The Health Care Showdown

Congress returns to work this week, and among the other items on their docket is constructing a workable health reform plan, bridging a wide divide between the parties on this issue, and a half-century of failure along these lines. The President has committed to reform in his first year, but obviously there are plenty of hurdles.

Lawmakers are far apart on some of the most important issues today, from the reach of government to the responsibilities of employers and individuals. And guaranteeing coverage for all could cost $1.5 trillion over 10 years, an eye-popping sum in a time of recession and mounting national debt.

Yet major constituencies often at odds are now clamoring for change. They range from consumer groups to insurers, from employers to doctors and hospitals. President Barack Obama has pledged to chip away at hardened ideological positions to find compromises.

"This is the toughest issue we have ever taken on — every part has got a chance of blowing up," said Iowa Sen. Charles Grassley. He is the top Republican on the Senate Finance Committee, which oversees government health programs and taxes, and plans to start work Tuesday.

The schedule is ambitious - we're talking about the full House and Senate passing a bill by the August recess.

One of the biggest points of contention is the public option - which Republicans obviously will seek to make a bright line, considering it a step toward "socialized medicine." The public generally supports having the option of a Medicare-like publicly run plan to fall back on. Insurers obviously want to corner the market. Consider me skeptical about this alleged compromise:

Nancy-Ann DeParle, director of the White House health reform office, said a public plan could be designed to address concerns about the federal government overreaching in its role.

"I'm actually very hopeful that we'll be able to reach an agreement on that, because it is part of the president's plan," DeParle said in a session with reporters at which she fielded repeated questions on the issue. "It's included because he wanted a mechanism to lower costs and to keep the private sector honest." [...]

DeParle suggested one compromise might be that the public plan pays hospitals and doctors rates similar to what private insurers pay. That would address fears that government would use its muscle to pay rock-bottom prices for medical services, allowing the public plan to charge discounted premiums that private insurers couldn't compete with.

Even if the government plan paid private-market rates to doctors and hospitals, it could still cut costs, DeParle said. A government plan wouldn't have to turn a profit, and could also save on administrative expenses.

"If it's a policy disagreement, there are ways of bridging that gap," said DeParle.

As Jonathan Cohn says, there's a public option and there's a "public option", and unfortunately what DeParle is setting out here looks a lot more like the one with the sarcastic quotes.

A second version has emerged, which you might call the partial, or weaker, public plan option: Creating a plan, or set of plans, that realize some of the administrative savings you find in programs like Medicare but explicitly avoid using government bargaining power to set prices. These plans would have potential to achieve some savings, but not nearly as much; and it's not clear whether they'd be as secure, or offer the same protection to the truly sick (who rightly worry whether private carriers will take care of them), as a strong public plan.

On the other hand, precisely because these plans would be less aggressive about underselling private insurers and driving down reimbursements--and since they wouldn't be "government-run" in the way a strong plan would--they are more acceptable politically [...]

DeParle's statement both clarifies and qualifies what Obama has said in the past. The administration likes the strong option, clearly, but they're open to the lesser version as well.

Essentially, the insurance industry has co-opted this debate, and is blocking the actual public option in favor of this lesser one. I understand the political realities here, but I hope that the groups (like DFA) pushing for a public option understand that the meaning of that phrase has shifted beneath their feet. We need a public option with bargaining power, otherwise you have a mild non-profit providing insurance without much difference in cost.

At that point, it may be worth scrapping the public plan altogether and going with something like the German model - which has no public option but very tightly regulates insurers to act toward desired social ends. Germany also eliminates the uninsured by having unemployment insurance pay for premiums of the non-working, and general fund revenue pay for kids.

I think what will need to be remembered in this debate are the stories of the uninsured, the underinsured, and those wiped out by soaring medical costs. Kate Michelman's story is almost unbelievable, but given the realities of the broken system all too familiar. And everyone has a relationship with the health care system, and knows a story just like this.

Michelman's daughter worked with horses. One day her horse spooked, reared and fell backward on top of her, crushing her spine and paralyzing her. Her daughter's employer provided no insurance, and after several surgeries and long hospital stays, the bills were astronomical.

Michelman cashed in both her 401(k) and her IRA to cope with the bills. "It was hundreds of thousands of dollars, close to a million," she says.

Then, a year later, her husband was diagnosed with Parkinson's disease. As a retired college professor, he was well-insured, Michelman says. He was on Medicare, but had supplemental health insurance. "The top of the line option," she says, "The most expensive, because it offered the greatest coverage."

They even had purchased long-term care insurance. "We felt we were really covered very, very well — we thought."

Despite the tragedies, Michelman's family was handling the expenses. But one last misfortune was too much to bear.

One day, Michelman's husband got out of the car in the driveway — and fell. "I knew immediately when my husband fell — and he screamed in pain — at that very instant, our lives would be forever different," Michelman says. "And it has been a nightmare."

Her husband had fractured his hip and broken his femur bone. He was in the hospital for months before being moved to an assisted living facility.

Michelman thought most of the bills would be covered. "But when 'most' comes to be reality," she says, "you're left with thousands of dollars of bills that are not covered for one reason or another."

This must be at the top of mind for the politicians when they set out on this debate. We aren't functioning in a healthy fashion. We need real reform. Just ask Kate Michelman.