform demonstration projects – the proposed legislation misses the opportunity to help create higher-quality, more affordable health care for patients. In fact, it will do the opposite.

In general, the proposals under discussion are not patient focused or results oriented. Lawmakers have failed to use a fundamental lever – a change in Medicare payment policy – to help drive necessary improvements in American health care. Unless legislators create payment systems that pay for good patient results at reasonable costs, the promise of transformation in American health care will wither. The real losers will be the citizens of the United States.

Over the weekend, Senator Mike Enzi (R-Wyoming), a staunch conservative and a member of the Senate's "Gang of Six" working on a health care bill, joined this chorus. He claimed that the Democrats' proposals "will actually make our nation's finances sicker without saving you money," would "raid Medicare" and intrude "in the relationship between a doctor and a patient."

It is important to distinguish this criticism from most of what we've previously heard from the right. Unlike many of his colleagues, and certainly contrary to conservative talking heads, Sen. Enzi's comments here are not so political as factual. They reflect the legitimate concerns of reasoning, mainstream conservatives who worry about simply throwing more money at health care without fixing anything.

Which constitutes the real health care reform opportunity for Republicans. The time could be right for centrist Republicans to pragmatically wrap their heads around this issue. After all, the approaches that are known to drive down costs and improve quality can easily be embraced by true conservatives who clamor for market-based solutions. Now, out of power and longing to demonstrate that they can produce substantive answers to our problems, the challenge will be to turn against their traditional industry benefactors and act on behalf of the American people.

On August 24th, Bob Laszewski posted an important column, There Will Not Be Health Care Reform in 2009 Without Republican Leadership, that listed four major areas of health care change that should come easily to centrist Republicans.

• Bulletproof Health Care Security. This is the idea that everyone would have significantly improved access to care, that the employer-sponsored system would remain available for those who like it, and that Congress would be required to use the same system that they pass for the rest of us.
• Medical Malpractice Reform. The Republicans have the Democrats where they want them on this one. There is no good reason why our current Med Mal system, as capricious and ineffectual as it has been, has not been revised with expert systems, except that the trial lawyers, in exchange for hefty financial support, have received protection from the Democrats. It's time to fix this problem that pervades our health care provider community.
• Paying for It. This is acknowledging that subsidies will be required for those who can't afford health care at its current cost level, and that there are ways to structure the new cost that are more sensible. As Bob points out, the nearly forgotten Wyden-Bennett bill would be cost neutral in its second year.
• Tough Cost Containment. As we said above, this has been the Congressional Democrats' proposals' most glaring and conflicted flaw. It is an area that, with a focus on primary care, paying for results instead of piecework, and cost/quality transparency, could dramatically drive down cost while improving quality, rightsizing our health system and going a long way toward ameliorating the most pernicious drag on our larger economy. Bob tackles cost control most effectively in his Health Care Affordability Model, a plan that would use tax incentives to encourage the industry to focus on driving out waste.

Collaborating with Democrats or, failing that, taking the lead to demand well-understood cost control mechanisms, would send a clear message that some Republicans are actually interested in problem-solving, not simply nay-saying.

It is possible that the health care reform issue has hardly begun, that the conventional back-room deals and horse-trading needed to be sorted through before the real work could begin. It is a profound truth that, town hall protests and nonsensical boasts about American health care notwithstanding, the middle class is terrified that their access to health care is slipping away. Both Democrats and Republicans have a large stake in visibly resolving this crisis. And, as Rahm Emanuel said, a crisis is a terrible thing to waste.`

The shame and danger of the health care reform proposals so far is that they would likely do little to actually address the crisis. The question now is whether lawmakers in either or both parties can put aside their partisanship, their petty grievances, and their special interest conflicts to do the people's work. Pursuing the structural solutions described here would get America's health care system headed in a new, far more positive direction.

And one thing is clear. The American people are desperate for meaningful health care change, and are watching this process very closely. Whoever takes the high road and achieves real reforms will win. The opposite is also true.

Brian Klepper, PhD and David Kibbe MD MBA write together and consult on health care market dynamics, reform issues, and health IT. Their collected writings can be seen here.

*As of Aug 25 this is what Mayo says about the various health care bills:

August 25, 2009

We support President Obamas call for healthcare reform, and agree with his position that the status quo is the one option that is not on the table. With the President and Congress commitment to reform, we have a window of opportunity now to create bold policy that will translate into real change for patients. Mayo Clinic and the many organizations and individuals working with us in the Mayo linic Health Policy Center are strongly in favor of reform of both health care delivery and health insurance. True health care reform is getting better results for the money spent. Better results for money spent is what we mean by high value health care: better outcomes, safer care, better service and at lower costs over time. If we can accomplish this we will find better access for medical services as well. With many proposals and legislation in the mix, overall we believe there must be two key elements in any successful reform measure:

• Insurance for all, so all Americans have access to health care.

• Payment system reforms that reward value rather than penalizes those who provide high quality, affordable care. Mayo Clinic has laid out an overall Point of View to help guide lawmakers on the elements needed to deliver quality, affordable health care.

• Paying for Value The Mayo Clinic Health Policy Center recommends that Congress focus on "paying for value as the fundamental step required to induce meaningful health care reform. If reforms can align the payment system to reward value, then doctors, nurses, hospitals and other providers will work together in appropriate ways to receive that reward. It may not take much to produce the changes needed to get high value care. Health care professionals have a true interest in providing the best quality care for their patients. If they are rewarded rather than punished as they are in today's system for providing high value care, the payment system will be aligned with their own professional instincts. Most importantly, paying for value will align with what people want: health care that provides good access, delivers quality utcomes, is performed safely, with compassion, and at affordable prices.

• Using Medicare as a lever. We believe the House and Senate have made progress ‐‐especially with reported provisions in the House bill that will help ensure that Medicare pays for value. We are encouraged by reports of provisions to be added to the House bill that addresses both quality and regional variation through two Institute of Medicine (IOM) studies. We believe that provisions such as these must be part of final health care reform legislation.

Making Health Care Reform "Deficit Neutral" Accomplishes Little--So Why Is That the President's Health Care Reform Budget Objective?

For me, one of the more amazing things about this health care debate is the way the press and many advocates of health care reform have accepted the notion that the fiscal objective should be to pass a health care bill that is "deficit neutral."

With health care costs unsustainable, why is that an appropriate goal?

Deficit neutral means that any impact of a health care bill on the federal budget would neither increase costs, nor would a bill decrease costs, from what they would have been without reform. So, if federal health care costs remain the same post-reform why would we expect the outcome to be any different for the rest of the system? Why shouldn't we believe that post-reform health care would cost the same $4.5 trillion and 22% of GDP we expect it would cost in 2018 anyway?

Now, the Democratic bills would bring in many millions of people who are uninsured today and that is a real benefit. But we would bring them into that same unsustainable system.

I was struck by a recent exchange between Senator Evan Bayh (D-IN) and Fed Chairman Ben Bernanke earlier this summer. In the second minute of the video link below, Bayh and Bernanke point out that any "deficit neutral" health care bill does not get at the "heart of the problem" and agreed we need to do more--we need "systemic reform."

Why then is "deficit neutral" the stated fiscal objective for the President and the Democratic leadership in their health care bills?

Video link

Bob Bennett Wants to Turn "Control of Our Health Insurance System Over to the Government"–-Say What?

That’s what the Club for Growth is saying about Senator Bob Bennett’s health care proposals.

Apparently, the Club for Growth has a reading comprehension problem. Or, are they just trying to twist the truth about the Utah Republican's health care efforts? The Wyden-Bennett Healthy Americans Act has to be the most pro-market health care reform proposal on the table.

First, it does not have the controversial public health care plan option that the pending Democratic health care legislation does have. Every one of the health insurance plans that would be offered under Bennett’s bill would be a private plan.

The Wyden-Bennett plan also puts the value of any employer-provided health plan in the hands of the consumer. Employers can keep their plans and employees can remain in them. But consumers can also take the cash and go purchase any plan available.

For a long time, conservatives have suggested putting the value of health care plans in the hands of consumers, so they could use the money to buy the kind of plan that works for them, as well as changing the tax code as Wyden-Bennett does to facilitate that.

Senator Bennett’s bill also creates a health insurance exchange where consumers could go to compare policies and pick the one that is right for them but that is hardly a proposal for government to take over the health care system.

Likely the truth the Club for Growth is trying to twist has its roots in this: The conservative Heritage Foundation has been critical of the design of these insurance exchanges in Wyden-Bennett because they rely on the use of a standard plan. As they put it, “standardization undermines personal choice and market innovation.” I think that is a valid criticism of a bill that is by no means perfect in its original form.

But that is a long way from condemning Senator Bennett’s efforts to find a way to accomplish bipartisan health care reform as promoting “a government takeover.” As the conservative Heritage Foundation put it in their review of the bill:

“By introducing the Healthy Americans Act (S. 334), Senator Ron Wyden (D-OR) and his chief co-sponsor, Senator Robert Bennett (R-UT), have courageously challenged the status quo on the federal tax treatment of health insurance and public health programs for the poor. The bill correctly targets the inequitable tax treatment of health care that favors coverage obtained through the place of work. It also recognizes the weakness of the existing public health programs, Medicaid and the State Children's Health Insurance Program (SCHIP). The bipartisan bill has attracted a dozen co-sponsors, drawn equally from both parties.

“Still, as the chief sponsors point out, the bill is a work in progress, intended to stimulate discussion. And despite many attractive tax reform aspects, a troubling feature of the bill is that it would replace the current health system with one that is heavily regulated by the federal government: Individuals would have access only to plans permitted by the government and would be required to purchase such a plan.”

A “courageous” attempt at reform that Bennett and all of the other authors agree is a “work in progress” is hardly a reason for the Club for Growth to condemn good faith efforts.

The Club for Growth also claims that Bennett is sponsoring the bill with "liberal Democrats." The Wyden-Bennett bill has such “liberals” co-sponsoring it as Republicans Judd Gregg of New Hampshire, Mike Crapo of Idaho, Lindsay Graham of South Carolina, and Lamar Alexander of Tennessee.

Here are what these Senator’s and their co-sponsors for the Wyden-Bennett bill recently said in a Washington Post op-ed piece:

“The Democrats among us accepted an end to the tax-free treatment of employer-sponsored health insurance; instead, everyone—not just those who currently get insurance through their employer—would get a generous standard deduction that they would use to buy insurance—and keep the excess if they buy a less expensive policy.

“The Republicans agreed to require all individuals to have coverage and to provide subsidies where necessary to ensure that everyone can afford it. Most have agreed to require employers to contribute to the system and to pay workers wages equal to the amount the employer now contributes for health care.”

Legislating is about give and take. I expect Senator Bennett would favor a health insurance market more like the one the Heritage Foundation has outlined. But for this kind of effective leadership, and not having the perfect bill, the Club for Growth says Bob Bennett is in favor of government control of health care?

If we had more Senators like Bob Bennett conservative ideas for modernizing America’s health care system, like turning massive health care purchasing power over to consumers and creating a health insurance supermarket, would be making even more progress.

Bob Bennett deserves a lot better than this cheap shot by people who were supposedly his friends!

The Health Reform Bills Would Be Great For the Business Of Health Care

Have you noticed how none of the big health care business special interests is running any negative health care reform ads? Why should they when each is poised to gain billions of dollars from it?

As President Barack Obama has said many times, any health care bill that costs about $1 trillion would be paid for, roughly half and half, with savings in the health care system and new revenues (taxes).

All told, health care providers will likely get hit by $500 billion in federal payment reductions over 10 years from what they would have received otherwise. This is their "savings" contribution to help pay for the overhaul effort. It amounts to no more than a couple of percentage points less than they would have received anyway.

But more importantly, the Congress is getting ready to spend $1 trillion over the same 10 years mostly to expand Medicaid and provide subsidies to the uninsured to help them purchase private health insurance and be able to pay their medical bills. The health industry, by giving up $500 billion, gets millions more patients armed with public and private health insurance cards. Not a bad deal—particularly when the other $500 billion needed to finance the bill comes from new levies on taxpayers, not bigger industry cuts.

The details show an even prettier picture for the business of health care.

Read the rest of this column at Kaiser Health News.

Health Care Reforms Deeper Problems

by BRIAN KLEPPER and DAVID C. KIBBE

Note: We were asked by Northeast Florida's regional newspaper, the Florida Times-Union, to write a piece for lay audiences distilling our thoughts on what's behind the reform curtain. This piece published this week and, while we doubt much of it will be news to this blog’s readers, we wanted to offer it up as a summary statement.

Congress' health care reform debate has highlighted how American governance is broken and the difficulty of addressing our national problems.

Take, for example, whether health care is in crisis at all. Conservative commentators argue that America's health system is fine, that our excellent care simply costs more than other countries' poorer quality, and that most uninsureds can afford coverage. They ask why we should revamp a great system for the two or three percent of Americans who get less.

This misrepresents reality, though. Care and outcomes are often superior in other developed nations. In America, the ranks of the uninsured and under-insured have skyrocketed, from insurance costs that have grown four times general inflation for a decade. Health coverage is employers' most unpredictable major cost, a threat to their businesses' competitiveness, and they have increasingly offloaded costs onto employees. So while the marginalized uninsured are an important problem, declining coverage for the mainstream is the greater worry. Most know that, even with insurance, any major health problem can spell financial ruin.

As businesses and individuals have been priced out of health coverage over the last four years, commercial health plan enrollment has plummeted by as much as 20 percent, or about 36 million people. The Kaiser Family Foundation reports that 40 percent who lose group health coverage probably become uninsured.

Fewer people buying coverage means less money to pay for health care products and services, so the industry is experiencing an unprecedented financial decline. With reforms looming, it has fiercely advocated for universal coverage, which would provide stable funding for a larger patient population. Meanwhile, the industry has opposed changing business mechanisms that encourage waste, even though experts agree that one-third or more of all health care cost is unnecessary or inappropriate. But this raises an important question. Why not spend less by recovering wasted dollars, and then improve access?

The industry has pressed its goals through lobbying, which lets special interests exchange campaign contributions for policy influence. The non-partisan Center for Responsive Politics reports that, between January and June, the industry gave Congress more than $260 million. One lobbyist commented, "A person can reach no other conclusion than this is a quid pro quo [this for that] activity."

The funds have gone mostly to Democrats, the party in power now, and are producing their contributors' desired results. The current proposals expand coverage, but do little to reduce cost, failing to heed any of health care's management lessons from the last 25 years. For example, they won't re-empower primary care, which other nations have found will maintain a healthy populace for half the cost of our specialist-dominated approach. They fail to make care quality and cost transparent, which would let health care finally work as a market, and help identify the best health care vendors. They continue to favor fee-for-service reimbursement, which rewards delivering more products and services rather than rewarding results. And they all but ignore our capricious medical malpractice system, which most doctors say encourages defensive practice.

These problems and their solutions are structural, and are well understood within the industry. If reform does not pursue these structural approaches, health care will continue to drag down the larger economy. Our current problems will remain and intensify, at enormous cost.

Out of this experience, the American people should become aware of a couple of harsh truths.

First, so long as Congress willingly exchanges money for influence, American policy will favor special interests rather than the public interest. We'll be unable to meaningfully address our national problems: energy, the environment, education, and so on.

Second, so long as partisans distort the truth to discredit their opponents, rather than focusing on our very real problems, America's future will continue to be compromised.

Which is to say that we have deeper problems than an inability to fix health care.
Brian Klepper, PhD is a health care analyst based in Atlantic Beach. David C. Kibbe MD MBA is a physician and Senior Consultant to the American Academy of Family Physicians

There Will Not Be Health Care Reform in 2009 Without Republican Leadership

I will suggest that there is an opportunity for the Republicans to score a huge political and policy win. It can be done in a bipartisan way and it can be done in a way that does not sell out the core principles that either Republicans or Democrats believe in.

It would require a new effort—a clean sheet—this time initiated by the Republicans.

The Republicans have won August. No doubt about it. But they have “won,” not because they actually did anything to deserve the win—they pretty much sat back and let political gravity do all of the work.

Now what? Do Republicans really think they can sit back and do nothing for three or four more months and come out “winners?”

At this rate, this health care debate is headed for a stalemate that will not do the country, nor either party, any good.

More, I don’t know any leading Republicans who don’t think this health care system is in crisis, that we have to bring our costs under control, and every responsible American should have health insurance.

The Democrats could just be on their way to a health care reform “Waterloo”—again. Letting them implode on their own—with a little bit of help from the far right—is a tantalizing proposition. But it is not a terribly patriotic one.

I will also suggest that the American people are smart enough to know the difference between a Republican Party that reaches out to take a constructive role in turning this around as opposed to the party of “No” that backs themselves into an accidental “win.”

For Republicans who think they can again convert the Democrats’ health care problems into a big election victory in 2010, there is one huge difference between this battle and 1994. In 1994 the Congressional Republicans hadn’t been in power for decades—they had new and intriguing ideas. After the American voters’ verdict in the 2006 and 2008 elections, it is clear the American people don’t exactly see Republicans as a new and intriguing brand.

It’s pretty clear that the Republicans have as great a need to prove something to voters, as do the Democrats. Republican leaders just sitting there letting the talkmeisters do their work for them isn’t going to turn around voters’ perceptions of the Republican Party.

I will also suggest there is a pathway Republicans can be enthusiastic about suggesting to Democrats, that there already is precedence for, and about which Democrats should be able to become enthusiastic.

I would suggest four ideas for the Republicans:

1. Propose Bulletproof Health Care Security - Lots of Americans, especially those with health insurance, are worried health reform will hurt them. Republicans have a chance to put those fears to bed. They can propose that the President, the Congress, and all federal political appointees should have to get their health care from that same health insurance exchange regular citizens would use in the community in which their families live. Insurance underwriting reform would be part of it.

That guy we saw in a town hall this month screaming at his Senator could be a lot more comfortable knowing he would get exactly the same health insurance choices his Senator—and his President—got.

This approach would send a message that everyone could be confident about because their elected officials would be in the same boat.

It is also clear that most Democrats and Republicans can agree on leaving the employer-based system of health insurance alone—including ERISA. This would give individuals the right to keep the employer plan they now have or join their elected officials in the insurance exchange. It is the citizens’ choice—whatever leaves them wealthier and happier.

With this approach, Republicans can combine the kind of insurance networks the conservative Heritage Foundation has argued on behalf of for years with the kind of health insurance Ted Kennedy called for in his recent Newsweek essay.

2. Medical Malpractice Reform – None of the Democratic bills that have made it through committee even mention it. There won’t be any compromise between Democrats and Republicans over the old arguments about whether or not we need to cap damages. But the thinking over malpractice has evolved greatly in recent years—health courts, for example, designed to quickly resolve medical injury claims and promote medical error reporting toward improved quality.

In candidate Obama’s health care plan document he called for “promot[ing] new models for addressing physician errors that improve patient safety.” Sounds like health courts to me. Republicans should call him out on it by putting it in their offer!

3. Paying for It – It is gratifying that both Republicans and Democrats see the need to give families not covered by employer plans the subsidies they need to buy health insurance. Of course, that is by far the greatest cost in any bill.

I was struck by a recent Washington Post op-ed written by the co-sponsors of the Wyden-Bennett Healthy Americans Act—six Democrats and one independent plus five Republicans. In it, they said:

“The Democrats among us accepted an end to the tax-free treatment of employer-sponsored health insurance; instead, everyone—not just those who currently get insurance through their employer—would get a generous standard deduction that they would use to buy insurance—and keep the excess if they buy a less expensive policy.

“The Republicans agreed to require all individuals to have coverage and to provide subsidies where necessary to ensure that everyone can afford it. Most have agreed to require employers to contribute to the system and to pay workers wages equal to the amount the employer now contributes for health care.”

Let me suggest that Republican Senators Bennett, Gregg, Crapo, Graham, and Alexander are showing the way. Republicans don’t need to sign-on to the entire Wyden-Bennett bill so much as recognize that these bipartisan Senators have found a way to reorganize and modernize existing health care tax incentives toward raising revenue and making the system more efficient in a way that appeals to both parties.

And, it is notable that these Republicans and Democrats have also compromised on ways to reform the medical malpractice system with some unique ideas.

Wyden-Bennett is a model that covers everyone and is deficit neutral in the second year after it is enacted—and begins to bend costs down in the third year.

4. Tough Cost Containment – Liberals tend to believe that the best way to control costs is with the public option. I disagree with that just like Republicans do—I see it as a means to artificially suppress provider payments but not get at the waste in the volume of care that is really at the crux of the cost issue.

But what I have been gratified by are all of the liberals who say passing a health care bill would not be health care reform—more that it would be a wasteful exercise—without cost containment. I doubt there are any conservatives who would disagree with that statement!

August has proven that the public plan option is not tenable—as a cost containment device or anything else.

So how could both parties agree on containing costs?

I have suggested something I call the Affordability Model. Simply, we set and phase-in affordability goals for health care a number of years down the line. Insurance companies, doctors, hospitals, drug makers, and everyone else in the system gets to do business in the way they believe will improve cost and quality. Patients get to choose any health plan available in their market—a completely free market. Republicans ought to like that.

The networks of insurers, doctors, hospitals, and drug companies that are right in their choices and meet the cost containment goals would get to continue to offer their services and products through networks as tax deductible health plans for employers and consumers. The networks that don’t control their costs or maintain their quality will not be attractive to patients and employers. They will also not be tax deductible any longer—a meaningful government enforcement mechanism. More, if there were not any affordable networks available at the end of the period, a government plan would be made available. Democrats ought to like the enforceability of it all.
***

There are a number of other health care proposals both Republicans and Democrats can agree on such as greater use of health information technology, prevention, wellness, and comparative effectiveness research.

One can see a pathway to a very meaningful reform of America’s health care system that both sides could agree to.

But with the politics of health care now so polarized who is in the best position to extend the “olive branch” and break the impasse? I believe it is the Republicans who hold the keys to a breakthrough. A breakthrough that would be bipartisan and therefore one the American people could have confidence in. A Republican led bipartisan breakthrough on health care also wouldn’t hurt anyone’s confidence in the American political system.

Which course will most likely lead to a Republican return to power?

Sitting on their hands watching somebody else’s “Waterloo”—or demonstrating real leadership?

Splitting the Bills? The Democratic Leadership and the White House Staff Really Need a Vacation

The latest word is that the Democratic leadership and the White House see a “60% chance” they will split their health care bill into two parts—one a budget bill that would be eligible for the 51-vote Senate rule and the other the operational non-budget portions that will need 60 votes.

This is all intended to get around the Byrd Rule—which allows the use of reconciliation rules only for budget items. I explained that rule in a post yesterday.

This week just keeps getting more bizarre. After the Secretary of HHS backpedaled on the public option on Sunday and liberals went ballistic on Monday, on Tuesday the White House said they really weren’t changing anything. Things took another big turn late Tuesday night with White House “sources” saying they were going to play hardball and go it alone by ramming Democratic health bills through with 51 Senate votes. But on Wednesday they were saying going it alone was not so much a threat as what would be left to them if the Republicans don’t deal in good faith—that nothing has been decided.

Now, they are 60% sure they are going to spit the bills and ram it through—concluding there is little or no chance for a deal with Republicans.

You know, it’s only Thursday—what are they going to leak tomorrow?

The split the bills idea has to be the most bizarre of all.

It would seem the assumption is that they can load the most controversial parts of their health care bills into one unpopular bill—the President’s health care approval rating is down to 41% per the NBC poll yesterday. Presuming they can get the public option into the budget portion—a big if—they would then get their most committed House and Senate members to pass that. Then they would tell the Blue Dogs and moderate Senate Democrats they should have no hesitation to vote for the operational part two of the bill. If course, without their vote for part two the more controversial part one could not become operational.

I can see the Democratic leadership selling this to doubtful members: “So we’ll do the tough vote and you moderates and Blue Dogs will only have to vote for part two and the fact that it makes the overall bill operational shouldn’t be a concern to you. All those people back at the town halls won’t have a clue you had anything to do with creating a public health plan option.”

The Democratic leadership and the White House staff really need a vacation.

In my mind, this does nothing for the real challenge Democratic leaders and the White House face. That challenge isn’t about legislative strategy in the House or the Senate. The real challenge is the fact that their health care approval rating is in the low 40s.

The Obama Admistration Would Do Well to Read the Senate Rules and the Polls

The latest reports are that the White House is getting ready to ditch any thoughts about a bipartisan health care bill and just ram the Democratic bills through the Senate with bare majorities.

Readers of this blog know that I don’t think it is ever possible to ram anything so big as health care through with slim Congressional majorities and even less public support. I would suggest people who think this is a good idea take a look at two things—the latest polls and the Byrd Rule.

Today, NBC is out with a poll that shows support for the Democratic bills well under 50%--and worse amongst swing independent voters. That is not to say the Republicans are doing well either—but they aren’t trying to ram anything through.

This poll was taken August 15th to the 17th—after the President’s town halls.

A few of the findings:

• 54% are worried that government is going too far—41% are worried that reform will not do enough to lower costs and cover the uninsured.
• 41% approve of the President’s handling of health care—47% disapprove.
• Just 36% believe that Obama’s efforts to reform the health care system are a good idea—only 24% think they will result in better quality.
• 43% say they approve of a public option—47% oppose it.
• The cheap shots are having an effect—majorities think the Democrats would grant coverage to illegal immigrants, for example.
• Only 21% approve of the Republican’s handling of health care.
• 60% said the system needs big change—but that is down 12 points since April.
  

The notion that Democrats can ram something so big as health care reform through with the 41% approval rating the President now has on health care is just nuts.

Politically, they would be asking for an even bigger polarization on this issue than we already have. It is hard to believe they wouldn’t pay a huge price for that in November 2010. I know many liberals think this is the right course but the fact is that Obama won the presidency and Democrats extended their Congressional majorities not because of who liberals voted for but who moderates in this country voted for.

More, they can’t pass health care reform in the U.S. Senate with 51 votes. The “reconciliation” rules that allow for 51 votes are budget rules. The second the Dems try that route a Republican Senator will rise with a “point of order” successfully pointing out that 900 of the thousand page bill is “extraneous” to the budget—things like a public option, insurance exchanges, new underwriting rules.

The opportunity for parliamentary objections would occur under the “Byrd Rule.”

Here is the summary of the Byrd Rule from the Congressional Research Service:

The Byrd rule defines matter to be extraneous in six cases: (1) if it does not produce a change in outlays or revenues; (2) if it produces an outlay increase or revenue decrease when the instructed committee is not in compliance with its instructions; (3) if it is outside the jurisdiction of the committee that submitted the title or provision for inclusion in the reconciliation measure; (4) if it produces a change in outlays or revenues which is merely incidental to the non-budgetary components of the provision; (5) if it would increase the deficit for a fiscal year beyond those covered by the reconciliation measure; and (6) if it recommends changes in Social Security. (Italics added)

The first point, that reconciliation cannot be used to for matters that did not produce a change in outlays or revenues, would likely be the provision a Republican would use—pointing to insurance underwriting rule reform, for example, as not having a federal budget impact.

Law in the Budget Act defines the Byrd Rule—it cannot be suspended by a simple majority vote in the Senate.

It is likely that a Republican point of order on a any one of the non budget items in the bill would be found “extraneous” by the Senate parliamentarian—there is enormous precedent for such a ruling. In fact, the rule’s author, Robert Byrd (D-WV), warned President Clinton that he could not use reconciliation to ram his health plan through!

To overcome the parliamentarian’s ruling would take 60 votes.

The upshot of all of this—it will take 60 votes to pass a comprehensive health care bill.

It will also take a lot more than a 41% health care approval rating.

The White House needs to start thinking about how it will accomplish that and stop the threats it can’t carry through on.

August 20 update: Splitting the Bills? The Democratic Leadership and the White House Staff Really Need a Vacation

Co-Ops Are the Single Dumbest Idea I Have Heard in the Health Care Debate in Twenty Years

This is a repost from June 23--sort of like regifting...

I am sure you have heard the story about the committee that was charged with designing a horse but, because of the bureaucratic ways of the committee process, instead ended up creating a camel.

We will not see a Medicare-like public health plan as part of any health care reform bill in 2009. I know proponents don’t want to hear that but it is crystal clear to me there simply are not the Democratic votes in either house of Congress for it.

But proponents are bound and determined to get something with the moniker “public plan” attached to it before they will sign-on to a bill. In an effort to compromise, North Dakota Senator Kent Conrad has suggested a defanged public plan in the form of a not-for-profit health care cooperative. I have been critical of that suggestion on this blog because his proposals look to me to be no different than the dozens of not-for-profit community-based health plans already operating—not the least of which is North Dakota Blue Cross.

When the day is done, what would Senator Conrad’s co-op proposal accomplish that is any different than the not-for-profit community-based health plans, that already have 50% of the market share in the under-age-65 market, have achieved?

But let’s take it a bit further.

At the thirty thousand foot level the notion of a public health plan cooperative doesn’t sound like a bad one.

But when you dig into it and actually explore how such a thing would work, it looks more and more like a camel to me.

First, the stated objective of a public plan cooperative would be to step up market competition to lower costs—to negotiate lower prices and more efficient provider treatment protocols. The argument goes that the existing plans aren’t trying hard enough.

OK, let’s start with the notion that a co-op can do a better job of negotiating prices and protocols. But wait, on day one how many members does the co-op have? Well it has no members on day one. So, the co-op's provider relations guy goes to the doctor and hospital administrator and demands better prices and protocols. My guess is the provider’s response would go something like this, “So you are here because your stated objective is to screw my reimbursement down more than it is, you have no members now, and if I give you the rates to take members away from the existing health plans you are going to make life even more difficult for me than those existing health plans have?" My guess is that when the provider stops laughing…

Next, the co-op has to hire people to staff its management and operations ranks. Who are they going to hire? Out-of-work realtors? Obviously, the co-op will have to hire experienced health plan people. First, for those of you in the business, just think of all the competition for your services if 50 new health plans suddenly get lots of capital to start-up. But secondly, if the co-ops hire the same people as are running today’s health plans—particularly people in not-for-profit plans now—why would the end result be any different?

And, how will they compete with health plans--for and not-for-profit--who have spent decades developing billion dollar information technology systems, pricing databases, and provider networks? From a standing stop, how many decades will it take to create anything meaningful? And when they are done, on what basis does anyone believe they will look any different than all of the not-for-profits we have today?

And, how will the co-op compete for these new hires? Why would the best talent want to go to work for a quasi government agency paying government pay scales whose future is in doubt? Will the co-op pay more than existing health plans to lure talent away? If so, how will their administrative costs be any lower? After all, payroll is at least half of total overhead costs.

Just how will the government decide how to capitalize these new plans? In the 90s we spent $75 million to $100 million to capitalize a health plan in each of the major markets. How much capital will each co-op get? In the market, that question was answered through the creation of a business plan. Any private not-for-profit health plan that did not ultimately meet minimum scale or reserve requirements was scuttled. Just how much, and over how many years, will the government dump capital into these plans and who will make the decision that the limit has been reached? Will co-ops have an unlimited access to government capital without accountability? No matter how ineffective they are will the government just keep subsidizing their losses?

Already, there is talk in the Congress about allocating $10 billion to build these things.

This whole debate gets back to the simple question I have not heard any of the co-op proponents answer: Just how will a co-op turn out to be any different than North Dakota Blue Cross with its profit percentage of less than 1% and its board a cross section of the provider, business, and consumer community?

Or for that matter, any one of the dozens of other similar Blues plans and not-for-profit community-based HMOs in just about every county in America?

But when you are grasping for a compromise—and putting the urgency for compromise ahead of good policy—it sure is easy to come up with a camel.

Related posts:

Here's an Example of a Cooperative Not-For-Profit Health Plan--North Dakota Blue Cross

Health Care Cooperatives--An Old New Idea--So What's a Blue Cross Plan?

A Public Health Plan That Looks Just Like a Big HMO---Why?

The Other National Universal Systems of Care Are Not Our Problem

You can't have an American health care debate without plenty of trashing of single payer systems elsewhere.

I am not a single-payer advocate. I believe it is simplistic to think that if we just had one and eliminated the duplicate expenses multiple payers bring with them everything would be OK.

I think a single-payer solution is simplistic because it misses the different histories that have gone on. When advocates compare what we have to Canada and industrialized Europe they miss a critical point--these single payer systems are 40 to 50 years old. Over these decades, our free market system has evolved to a point very different than the Canadian and European systems. Their systems had much less money poured into them than ours did over this period. The biggest difference is that we now have this huge medical industrial complex that devours great sums of money. Does it often provide excellent, even better care? Yes. But it needs to be fed vast quantities of dollars every day to keep it humming.

Layer a single-payer system over this money monster and I fail to see how politicians are going to stand in its way any more than they are this summer. This, by the way, is not intended to be an endorsement of the free market that has pretty much stood by the side of the road and watched--and profited from it.

Just what place we will ultimately come to that will fix our system is still very much a work in progress--and it will have to be both political and market-based.

My point here is that trashing systems in Canada and Europe is a handy political exercise but it really isnn't helpful. In fact, it just diverts us from the discussion WE need to have about OUR system.

I have lived in Canada and carried an Ontario Health Insurance Plan (OHIP) card (as a documented alien no less.) I had Canadian insurance company executives defend their system over the mess they thought we had.

I have worked with many of the people who lead our European systems. Their challenges look a lot like ours. We had far more in common than was different.

There is an op-ed in today's Washington Post, "In defense of Britain's Health System," penned by a former British Health Minister.

A few points:

Every Briton is registered with his or her own family doctor, whom they can see when they need -- without paying a fee. These doctors are independent contractors to the health service and are recognized and rewarded for quality in their compensation -- so they can focus on what works, not just what pays. Expanding on the facilities that are already in place, by next year every community in England will have a physician's office open from 8 a.m. to 8 p.m. every day of the year, and you can simply walk in and see a doctor, for free, regardless of whether you are registered.

In the unfortunate instance that a patient is diagnosed with a dire disease, such as cancer, it often takes only a week or two for a patient to be seen by all the right specialists, complete all the required diagnostic tests and be ready for surgery or other interventions. This rivals the best care in the United States or anywhere else in the world.

Under our NHS constitution, patients have a legal right to choice of provider. That means any provider -- public, private or not-for-profit. By April 2010 our NHS will be the first health system in the world to systematically measure and openly publish the quality of care achieved by every clinical department in every hospital. It means patients will be able to make meaningful, informed choices on what is best for them and their family. Some of this data is already published.

Many of the mischief-making rumors have focused on our National Institute for Health and Clinical Excellence, the clinically led body, independent of government, that gives advice on the effectiveness of drugs and treatments. Call it fiscal conservatism or old-fashioned common sense, but we think you should pay only for what works. At the same time, it should be remembered that Britain's pharmaceutical industry is second only to the United States in its innovation and the significance of its discoveries. The NHS invents and delivers pioneering treatments, from the first clinical use of MRI in the 1960s to leading developments in robotically enabled scar-free surgery today.

You can read the full op-ed here.

Should we have the British system in the U.S?

No. They have plenty of their own problems not the least of which is the millions of their citizens that have bailed in favor of a private plan. But the vast majority of Brits, Canadians, and all the rest are proud enough of their systems not to want ours.

Let's stop trashing some pretty good systems that work for their people and focus on something that will finally make our people proud.

Are Democrats Getting Ready to Ditch the Public Option? But They Would Still Be Challenged by the Trillion Dollar Price Tag

It looks to me like the popular objections to a health care bill being expressed by voters this month are concentrated in two primary areas:

1. A concern about “government control of the health care system”—mostly around the public plan option.
2. The trillion-dollar cost of a health care bill at a time deficits are swelling and worries about who will really end up paying for it.

As a result of the first concern, we are getting the first indications that some Democratic leaders are ready to ditch the robust Medicare-like public option and are beginning the process of talking the party out of demanding it be included in a health care bill.

This from Politico today:

After the toughest week yet for health reform, leading Democrats are warning that the party likely will have to accept major compromises to get a bill passed this year – perhaps even dropping a proposal to create a government-run plan that is almost an article of faith among some liberals…

"Trying to hold the president's feet to the fire is fine, but first we have to win the big argument," former President Bill Clinton said Thursday at the Netroots Nation convention, a gathering of liberal activists and bloggers who will prove most difficult to convince. "I am pleading with you. It is OK with me if you want to keep everybody honest. . . .But try to keep this thing in the lane of getting something done. We need to pass a bill and move this thing forward."

It has been clear to me for months, and I have been saying so on this blog, that the public option has not had the votes even among Democrats to make the finals. With all the heat “a government takeover” of health care has attracted from those at the town hall meetings either the Democrats ditch it or get used to the idea they have no chance of passing health care reform.

Given all of the stridency we have heard from liberals in recent weeks making inclusion of a public plan a litmus test for the minimum health bill they will vote for, it will be interesting to see just how this rolls out.

But getting rid of the public option doesn’t make health care reform easy.

While there are lots of other issues to sort through, I will suggest that the public’s unease with health care goes beyond the public plan. Voters seem every bit as uncomfortable with the trillion-dollar cost of reform and just how it would be paid for. They just don’t seem to buy the argument that savings from the current system and a tax on someone else will save them from eventually having to pay for it—and I think they are justified in believing that.

With talk about abandoning the public option also comes a discussion about a smaller health care bill that would cost less and just make a down payment on reform—focusing on insurance rules and the insurance exchange.

That is a possibility. However, even that will not be easy.

In order to craft an insurance system where pre-existing conditions limits and medial underwriting could be largely or entirely done away with, it would also have to be a fix that got lots of the healthy people to buy coverage. To do that, get a good mix of the sick and the healthy to maintain a viable insurance pool, the subsidies for those now uninsured and unable to afford the thousands of dollars health insurance costs would have to be robust.

Those insurance subsidies are what costs so much and make up the better part of the trillion dollar price tag the current Democratic health care plans have.

So, we can theoretically get rid of the robust Medicare-like public plan option with a stroke of the pen but not the trillion dollar price tag—and with it the voters’ concern about how much a bill costs and who will pay for it.

Related posts:

Health Insurance Reform or Health Care Reform? The President Gets It Right!

The Public Plan Option: Litmus Tests Are Never a Good Sign

You Call This a Health Care Debate?

Any of us who do health care policy full time might as well take the rest of the month off and let the demagogues bent on scarring the American people just get it all out. I swear it is getting worse by the hour. Then maybe we can get back to a rational debate.

The British Health System's National Institute for Health and Clinical Excellence (NICE) and Dr. Ezekiel Emanuel have been particularly taking it on the chin lately. They are what we are all supposed to be afraid of.

NICE is run by a guy named Andrew Dillon. Dr. Emanuel is advising the Obama administration on health care and is one of the most respected health care ethicists in the country (but is handicapped by what his brother does for a living).

Sarah Palin want-to-be Betsy McCaughey, who had her last 15 minutes of fame during the Clinton health care debate, claims Dr. Emanuel endorses age discrimination for health care services--basically saying he wants to pull grandma's plug.

NICE actually makes the British system's tough decisions so many worry might have to be made here. For example, last year NICE issued guidance rejecting kidney cancer drugs Sutent (sunitinib), Avastin (bevacizumab), Nexavar (sorafenib) and Torisel (temsirolimus). This leaves patients with only one treatment option – interferon. The reason is these drugs only extended the life of the patient a very few months but they cost about $200,000 to keep a patient alive that long.

Dr. Emanuel is one of the most widely respected health care ethicists in the country. The issues McCaughey is using were quoted out of context and had to do with one of the things Dr. Emanuel gets to think about at the National Institutes of Health--what to do when you don't have enough organ donors for those who want organs.

A few years ago Andrew spoke at an international conference I chaired in DC having to do with how different industrialized nations manage their use of medical technology. It was clear to me that NICE was making some very difficult but unavoidable decisions about when to use expensive technology and when it just did not make sense to--all following the science. Whatever, he was doing what a consensus in his country had decided he should be doing.

Would you expect your group insurance plan to spend hundreds of thousands of dollars on a drug that extended your life for a very few months? Or your individual health plan? Or Medicare? Lots of gray areas? How would you propose settling them?

Unless of course you are one of these people out there these days telling the American people there is nothing wrong with a health care system that we can't afford (and is on its way to doubling in cost in the next ten years) and there is no reason why we can't just pretend that we can continue to have it all.

Would you want careful and deliberate thought given to just how we manage organs whose supply falls short of demand? Would you want someone to stand up and say $200,000 coming out of an insurance pool--public or private--for two more months with your body racked with cancer is nuts?

Well I would.

Tell you what, I will stand with Zeke Emanuel and Andrew Dillon any day of the week rather than these fear mongers that know better than to say the things they are saying and have no conscience for what they are doing.

I don't like the Democratic health care plans nor am I a single payer advocate. But just when did we get to the point that smearing some really fine people and getting 15 minutes of fame was worth scoring some cheap political points?

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Related article in the London Telegraph rebutting criticisms of UK system.

Why the Democrats Are On Their Way To Blowing Health Care –Again

There will be a pretty long list of answers to this question but I will give you what I consider to be the number one reason.

The Democrats chose partisanship over bipartisanship.

There has been a school of thought in this town, of which I have strongly agreed with on this blog, that the only way you can do something as big and complicated and close to people’s self interests as health care is to do it in a bipartisan way.

The White House let the Democratic Congressional leaders choose a partisan route thinking they could ram something as big as health care through with their big majorities and without political cover from the center.

Now they are left with the 2009 health care reform well poisoned. Their far right opponents have, at least for now, hijacked the debate. This is no longer about health care reform. It is about just how far the American people want government to go past what has already happened this year. The new mantra is, “too far too fast.”

My sense is that when the government took over Chevrolet a switch went off in the minds of lots of middle Americans and the far right has capitalized on it. Message lost.

I firmly believe health care can only pass the Congress if in the Senate, for example, you have 70 or 75 votes. Simply, either party trying to move such a politically complex proposal has got to have bipartisan political cover. You will recall there were a ton of Democratic votes for George Bush’s Part D bill.

Whether health care reform comes from Republicans or Democrats the opposition will try to do what the opposition did in 1994 and is doing now. When the attacks start you need a bill that is not hard left or hard right but something the middle of the country can be comfortable with—you need a coalition of at least one side plus the middle. The best way to deliver that comfort to voters is to have lots of minority party folks on line with the majority—in the form of 70 or 75 Senate votes.

After this August fiasco, just how many Blue Dog arms do you think Pelosi is going to be able to break?

I will even go a step further--if this thing continues to sink the Democrats are going to have to demonstrate they clearly got the message or they will risk another defeat just as they did in the '94 elections over a health care debacle. That means dumping the architects of this mess--at least Pelosi and probably Reid.

After all, who will Pelosi have to blame? The "villain" insurance companies? I don't see any of their "fingerprints" on this.

I know there have been bipartisan efforts led by Baucus and Grassley in Senate Finance. Now, people will ask if that is the only hope left for a bill this year. The answer is no. While I have the greatest respect for these Senators, I see their effort as tantamount to trying to build a rickety bridge across a great chasm. The real problem they have faced in Senate Finance is that their parties are so far apart that it has been all but impossible for the two sides in these discussions to find anything practical to make everyone happy.

The “gang of six” from Senate Finance MIGHT come up with a compromise in September but it will be so convoluted in order to bridge the big divide that it will quickly fall flat—and that is IF the Republican party lets their three Senators even attempt to take the Dems off the hook they are dangling from.

Is health care bipartisanship a pipe dream? No. Ron Wyden figured out how to do it.