The Week In Health Care

This has been a very interesting week in the fight for health care reform. Let's take a look at some of the major developments.

• Single-payer: Sen. Bernie Sanders introduced S.703, a single-payer health care bill (called the American Health Security Act of 2009), in the Senate. While this would be a companion bill to HR676 on the House side, it's the first time I can remember, and apparently the first time since the death of Paul Wellstone, that anyone in the Senate has carried a single-payer bill. Sanders in the release calls the bill "the most fiscally conservative option for reform" because private insurance overhead would be eliminated, saving over $400 billion dollars annually. Now that such a bill has been introduced in both Houses, there should be a demand from single-payer advocates to get the CBO to score the bill. Without numbers that Washington trusts, and sadly the CBO is the only number-crunching body with that authority, single payer will not be taken seriously. But a true accounting of the cost savings could spur reform. You can find the bill here.

• The Public Option: Howard Dean has jumped squarely into the health care debate from his perch at DFA, advocating strongly for a public insurance option to compete with the private market. Dean has gone so far as to say that without a public option, health care reform essentially doesn't exist.



Obviously, the insurance industry wants no part of a public option, that would force them to compete on price and quality of coverage, instead of the current system of competing to deny care to their customers to maximize profits. They say such a system would put them out of business. To which I say, YAY! What's important to understand is that there are public options and there are public options. Ezra Klein explains the structure of the three most common proposals:

• Single-Payer Lite. This was the rationale you heard during the primary campaign. A public insurance plan able to use Medicare's bargaining power to secure deep discounts for its customers and ensure the maximum possible network would be cheaper and more efficient than private insurers. Over time, this increased efficiency would make the plan more attractive because it could offer more coverage for less money. As consumers recognized this fact, they would increasingly migrate towards the plan, and the public insurer would become, if not a de facto single payer system, something close to it. The public insurer, in this scenario, is a game changer. But it's a game-changer because it's a form of single payer using a mild version of monopsony buying power.

• The Level Playing Field Plan. Insurers, predictably, howled that a public insurer with access to Medicare's market power would put them out of business. (Generally speaking, liberals agreed with that.) The messaging they settled on was conceptually odd but has proven pretty effective. A public insurer, they argued, would not be competing on a "level playing field." This might have caused someone to wonder when, exactly, the market had ever cared about "fair." But instead, this frame has been widely adopted, with Obama telling Chuck Grassley, "I recognize that there's that concern. I think it's a serious one and a real one. And we'll make sure that it gets addressed." In answer to this, Len Nichols proposed a public insurance plan that doesn't have access to Medicare's bargaining power, and this is the policy that CAP's paper advocates. This is not single-payer lite. It's just an insurer without shareholders or highly-paid executives. (I should note that some, like Harold Pollack, believe you could begin with this plan and end with the single-payer lite plan. I'm not convinced, but its possible.)

• The Catch-All. I've heard that the insurance industry and some advocates are interested in a compromise that looks a lot like Medicaid choice. Here, you'd have a public insurance option, but only for people making under a certain income level. It's a way of folding Medicaid into the new system.

If the single-payer lite plan is jettisoned, with the "level playing field" plan offered, such a public option would not achieve the kind of bargaining power to make it cost-effective. You reduce a bit of overhead and eliminate the profit motive to a certain extent, but you will not have done much to force private industry to heel. So if Dr. Dean wants to advocate for a public option, it had better be the right kind. For his part, Max Baucus, who has as much power over health care reform as anyone in Congress, characterized the public option as more of a bargaining chip than an actual policy point:

"Essentially, it's to keep it on the table to encourage the private health insurance industry to move in the direction it knows it should move toward—namely, health insurance reform, which means eliminating pre-existing conditions, guaranteed issue, modified community ratings. [TRANSLATION: Measures that would force the insurers to cover the sick as well as the healthy, at a cost that everyone could afford.] It's all those actions that insurance companies must take in order to provide affordable coverage. And the public option helps encourage the private companies to move in that direction, because they're worried. We might have to modify the public option to get enough votes. I hear some concerns among Republicans about the public option. The main purpose is to keep the health insurance feet to the fire."

Which leads us to...

• Industry Concessions: The insurance industry has offered what I imagine they consider their grand bargain: they will agree to both guaranteed issue (no more denial for pre-existing conditions) AND community rating (charging a flat rate for a community regardless of medical history) in exchange for an individual mandate that forces everyone to buy health care. This would be significant, but the devil is in the details:

The companies left themselves several outs, however. The letter said they would still charge different premiums based on such factors as age, place of residence, family size and benefits package.

"If the goal is to make health care affordable, this concession does not go far enough," said Richard Kirsch, campaign manager for Health Care for America Now. "It still allows insurers to charge much more if you are old." His group, backed by unions and liberals, is trying to build support for sweeping health care changes.

Importantly, insurers did not extend to small businesses their offer to stop charging the sick higher premiums. Small employers who offer coverage can see their premiums zoom up from one year to the next, even if just one worker or family member gets seriously ill.

Ignagni said the industry is working on separate proposals for that problem.

"We are in the process of talking with small-business folks across the country," she said. "We are well on the way to proposing a series of strategies that could be implemented for them."

Lots of outs for themselves, particularly age, which is intimately tied to increased need for care. It's good in the abstract because the industry clearly feels the need to move in the direction of reform. But they sang a lot of this tune in 1993 as well. Kevin Drum has more.

• Massachusetts Debate. One of the more interesting arguments among health care reformers concerns Massachusetts' "universal health care" policy adopted in 2006. It included an individual mandate and shared responsibility for stakeholders to provide subsidies to ensure everyone signed up for insurance. Monica Sanchez took a look at the MassCare plan relative to Barack Obama's principles for health care reform and found it lacking. A sample:

1. Does it protect families' financial health?

NO - Of those surveyed in a fall 2008 survey of Massachusetts residents on healthcare conducted by the Boston Globe and the Blue Cross Blue Shield of Massachusetts Foundation: in a recent survey 13% of insured said they were unable to pay for a health service; 13% said they were unable to afford to fill a prescription; and 33% ranked the cost of care their biggest health concern.

2. Does it make health coverage affordable?

NO - not for the middle class and not even for some people with low incomes. According to the report released last month, "Massachusetts' Plan: A Failed Model for Health Care Reform," by Drs. Nardin, Himmelstein, and Woolhandler, in fiscal year 2009, to bring cost increases down from more than 15.4% to 9.4% for CommCare, the state cut benefits and increased copays.

Read the whole thing. Jon Gruber argues that cost control was not entirely a part of the Massachusetts reform, as it focused more on universality. Thus it created what amounts to an entitlement in the hopes that the political dynamic could be changed to focus on bringing down costs once the plan was in place. In other words, there is, as Ezra Klein put it, an embedded political logic to doing coverage first.

States don't really have the bargaining power to bring down costs, nor can they deficit spend, so I don't know how building the political advantage for cost control really helps them, actually. And while this would possibly make sense on the national level, the Obama plan seeks to do everything at once, so it's not really germane.

• Budget Reconciliation. Harry Reid says he is completely open to using the budget process for health care reform, meaning that such legislation would only need 50 votes. Others violently disagree, not just Republicans but people like Budget Committee Chair Kent Conrad and Ben Nelson. In steps Steny Hoyer, of all people, as a mediator.

As House Speaker Nancy Pelosi (D-Calif.) did earlier Thursday, Hoyer defended the House’s decision to include budget reconciliation in its budget.

“Reconciliation on healthcare is a fallback position. It is not the preferred option. The preferred option is creating a bipartisan consensus,” Hoyer said [...]

Republicans argue that Democrats, by having reconciliation in their hip pocket, can pull out of any negotiations, whenever they want, making those talks potentially pointless for the GOP.

Hoyer said that if Democrats acted in that way, the Republicans would have a right to complain.

“If they are negotiating in good faith and then we pull the rug out from under them, I think that would be harmful to our objective of passage with a degree of bipartisan support and therefore credibility in the public,” he said.

Without reconciliation as a fallback, Republicans wouldn't even come to the table. So I do think it's a vital tool and shouldn't be set aside just yet. Hoyer had some interesting things to say about single payer and the public option, as well.