California Health Care Reform: The Prequel

Governor Arnold Schwarzenegger wasn’t the first state executive to try to expand health care coverage in California. He won’t be the last. The effort goes back at least as far as 1945 when then Governor Earl Warren sought to impose a payroll tax to cover workers’ and their families.

Steve Wiegand of the Sacramento Bee describes what happened to the Warren proposal. It’s worth reading as a reminder of just how tough health care reform can be. Back then, Governor Warren faced opposition from Labor, the California Medical Association and the Chamber of Commerce. It was branded by some as “socialized medicine” and wound up being killed in the Assembly Health Committee along with competing reform plans.

 While Mr. Wiegand doesn’t delve into whether the details of Governor Warren’s plans was frought with problems or the strength of the California’s economy at the time, there’s still enough parallels to the state’s recent debate to create a sense of deja vu.

Over the past year I’ve become convinced that any meaningful reform will have to be national in scope. States are simply too constrained in addressing a national problem to make much headway. If the new president fails to enact meaningful health care reform, however, the states will need to address the matter. Again. Hopefully whoever is governor of California at the time will have learned from Governor Schwarzenegger’s efforts. And from Governor Warren’s, too.

Individual Health Insurance to Get Federal Scrutiny

Over 17 million Americans purchase health insurance for themselves and their families. Of the 47 million Americans uninsured during any year, academics project that six-to-twelve million could afford coverage, but either cannot obtain it due to their health conditions or choose not to purchase insurance. For argument’s sake, let’s say the market for self-purchased policies — generally referred to as individual coverage or, sometimes individual and family coverage — is around 20 million Americans.

That’s a substantial market. For years, however, it was mostly ignored. To be sure, consumer affairs and financial writers would publish their annual article on how to buy health insurance you’re self-employed. And health insurance agents certainly talk about the product. But for most people, the difference between individual and group coverage was of no interest. It was all “health insurance.”

That’s changing. First, because Senator John McCain and others, mostly Republican lawmakers, want to shift the nation’s health care system from one built around employers to one centered on individuals. Senator McCain’s health care reform plan calls for allowing “individuals to get insurance through any organization or association that they choose: employers, individual purchases, churches, professional association, and so forth.”

The second reason for greater attention being focused on individual insurance is the result of how some insurance companies have reacted to current market realities.  Since purchasing health insurance is voluntary, insurance companies need to protect themselves from those waiting until they’ve got claims in hand before buying. This means they require a health history from all applicants and accept only those posing an “acceptable risk.” In other contexts this behavior is understandable. No one expects auto insurance companies to sell coverage after an accident. No one expects insurers to sell a fire insurance policy after the house has burned down. Yet, surprisingly, many consumers — and policy makers — seem to believe that requiring insurers to sell medical coverage to individuals who have already scheduled their surgery is both financially and morally sound.

Some states, such as New York and New Jersey, require insurers to guarantee issue coverage to all applicants regardless of their health condition. Consumers in New York and New Jersey also pay premiums costing on average twice as much as those in Californians. But some carriers went beyond screening out high risks at the time they applied for coverage and instead sought to terminate the coverage when they used their insurance. The aggressive rescission practices of these carriers earned insurers tremendous criticism and ill-will.

The convergence of these two factors: the presumptive Republican presidential nominee seeking to expand the individual market and abusive rescissions by some carriers can have but one result: a Congressional inquiry. Democratic House Committee Chairmen John Dingell, Henry Waxman, and Frank Pallone have asked the Government Accountability Office to investigate the state of the individual health insurance market. They have also asked the GAO to look into the operation of state high risk pools which offer coverage to those unable to obtain private insurance.

In making their request, the Congressmen stated “The individual market for health insurance coverage is seriously flawed. Many people who need insurance and apply for it are denied coverage in the individual market or are offered insurance coverage that turns out to be inadequate or it is too expensive or both.” If this sounds like they already know what the GAO investigation will uncover, well, they do.

This makes the results from this Congressional involvement relatively easy to predict. Insurance company CEOs will be required to testify under oath concerning their rescission practices. The Committees will determine that the current individual marketplace underserves consumers by excluding those with existing medical conditions. And while the high risk pools are serving an important purpose, the committees will determine their coverage is too barebones and too expensive.

Next will come a call for guarantee issue in the individual marketplace and, if Congress is serious about real reform, that will mean a call for requiring that all Americans obtain coverage. And that, in turn, means a health care reform package similar to what’s being put forward by Senators Hillary Clinton and Barack Obama — and it might even be acceptable to a President McCain.

Of course, just because what’s coming is predictable doesn’t mean it’s wrong. It just means change is coming, regardless of who is elected president.

Senator Invites Carriers to Help with Health Care Reform

A coalition of Senators is waiting to help the next president forge a bi-partisan coalition on health care reform. A leader of the group, Senator Ron Wyden of Oregon, spoke before the America’s Health Insurance Plans 2008 National Policy Forum on March 5th and urged health plans to join the effort, not to fight it.

The 12 Senators, six Democrats and six Republicans, have their own health care reform proposal before Congress, the Healthy Americans Act. None of the Senators support every element of the package. But the mere existence of a bi-partisan coalition surrounding health care reform will give the next president a boost in developing a compromise plan.

In Senator Wyden’s address to AHIP, he said the “success of health care reform hinges to a great extent on how your profession responds to the efforts of a new president and a new Congress.” He warned, however, that if medical carriers spend ”millions of dollars fighting to preserve the status quo, you may delay reform for awhile but you will increase the likelihood of a government run health system with no role for the private sector.”

In urging the insurance industry to become a part of fashioning a solution, Senator Wyden noted that in a market in which 20 percent of Americans are uninsured, carriers need to be good avoiding risk. As Senator Wyden put it, “If you don’t excel at shedding risk, you are going to enroll too many people who need too much care.  Enrolling too many people who need too much care means that your costs are going to go through the roof.  When your costs soar this way, the healthy people that you do business with are going to start looking for another insurer whose costs aren’t going through the stratosphere.  In other words they’re going to look for another insurer who does a better job of shedding risk.”

This, according to Senator Wyden, is part of the reason the current health care system is broken. Another reason is that health care in the United States is tied to the employer/employee relationship, which the Senator noted hasn’t changed much since 1948. “But economic challenges for business and workers today are very different then they were in 1948,” he noted.  “Sixty years ago employers weren’t operating in a global marketplace and employees who went to work at twenty stuck around long enough to get a gold watch and a steak dinner for retirement.  Employers need cost-containment and workers need quality health care within a system that is portable – where they can truly take their insurance from job to job.”

As an alternative, Senator Wyden suggested carriers consider a new approach in which “everyone who’s not in the military or on Medicare, has a basic private health insurance policy. Private insurance companies are on the same footing – each must take all comers. Competition would be based on price, benefit and quality.”

This is the underlying approach established by the Healthy Americans Act. In asking his audience to consider supporting the legislation, he cited six reasons why health plans would benefit from this alternative system:

1. Bringing the 47 million uninsured into the system would greatly expand the private insurance market.
2. There would be “no competitive disadvantage for carriers doing the right thing” and, with a risk sharing mechanism as part of the package, there would be no need to specialize in risk avoidance.
3. The legislation supports increased information and transparency in the health marketplace.
4. By focusing on wellness and preventive programs, carriers would be selling a product people want more of.
5. Carriers “wouldn’t be the political football any longer.”
6. More attention could be given to cost containment issues such as reducing needless medical errors.

He concluded his speech with a plea to carriers to be a part of the solution. “I want to ask you to become a part of the Senate’s bipartisan effort to fix American health care. Both Democrats and Republicans in the Senate want to work with you to get health care right in 2009.”

My take on all this is that the stars may be aligning for a health care reform effort that is more consultative than adversarial. Senator Barack Obama has certainly spoken of the need to have everyone, including carriers at the table. Senator Hillary Clinton has also spoken of leading a more open process than she did during her husband’s Administration. Significantly, Senator John Edwards, who promised to exclude the health insurance industry from participating in the health care reform debate, is out of the race.

I also think a move away from employer-provided coverage is likely to be a strong current in future health care reform discussions. Senator John McCain favors this approach as does the bi-partisan coalition of Senators backing the Healthy Americans Act. The business community would love to be relieved of the burden of shouldering the nation’s health care system. In speeches I began giving in 2006 I predicted that health care coverage might follow the path of pensions. Instead of companies running pension plans they moved to simply administering — and contributing to — their employee’s individual retirement plans. Similarly, employers could administer — and contribute to — employee’s individual health plans. Even though the Democratic presidential candidates still embrace an employer-centric system, the support fora more individual-centric model is gaining momentum..

For health plans this could be good news. They would remain a core part of the nation’s health care system. While the nature of their competition would change, it would still likely be a vibrant, primarily private, market.

The role of health insurance agents could change far more dramatically. If consumers are pushed into exchanges, connectors or purchasing pools, the system administrators might assume they can play the role of agents. It will be important for agents to make sure Americans continue to have access to independent advocates and consultants — in other words, to professional insurance agents. That won’t be easy. Many lawmakers — and even more of their staffs — have never worked with an agent and don’t understand the value we bring to the system.

Senator Wyden and others, however, have expressed a willingness to listen to others. That’s an opportunity agents need to seize. Fortunately agents have a compelling story to tell. 

Health Care Still Vital Issue in 2008 Campaign

The Kaiser Family Foundation has been issuing quarterly tracking polls on the issues voters want presidential candidates to address. Health care has been the top domestic issue voters are focused on (Iraq has been the top issue). But now that the mortgage crisis, gas prices and a faltering stock market has had more time to impact family’s sense of financial security, the economy has taken on greater importance to voters.

In the March 2008 Kaiser Health Tracking Poll 45 percent of the voters listed the economy as one of the two issues they would most like to hear presidential candidates talk about. 32 percent of the voters listed Iraq and 28 percent mentioned health care. Immigration followed with 14 percent, education with seven percent and terrorism six percent.

The economy topped the list for Democrats, Republicans and Independents alike. For Democrats, however, health care was the second most mentioned issue followed by Iraq.

In the Kaiser poll published in December 2007, Iraq was the top issue, mentioned by 35 percent of those surveyed, followed by health care mentioned by 30 percent and then the economy, cited by 21 percent of the participants. Democrats, Republicans and Independents all ranked the top three issue in this order.

When asked what single issue will most drive their choice for the next president, the economy was at the top of the list for all voters, Democrats, Republicans and Independents. For Democrats and Independents, the next two issues were Iraq and health care; for GOP voters it was terrorism and Iraq.

In March, the top issue for all voters was Iraq, followed by the economy and health care for Republicans and Independents, while Democrats selected health care and the economy as their next two most important issues.

While the economy has supplanted health care as the top domestic issue among voters, health care is still a powerful issue. However, health care costs are a factor in how people feel about the economy. 10 percent of voters cited health care costs as the single most important economic issue facing you and your family. This trailed inflation (26 percent), high taxes (13 percent), and the price of gasoline (11 percent), but it was higher than items like problems getting a good-paying job or a raise in pay (nine percent) and the cost of housing (six percent).

Health care reform remains a critical issue, especially among Democrats and Independents. When evaluating health care reform proposals, 58 percent of what the Kaiser Foundation calls “health-focused voters” want to provide health insurance for nearly all of the uninsured, even if it involves a substantial increase in spending. 30 percent support a more limited plan that would cover only some of the uninsured, but involve less spending.

In 1992, the sign in the Clinton campaign war room read “It’s the economy, stupid.” What’s less well known is the addendum to the sign that read, “And it’s health care, too.” History looks like it’s repeating itself (although this time it may not be a Clinton war room). While Iraq will remain a critical issue, the economy and health care are even more relevant to voters’ decisions. That could change, but barring a terrorist attack on American soil, the voters are increasingly focused on the economy and remain strongly interested in the candidate’s positions on health care.

In other words, future debates will sound a lot like the recent debates. 

Recissions, the LA City Attorney, and the Three Laws of Politics

The debate over health care plans cancelling policies for members who incur significant claims on the grounds that they omitted or misstated information on their original applications for coverage (a practice called “rescission”) is instructive. Few defend the right of consumers to lie on their applications. In addition, few maintain the carriers haven’t overreached in defending themselves from fraudulent applications. And no one claims the carriers have done a good job of presenting their case to the public on this issue.

In some of my speeches I talk about the three laws of politics I’ve developed over (too many) years dealing with campaigns, the press and politics in general:

• Law #1: The Law of Political Reality: Political Reality trumps Real Reality for all political parties at all times.
• Law #2: The Law of Political Activity: Politicians are paid to address perceptions and that’s what they do
• Law #3: The Law of Political Reporting: The media is paid to report on what politicians do and that’s what they do

The application of these three laws can lead to an echo chamber of surreal proportions. It often begins with the press reporting on a study or action by a company — let’s say questionable rescission practices by a major carrier. That’s what the press is supposed to do. Politicians read the article, perceive a problem and hold a press conference promising to address the problem. That’s what politicians are supposed to do. The press then reports on the press conference held in response to the press’ earlier article. Other politicians see that story, hold their own press conference and so on and so forth. After awhile it doesn’t matter what the original problem was, how widespread it is, or how nuanced it might be. The Laws of Politics do not suffer nuances.

This is the way issues become a part of the public’s consciousness. When real problem (and the problems surrounding abusive rescissions are real) and addressed by sincere politicians (there are more of them than you’d think), the process works great.

Some politicians, however, are more adept at applying the laws than others. Few would suggest that Los Angeles City Attorney Rocky Delgadillo is in the running for most adroit politician of the decade. He’s had several self-inflicted political mishaps that have shaken his credibility and weakened his future electoral prospects.

The City Attorney is astute enough to know the rescission issue has hit a chord with the public. And he’s clever enough to get his office engaged in the battle. Let’s give him the benefit of the doubt: he’s seen a problem, is sincerely concerned, and is seeking to address it.

Last week he sued Health Net for “engaging in unlawful and deceptive business practices” according to his office’s press release announcing the civil action (He is also initiating a criminal investigation against certain individuals at Health Net). The suit alleges health Net engaged in “unlawful, unfair and fraudulent business practices and unfair, deceptive , untrue and misleading advertising.” City Attorney Delgadillo claims he brought this action against Health Net because “[c]ountless Californians who believe they have insurance actually have policies that aren’t worth the paper they’re printed on.” I’m not sure what the legal definition of countless is, but it’s a lot. Never mind that less than one percent of health insurance policies are ever rescinded.

Using the unfair advertising laws in this context is an interesting legal theory. It’s awfully broad and, taken to extremes, could be abused. But there’s nothing wrong with a prosecutor — elected or otherwise — testing out a theory like this.

And testing it he is. Now City Attorney Delgadillo is turning his attention to Blue Cross of California. This time it’s not for the carrier’s rescission practices, but because the company issued a press release describing changes to its rescission practices. The City Attorney doesn’t believe Blue Cross, apparently because press releases are tools for burnishing a company’s public image and because, well, Blue Cross is an insurance company.

“In all of our dealings with the health insurance industry, our experience would lead me to have little or no confidence that the claims made by Blue Cross … are accurate,” he’s quoted as saying in an interview with the Associated Press. 

Leave aside the irony of an elected official whose official home page is not much more than a listing of the numerous press releases put out by his office publicly criticizing a company for issuing a press release. What’s more disturbing is that in the City Attorney’s mind, insurance company’s are incapable of telling the truth. City Attorney Delgadillo doesn’t claim his office has received complaints about Blue Cross not living up to the promises it made in the press release. It’s that, as an insurance company, the presumption is they’re lying.

That’s a sad statement about both, the low public standing the insurance industry has brought upon itself and the standards of fairness in the City Attorney’s office.

None of this should be taken as a call for the City Attorney to stop investigating insurance companies. But it does underscore that by adhering too closely — and inartfully — to the Law of Politics, the Los Angeles City Attorney is undermining the credibility of the office’s legitimate legal undertakings.

The State’s Role in Health Insurance Rate Increases

The first part of the year is when the cost of most health insurance policies increase. Most medical plans in most places are seeing rate increases far greater than general inflation. This raises legitimate questions about the sustainability of private health insurance pricing. Increasing faster than other prices means health insurance costs represent a larger percentage of overall spending. This, in turn, impacts the competitive position of American firms and the spending power of American families. That’s one of the reasons comprehensive health care reform needs to be high on the nation’s agenda.

In fashioning reforms, it’s important policy makers look at the complete picture. For example, comparing the rate of rising health insurance premiums inflation to general inflation is misleading. What drives health insurance costs is a complex mix of new technologies, an aging population, increased consumer demand and expectations, greater utilization of medical treatment, the cost of prescriptions in this country and a horde of other factors. Those required to defend health insurance rate increases (no one volunteers for the job) usually point to medical care inflation as a more appropriate benchmark than using general inflation. The problem with this defense is that, recently, premiums have increased at rates higher than medical inflation. This discrepancy was pounced upon by some legislators during hearings on health care reform in California this year. Clearly, the lawmakers implied, this is evidence of the industry’s lust for profits. What’s required, they say, is a governmental smack down. (OK, they didn’t actually use the word “smack down,” but premium regulation amounts to the same thing).

Before lawmakers get too carried away, however, they should look at their contribution to rising health insurance costs. Leave aside the costs related to mandated benefits, regulatory compliance and the like. Those are significant, but obvious. What’s less apparent is the government’s use of private insurance to subsidize public programs.

Medicare and Medicaid make up 55-to-60 percent of the average hospital’s revenues according to Richard Umbdenstock, president and chief executive of the American Hospital Association. As reported by the Todelo Blade, Mr. Umbdenstock said this would require providers to shift more costs to private insurance. In other words, when government budgets get tight, they cut back on what they pay doctors and hospitals to provide care to Medicare and Medicaid enrollees. Some of those providers reduce the number of such patients they’re willing to see — or stop serving them all together. That’s bad enough.

Others, however, shift the cost to those with private coverage. With more than half their income generated by government programs, it means a disproportionate amount of increase on private plans is required to make up for public cutbacks. If 60 percent of a hospital’s income flows from public programs, a 10 percent reduction in reimbursement rates requires increasing charges to private insurers by 15 percent. And that’s before increases based on medical cost inflation, general inflation or any other factors. It’s a rate increase entirely generated by governmental action.

This system actually works well for politicians. They get to cut government spending by undercompensating medical providers treating public program patients and they get to complain about “indefensible” rate increases by greedy private health plans. In other words, they get to pitch the problem, avoid having to catch it, and they can criticize the people that do.

Politicians who want to control both sides of the equation — cut back on public program funding and regulate private health insurance premiums – should be careful about what they wish for. Their own contribution to skyrocketing medical insurance premiums will be much more obvious. They’ll have to catch the problems they create  and they’ll be on the receiving end of the criticism, too.

Congressional Health Care Reform Plan Waiting for New President

During their Ohio debate Tuesday night, Senator Hillary Clinton and Senator Barack Obama spent the opening 16 minutes diving deep into the minutia of their health care reform plans. The public has heard the debate many times before. One might be forgiven for believing the differences actually matter. They don’t.

The reality is that health care reform will be a top priority for either of these candidates should they gain the White House. What plan eventually emerges will be negotiated, compromised and updated so much and so often, it may bear little resemblance to the proposals Senators Clinton and Obama have put on the table. And that’s fine. No one has the secret formula. Crafting the best health care platform for America should involve a great many people not yet heard from.

Then there’s the health care reform proposal already waiting for the new president. Sponsored by Democratic Senator Ron Wyden and Republican Senator Bob Bennett, the Healthy Americans Act is the most bi-partisan and prominent bill stewing in the current Congress — or any recent one, for that matter.  Supported by a dozen senators, six from each party, in many ways it goes much further than the plans being promoted by the Democratic presidential candidates. And compared to Senator John McCain’s market-based reform plan, it’s downright radical.

Twelve percent of the Senate is a long way from a majority. But it’s a start. Even Senators Wyden and Bennett don’t agree with every aspect of their bill. The plan requires all Americans to buy coverage. It does away with the preferential tax treatment of employer-based coverage, forcing individuals to purchase their own coverage through regional purchasing pools. While it’s not a single-payer system, those pools do mean multiple governmental agencies will be running the show.

The Healthy Americans Act is, as it stands, seriously flawed. But that’s not the point. The details of this legislation don’t matter any more than the specifics of the candidate’s proposals. What matters is the existence of a bi-partisan coalition of Senators waiting for a president who is serious about building a consensus to appear on the scene. That’s fertile ground for a serious debate and equally serious negotiations about a complex and vital issue. And that’s good news.

Seeds of 1993 Health Care Plan Defeat Planted by Clinton

At the Democratic debate in Austin last week, Senator Hillary Clinton declared her experience in the 1990s in developing and promoting health care reform would serve her well if elected president. She claimed it would help her stand up to the special interests. Senator Barack Obama responded it was her approach to health care reform that doomed the effort. He is right. She is wrong.

Senator Clinton blames special interests, especially the insurance companies, for defeating the health care reform package she developed for her husband’s administration in 1993-94. There’s some merit to the claim. Tens of millions of dollars went to lobbying, advertising and organizing against the proposal. But while that level of spending would have made passage more difficult, if the plan had been well conceived and well promoted it would not have been enough. With Democrats in the White House and controlling Congress, the right plan, developed and sold in the right way should have been successful. And that was the problem. Under now-Senator Clinton’s leadership, the plan was developed in secrecy and presented to the public and decision makers with unforgivable ineptitude.

Senator Clinton talks a lot about reaching out to all points of view to fashion consensus policies and programs. Now. Then, however, it was her way or the highway. In late-1992 she began assembling a large group of very smart people to develop her health care reform package. They sequestered themselves in Washington and talked among themselves. Occasionally they’d seek input from outsiders. But like Ken Kesey’s Merry Pranksters, you were either on the bus or off the bus. And if you were off the bus, your opinions didn’t matter.

This created two problems. First, developing policy in an echo chamber rarely works. The results may look good when considered in a vacumn, but when exposed to the real world, one flaw cascades through the interwoven assumptions, reducing the whole to dust. The Clinton health care plan of 1993 and 1994 was beautiful to behold, an exquisite example of theoretical policy. It was also fragile. Because the Clinton administration was unwilling to accept advice or input or, heaven forbid, changes, from the outside, it lacked a foundation to withstand deep scrutiny. Much to the surprise of the Clinton health care working group, their plan was flawed. And those flaws led to the unravelling of the whole.

Second, excluding members of Congress from the process was just stupid. By ignoring even Democrats in Congress, there was no one at the other end of Pennsylvania Avenue who had any stake in the outcome. In fact, it merely engendered hostility. I participated in three Congressional hearings, representing the National Association of Health Underwriters (NAHU is an association for health insurance agents and other professionals). None of the questioning dived deeply into the Clinton health care plan. There was plenty of questions concerning other reform proposals, but our criticism of the Administration’s plan was pretty well accepted by the Congressional panels.

The lack of an open process is one of the reasons Assembly Bill X1-1 failed in the California legislature. To their credit, the staff of Governor Arnold Schwarzenegger consulted with far more “outsiders” than the Clinton health care task force. But these were seriel discussions held in private. No one really knew what the entire package looked like until months into the Year of Health Care Reform. As a result, when the legislation reached the State Senate, there were few there who had a stake in its passage. When faced with the state’s budget crisis, it was easier for them to let health care reform slide away.

The lesson is clear: developing health care reform requires an open, inclusive process. Every opinion and perspective needs to be represented. Senator Obama gets this. Unlike Senator John Edwards, who claimed he wouldn’t let the insurance industry participate in developing his health care reform legislation, Senator Obama said they’d have a seat at the table, they just wouldn’t be able to buy them all.

It’s this approach to openness and collaboration that holds the greatest promise of success. Senator Clinton tried the old way. It didn’t work. Her continuing the blame the special interests instead of her own mistakes for the defeat of the Clinton Administration’s health care plan shows she may not have learned the right lesson. And that’s another reason she’s no longer the frontrunner for the Democratic nomination.

The High Cost of Simplistic Health Care Reform

Representatives Jim Langevin, a Rhode Island Democrat, and Christopher Shays, a Republican from Connecticut, introduced legislation this week to create a nationwide health insurance plan similar to the Federal Employee Health Benefits Program. This is an idea that blossoms every Congressional session like the cherry blossoms near the Jefferson Memorial. There’s an internal logic to the proposal which is compelling: every American should have the same health care coverage as members of Congress.

The concept is similar to the managed competition initiative developed by the Clinton Administration in the early 90’s.  As described by the Kaiser Family Foundation’s KaiserNetwork.org, uninsured residents would be required to enroll in a health plan that meets national standards. Individuals would pay up to 28 percent of the premiums. Employers would either offer their workers coverage or pay up to $12,000 per employee to finance their coverage through the FEHBP-type purchasing pool.

That this kind of reform was introduced — again — isn’t what caught my eye. It’s the potential price tag: $12,000 per employee. A California Employer Health Benefits Survey in 2007 found employers in the state pay monthly premiums of about $374 for each employee. That comes to slightly less than $4,500 per year. Double this real world premium average and the Langevin/Shays proposal still seems to apply a 25 percent surcharge.

Maybe I’m missing something in their formula, but this does seem to point out a problem with overly simplistic approaches to health care reform. They sound good, but don’t always hang together well. And cost is not the only problem. The population served by the FEHBP tends to be well educated and, as federal employees, have a support network to help them make it through the annual open enrollment program. It tends to service a healthier population than the overall country, too. Duplicating that system for the general public won’t be nearly as straightforward as its advocates hope.

Even with all it’s problems — and it’s high cost — the Langevin/Shays proposal should be part of the mix when the next Administration begins to address the nation’s health care system. So should a single payer system. So should health care vouchers and every other idea out there. It’s important for the presidential candidates to explain their approach to health care reform. But once the real work begins, it would be more helpful for the next president to identify the goal and set the parameters, then let all ideas flourish. Even those that are too simplistic for their own good.

Speaker Nunez on Health Care Reform 2008

According to Assembly Speaker Fabian Nunez, there’s no chance of California passing comprehensive health care reform before 2009 — if then. But that won’t stop the legislature from pursuing more narrowly focused  changes to the state’s health care system.

Frank Russo, who publishes the California Progress Report blog, was among those who talked to the Speaker following a press conference on Tuesday at the Sacramento Press Club.  Mr. Russo describes Speaker Nunez as being “quite animated” discussing the headlines that day concerning Blue Cross of California asking physicians to confirm the disclosure of pre-existing conditions on members’ applications (a practice Blue Cross has now discontinued). He quotes the Speaker as blasting the carrier and then promising, “No comprehensive health care package, but reforms to help improve the current health care system—absolutely.”

This is further evidence Senate Bill 840, Senator Shiela Kuehl’s legislation to establish a single payer system in California, is going nowhere this year. The Speaker again promised to subject the measure to the same level of scrutiny Senator Kuehl, as chair of the Senate Health Committee, gave to the Speaker’s comprehensive health care reform package, Assembly Bill ABX1-1. And if by some miracle — or political calculation — SB 840 were to be passed by the legislature, Governor Arnold Schwarzenegger would be certain to veto it.

Instead of comprehensive reform, I expect lawmakers to introduce several elements of ABX1-1. Setting a medical loss ratio target was an aspect of ABX1-1 that resonated with lawmakers — and will be looked at even more favorably in an election year. Bills addressing rescissions and establishing premium rate regulation mechanisms are also certain to emerge. There will be others. Few of these bills, however, are likely to become law. First, not all will pass. If money is a bill’s chances fall to near zero. Second, Governor Arnold Schwarzenegger will look closely at those that do make it through the legislature. During the health care reform negotiations that led to ABX1-1, he demonstrated a firm understanding of how the elements of ABX1-1 related to one another. He will likely be skeptical of a modular approach to reform, reasoning that without the checks and balances contained in ABX1-1, the consequences of a specific reform could do more harm than good.

There’s a good chance California won’t take another shot at comprehensive health care reform even in 2009. The timing will depend a great deal on who wins the White House in November. If a Democratic becomes president, California lawmakers will likely wait to see what progress on health care reform the new Administration can make. If a Republican wins, however, Democrats won’t wait. They’ll assume whatever reforms come out of Washington will be insufficient. The wild card in the timing? Governor Schwarzenegger. He’s termed out of office in 2010. He may want to finish what he started in 2007 while he can.

In either case, health care reform is not going away. Only the location may change.