Health Care Reform Makes It Clear: Howard Dean is No Ted Kennedy

Dr. Howard Dean was governor of Vermont for 12 years. He was a front runner briefly during the 2004 presidential campaign. He became chair of the Democratic National Committee. And now he is demonstrating why he failed for Governor and why Democrat are better off having him as the “former” chair of their party.

As Democrats in the Senate struggle to cobble together a super-majority in support of health care reform, Governor Dean is busy throwing bricks into the room. Upset that the legislation likely to emerge from the Senate will contain neither a government-run health plan nor the ability for 55-to-64 year olds to buy-in to Medicare, Governor Dean is urging defeat of the bill. The reason, according to a report by the Associated Press, the Senate health care reform bill is “an insurance company’s dream.” Which is malarkey. I don’t know any insurance carriers happy with the direction of health care reform in Washington. As the AP reports White House spokesman Robert Gibbs putting it, “If this is an insurance company’s dream, I don’t think the insurance companies have gotten the memo.”

Governor Dean asserts that “You will be forced to buy insurance. If you don’t you’ll pay a fine.” True enough, although in the Senate bill the fine is $750, far less than the cost of coverage. Then he goes on to assert that insurance companies would not be prohibited from denying coverage for preexisting conditions. And that older Americans would pay more than their younger neighbors for coverage.

Let’s look at the substance of the Governor’s complaints. Does he seriously believe that whatever health care reform bill emerges from Congress will allow health insurance companies to deny applicants for coverage? If so, he’s the only pundit in the country who does. Even Republicans support guarantee issue of health insurance coverage.

As for older people paying more for coverage than younger people, he’s right. Both legislation passed by the House and being considered in the Senate allow carriers some flexibility in setting rates by age. But both bills substantially reduce the differential that exists today. In California, for example, a 64 year old can expect to pay six times more than a 19 year old for the same coverage. (Anthem Blue Cross offers a $3500 deductible PPO that costs a single 19 year old in Los Angeles $110 per month and his 64 year old neighbor $664 a month). Under the legislation being considered in the Senate, the ratio would could be no more than 3-to-1. The House bill limits the differential to 2-to-1. Governor Dean never complained about this premium spread before. Now that the public option is likely to be cut from the Senate bill, a 3-to-1 limit on premiums becomes a decisive factor for him?

Governor Dean’s attack on the Senate bill is a loud reminder of how much Senator Edward Kennedy is missed in Washington. Senator Kennedy was as liberal, if not more liberal, than Governor Dean. The difference is that Senator Kennedy accomplished a great many things on the national stage. Governor Dean has accomplished nothing nationally. Senator Kennedy was successful in large part because he recognized the need to seize progress when and where he could. He knew there would be future opportunities. Even more importantly, he understood that, in broad terms, America becomes more progressive over time. Consider: it wasn’t that long ago that the fight was over whether the government should provide a medical safety net for older citizens. Republicans called Medicare socialism. Now they defend the program.

There’s a lot in the current health care reform bill I don’t like. There’s a lot about the status quo I don’t like either. What is infuriating about Governor Dean’s attack on the bill is that it is as nonsensical as those of the right. His “insurance company dream” is to the left what former-Governor Sarah Palin’s “death panels” are to the right – ideology masquerading as dire warnings.

Liberals in Congress will probably come around to supporting what they consider a watered down, insufficient health care reform bill. Liberals outside of Congress, like the former Governor from Vermont, will call on them to defeat the bill and start over. Underlying their logic is apparantly the belief that it’s possible to pass an even more liberal Congress.

What liberals like Governor Dean need to realize is that moderate Senators like Ben Nelson and Blanche Lincoln are just a part of the party as liberals like Senators Jay Rockefeller and Charles Schumer. I suppose Governor Dean could recruit liberals to run for the Senate in Nebraska, Arkansas, Indiana, Louisiana and other states from which moderate Democrats hail. There’s only one problem. Liberals don’t get elected to the Senate from those states. Not in 2010.

Members of Congress understand the need for compromise. They may not like it, but they accept that their less-than-liberal colleagues represent their constituencies. Those on the sidelines have the freedom to ignore such realities and to throw bricks with abandon. These ideologues won’t solve many problems, but I guess the brick throwing makes them feel better.

Senator Kennedy understood the need to work with those less liberal than himself, to keep issues alive by passing significant reforms that may not be all he wanted to achieve, but laid the groundwork for future efforts. Governor Dean is blind to this approach. But then, Howard Dean is no Ted Kennedy. Never was. Never will be.

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Obama Openness to Compromise Should Be No Surprise

Negotiators on the Senate Finance Committee are expected to put forward their compromise health care reform proposal on or before September 15th. President Barack Obama is not waiting to see what they produce. Instead he’s likely to provide some helpful hints during an address to a joint session of Congress on September 9th.  The speech will not lay out legislative language, but is likely to put forward the President’s prescription for change in far greater detail than has previously been the case. And liberals are nervous.

As reported by the Associated Press and elsewhere, the White House is signaling that President Obama’s intends to offer common ground for moderates, but not much red meat for liberals (to mash two unrelated metaphors). Senior advisor David Axelrod, for example, is quoted as saying that the president “believes in ‘fundamental principles’ about overhauling health care … but ‘he’s not dogmatic about how we get there.’”

This type of talk infuriates liberals who are adamant that a government-run health insurance plan – an anathema to conservatives and many moderates – be included in the final reform package. The Congressional Progressive Caucus has directly lobbied President Obama by letter and phone to include a public plan and its members are threatening to vote against any bill without one.

During the phone call the President did not reassure the liberals, but promised to continue to communicate with them. Meanwhile, the White House was signaling a willingness to accept a so-called “trigger” for a public health plan in lieu of launching a government insurance plan on Day One of reform. The trigger concept is being pushed by Senator Olympia Snowe, one of the Republican senators working on the Senate Finance legislation. She has proposed what the Associated Press describes as nonprofit agencies offering health coverage “only if private insurers could not cover 95 percent of the people in their regions with plans costing no more than about 15 percent of the person’s or household’s annual income.” (While an uninsured rate of five percent might sound like a high hurdle meet, other countries have significantly lower rates. (In Germany the uninsured rates is roughly 0.2 percent; in the Netherlands approximately 1.5 percent. Both countries have private insurers).

If on Wednesday the President fails to insist on a government-run health plan liberals will be outraged, but they should not be surprised. President Obama has been totally forthcoming concerning his pragmatic approach to politics and legislating. In a speech to Families USA in January 2007 – even before he announced his presidential campaign – then Senator Obama declared that while it was critical to achieve health insurance for all Americans, it was important to be “agnostic in terms of how to achieve those values.” Throughout the current debate he has constantly repeated his three guiding principles for reforms and, while stating his preferences, has made clear everything is on the table.

The fact is, and this will shock many, Congressional Democratic are not a monolithically liberal group – and as a whole they are certainly less liberal than their leadership. Some liberals seem to think that all members of the Democratic caucus need to think like and, more importantly, vote like, Speaker Nancy Pelosi and Senate Majority Leader Harry Reid. Such delusions are at best naive and at worst dangerous. Congress should represent a broad spectrum of opinion and their voting should reflect that diversity. In fact, one of the strengths Democrats have among the electorate is the perception they are more open to and tolerant of diverse opinions than the GOP.

Only rarely, and then usually as the result of a national calamity, do the extremes of a party pass legislation. Usually the heavy lifting is done from the center. This goes back to the importance of the final vote (in the Senate the 60th vote; in the House the 218th). As explained in a previous post, their tolerance for change has a great impact on what winds up in any particular bill. In the Democratic party, these votes are far closer to the political center than it is to the ideology of the Congressional Progressive Caucus. This doesn’t make these moderates unfaithful to the Democratic party. On the contrary, it helps define that party.

Liberals seeking health care reform need to acknowledge this reality. President Obama has long made clear he does. Like his mentor Senator Edward Kennedy, President Obama appears more interested in passing legislation than he is in maintaining the purity of his ideological positions. And like the liberal Senator Kennedy, President Obama appears willing to accept a portion of the loaf if, in doing so, he improves the lives of those he champions.

Liberals may be unhappy with this pragmatism, but in doing so they ignore the reality of the 2008 election: the Democratic Party and the independent voters they won over last November may be left of center, but like President Obama, they are more pragmatic than ideological. They seek change not purity. Unlike the true believers, they are agnostic in terms of how to achieve desired results. If that means compromising on issues like a government-run health plan, then compromise is what they, and their President, will do.

Progressives Will Face Tough Health Care Reform Choice

Just looking at the broad facts, liberals should be riding high. President Barack Obama occupies the White House. Democrats hold a 60-40 super-majority in the U.S. Senate and a commanding 256-178 majority in the House (with one more on the way after a special election in California later this year). Republicans are on an electoral losing streak of epic proportions and have yet to find a unified voice. It doesn’t get much better than this.

Except appearances can be deceiving and liberals will soon need to decide whether they are willing to vote for a bill that, in their view, improves America’s health care system but does not go nearly far enough or should they leave the system the way it is.

Note: This post was updated on July 30th to provide more details concerning the House Energy & Commerce Committee compromise and liberals reaction to it. Additions are presented in italics.

The evolution of health care reform legislation as it moves through Congress must frustrate progressives. It started off to their liking. Senator Edward Kennedy’s Health, Education, Labor and Pensions Committee pushed forward a bill that satisfied much of the liberal wish list. Good times continued when the House Ways & Means and the Education & Labor Committees passed equally progressive bills. That the affirmative votes on all three committee came exclusively from Democrats was not of great concern to supporters. Health care reform was coming whether Republicans wanted to join the parade or not.

Liberals were on a role, but then their moderate and conservative colleagues began to make their presence felt. And there are more of them than is generally acknowledged. While conservative talk show hosts like to brand the Democrats as a monolithic subsidiary of Mao-spouting communists, the reality is far different (actually, reality is usually different than that described by conservative talk show hosts, but that’s a topic for another day).  A party does not capture 60 percent of the Senate and 59 percent of the House by running cookie cutter candidates all pledged to the same ideology. The country is too diverse. The brilliance of Rahm Emanuel, then head of the Democratic Congressional Campaign Committee and now White House Chief of Staff, was that he discarded virtually the entire Democratic litmus test in his search for candidates. The only significant requirement he demanded of the candidates he recruited was that, once elected, they would vote for a Democrat for Speaker of the House. Meanwhile, the GOP who hewed closely to the beliefs and principles of their base. Moderates were scorned and labeled RINOs (Republicans in Name Only). They succeeded in recruiting ideologues who had no chance of winning outside the reddest of red districts.

Consequently, the Democratic caucus is chock full of moderates and even conservatives.  Which all but guarantees that liberals will be disappointed. There are simply not enough liberals in Congress to pass a bill without support from moderates.

So it should not have been a surprise when problems developed as the progressive juggernaut moved beyond some of the most liberal committees in Congress. The Blue Dog Coalition, a group of moderate Democrats in the House, objected to a host of provisions in the Ways & Means and Education & Labor bills. While they lacked the votes to hold up the legislation in those committees, they did such leverage in the the House Energy & Commerce Committee. The Blue Dog Democrats had an agenda for health care reform that differed in many respects from that of their more liberal colleagues.

Meanwhile, in the Senate, Democrats and Republicans on the Senate Finance Committee were working tirelessly to hash out a health care reform package that could garner bi-partisan support. To get there, Senator Max Baucus, Chair of the committee, was willing to jettison some of the more treasured elements of the liberal health care reform agenda.

Both the Blue Dog Democrats and the moderates on the Senate Finance Committee are making substantial progress. House Energy & Commerce Committee Chair Henry Waxman and Representative Mike Ross, speaking on behalf of the Blue Dogs, announced an agreement that will allow the full committee to begin marking up health care reform legislation. The specific changes to the bill from the versions passed by the Ways & Means and Education & Labor Committees are not yet public. But there are four major elements according to wire stories:

• Keeping the 10-hear cost below $1 trillion by agreeing to $100 billion in cuts
• Preventing a public plan from simply imposing Medicaid rates by allowing physiicans and other medical providers to negoiate rates with the government plan
• Exempting businesses with payrolls below $500,000 (86 percent of all small businesses)  from any government mandates requiring them to provide health insurance to their employees
• Postponing a full House vote on health care reform until after September 8th

At the same time, Senator Baucus and the ranking minority member of the committee, Senator Chuck Grassley, are making it known they are close to unveiling the Senate Finance Committee’s compromise. Their proposal is unlikely to include a government-run health plan. It may not include all the mandates and subsidies liberals seek. In short, they will reform the health care system, but leave much of what exists in place. Which puts progressives in an uncomfortable position.

Moderates and conservatives seem willing to defeat any health care reform legislation rather than vote for the kind of reforms liberals seek. Will liberals refuse to support legislation that does not go as far as they demand? As of now they are threatening to do just that. The Progressive Caucus is circulating a letter seeking 50 signatures (enough to defeat any bill) pledging to kill any legislation failing to contain a strong public plan.

That’s not yet known. That the compromise proposals will be attacked from both the left and the right is to be expected. And liberals are already expressing outrage at having their wishes denied. For example, the Associated Press quotes Representative Lynn Woolsey  as saying “They can’t possibly be taking us seriously if they’re going to bring this [compromise legislation] forward.”

But will liberals insist on getting their way even if it means letting the status quo stand?

Ideology and pragmatism are often hard to reconcile, but my prediction is that liberals will vote for moderate health care reform. The reason: Senator Kennedy and President Obama will eventually accept a compromise. Throughout his career Senator Kennedy has demonstrated the political wisdom of taking half a loaf now and continuing the fight for the rest another day. And, according to the Associated Press story cited above, the White House is already making clear the Administration is willing to settle for a more moderate bill.

With Senator Kennedy and President Obama’s urging, enough liberals will accept that even modest reform is preferable to the status quo. They won’t be happy with what it contains, or more accurately, what it doesn’t contain, but they will be among those applauding when President Obama signs the bill into law this Fall.

Added 9:05 pm July 29, 2009: As noted above, liberals are upset over any compromise that does not include a public health insurance plan. In a post on Politico.com, Glenn Thrush reports that “Two months ago, most of the 80-plus members of the Congressional Progressive Caucus signed a pledge that they would oppose any health care bill that didn’t contain a bona fide public option that would compete with private insurers. On Wednesday, they seemed willing to stick to their promise.”  He goes on to quote Representative Barney Frank as saying liberals might reject the House leadership’s  request to support a weakened public option. “I don’t think it would pass the House — I wouldn’t vote for it,'” the post quotes Rep. Frank as saying.  No one would cheer louder than Republicans to see health care reform fail because moderate and liberal Democrats fail to come together. Which is, to repeat my prediction from above, why I think liberals will eventually take a deep breath, vote for a moderate bill, and come back in 2010 fighting for more.

Health Care Reform: A Historic Milestone

History was made today. The Senate Health, Education, Labor and Pensions Committee approved comprehensive health care reform legislation, the first Congressional committee to do so in decades. Never mind that the bill is well to the left of the emerging consensus concerning health care reform. Never mind that it passed on a party line 13-10 vote. What is meaningful is that a congressional committee moved comprehensive health care reform forward. Significantly, three House committees are likely to follow suit within the next three-to-four weeks.

The legislation approved by the Senate HELP Committee, which carriers a $600 billion price tag, would require individuals to obtain coverage, employers to help their workers pay for it, and carriers to accept all applicants regardless of their health conditions. Individuals and families earning up to 400 percent of the Federal Poverty Level ($88,000 for a family of four) would be eligible for subsidies. The Associated Press provides additional information and reaction to the Committees vote, but in my mind, the details are secondary. The vote itself is what is significant. Remember, the Clinton Administration health care reform proposal was never voted upon by any Congressional Committee.

The Senate HELP Committee’s action testifies to the tenaciousness of the Committee’s chair, Senator Edward Kennedy, the political skill of Senator Christopher Dodd (who is leading the Committee while Senator Kennedy battles cancer), the political standing of President Barack Obama, and the widely recognized need for meaningful health care reform. Given that Senator Kennedy has been advocating for universal coverage since the 1960s it is fitting that his Committee was the first to act

No doubt there will be some elements of the Senate HELP Committee’s proposal in whatever legislation, if any, eventually emerges from Congress. However, as noted previously here, the Committee’s version of reform is to a large degree a negotiating position for liberals in the Senate. The proposal being written in the House of Representatives will be even more liberal. It is the Senate Finance Committee, where its Chair, Senator Max Baucus and ranking Republican member, Senator Charles Grassley, are seeking to draft legislation that will earn at least some Republican votes, that the outlines of the ultimate health care reform package is taking place.

There are still numerous contentious issues to work through, any of which could derail health care reform altogether. However, there is a surprising amount of common ground coming into view. The  Robert Wood Johnson Foundation recently released a study, Emerging Common Ground? An Analysis of Health Reform Positions, that describes (perhaps overly optimistically) several of these areas of general agreement. Among them:

1. the nature of private insurance market reforms;
2. the need for, and the structure of, a health insurance exchange;
3. whether and how a government-sponsored “public plan” should be created;
4. how best to leverage Medicaid and/or public programs to expand access;
5. whether an individual mandate is needed;
6. the scope and authority of government involvement in comparative effectiveness research;
7. sequencing and scope of payment reform; and
8. whether to limit the tax exclusion on employer-based coverage as a reform financing mechanism.

I’m not sure I agree that all of these are settled issues, but the study is worth reading nonetheless.

As I’ve written before, I believe health care reform is coming, but that’s no reason to panic. The status quo, while comforting in its familiarity, is unsustainable. History is the story of change. Health care reform history was made today. But in context it’s only a milestone — a significant milestone, but solely a milestone. Consider it one big step in a long journey toward something truly historic.

Health Care Reform Common Ground Meets Reality

So much for common ground on health care reform in the United States Senate. It wasn’t that long ago, May 30th to be exact, that Senate Finance Committee Chair Max Baucus and Senate Health Education Labor and Pensions Committee Chair Edward Kennedy issued a joint statement that read, “”For both of us, reforming the nation’s health care system to cut cost, improve quality and provide affordable coverage remains the top priority on our two committees.  We have worked together closely over many months and will continue to do so.  We intend to ensure that our committees report similar and complementary legislation that can be quickly merged into one bill for consideration on the Senate floor before the August recess.”

That was then. This is now: The Associated Press is reporting that the Senate HELP Committee is moving forward with legislation to create a government-run insurance plan to compete with private carriers. This provision, along with one imposing a $750 per worker annual fee on large employers who fail to offer health care coverage to workers, guarantees the legislation will pass through the committee with only Democratic votes. As I described in yesterday’s post, the committee has tried to position their public plan as more innocuous than was originally contemplated. It is not.

Meanwhile the Senate Finance Committee continues to seek a bipartisan health care reform package. The Associated Press story notes that, “As a result, a government-run option for coverage is unlikely to be included. Negotiations are centered on a proposal for a nonprofit cooperative to sell insurance as a competitor to private companies.” Co-ops can be considered public plans, but unlike the version proposed by the Senate HELP Committee, it is far more likely health insurance cooperatives will result in a more fair marketplace. The devil dwells in the details and we have not seen those yet. But if Senator Baucus is sincerely seeking GOP votes, and it appears he is, his committee will avoid a result that would eventually lead to a single, government-run carrier.

(Democrats on the House side of the Capital also pledged to work together — and they are doing so. The three committees with jurisdiction in that chamber are all working from the Tri-Committee Health Reform Draft Proposal. They expect to have their work done by the end of July. Like the Senate HELP Committee, their plan will include a robust government-run health plan.)

What’s significant about the divergence in approaches by the Senate HELP and Senate Finance Committee is that it makes responsible compromise more likely. Senator Kennedy and House Democrats are providing a haven for liberals in the debate. If liberals had 60 votes in the Senate, or even 50 for that matter, their legislative versions would foreshadow the final package. But as I noted yesterday, the fact that the Senate HELP Committee needed to dress their public plan in fig leaves of compromise is evidence they do not have the votes. Moderates will dictate what health care reform legislation passes Congress.

The Senate Finance Committee recognizes this reality. Heck, they are this reality. Which is why what this committee proposes concerning a host of controversial issues — requirements for individuals and/or companies to buy health care coverage, the structure, purpose and powers of an Exchange to present coverage options to individuals and small businesses, cost containment provisions such as turning to comparative effectiveness research for treatment guidelines — is so important.

It is not the common ground between the Senate Finance and Senate HELP committees that matters. It is the compromises reached within Senate Finance that will foreshadow the health care reform bill that winds up on President Barack Obama’s desk for his signature.

Senate Committee’s Revisions More Fig Leaf Than Compromise

The Senate Health, Education, Labor and Pensions Committee worked hard to produce a final draft of its health care reform legislation before Congress adjourned for the July 4th holiday. It made substantial progress, but failed to complete work some key elements, including those related to a government-run health plan and a requirement that employers obtain coverage for their workers. However, the broad outlines of their approach to a public plan are taking shape.

As I posted last month, the Senate HELP Committee and its chair, Senator Edward Kennedy, seemed intent on anchoring the left on several provisions, including a public health insurance plan. When first proposed, the government-run plan would be permitted to limit doctor and hospital payments to just 10 percent above those paid by Medicare. This would still have resulted in payments less than the providers’ actual costs in many instances, resulting in a cost shift to the private plans. This would create a tremendous premium gap between the private carriers and the public plan with the inevitable result that, eventually, the government plan would be the only carrier remaining.

Republicans and some moderate Democrats have made it clear that this chain of events is unacceptable. The response of the Senate HELP Committee is intriguing. Instead of simply ramming through their initial provision, they seem to be trying to dress it up as more moderate. According to Bloomberg.com  the committee will now call on the  public plan to abide by “the same rules for defining benefits, protecting consumers and setting premiums ‘that are fair and based on local costs.'” Although the government would pay the first three months of [the public plan’s] claims, these “would be considered a loan to be repaid over time,” according to Bloomberg. The government-run plan would be empowered to pay providers up to the “local average private rates.”

While this might sound like a retreat from their original position, it’s less movement than it is meant to convey. The public plan may pay up to the average rates paid by private carriers in a community, but it can also pay less. The Secretary of Health and Human Services would negotiate the reimbursement schedule. The Secretary is a political appointment of the President. Regardless of which party controls the White House, does anyone think the Secretary would — or should — seek to settle for the maximize payment amounts? If so, that anyone has not paid attention to what Democratic and Republican Administrations have done to Medicaid and Medicare providers.

Another fig leaf: although the public plan would be expected to pay its own way (after initial seed money) it would also be eligible for “‘risk corridor protections’ to offset or reclaim excessive losses,” reports Bloomberg. In other words, if the artificially low premiums it charges are not enough to pay its bills, a bailout from the federal government is already in place. Maybe I’m missing something, but recipients of bailouts are, by definition, not paying their own way.

What’s matters about all this is not that the Senate HELP Committee’s compromises are insubstantial, but that Democrats on the committee felt the need to compromise at all. It is a clear sign that support for a government-run health plan is waning in the Senate. Continued talk in support of health insurance co-ops as a possible compromise underscores this reality. So does the intensity of public health plan advocates campaigns against moderate Democrats. These campaigns are facing tough going in some states. For example, the Wall Street Journal’s Washington Wire blog reports that Senator Mary Landrieu continues to express reservations about a public option in spite television and radio advertising attacks on her by liberal groups like Move-on.org and Democracy for America. Senator Landrieu, through a spokes person, continues to be “committed to reforming the health care system and ensuring that all Americans are covered … but does not believe that healthcare reform starts with a public option. Senator Landrieu supports a predominantly private system that features a federal backup plan that serves as a safety net.”  Co-ops could serve this safety net function.

There’s a long way to go before the final act and advocates of public health plans will win a few skirmishes between now and then. The need for fig leaves, however, underscores that, for now at least, they are in danger of losing the war.

More Health Care Reform Proposals Added to the Mix

So many health care reform proposals are flying around the nation’s capital it’s nearly time to bring in the air traffic controllers. There are draft bills, option papers, proposals, outlines, and about any other kind of document you can name whirling around like jets over O’Hare.

Michael Johnson of Blue Shield of California and I gave a presentation on health care reform Wednesday to a group of health insurance brokers. We were reading up on one of the latest ideas issued a few hours earlier literally minutes before the panel got underway. It’s only going to get worse as some stake out (somewhat extreme) negotiating positions while others offer up potential compromises.

Here’s some of the more recent health care reform proposals to be launched — or about to be:

1.  The web site The Hill is reporting that moderates in the House of Representatives from both sides of the aisle are meeting in private to fashioning a compromise package. Among those meeting are part of the GOP’s “Tuesday Group,” the New Democratic Coalition and the Democratic Blue Dog Coalition. Fearing retribution from party leaders, neither side is offering the names of participants. The meetings are significant not just because they are likely to produce yet another health care reform package. The negotiations also underscore the reality that while the media tends to portray both Democrats and Republicans as monolithic parties of extreme ideologies, there are a significant number of lawmakers who eschew the hardline ideology of their colleagues and search for pragmatic solutions.
2. Former Senate majority leaders unveiled a health care reform plan they hope will provide a middle ground in debate. The plan was developed by Republican former Senators Howard Baker and Bob Dole along with Democratic former Senators Tom Daschle and George Michell. (Former Senator Mitchell is credited by the Boston Globe with having contributed to the document, although it is signed by only Senators Baker, Daschle and Dole). It weaves around the middle on a number of issues, although it does lean to the left. For example, while the proposal does not call for a creation of a federal government-run health plan it would permit states to create them. It also calls for taxing the value of health plans an employee receives to the extent it exceeds the cost of coverage provided to members of Congress. According to the Boston Globe this would amount about $5,000 for an individual and $13, 000 for a family.
3. The House Republican leadership unveiled their health care reform plan on Wednesday, too. Among other features it would allow states, small businesses and other group to come together into “pools” to offer low cost health plans that, at a minimum, is provided in a majoirty of states. It also would offer lower-income Americans refundable tax credits they could use to purchase coverage and would make individual health insurance premiums tax deductible. It does not require consumers to buy coverage, but the GOP plan would encourage states “to create a Universal Access Program by establishing and/or reforming existing programs to guarantee all Americans, regardless of pre-existing conditions or past illnesses … access to affordable coverage.” Development of the GOP plan was led by Representative Roy Blunt.
4. Last week the Chairs of the three House committees with jurisdiction on health care reform released a framework for reform. The Tri-Committee Health Reform Draft Proposal, put forward by House of Representative Chairs Charles Rangel of the Ways and Means Committee, Henry Waxman of the Energy and Commerce Committee, and George Miller of the Education and Labor Committee outlines the key provisions of a unified Democratic reform package. The framework calls for creation of a government-run health plan to compete with private carriers, requires all Americans to obtain coverage (with exemptions in cases of financial hardship), requires most employers to either provide coverage or pay a fee, and provides subsidies for Americans households with incomes up to 400 percent of the federal poverty level.

There will be many more proposals coming soon. As it is relatively early in the legislative process, most will stake out relatively pure ideological positions. Neither party has an incentive to offer compromise solutions yet. So House Democrats, along with Senator Edward Kennedy and his Health, Education, Labor and Pensions Committee, will anchor the left and the GOP Leadership and conservative Senators will anchor the right. As in most negotiations, the goal is to establish a starting position so far to one extreme or the other that the middle shifts in their direction.  

There will be some pragmatic proposals put forward as well. The most anticipated is that expected to be coming soon from the Senate Finance Committee. It’s Chair, Max Baucus, and its Ranking Member, Charles Grassley, seem to be sincere in their efforts to put forward a bi-partisan solution. In the meantime, President Barack Obama will keep up a drumbeat in support of getting comprehensive health care reform legislation through Congress before the end of the year. Although the White House continues to let Congress take the lead in fashioning the final reform package, the Obama Administration is beginning to get more engaged in the legislative process.

What the final health care reform legislation will look like is, as yet, unknown. It may resemble one of the ideas already put forward. Or perhaps something new to the mix will gain momentum. I’m betting that something will pass this year. The process of getting to one bill will be messy, but eventually, a consensus will form.

Not yet, but eventually.

CBO Analysis Highlights Difficulty of Affordable Universal Coverage

Among the duties of the Congressional Budget Office is determining the financial impact of legislation proposed by lawmakers. Their highly credible analyses is given great credence within Congress. Which means today’s preliminary report on the health care reform package crafted by Senator Edward Kennedy and other members of the Senate Health, Education, Labor and Pensions Committee is especially important.

The CBO Preliminary Analysis of the Affordable Health Choices Act, released on Monday, underscores the challenge Congress faces in attempting to insure the uninsured without breaking the federal budget. Before discussing the finding, it is important to note: this is a preliminary analysis of draft legislation. The CBO analysis focused on “major provisions on health insurance coverage,” leaving several important elements out of their review. There are elements of the draft bill that have not yet been modeled, for example, allowing children through age 26 to be considered dependents on their parents’ policies. There are a host of other caveats involved. So it is best to treat the findings of this report as broad and directional.

Considering the sincere commitment Senator Kennedy and his allies have for universal coverage, the direction of the Congressional Budget Office’s conclusions must be disappointing.

Without intervention, the CBO estimates that by 2019 approximately 228 Americans under the age of 65 will have health care coverage, but from 50-to-54 million people — about 19 percent of this population — will not. If the HELP Committee’s health care reform package were enacted, the CBO estimates the percentage of uninsured would fall to 13 percent of the non-elderly population would still be without coverage — approximately 36 or 37 million.

The net increase to the federal budget for covering these 13-to-18 million Americans would be $1.o trillion between 2010 and 2019, most resulting from the subsidies the legislation would offer to individuals earning up to 500 percent of the federal poverty level purchasing coverage through a government-run Exchange.

In the CBO Director’s blog posting on the analysis, Director Douglas Elmendorf points out that while the study estimates that 39 million Americans would obtain coverage through the Exchange, “the number of people who had coverage through an employer would decline by about 15 million (or roughly 10 percent).” He pegs the net decrease in the nation’s uninsured at about 16-to-17 million people.

No one claims comprehensive health care reform will be easy. The Affordable Health Choices Act is only one reform package on the table. And, as Politico.com reports, the White House made clear it is not the Obama Administration’s plan.  The CBO preliminary analysis on the draft legislation developed by the Senate HELP Committee makes clear just how difficult — and expensive — it will be.  Will the CBO report convince lawmakers to scale back their ambitions for government’s involvement in America’s health care. Perhaps, but I wouldn’t count on it. Health care reform is as much about ideology as pragmatism. 

The CBO study should embolden Congressional moderates, however, to stand firm for comprehensive reform that neither breaks the budget of the federal government nor American families.

Public Health Plans and Level Playing Fields

Whether comprehensive health care reform should include a government-run health plan is receiving a lot of attention of late. As well it should. Several issues before Congress have the potential of creating substantial, negative unintended consequences, but few as much as a pubic health insurance plan.

Advocates of government-run plans insist, as The Huffington Post reports President Obama did at a town hall meeting in Green Bay, Wisconsin, on Thursday, that “If the private insurance companies have to compete with a public option, it will keep them honest and it will help keep their prices down.”

However, as I’ve written before, a government health plan can have severe consequences to private carriers. Current government programs like Medicaid and Medicare pay doctors and hospitals less than their actual costs. They make up the difference by increasing what they charge private health plans. But Medicaid and Medicare don’t compete directly with private carriers. The government-run health plan advocated by President Barack Obama and many Democrats would. The cost shift their would result in an ever increasing pricing gap betweent he public plan and private carriers. Eventually private carriers would become uncompetitive and leave the market.

President Obama hears these concerns, but rejects them. In Wisconsin, The Huffington Post reports him as saying, “So, what you’ve heard is some folks on the other side saying, I’m opposed to a public option because that’s going to lead to government running your health care system. Now, I don’t know how clearly I can say this, but let me try to repeat it. If you’ve got health insurance that you’re happy with through the private sector, then we’re not going to force you to do anything.”

People can keep their private coverage if they want. Well, maybe. If the public plan behaves like Medicare, then this argument becomes a bit disingenuous. Medicare pays roughly 19 percent less than the actual cost care. Senator Edward Kennedy has proposed a public plan that pays providers 10 percent more than Medicare. This underpayment would force even more dollars to be shifted to private insurance companies. Not a recipi for those private plans you have the right to stay in to last very long.

President Obama is optimisitc a compromise can that avoids this inevitable result can be found. “And I think that we can come up with a sensible, commonsense way that’s not disruptive, that still has room for insurance companies and the private sector, but that does not put people in the position where they are potentially bankrupt every time they get sick.” Maybe he can. If so, it would be nice for him to describe what this compromise might look like.

Senator Kent Conrad a proposal that might work. He calls for creating non-profit, co-ops, owned and operated by local residents and small businesses. They would receive federal dollars to get launched, but otherwise would receive no favored treatment and would have to be self-supporting.  However, House Speaker Nancy Pelosi opposes such an approach according to the New York Times’The Caucus blog. At the same time, however,  Speaker Pelosi claims to want a public health plan to compete fairly in the marketplace. “It should be actuarially sound. It should be administrative and self-sufficient. It should be a real competitor with the private sector and not have an unfair advantage. When you say the words public option if that is the term about we will be using, you have to say right next to it, level playing field.”

The interesting conundrum this raises is, if a public plan is going to be just another option competing on a level playing field, why create it? Yet if it is given an artificial advantage it distorts the market in harmful ways. If a goal is to preserve the private market, this is problematic.

One option being discussed, according to the New York Times, is to introduce a public plan only “if people were not able to get insurance through private companies. This approach, called a trigger on Capitol Hill ….”  At least this approach makes some sense. If the private market in an area is dominated by one carrier, the government would introduce competition.  Competition does keep the participants honest. If it’s lacking in a community, a case can be made that the government can and should provide it.

Whether this limitation on public plans would satisfy its advocates or its opponents is yet to be determined. What is clear is that we’ll be hearing a great deal more about public plans, level playing fields and fair competition in the months ahead. Whether what eventually emerges is compatible with any of these concepts remains to be seen.

Kennedy Health Care Reform Bill Launches New Phase of Debate

The health care reform debate moved to a new phase Senator Edward Kennedy and his fellow Democrats on the Senate Health, Education, Labor, and Pensions Committee (HELP) introduced sweeping legislation. Senator Kennedy is Chair of the ccommittee. What is significant is not what is in the bill — it’s general outline has been known for awhile — but the publication of the bill itself. It marks the beginning of the move from discussions on generalities to negotiations on specifics.

The HELP Committee Legislation is entitled the “Affordable  Health Choices Act.” (Virtually every piece of health care reform legislation will include the word “choice” as the lack of choice — see as evidence The Patients’ Choice Act four Republican lawmakers are planning to introduce. The reason is that many in Washington believe opponents framing of the Clinton Administration’s health care reform plan as limiting choice was a leading contributor to it’s downfall.) The HELP Committee press release proclaims the legislation “reduces health care costs, allows Americans to keep the coverage they have if they want it, and makes health insurance affordable to those who do not have it today.”

That remains to be seen. The 615 page draft health care reform bill covers a lot of territory and it will take some time to sort through its many provisions. A quick skim, however, indicates that it generally hews to the outlines Senator Kennedy has been talking about in recent days. It would create state gateways through which individuals and some businesses could purchase coverage and a government-run carrier would compete with private carriers  Individuals earning up to 150 percent of the Federal Poverty Level ($16,245 for an individual in 2009) will be eligible for Medicaid. Insurance premiums for those earning up to 500 percent of the federal poverty level (currently $110,250 for a family of four) so their payments do not exceed 10 percent of their gross adjusted income.

At this stage, the details actually are not all that important. Discussions among the HELP Committee’s Democrats and Republicans continue (now those would be interesting to watch). And several other bills by different committees in both the House and the Senate are due. All will wind up in the sausage making process. What any one draft contains is not necessarily what will emerge at the end.

For now, Senator Kennedy is anchoring the left in the debate. (Anchoring a position is done by both liberals and conservatives. It is a negotiating tool in which the anchor calls for extreme provisions in the hopes of having any compromise which emerges from moving too far toward the other side). I don’t mean this cynically. Senator Kennedy is no doubt sincere in supporting the provisions of his committee’s legislation. However, he is a practical policitian and knows compromise is inevitable. Being the first Congressional committee to issue a draft, there is no need for him to introduce a watered down bill. After all, he would be foolish to negotiate with himself. Better to stake out his ideal position and see what the other committees produce.

A public hearing on the HELP Committee bill is scheduled for June 11, 2009 and the committee will begin editing the bill at a June 16, 2009 meeting. The Democrat’s press release emphasized that negotiations with GOP members of the committee are ongoing so it will be interesting to see what changes emerge  once mark-up begins.

All this is important and interesting. But again, the details of the Affordable Health Choices Act are less important than the existence of the Affordable Health Choices Act. A new phase of the journey toward comprehensive health care reform has begun. The debate continues.