Obama Cracks Down On The Blue Dogs

The President met with key Blue Dog Democrats on the House Energy and Commerce Committee last night, and they appear to have reached an agreement on the MedPAC reform that the White House has been pushing to get Medicare structural issues out of politics and into the hands of independent observers that can work to lower costs system-wide.

The White House's proposal to strengthen the Medicare Payment Advisory Committee, which makes recommendations on how Medicare pays health care providers, won support from Rep. Henry Waxman (D-CA) and Rep. Frank Pallone (D-NJ), according to Rep. Mike Ross (D-AR), but they haven't finalized an agreement.

"We came out of the meeting with an understanding that we're moving in that direction, based on the fact that the CBO tells us that it's the biggest single item we can address as it relates to cost containment," Ross told Dow Jones.

Ross also said they agree with Obama's four main goals for health care reform, according to Politico.

"He said it must be deficit neutral. He said it must contain cost and reduce health care inflation. He said we've got to cover as many people as we possibly can, making health insurance affordable for them. And that we need insurance reform, that we've got to cover pre-existing conditions. We share all of those principles, all those concerns," Ross said.

Kevin Drum likes the idea and agrees that rate setting should get nowhere near Congressional appropriators. Just the President's engagement on this issue is winning converts, as Blue Dogs assess their own self-preservation and recognize that Democrats either hang together or hang separately, with those in vulnerable districts like them the first in the noose.

Does the MedPAC inclusion turn the House bill into a bill that cuts costs? Some experts believe it does even without MedPAC reform, and that the CBO is just being too conservative. Of course, the CBO probably won't score something like MedPAC reform in the bill anyway, and then skittish Blue Dogs will claim that did nothing to control costs. Then there's this problem, which I hadn't fully grasped:

...the cost of expanding coverage--that is, strengthening Medicaid and giving people subsidies with which they can purchase insurance--comes to a little over $1 trillion over ten years. The House bill raises a roughly equal amount of money through a combination of savings within the health system (changes to Medicare reimbursement, etc.) and an income tax surtax on very wealthy people. So it's deficit neutral in that sense. (what about the money employers who don't provide health care would pay, is that included in this?)

The "but" is because of what's called the "sustainable growth rate" or SGR. Every year, there is supposed to be an automatic reduction in Medicare payments to physicians. Every year, Congress at the last second postpones the cut, because it would have a drastic effect on physician incomes and perhaps (as a result) the availability of physician services. Obama and the Democrats said they it's time to 'fess up and admit that nobody is going to allow those cuts to take place. But doing that means we're on the hook for another $200 billion in spending over the next ten years.

Some would say you have to include that in the cost of a reform plan, particularly since that promise was a key reason the American Medical Association now says it supports reform. And if you do that, the House plan does not pay for itself. It's in the red for about $200 billion over ten years. (I'm rounding figures to keep it simple.)

Others would say it's essentially a separate expenditure--an obligation we were already forced to meet and that shouldn't be added to the price tag of reform. The wonks say "it's baked in the cake already."

So that must be where conservatives are getting that number, although Nancy Pelosi sent out a press release three days ago that says paygo legislation will cover that SGR and even produce a surplus. It sounds like the AMT patch that gets added every year to save middle-income taxpayers $80 billion dollars. We never outright fix these things, and our overall budget suffers because numbers-crunchers expect that money to be there before Congress pulls out the rug.

With all of these knotty questions, I don't think anyone should be surprised that the timeline is slipping. The House may be able to pass a bill, and the Senate Finance Committee may be able to come up with some agreement, by the August break.

Which begs the question, why go on break at all? We have this enormous bill that's central to our economy, a deadline to deal with it either as a standalone or through budget reconciliation, and the Congress wants to go home for three weeks? In three weeks in America, 143,250 people lose their health care on average, 53,000 slip into bankruptcy for medical reasons, and 1,265 die without coverage. Why go on recess? Staying to finish the job would alleviate the worry of Reps. "getting hammered" in their districts (though I actually don't think it would go that way) and would keep on the timeline that the White House wants.

No recess.