Health Care Reform 2009 Style

When it comes to health care reform 2009 has been an interesting year. And while comprehensive health care reform legislation will not be arriving on President Barack Obama’s desk this year, it is all but certain that will happen early in 2010. Getting to this penultimate moment has, to put it mildly, taken some doing. And the process says a lot about America and its leaders.

Health Care Reform Activity

President Obama had made clear throughout his campaign for the presidency that health care reform would be a top priority of his new administration. He lost no time making his promise real after his inauguration. Expansion of the State Children’s Health Insurance Plan, a proposal twice vetoed by then President George Bush, along with significant funding for medical technology, were a part of Administration’s economic stimulus package.

President Obama’s health care reform efforts took a serious blow in February when former Senate Majority Leader Tom Daschle was forced to withdraw his nomination as Secretary of Health and Human Services and as Director of the White House Office on Health Reform due to problems with his past tax returns. Senator Daschle is a political pragmatist who is highly regarded by lawmakers from both parties. Would the health care reform debate have been more civil had Senator Daschle led the White House reform effort? We’ll never know. What we do know is that civility quickly left the room as the House and Senate Committees with jurisdiction on the matter began their deliberations. The health care reform debate was passionate, raucous and partisan to the extreme. Neither party and no ideology is blameless for this descent into the dark side of politics. Both have benefited from it (although none as much as the 24 hour cable news channels) and both have sullied their standing with the public as a result.

Given what’s at stake when 1/6th of the nation’s economy is subjected to the legislative process, there may have been no avoiding an ugly health care reform debate. President Obama made clear in a speech in February that he wanted health care reform passed quickly. Many Republicans (and their talk show host allies) made it clear they’d rather see no health care reform rather than anything along the lines being proposed by – or that would politically benefit – President Obama. Meanwhile, the House Ways and Means, House Education and Labor and the Senate Health, Education, Labor and Pensions Committees pushed through liberal bills; anchors on the left in anticipation of the negotiations to follow. The resulting climate promoted intense partisanship.

Eventually more conservative Democrats forced the House Energy and Commerce Committee to slow done and moderate the legislation, although what they passed would still be considered “liberal” by most definitions.  All the House bills passed out of the committees without a single Republican vote. Meanwhile Senator Max Baucus was trying to fashion legislation that might gain the support of at least three GOP members of the Senate Finance Committee. (He would eventually manage to get the support of only one GOP Senator).

The difficulty of finding common ground between liberals and conservatives on health care reform was made abundantly clear during the summer of 2009. The disruption of lawmaker’s town hall meetings were reminiscent of the anti-Viet Nam War protests of the 1960’s. (I suppose it’s ironic that many of those shutting down the town hall meetings had participated in the anti-war protests more than 40 years earlier). The passion and concern of the health care reform protests were as sincere as some of the rhetoric and actions were unfortunate and despicable (death threats and swastikas are inherently contemptible and disgraceful). The protests did assure, however, that Republicans would remain united against the kind of reforms being pushed by the Administration.

Reform was being pushed by the White House even if the Administration was declining to define reform. Instead the White House broadly described the key elements they’d like to see in a reform bill. President Obama’s three core principles for health care reform called for reducing costs, guaranteeing choice and ensuring quality care for all. He would later add other conditions (e.g., reform could not add to the deficit), but the details of the bill were being hashed out in Congress by Democratic lawmakers. The result, much to the chagrin of liberals, was that over time the legislation became increasingly moderate culminating in the legislation passed out of the Senate Finance Committee with the support of only one Republican, Senator Olympia Snowe.

With all the committees of jurisdiction having staked out their positions it was time for Speaker Nancy Pelosi and Senate Majority Leader Harry Reid to pull together the pieces into bills that could pass their respective chambers. Speaker Pelosi succeeded first with the House passing a health care reform in November. The price of passage was high: liberals had to accept language dealing with abortions that sparked outrage in the pro-choice community.  It took the Senate more than a month to follow suit, but eventually they did. Now it’s up to a conference committee to pull the pieces together into one bill that can pass both the House and the Senate. Not an easy task, but with the finish line in sight it’s very doubtful lawmakers will falter now.

The Public Policy Dimension

While the activity swirling around health care reform has been … interesting, the evolution of the substance of the legislation has been even more fascinating. Not all that long ago liberal lawmakers were claiming a health care reform bill lacking a government-run health plan was no health care reform at all. They seemed to believe that a public health plan was the magic wand that would remake America’s health care system into something fair, competitive and wonderful. Or maybe they just thought the public option was a way station on the path to their promised land: a single payer system. While the House bill would create a new government health plan, the Senate legislation rejected the public option. While liberals outside of Congress continue to attack reform without a public option, liberals lawmakers seem to accept the inevitable. What emerges from the conference committee will no doubt lack a public option and liberal lawmakers will still support the reform package.

While liberals were losing a public option an unlikely coalition of conservatives and liberals were also watering down a requirement that all Americans purchase coverage. Conservatives dislike the idea as a restriction on the freedom of people to have their health care reform subsidized by higher health insurance premiums for everyone else. Liberals don’t like it because, apparently, the result is a windfall for evil health insurance companies. (OK, they offer more substantive public policy arguments against the individual mandate, but the rhetoric focuses on freedom and windfalls). Never mind that requiring health plans to sell coverage without requiring individuals to buy coverage before they incur claims is a recipe for higher insurance costs or that many states require drivers to buy auto insurance. As the legislation has moved through Congress the penalty for failing to purchase coverage has drifted toward a slap on the wrist end of the spectrum.

Other issues have taken interesting turns as well. Reimbursing doctors for counseling to seniors concerning living wills and the like was removed from the bill once the discussions were labeled “death panels.” What taxes will be imposed to pay for health care reform is still uncertain. Anti-abortion advocates have done a masterful job of inserting abortion into the debate. Both the House and Senate bills contained provisions that could “bend the cost curve” (which is apparently the new articulation of what was once called cost containment). If all the cost cutting provisions in the current bills were moved into separate legislation it would actually look like a serious effort. Mixed in with the health insurance reform dominating the current versions, however, the provisions appear weak and almost an afterthought.

Health Care Reform 2009: The Human Factor

So what to make of health care reform 2009 style?

First, that the legislative process is messy and can be downright uninspiring. Second, that tackling an issue as important and complicated as health care reform cannot overcome the need for partisans of both parties to put aside the public good for their political stratagems. Third, that the health care reform package that finally passes will be far more moderate than might have been apparent earlier this year. Fourth, criticism that Congress is moving too fast on reform are really complaints that Congress is not doing what critics leveling this charge want them to do. The health care reform bill that will find its way to President Obama’s desk in 2010 will be over a year in the making. Longer if you count the debate on health care held during the 2008 presidential election. Longer still if you include the previous health care reform efforts undertaken over the past several decades.

We elect politicians to hold office because they promise to address problems. No one has ever won a campaign on the promise to do nothing if elected. In 2008 Democrats won, and won handily, in part on a promise to solve the problems posed by America’s current health care system. They are fulfilling that promise. In the process they will create new problems.

Because the fact is we humans rarely solve problems. Instead we tend to replace existing problems with new ones. And if the 2009 health care reform process has taught us anything, it’s that the people who make up the Administration and Congress (and the general public) are only human. Anyone looking at the health care reform package emerging from Congress would find evidence of that reality.

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Countdown to the Real Work on Health Care Reform

With a commitment of 60 votes, Senate Majority Leader Harry Reid unveiled the manager’s mark of the Patient Protection and Affordable Care Act or, as it is better known, the Senate’s health care reform bill. After day long negotiations over abortion and other issues, Senator Ben Nelson agreed to vote in favor of bringing the bill to the Senate floor.

The manager’s mark of HR 3590 identifies the changes made to the  original Senate health care reform legislation (in other words, if you want to read the bill you have to read both the original and the most recent document). As has been widely reported, there are some provisions of the legislation specifically aimed at securing the support of Senator Ben Nelson of Nebraska. For example, the health care reform bill will increase state spending on Medicaid. The Senate bill reimburses states for this extra cost until 2017 at which time the federal matching funds are phased out. Except for Nebraska where the federal government would pay for Medicaid expansion forever. (Or, to be realistic, until Congress takes the subsidy away).

There’s a host of other provisions of interest. A government-run health plan is out of the bill, much to the frustration and dismay of liberals. Carriers would be required to maintain a medical loss ratio of 80 percent for small group and individual products while meeting a minimum 85 percent MLR for their large group block of business. Rating differences based on age would be limited to a 3-to-1 ratio. However, states could increase the minimum medical loss ratios or narrow the age-based rating difference. There’s new language concerning abortions, one of the inducements to get Senator Nelson’s vote, although this language is apparently not strong enough for anti-abortion Democrats in the House.

The Office of Personnel Management would create a copy of the Federal Employee Health Benefit Plan featuring private carriers. (It appears both for-profit and non-profit plans could participate in this new program, but I may be reading it wrong and only non-profits are permitted). There’s a host of preventive/wellness programs, pilot projects and other provisions aimed at addressing costs. And it would allow carriers meeting certain federal standards to offer coverage in other states through state exchanges.

(I received an email from a conservative broker blasting this provision as removing the ability for “the Citizens of a State having a say on State Laws and Mandates!” Which is pretty funny considering it’s at the center of Republican reform proposals, was a part of Senator John McCain’s health care reform platform when he ran for president, and is not much different than the Associated Health Plans advocated by conservatives for over a decade. Sometimes it seems to be less about the underlying public policy and more about who makes a proposal that drives the reaction.)

The bottom line is that Senator Reid did what he needed to do to cobble together 60 votes in the Senate. What, in the words of former Majority Leader Tom Daschle, is the equivalent of shoveling 60 frogs into a wheelbarrow.)  As a result, the Senate will pass health care reform.

And that’s when the fun begins. There are substantial differences between the House and Senate versions of health care reform. Perhaps Speaker Nancy Pelosi, recognizing the greater challenge Senator Reid has in rounding up votes, will instruct House negotiators to quickly adopt the Senate version of health care reform. This could result in a bill passing Congress in very early January.

More likely, however, House and Senate negotiators will struggle to refine the legislation. The result will be closer to the Senate version than what passed the House, but it would not be the same HR 3590 that will pass the Senate. This process will take significantly longer, perhaps most of January. While unlikely, the conference committee has the power to start with a blank piece of paper and write a brand new bill.

My guess is Speaker Pelosi will focus on a few key modifications to the Senate bill. So long as it doesn’t cause one of Senator Reid’s frogs to jump out of the wheelbarrow these will be accepted. The result will a relatively short conference committee leading to a final vote on health care reform by mid-January.

What’s significant is that the playoff season is almost over. The World Series (that would be the conference committee) is about to begin. Which means the real work of writing health care reform legislation is about to begin.

Added December 21, 2009: Memorandum from the Congressional Budget Office to Senator Harry Reid summarizing their analysis of the Patient Protection and Affordable Care Act and to a blog posting by CBO Director  Douglas Elmendorf concerning a correction to the calculation of federal reductions beyond 2019.

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.

Obama’s Warp Speed Health Care Reform Rightly Focused

President Barack Obama’s address to the nation was both a rallying cry and a call to arms. And, if there remained any doubt, President Obama made clear he wants health care reform and he wants it now.

In his speech, President Obama promised the budget he will propose soon “includes an historic commitment to comprehensive health care reform — a down-payment on the principle that we must have quality, affordable health care for every American.” He then pledged to begin meetings among stakeholders to begin working through the contentious issues surrounding the topic next week. Pledging reform at warp speed he proclaimed, “So let there be no doubt: health care reform cannot wait; it must not wait and it will not wait another year.”

Can meaningful and comprehensive reform really be developed, debated and enacted in less than 12 months? Some would argue that it has to, that the political will to pass meaningful change must be seized and seized quickly. There will be great pain for some in the reform, and like pulling off a band aid it’s helpful to pull it quickly. Others will say making massive changes to a system as complex as America’s health care system needs to be done thoughtfully and carefully or else the damage from unintended consequences will swamp the benefits of change.

My take on it is that various aspects of a reform package can be developed in a year, but some elements will take longer. The question will be whether the Administration determines it’s better to pass what it can quickly and continue the legislative process into 2010 or wait for an omnibus package.

In any event, the President has little choice but to call for fast reform. His political capital is high right now. It has a lot more room to fall than to grow. Further, there’s broad consensus that health care reform could greatly aid the nation’s economic recovery — and that is his top priority. The sooner the details of reform are clear, the sooner business can rely on help in managing this cost. Further, there’s no shortage of proposals being discussed in and around Congress. If he doesn’t act on health care reform, someone else will. And he has no intention of ceding leadership on the issue to anyone else. Besides, if he misses his target and only brings about reform in 2010, is anyone going to complain? The only real deadline he has is to pass something before the mid-term election in November of next year. In the meantime, why not call for fast action?

More important than his timetable for reform is his focus for reform. And President Obama has made clear the kind of reform he’s looking for. Although former Senator Tom Daschle will no longer be leading the effort, his book, Critical: What We Can Do About the Health-Care Crisis (co-written with Scott S. Greenberger and Jeanne M. Lambrew, now the Deputy Director of the White House Office of Health Reform) clearly sets forth the Administration’s goals.

As I’ve written before, what’s significant, and encouraging, about this approach to health care reform is its focus on controlling the underlying cost of medical care. And that’s where the focus needs to be. A report by the Department of Health and Human Services projects health care costs in 2009 will exceed $8,000 per person. And this doesn’t include additional costs likely to result from the recent expansion by Congress of coverage for children and the economic stimulus money targeting medical technology. In a story on the report, the Associated Press quotes White House spokesman Reid Cherlin as saying “Health care costs are crushing middle class families and the small business that fuel job growth in this country.”

This doesn’t mean the administration will ignore market reforms or back off from seeking to establish a national purchasing pool (they’ll call it an Exchange) for coverage. But the fixation on costs is both appropriate and needed. Especially if we’re going to take health care reform where no American system has gone before — and at warp speed at that.

Obama’s First Health Care Reform Test: His Tax Increase Proposal

Health care reform rarely is accomplished in a process that is anything like a straight line. In 2009, for example, changing America’s health care system first requires addressing the nation’s tax system. That may not be intuitive, but it does seem to be the way things are working out.

President Barack Obama makes very clear that comprehensive health care reform is an integral part of his economic recovery program. Impressively, he has already accomplished a number of his goals, specifically inclusion of funding for health care technology as part of the recently passed stimulus package and the renewal and expansion of the State Children’s Health Insurance Plan (SCHIP). Those were just the start of his reform efforts, however. And now comes the difficult part.

President Obama wants to change the way Americans purchase and use their health care. He wants to achieve near universal coverage, reduce the cost of both health insurance and of medical care, and vastly reduce wasted spending on health care. This is not an easy task — just ask California Governor Arnold Schwarzenegger. Or Secretary of State Hillary Clinton, for that matter.

President Obama’s mission is complicated by the withdrawal of former Senator Tom Daschle to lead the Administration’s health care reform efforts. Senator Daschle had tremendous credibility in Congress and policy wonks alike. He was a superb choice to serve as President Obama’s Secretary of Health and Human Services and to be Director of the White House Office of Health Reform.  His nomination withdrawn due to Senator Daschle’s tax problems, the Administration is unlikely to find a replacement of equal political heft, access to the President and in-depth knowledge of the issue.

Finding a leader for is the Administration’s second most pressing health care reform challenge. The first is passing a tax increase. Here’s how it plays out.

The stimulus plan supported by President Obama greatly increases the nation’s spending. At the same time, the Obama Administration inherited a budget deficit of about $1.3 billion courtesy of the Bush Administration. This week, in a White House summit on fiscal policy and in an address to Congress, President Obama will make clear his commitment to slashing the deficit to $533 billion by 2013. To do that, according to the Associated Press, he will: 1) reduce spending on the Ira war; 2) end “temporary” tax breaks enacted during the administration of President George W. Bush on those making $250,000 or more a year; and 3) increase government efficiency. Among those programs slated for streamlining is reducing Medicare Advantage subsidies to insurance companies according to the New York Times.

The Administration is also likely to propose treating investment income earned by hedge-fund and private-equity partners as ordinary income according to the Bloomberg Press. This income is currently taxed at the capital-gains rate of 15 percent. Ordinary income is taxed at as much as 35 percent (but could go up to 39.5 percent if the Bush tax cut for those earning $250,000 or more is repealed.

Without these savings, President Obama will be hard pressed to finance expansio of health care reform and his energy  initiatives, increase education spending and enact his homeowners assistance program and send more troops to Afghanistan and reduce the deficit.

Of these, make no mistake: health care reform is near or at the top of the list.  As Office of Management and Budget Director Peter Orszag puts it, as quoted in the New York Times, “He wants to present an honest budget, he wants to focus on health care ….”  The Times quotes senior adviser David Axelrod as explaining, “The president believes there are essentially three areas that have to move forward even as we pare back elsewhere — health care, energy and education.”

It all comes down to the economy, however. And most objective observers would agree that America needs health care reform to have a sound economy. (The debate is not over whether reform is needed, it’s what kind of reform is required). So health care, taxes and the rest are all tied up in the Administration’s effort to right America’s fiscal ship.

We’ll have updated estimates as to how much revenue the tax increases are expected raise over the next four years when President Obama introduces a summary of his budget later this week. Clearly, however, it will be a critical component to the Administration’s fiscal goals. If the tax increases fail, it will be substantially harder for President Obama to finance a big ticket item such as his health care reform proposal. With the increases, he will have demonstrated his political acumen and bolstered his bargaining position with Congress while, at the same time, finding the revenues he needs to implement his plans.

So the first test of whether President Obama can pass his health care reform will not be a vote on creating a Federal Health Board or establishing a national purchasing exchange. It won’t mention guarantee issue or community rating nor even provider reimbursement levels. It will be a vote on whether a tax reduction scheduled to expire in 2011 will be allowed to so, then or sooner. Not a straight line, but a necessary course of action nonetheless.

Daschle Withdrawal Could Be Bad News for Reasonable Reform

There are some who will celebrate former Senator Tom Daschle’s decision to withdraw his nomination as Secretary of Health and Human Services and as Director of the White House Office on Health Reform. They should not. Even for those who disagree with his approach to reform — and I certainly disagreed with significant portions of it — the withdrawal is bad news.

First, because Senator Daschle is bright, very bright. And anyone tackling substantial changes to a system as complex, critical and impactful as America’s health care system better be very bright.

Second, unlike many bright people, Senator Daschle is a proven political pragmatist.  He understands the need for buy-in from competing interests and for compromise. This doesn’t mean he doesn’t have principles and a philosophy. He has both. But he also has a commitment to getting reform passed, which means he’d listen to and, where possible, incorporate the ideas of those who oppose his philosophy.

Third, Senator Daschle knows Congress and is trusted by the President. This would enable him to effectively influence the former and to ably represent the latter. Without his presence, reformers in Congress may have more sway and President Barack Obama will have a less forceful voice in negotiations.

Fourth, the individual(s) nominated in his stead may lack any of these strengths. One of the names floated, for example, is former Governor and Democratic National Committee Chair Howard Dean. Governor Dean, a doctor by profession, showed himself to be a smart organizer as head of the DNC. There were also plenty of times, both at the DNC and a presidential candidate in 2002, that he demonstrated a more ideological and erratic approach to issues like heatlh care reform than Senator Daschle.

There are others President Obama could turn to for leadership on health care reform. None are likely to possess the leadership traits possessed by Senator Daschle.

Senator Daschle’s tax return errors says more about the complexity of the country’s tax code than it does about his character. Those who oppose his approach to health care reform may find themselves nostalgic for his approach before long.

Health Care Reform 2009: Required Reading

Health care reform will be painful enough without requiring home work, but such is life. Here then is the required reading list for understanding the 2009 health care reform debate, where it’s going, and why.
(Note: a second list of health care reform required reading was added June 2, 2009 and a third list was added on August 11, 2009)

1. Critical: What We Can Do About the Health-Care Crisis by Tom Daschle withScott S. Greenberger and Jeanne M. Lambrew.

Former-Senator Daschle will be leading President Barack Obama’s health care reform effort, both in his position as Secretary of Health and Human Services and as Director of the Office of Health Reform inside the White House. Ms. Lambrew will be serving as Deputy Director of the Office of Health Reform. That there even is an Office of Health Reform highlights the importance of this issue to the incoming administration. That the Director of this office is also a Cabinet Secretary enhances the prestige — and clout — of both the office and its leader.

This makes understanding soon-to-be Secretary Daschle’s outlook on health care reform, well, critical. His book, Critical serves as a blueprint to his thinking.  Although the book was written before the identity of the Democratic nominee would be, Senator Daschle was an early supporter of Senator Barack Obama. It’s not surprising that his proposal ties-in well with the then presidential candidate’s health care reform proposal. Senator Daschle’s book, however, goes further.

Core to his solution for what ails America’s health care system is the creation of a Federal Health Board. Modeled after the Federal Reserve Board, it’s aimed at removing effort to control health care costs one step away from the day-to-day politics of Capitol Hill. “I believe a Federal Health Board should be charged with establish the [health] system’s framework and filling in most of the details. This independent board would be insulated from political pressure and, at the same time, accountable to elected officials and the American people. This would make it capable of making the complex decisions inherent in promoting health system performance. It also would give it the flexibility to make tough changes that have eluded Congress in the past.”

Specifically, Senator Daschle would have the Board set the rules for the national health exchange he would create. Through its own research and helping to prioritize research by other federal agencies, the Board would help promote “high value” medical care by “ranking services and therapies by their health cand cost impacts.” Senator Daschle would also have the board “align incentives with high-quality care.”  This would be done through evaluating new technologies as well as by aligning provider payments made by the federal government with health outcomes, rather than with services delivered. Finally, Senator Daschle would ask the Board to assist in “rationalizing our health-care infrastructure” by issuing an annual report identifying where investments are needed across the country — and where they’re not.

In addition to providing a blue print for the Obama Administration’s future health care reform proposals, Senator Daschle does an exceptional job of describing the history of America’s health care reform efforts from 1914 through the present day. As a participant in much of that history, his review can’t help but reflect his own biases, but Senator Daschle ably places today’s debate in an appropriate context.

What’s most encouraging about Critical is that it signifies a clear understanding of the central role controlling medical costs holds in reforming the system. This doesn’t mean Senator Daschle won’t seek to change the health insurance industry. He calls for expansion of federal programs, including a government program that would insure most individuals and small groups. For insurance agents, what is most disconcerting is that Critical never once mentions the role agents play in the current system nor what role Senator Daschle foresees agents playing in his vision for a future system.

 Nonetheless, Critical is important reading as Washington prepares to address America’s health care challenges.

2. Key Issues in Analyzing Major Health Insurance Proposals, by the Congressional Budget Office, published December 2008.

The Congressional Budget Office provides critical input to lawmakers on the expected impact of their legislative proposals. A negative analysis ruling can — and probably should — kill a bill; a positive one can help build momentum and support. Key Issues is not aimed at instructing members of Congress what to do about health care reform. Instead, it lays out how the CBO intends to evaluate whatever proposals Congress generates. As the report notes, “This document does not provide a comprehensive analysis of any specific proposal; rather, it identifies and discusses many of the critical factors that would affect estimates of various proposals.”

The budgetary impact of any health care reform proposal will be critical to its eventual success. The CBO document lays out in significant detail how it will go about measuring that impact. In doing so, the CBO provides a host of statistics, graphs and data that will be bandied about during the debate.

As if all this wasn’t enough to make Key Issues  a must read, Peter Orszag was Director of the CBO when the report was prepared. Mr. Orszag will be Director of the Office of Management and Budget in the Obama White House. In that role, he will have a great deal to say about the financial impact of various reform plans. Given his involvement, it’s not unfair to expect the Administration’s analysis to closely mirror the Congressional analysis described in Key Issues.

3.  Roadmap for Implementing Value Driven Healthcare in the Traditional Medicare Fee-for-Service Program,” by the Centers for Medicare & Medicaid Services.

The upcoming reform debate will be peppered with calls for “transparency,” paying for “value, not services” and for making commercial coverage as cost effective as Medicare. So it makes sense to see what the folks who run Medicare are thinking about concerning these issues. This report is CMS’ effort to help lawmakers “create rationale approaches to lessen healthcare cost growth and to identify and encourage care delivery patterns that are not only high quality, but also cost-efficient.”  The report describes the programs and demonstration projects already put in place by CMS to “foster joint clinical and financial accountability in the healthcare system.”

The CMS report is a tougher read than the other’s on this list. But given that any reform proposal will need to tackle skyrocketing medical costs, the report is worth the time.

I’ll add to this list in later posts, but these three items are a good place to start. And remember, if you think the reading list for health care reform is bad, just wait until you see the final exam.

National Health Care Reform: Later Than Sooner?

Whether comprehensive health care reform is needed is no longer debated on Capitol Hill. The only question is when it’s coming. I’m among those who have been predicting that the Obama Administration and Congress will move quickly to enact comprehensive health care reform. I’m far from alone in this: incoming Secretary of Health and Human Services Tom Daschle thinks so, too. In fact, so does incoming President Barack Obama. Throw in several leaders in the U.S. Senate, including Senators Ted Kennedy and Max Baucus and you’ve got a growing conventional that universal coverage will be coming sooner or later.

But this consensus is not universal. Representative Pete Stark will have a big say on health care reform as chair of the Health Subcommittee of the Ways and Means Committee. And, according to The Hill, he’s saying Congress is unlikely to be ready for a vote on health care reform until “the end of 2009 or the beginning of 2010.”  The problem, according to Rep. Stark, is that there are simply too many competing priorities, including the economy, to get to comprehensive reform. This doesn’t mean less grand reforms won’t happen early in the new Administration (e.g., expansion of the State Children’s Health Insurance Program (“SCHIP”)), but even those could cause a delay in working through a major reform package, according to Rep. Stark.

Rep. Stark, a California Democrat who has served in Congress for 35 years, encourages a deliberate approach to comprehensive reform. According to The Hill he believes the House “needs to build toward health reform through the regular order. ‘I think you have to give everybody a chance to have a hearing,” including interest groups. Of note, Rep. stark pointed out the need to hear from the American Medical Association, the American Hospital Association and the Pharmaceutical Research and Manufacturers of America. He dismissed the need for the health insurance industry to buy-in to the reforms, however. Predicting they would never support a Democratic health care reform package, Rep. Stark said the industry’s opposition won’t change much. “They’re going to be easy to roll because nobody likes insurance companies.”

Rep. Stark is not the only voice suggesting health care reform will take some time. Senator Charles Schumer, who sits on the Finance Committee, in April told The Hill, “Health care I feel strongly about, but I am not sure that we’re ready for a major national health care plan.”

While there is broad consensus that reform is needed, the debate will grow contentious as details of a plan emerge. Current allies may find themselves on opposite sides when the nitty meets the gritty. Or as Michael Cannon of the Cato Institute put it in USA Today, the interest groups “all want to be at the table because they don’t want to be on the menu. Sooner or later, someone is going to be on the menu. You can’t do comprehensive reform without goring someone’s ox.”

Beneath all the flying metaphors is the realization that achieving comprehensive health care reform won’t be easy. It’s also vitally important. The Obama Administration and Congress should take the time needed to get it right. Because there are no do overs when you’re tinkering with 16 percent of the nation’s economy in the middle of a recession.

Dashcle Appointment Puts Obama Health Care Reform on Fast Track

In case there was any doubt, President-elect Barack Obama made clear today that reforming the nation’s health care system will be an early priority for his Administration.  Hhealth care reform won’t wait while President Obama first focuses on fixing the country’s economic mess, but will instead be an integral part part of that effort. As he said during a press conference announcing the creation of a White House Office of Health Reform, to be led by his nominee for Secretary of Health and Human Services, former Senator Tom Daschle, “If we want to overcome our economic challenges, we must also finally address our health care challenge.” (Here’s a  video of the press conference — the comment is made at roughly the 2:40 mark).

The need to move quickly on health care reform was a central theme of the press conference. After reciting the usual litiany of the current health system’s shortcomings, President-elect Obama said, “We’re on an unsustainable course. The time has come, this year, in this Administration to modernize our health care system for the 21st century, to reduce costs for families and businesses and to finally provide affordable, accessible health care for every single American.” (This statement begins at about the 1:40 mark).

He then directly tied health care reform to addressing the current financial meltdown.  “Now, some may ask, ‘How at this time of economic challenge we can afford to invest in reforming our health care system’. And I ask a different question: ‘How can we afford not to?'” (About the 2:00 mark).

The creation of a White House Office of Health Reform, and the appointment of Senator-soon-to-be-Secretary Daschle as it’s Director is especially telling. By placing the locus of health care reform inside the White House, President-elect Obama elevates the importance of achieving meaningful change. By placing the leadership of the Office in the hands of his HHS Secretary he makes it easier for his Administration to speak — and negotiate — with one voice. By making that HHS Secretary Senator Daschle he assures the reform effort will move forward in a nuanced fashion, sensitive to the legislative process. 

This approach stands in stark contrast to the Clinton Administration’s health care reform initiative.  That fiasco, led by then First Lady Hillary Clinton, was a textbook example of insularity and insensitivity to political realities. It discouraged vigorous debate and excluded Congressional input.

Senator Daschle, who led Democrats for 10 of his 18 years in the Senate and who served in the House for eight years, will take a far different approach. First, he can’t help but reach out to members of Congress — it’s in his DNA. Second, at the press conference he pledged to work with “people from across the country to find a path forward that makes health care in this country as affordable and available as it is innovative.” As a member of the Obama Transition Team he is already coordinating thousands of small meetings across the country on the topic to bring the American people “into this conversation” in order to make “an open and inclusive process that goes from the grass roots up.”  (Beginning at the 7:10 mark).

Senator Daschle is no newcomer to the health care reform debate. He’s studied, and written about, the issue as a Senior Fellow at the Center for American Progress. He is co-author of Critical: What We Can Do About the Health-Care Crisis along with Dr. Jeanne Lambrew, who President-elect Obama named today as the Deputy Director of the White House Office of Health Reform.  Their prescription for reform is not dissimilar from that put forward by Senate Finance Committee Chairman Max Baucus which, in turn, reflects many of the principles put forward by candidate Barack Obama during the presidential election.

During the press conference, both President-elect Obama and Senator Daschle emphasized the many problems apparent in today’s health care system. This shouldn’t be a surprise. When rallying the nation to change a complex and critical component of government service reminding voters of its flaws and the need for reform is standard practice.

It would have been nice, however, if a bit niaive, to hope they would have noted, even in passing, that much of the current system works and is worth preserving. Such a statement would have been as refreshing as it would have been unexpected. And it might even have underscored the new kind of politics President-elect Obama promises to bring to Washington. 

Obama Health Care Reform: Early Tea Leaves

As President-elect Barack Obama’s administration takes shape some hints as to the direction health care reform will play out are beginning to drop. While the clues are preliminary and a lot can change in the 47 days before the inauguration. But it’s never too early to read tea leaves. Who knows, some of these predictions might actually be right. Among those tea leaves:

Health care reform will be addressed sooner rather than later. The issue was too central to the President-elect Obama’s campaign to be put off for long. And there’s too much pent up demand for change to delay. Plus there’s a host of reform proposals already, or soon to be, in play. Some are plans bi-partisan, some are being offered by Congressional heavyweights like Senators Max Baucus and Ted Kennedy. All of these proposals have a lot in common, which means health care reform 2009-style will be off to a much better start than the Clinton Administration effort (fiasco?) in 1993.

Former Senator Tom Daschle will play a major role in fashioning health care reform. Although his nomination to be Secretary of Health and Human Services isn’t yet official, it’s received the controlled leak treatment that has presaged every other nomination. Senator Daschle has spent much of his time since losing his Senate seat in 2004 thinking and writing about health care reform.  That thinking has led him to argue, according to Time magazine, that health care reform is essential to dealing with the nation’s financial woes and that delay in implementing reforms is unacceptable.

As a Senior Fellow at the liberal Center for American Progress has described the current health care system as seriously broken. Writing in an undated statement on the Center’s site, Senator Dashcle claims “Efforts to reform our health care system have been undercut by myths that hide the weaknesses of our current system and overstate the challenges of reform. One myth is that the United States has the best health care system in the world. There is no doubt that some Americans have access to the best care anywhere, but not all care is excellent.”

He continued, “We need to move beyond ideology and partisanship and meet our common health care system challenges with commonsense answers to provide affordable, quality health care to everyone in this great nation. This is not a weak alternative; it is the only one.”

These statements summarized the findings in a white paper on health care reform entitled, “Paying More but Getting Less: Myths and the Global Case for U.S. Health Reform.” The reforms called for in the white paper overlap those advocated by candidate Obama during the campaign. One encouraging note: Senator Daschle spends considerable time in his analysis on the need to control health care costs. This means he should find an ally with the new Director of Office of Management and Budget, Peter Orszag.

Controlling costs will be central to Obama’s health care reform plan.Although it got fewer headlines than the debate over whether his proposal would lead to universal coverage or not, candidate Obama focused more than most of his opponents on the need to restrain skyrocketing medical costs. As a candidate, President-elect Obama’s proposals were, to put it kindly, somewhat general in scope. Yet he’s bringing on board people who clearly get the importance of this task. As noted, Senator Daschle is one. Incoming Director of the Office of Management and Budget, Peter Orszag is another. In his current job as Director of the Congressional Budget Office, Director Orszag has long called for a focus on controlling medical costs. At the CBO Director Orszag pushed for evidence based assessments of new technologies and expansion of research into the effectiveness of treatment. He also called for new incentives in order to change provider and consumer behavior. His move down Pennsylvania Avenue from Congress to the White House is unlikely to change this emphasis. And given the impact health care reform will have on the economy (and thus the nation’s budget) his will be a loud and attended-to voice in the debate.

Emanuel may have a lot to say, too. Incoming White House Chief of Staff Rahm Emanuel will no doubt weigh in on health care reform, but he’s not the Emanuel I’m referring to. The one to keep an eye on is his brother, Ezekiel Emanuel, currently Director of the Clinical Bioethics Department at the National Institute of Health. Dr. Emanuel is a strong advocate of a voucher system. His proposal has gained significant attention, if not support. But with his brother holding the door open it’s highly likely the doctor will have a voice in shaping the Administration’s health care reform plan.

Reforming America’s health care system won’t be easy. The need for comprehensive health care reform is widely shared across the political spectrum. And as the Los Angeles Times, recently reported, there’s a growing consensus supporting universal coverage that includes business, unions, doctors, hospitals and insurance companies. Yet sharing a goal is a far cry from agreeing on solutions. As history has shown, once details emerge, so do objections. I believe health care reform is coming, but there will be vigorous debate and substantial compromises along the way.

A Single Payer system will be part of the debate, but not the solution. Supporters of a single payer system have a nearly religious zeal for their approach. They speak in terms of the morality of covering everyone and throwing those earning profits from the health care system. A government-run system accessible to all and paid through taxes is the salvation they preach. Advocates of a single payer system will not go away and they have many supporters in Congress. Yet, their chance of success has not been this bleak in years. The consensus building in Washington focuses on an employer-centric system. While expanding government health insurance programs is explicitly supported, all the major proposals currently gaining traction implicitly reject a single payer system. There will be sound and fury around this approach, but as a solution, it’s a virtual non-starter. This doesn’t mean that what emerges from the coming health care reform debate isn’t dangerous to health insurance agents and others important to the current system. It just means the truck heading our way is not being driven by Michael Moore.

Change is coming. Stay tuned. For those who care about America’s health care system, 2009 will be a watershed year. Something is coming. It’s broad outlines are becoming more clear as the new year draws closer. But the system won’t be changed by generalities. It’s the specifics that matter. And it’s time that is required to shape those details into reforms that make the system better, not worse, for the effort. The opportunity for meaningful, positive reform has never been greater. While there are risks to current stakeholders, there’s a good chance they may emerge stronger from the process. What’s clear is that the process will take months, maybe even years, before the coming change arrives. And make no mistake, change is coming. No tea leaves are required for that prediction.