The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

Obama Health Care Reform Plan: Part I

Posted by Alan on February 22, 2010

At last. President Barack Obama has unveiled his own version of health care reform. No longer subjecting themselves to blame or praise for what members of Congress put forward, the Administration now has a plan to call it’s own. Copies of President Obama’s health care reform plan, as well as copious supporting material, are available on the White House web site.

And it looks a lot like what we’ve seen from Congress. In fact, it’s pretty much the bill passed by the Senate last December with some several tweaks – some significant; some less so. For example, the “sweeteners” benefitting specific states (think Nebraska and Louisiana) have been removed. Not a big surprise. Seizing on the recent outrage over large rate increases in the individual health insurance market the President has added a provision that would provide for “rate review” of premiums charged by health insurers by creating a Health Insurance Rate Authority “to provide needed oversight at the Federal level and help States determine how rate review will be enforced and monitor insurance market behavior.” The Associated Press describes this provision as seeking to “regulate the health insurance industry much like a public utility.” 

Once there’s been time to analyze his proposal I’ll address specific elements of President Obama’s health care reform proposal. What’s of immediate interest is the strategy behind the proposal.

In advance of the bi-partisan health care reform summit he is convening this Thursday, President Obama had a choice concerning the nature of the health care reform proposal he put forward today. He could repackage comprehensive health care reform along the lines of those approved by the House and Senate. Or he could introduce a new, less comprehensive package. Whatever approach he chose would change the dynamics of the summit.

Moving forward comprehensive, complicated reforms based on what had already passed a chamber in Congress (which is what he did) would reassure Democratic members of Congress – many of whom risked their political careers supporting controversial reforms. This approach also gives him more negotiating room. The President can go to allies later and say “I fought for this provision, but if we want any health care reform we have to compromise.” This approach also allows him to offer the Republicans concessions that otherwise might never have been on the table. This seems to be the thinking of the White House. The Associated Press quotes Administration spokesman Dan Pfeiffer as saying the health care reform plan the President introduced today “is an ‘opening bid’ going into Thursday’s summit.” Mr. Pfeiffer then reiterated that “The president is coming into the meeting with an open mind. If the Republicans do, too, our hope is that we can find some areas of agreement.”

The problem with this approach is that it is more confrontational than the alternative. And it opens the Administration to charges that it has failed to understand the public’s concern with a dramatic increase in the government’s involvement in America’s health care system. In fact, that’s what’s happened with House Minority Leader John Boehner saying “the president has crippled the credibility of this week’s summit by proposing the same massive government takeover of health are based on a partisan bill the American people have already rejected,” according to the AP.

Yet if President Obama had taken the second option – putting forward a more modest health care reform package that already incorporated elements of Republican proposals – he would have taken flack from his Democratic allies and had left bargaining room. However, he also would have made it more difficult for Republicans to declare the summit political theater.

President Obama is not the only summit participant who will have to find a way to simultaneously appealing to his base while showing the flexibility independents demand.  Republicans face the same challenge. The conservative base wants no compromise with the Democratic president. Independents, however, want lawmakers to solve problems.

My guess is that the president has decided to approach this political quandary in two-steps. First, demonstrate to the base that he wants what they want (although he did abandon the public option as an absolute non-starter and left it out of his proposal). The cost: a barrage of criticism from opponents that he’s arrogantly ignoring the public’s rejection of these plans (as indicated by various polls). The second step, however, will be to embrace proposals put forward by Republicans during the summit, claiming that the result is a bi-partisan bill. He’ll then work with Democratic lawmakers to introduce the refined legislation and challenge the GOP to reject a bill that includes several of their ideas. If this legislation fails President Obama still has the option of bringing forward a greatly scaled down bill blaming Republicans for failing to support more comprehensive reform.

Whether this strategy works or not remains to be seen. But the first moves have been made. It now falls to the Republicans to respond. Will they simply attack President Obama’s health care plan or offer alternatives of their own prior to the summit? And will those alternatives be presented as a single health care reform package or as a assorted, separate proposals? Will the GOP play solely to its base or seek to seize centrist ground? The President has given Republicans an opportunity to capture independents. Now we get to see what the GOP does with this opening.

Stay tuned.


11 Responses to “Obama Health Care Reform Plan: Part I”

  1. Alan,

    I think that you make some good points in your commentary; yet I find that much of what is being brought to the health care reform “Bi-partisan” summit to be no more than has already “steamed the beans” of many who are strongly opposed to a decreasing of Medicare funding by $500Billion, and that this “Bill”, which closely parallels the already unpopular Senate version of ObamaCare will not provide much wiggle room for compromise demanded of the Republicans, making the republicans again look like thugs, a very unfair characterization. Most “independents”, as myself, are “Fiscal Conservatives to Moderates, and Social Liberals to Moderates”. How should we define “independents”?

    Worse, perhaps far worse, is the now “Leaked” new information that the “White House” has already entered “2012 Campaign Pre-planning” considered by many pundits, including many liberal political pundits, to be arrogant on its face and very premature this being eight months before the 2010 mid-term elections. While previous presidents have also started their pre-planning for their second term in what many consider to be premature, they have at least waited until after the mid-term elections to have such a move made public. I think it not inconceivable that this just just announced news will have a deleterious effect on any claims of bi-partisanship by the While House and still Democratic Controlled Congress. It has been in large part the perceived arrogance of the Democratic controlled Admin and Congress that doomed any chance of Health Care Reform passing into law in 2009. It is not a stretch to imagine that this continued level of arrogance, and attempts to shove down the throats of an unwilling public, legislation that can negatively alter the now excellent coverage many of the electorate have (75 to 80%) may doom any chance of passage of Health Care or Insurance Reform in 2010.

    2010 is the year in which Americans want to be able to go back to work, the vast majority of the 15 million now unemployed, and they do not want to hear statistics about how well they are theoretically doing when they know those statistics to be fallacious. They really want to be able to go to work, pay their mortgages, and feed their families. The continued push for reforms that will not allow them to go to work (and in fact will only result in many more losing their jobs…regulate insurance like a public utility? Bye bye to many thousands of jobs, including many of those who are self-employed and employ others) will likely alienate many more than we have already seen discouraged by Democratic Party initiatives.

  2. SACRAMENTO, Calif. —
    California’s insurance regulator said Monday his office has found more than 700 violations by the state’s largest for-profit health insurer, including late payment of claims, giving misleading information to consumers and failing to cooperate with regulators.


    Rick, you make it sound like Wellpoint, Anthem, etc. are just 100 percent innocent “messengers” whose only purpose is to serve the public by altruistically interposing themselves between consumers and healthcare providers, helping the former pool and manage their risks while taking a reasonable profit for their innovative efforts.

    Do you really, in your heart of hearts, believe–even after Enron, Lincoln Savings & Loan, Bernard L. Madoff Investment Securities LLC, and countless other high profile examples of corporate criminality–that the free market is always (or almost always) good, and that government is always (or almost always) corrupt and inept?

    People are people, and systems are systems. Granted, different systems variously reward and suppress different human character traits. But there is potential for goodness and rottenness wherever our species gains a toehold. And to expect that the health insurance industry is immune from greed and misbehavior is as naive as those who would argue that government is the answer to all problems.

    • Allen H. said

      I don’t know Anthem’s reason for the increase. I live in Phila. Blue Cross had a similar huge rate hike here recently. But here were the facts about that… Guaranteed Issue plan, IBC had petitioned for an increase for over 5 years and always got denied. Finally, it was approved. Before the big hike, the rates were ridiculously low, for the product. Now, after the big increase, rates are fairly reasonable. Oftentimes, there is more to the story than the screaming headlines.

    • Rick said

      Jim, I want to reply point by point and might have time later.

      I have two questions for you. Let’s make a giant leap of faith and assume government does most things right. Let’s also assume all insurers do most things wrong. Let us imagine government as more cost efficient than the market and has imposed a single payer system run by government, as I feel that is what you favor.

      When that government program has been in place a number of years:

      #1. Explain what government must do to control the ever increasing cost of health care.

      #2. What must government do to prevent the bankruptcy of this country from insuring the health of 300,000,000 people?

      • Norman Nichols said

        Rick Wrote:
        #1. Explain what government must do to control the ever increasing cost of health care.

        #2. What must government do to prevent the bankruptcy of this country from insuring the health of 300,000,000 people?

        I ask: How is it done in other countries that have a successful health system? An idea, for a start, might be to Google ‘gov’t agencys’ and see how many of the listed 500 or so that we could easily do without.

        • Norman,

          I think that you may be onto something…I’m not in favor of other countries socialized systems, but I think you may have put your finger on a heck of a good place to start reducing our country’s overwhelming debt. We have far too many government agencies that bleed us dry while providing nary a scintilla of beneficial product.

          Why, I’ll bet that after eliminating only a few Obama and Company won’t feel it necessary to steal money from Medicare!

    • Mark said

      Hard to imagine 700 violations over 5 years. Pretty outrageous! They precess about 2 million claims a year in California so that’s about 10 million claims and 700 are griping. That’s a whopping.00007 percent.

      Hard to believe….no not really.

      All plans or countries, Hello Canada, have gatekeepers between providers and patients. I wonder if those countries allow for an arbiter when they turn down a treatment plan.

      After 30 years in this business I can say that most issues with claims have been with therapies. Physical, psycho and occupational all have limits and people don’t like that. The second larges issue is incorrect coding from providers and often their stubbornness to correct it. I’ve never had a single issue on a major illness or accident. EVER!

      I use name brand carriers and make sure the plans that are chosen include pharmacy including name brands as opposed to generic only. I educate people to be more concerned about the back end (major expense)than an office co-pay.

      I readily agree with the concept of reform we don’t have a sustainable system but the conversation is getting more off the topic everyday and Congress sounds like a bunch of whinny brats.

  3. Rick said

    I think by bombarding the messenger (insurers), and having no essential cost containment, exposes the hypocrisy of this administration. It’s not about the cost of health care, it’s about government control.

    • #1. Explain what government must do to control the ever increasing cost of health care.

      a. shift to an evidence based medicine and refuse to pay for procedures that have been proven not to work. period. If an octagenarian dying of lung cancer wants to try having a pig lung transplanted into her chest, fine. But they can pay for it, not the government. If fact, this is probably the basic thing as far as I am concerned: pay for reasonable but not extraordinary care. If people have the money and want to pay for the latter out of pocket, let them.

      b. just as doctors now must personally sign Rx pads in most states saying “generic substitution not allowed”, health care providers should be affirmatively forced to autograph procedures they advocate as “medically necessary” so they are on the record for things like MRI’s everytime a patient has a twinge in the knee

      c. a Glass-Steagel like act erecting a barrier between doctors and testing procedures so that the former cannot earn extra money by overuse of technologies they own

      d. an independent review panel to assess malpractice claims. If a drunken doctor removes the healthy lung, leaving one with cancer inside the patient, he should be held accountable. If an honest mistake is made, or a fraudulent claim is made by a patient, this should be handled by reasonable tort reform. But capping any malpractice at $250,000 for “pain and suffering” denies the fact that some practitioners should be punished severely, though doctors–like cops–almost never testify against each other (but ask them privately if they would agree to let Dr. Y take out their child’s appendix, and they will scream, No Fing way!)

      e. Open up markets globally to health care, allowing people to buy medications from any country they want. Do some checking here, but stress that only domestic drugs are checked rigorously, so caveat emptor reigns elsewhere.

      f. Change FDA testing of new drugs so that they are compared not to placebo but to the current standard of care. Not only will new drugs have to prove themselves as good as what medicines we currently have, but in order to justify huge price increases over yesteryear’s models, they will need to prove they are actually better. If this cuts significantly into PHARMAs “new and improved” hucksterism, tough.

      g. Do not allow legal guardians, relatives, etc. to overrule a patient’s living will. Most people end up dying expensive deaths in a hospital setting, very often against their express wishes. A nurse last night told me that this happens “all the time”–the old person wants to die at home, but they are whisked off to a hospital, stuck in ICU, etc. Then some distant relative threatens to sue the hospital if the staff honors the dying person’s “do not resucitate” directives.

      Whether hospital adminitrators knuckle under because of fear of being sued–or because a dying person covered by Medicare and supplemental insurance is a profit center extraordinaire–or a combination of both, is debatable. But I don’t know ANYBODY who wants to end up plugged with tubes and out of it, their estates draining to the tune of $20,000 a day. Don’t let the Bible Thumpers and the Medical Industrial Complex let this happen.

      #2. What must government do to prevent the bankruptcy of this country from insuring the health of 300,000,000 people?

      Employers and individuals with private coverage are already contributing X number of dollars annually into the national healthcare budget.

      I don’t know what X is–perhaps Alan has a figure–but it’s clearly guargantuan.

      You also have to add in all the care currently being provided to people without insurance because ERs are not allowed to turn people away, the costs of which are likely also guargantuan. Call this figure Y.

      Now add in the cost of providing health care in the current fashion. This includes salaries for everyone from the $124.8 million paid to the CEO of United Healthcare in a recent year, to the near minimum wage of a myriad clerks nationwide whose only job is to process claims forms at doctors’s offices for the 1300 health insurance compaines. Add, as well, advertising, marketing, the MRI wars (Institution H gets the latest Robotic Prostatectomy Fuzz Buster 7000 technology to outcompete Institution J, which immediately gets Robotic Prostatectomy Fuzz Buster 8000 in a parody of the nuclear arms race), the cost of cherry picking (medical underwriting), lemon dropping (recision), profits, etc. Call this number Z.

      So if you add X, Y, and Z (plus probably a whole bunch of other things I am too dim to recognize), we clearly already ARE spending a huge amount of money on healthcare, with no equitable rhyme nor reason to it, in a system that Uwe Reinhardt, medical economist at Princeton, has described as often being just cruel. Call the current spending in the US S (for status quo).

      So how would the goverment pay for this?

      Let’s call the total government single payer spending “G”.

      G would, of course, have to come from taxes.

      It seems to me that your question, Rick, implies that G, both on a total and a per capita basis, will be much, much higher than C. Is this accurate? I don’t think so. Why are private insurers so scared of even a public option if they are so cocksure they can provide better coverage at cheaper rates? I believe they are scared because they know that overhead, profits, and the sheer cost of buying bullets to shoot trout like me in the barrel they have placed me in HAS to cost more than a single payer system.

      I think the “anti socialized medicine” forces honestly believe that most hard working Americans will not only end up paying more G than they save in not having to pay for C anymore, but what they will get from the deal is worse health care than they curently get.

      For some, this might indeed be true. I think the paranoia on this forum is, by and large, partly fueled by the fears of the very wealthy (and wealthy fantasizing wannabes that will never get there) that they might end up paying more in tax increases than they are currently paying in premiums.

      But another big chunk of the paranoia I sense is that if a dysfuntional system is replaced by something more efficient and equitable, a lot of people currently making their living on different portions of the rotten carcass of American healthcare will have to find a new place to find sustenance.

      • Rick said

        Jim, even though I disagree on a government single payer plan I gave you a thumbs up on this one!

        In a few short words these are my concerns.

        I feel the ultimate outcome to question 1 is rationing of care, price fixing and therefore a lower quality of health care.

        Health insurers do not have the luxury of deficit spending or printing money. The performance of politicians past and present prove they do not have the courage to properly fund a health plan, especially one covering 300 million people. I think the more apt wording is that they don’t have the guts. Presently our national debt increases 3.87 billion per day and is now about 12 trillion. I feel the outcome to question 2 is hyperinflation by monetizing the debt. That in turn reduces the standard of living for all 300 million of us.

        Therefore if I’m correct, the final outcome would be inferior health care and substandard living.

        • Thanks for your thumb, Rick.

          I wonder if maybe the answer is some kind of hybrid, almost like Medicare is now for lots of people. The government covers the basics through Medicare, then if an older person wants to cover more, they can buy Medigap coverage.

          Maybe there could be some way that the government could offer a very basic policy to all Americans with a limited number of conditions covered. Heart disease yes, cosmetic surgery no, basic dental yes (so people don’t end up having to pull their own teeth), tooth whitening and braces, no.

          Drugs would always be generic unless there is none available and no “good enough” alternative in a different but related class.

          Hypochondriacs and the worried well would be given access to the standard of care range of tests–but after that, they pay.

          Rigorous records to prevent doctor shopping and duplicative care and redundant tests.

          Just allow the government to fund this bare bone approach that gives everybody a shot at decent care, but not necessarily astronomical care. Fund a lot more community health clinics where providers would be paid salaries and not fee per service, based on the Mayo model and Cleveland Clinic model.

          Even the most fiscally austere should not begrudge the thought that we can give at least minimum care to those who need it and can’t afford it. Everybody’s taxes would pay for this.

          The highest quality care, on the other hand–heart transplants, Gamma knives, autologous progenitor cell therapy for heart damage repair: all this stuff would be like the best restaurants in New York. Those who can afford to dine there can pay for it themselves.

          I do think that we need to somehow dismantle this jury rigged system where quality of health care depends so hugely on whether you or your spouse has a job with good insurance coverage.

          Companies hate it. Workers like the subsidies, but many hate the sense that they can’t leave their jobs to try something new out of fear of losing coverage.

          It stifles the very entrepreneurship and small business formation that Republicans claim to champion so much.

          It just doesn’t make sense–unless you see it from the point of view of the companies that profit from the status quo: insurers, drug and device manufacturers, brokers, actuaries, underwriters, recission experts, and so forth. Even doctors are starting in greater numbers to resent the system. Talk about the paperwork requirements of the federal bureacracy. I think they are pikers compared to the claims filing system.

          The whole thing is sort of like a turn of the century hospital. Rather than tearing the poorly designed edifice down and rebuilding something that makes sense, architects have just kept adding new wings and floors and skyways till the modern urban mega hospital is a cross between one of those tubular hamsters environments and Kafka’s The Castle.

          They could teach orienting classes inside these mostrosities.

          Occasionally cities have a catastrophe, like the Chicago fire or the San Francisco earthquake or New Orleans Katrina, It’s a horrible, horrible thing. But if there’s any silver lining to these natural disasters, they do wipe the slate clean in a sense, offering the chance, at least, to build something much better than was there before.

          Maybe we will have to wait till healthcare is so broken and dysfunctional that it can no longer stand. And then we will see which philosophy that prevails. The conservatives’ “every man for himself” or the liberals’ “we stand or fall together as a nation.”

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