Health Care State Of Play

One problem with yesterday's "game changer" of an announcement on industry-wide health care cost reduction is that it will not improve prospects to pay for health care from the government's perspective. As long as the Congressional Budget Office cannot "score" the savings into their assessment of paying for the health care plan, you still need to find the same dollars. Igor Volsky thinks that the prospect of savings makes the prospect of health care more plausible, because it provides a counter-weight to the CBO gospel, but if you still have to find the dollars, I don't see how that matters. Ezra Klein offers the idea of "directed scoring," where the CBO is essentially forced to account for industry-wide cost savings, but it's not entirely likely.

Regardless, the Senate Finance Committee is moving forward with a game plan for how to get a bill to the floor.

In a document laying out health-care options, Senate Finance Committee Chairman Max Baucus, a Democrat, and Senator Charles Grassley, the panel’s top Republican, yesterday endorsed the idea of requiring everyone to have coverage. Insurers have sought such a requirement in exchange for agreeing to accept President Barack Obama’s demand that they enroll all applicants, regardless of medical condition.

The committee will discuss the options on May 14 with the goal of getting the measure to the Senate floor in July. Obama has said he wants Congress to create a plan that would reduce medical costs and extend coverage to the 46 million uninsured people in the U.S. They were 15 percent of the U.S. population in 2007, according to U.S. Census data released in August.

So we're seeing the AHIP-friendly individual mandate in exchange for guaranteed issue and modified community rating. People will be able to keep the health care they have if they choose. The government would provide subsidies to allow lower-income Americans to afford health insurance, and employers of large companies may have a mandate to cover their employees. And then there's the real sticking point, the public option:

Obama’s administration says competition from a government- backed health plan will improve quality and lower costs.

Last week, Health and Human Services Secretary Kathleen Sebelius told the House Ways and Means Committee that Obama has no wish to “undermine” private health-insurance companies by supporting a government-backed alternative. She also said Obama would be willing to consider a requirement that everyone have health coverage, a proposal he criticized during his presidential campaign.

The so-called public option to purchase government-provided health care is a central issue. House Speaker Nancy Pelosi has said the chamber will include such an approach in legislation it considers later this year. Republicans and some insurers, including Aetna Inc., have opposed the creation of a new program modeled on Medicare.

‘Medicare-Like’

Baucus and Grassley said one way to fashion a government plan would be to make it “Medicare-like” and have it administered by the Department of Health and Human Services. Alternatively, it could be run by the states or by private- sector, third-party administrators, they said.

Groups like Health Care For America Now are pushing hard from the outside to force inclusion of a public option, and they appear to be having an impact. Kirsten Gillibrand offered her support yesterday, and none other than Arlen Specter has signaled openness to a public plan. As Jon Cohn notes, "the nice thing about nakedly opportunistic politicians is that their ever-shifting positions are a leading indicator of changing political currents."

The President failed to mention the public plan in his statement yesterday, focusing on the matter at hand, the industry wide cost reduction. My personal view is that you need a public option, guaranteed issue, real community rating (where consumers pay the same baseline rate regardless of their medical condition), medical device reform, comparative effectiveness research, and stiffer penalties for non-compliance at a MINIMUM if you're going to go to this individual mandate/shared responsibility model. And all of these must be legitimate, particularly the public plan, which cannot just be a non-profit insurance option without monopsony bargaining power.

But we're moving toward a solution, and even if it passes, it will only be a step to an eventual single-payer system. That's my view on it.