In Praise Of Lobbyists?

If you haven't been following the health care debate, this AP article will strike you as curious.

A strong force, perhaps as powerful in Congress as President Barack Obama, is keeping the drive for health care going even as lawmakers seem hopelessly at odds.

Lobbyists.

The drug industry, the American Medical Association, hospital groups and the insurance lobby are all saying Congress must make major changes this year. Television ads paid for by drug companies and insurers continued to emphasize the benefits of a health care overhaul — not the groups' objections to some of the proposals.

Why on Earth would the drug industry, insurance industry, hospital industry and the AMA be so interested in protecting the passage of health care reform? Because they would all grab some goodies in the process. As a result of all those meetings with health industry executives, the President secured their support for reform. But it came at a price. The drugmakers got to extend their patents for biologics and didn't have to completely fill the doughnut hole for Medicare Part D. The insurance industry got their individual mandate that will require millions of Americans to sign up for their coverage. The AMA got the sustainable growth rate (SGR) formula for Medicare physician reimbursement dumped, which will likely increase their payments. And hospitals are working hard for their piece of the pie as well. All of these deals, which constrict the ability for Congress to wring more costs out of the system, would fall apart if no reform bill passes, leaving these interests vulnerable. So of course they want the process to advance. Yet if you take the Blue Dogs at their word, that they are concerned about costs, these deals are INHIBITING progress, not promoting it.

Deals, of course, are made to be broken, and Nancy Pelosi, who didn't sign on to any of them, will not adhere to their guidelines if it risks cost control.

House Speaker Nancy Pelosi said Thursday that she doesn't feel bound by the $235 billion in deals that the White House and the Senate Finance Committee cut with hospital and pharmaceutical companies to defray costs of a new health-care plan, stating that she thinks the industries could do more.

"When we're trying to cut costs, certainly we know that there are more costs to be cut in hospitals and pharmaceuticals. . . . So we'll be subjecting everything to some very harsh scrutiny as we see whether we can get more savings," Pelosi said in a late-afternoon interview, shortly after she left a marathon negotiating session with White House Chief of Staff Rahm Emanuel and conservative "Blue Dog" Democrats, who have put the brakes on the House version of the health-care reform bill. "As we look, there may be some more ways to get money out of pharmaceutical companies."

Pardon me if I don't see the lobbyists as the key to real reform. I think Nancy Pelosi's calculus might have more to do with it.

One Too Many Deals?

Robert Reich has an interesting thesis:

Right now, Obamacare is at war with itself. Political efforts to buy off Big Pharma, private insurers, and the AMA are all pushing up long-term costs -- one reason why Douglas Elmendorf, head of the Congressional Budget Office, told Congress late last week that "the cost curve is being raised." But this is setting off alarms among Blue Dog Democrats worried about future deficits -- and their votes are critical.

Big Pharma, for example, is in line to get just what it wants. The Senate health panel’s bill protects biotech companies from generic competition for 12 years after their drugs go to market, which is guaranteed to keep prices sky high. Meanwhile, legislation expected from the Senate Finance committee won't allow cheaper drugs to be imported from Canada and won't give the federal government the right to negotiate Medicare drug prices directly with pharmaceutical companies. Last month Big Pharma agreed to what the White House touted as $80 billion in givebacks to help pay for expanded health insurance, but so far there's been no mechanism to force the industry to keep its promise. No wonder Big Pharma is now running "Harry and Louise" ads -- the same couple who fifteen years ago scared Americans into thinking the Clinton plan would take away their choice of doctor -- now supportive of Obamacare. Private insurers, for their part, have become convinced they'll make more money with a universal mandate accompanied by generous subsidies for families with earnings up to 400 percent of poverty (in excess of $80,000 of income) than they might stand to lose. Although still strongly opposed to a public option, the insurance industry is lining up behind much of the legislation. The biggest surprise is the AMA, which has also now come out in favor -- but only after being assurred that Medicare reimbursements won't be cut nearly as much as doctors first feared.

But all these industry giveaways are obviously causing the healthcare tab to grow. And as these long-term costs rise, the locus of opposition to universal health care is shifting away from industry and toward Blue Dog and moderate Democrats who are increasingly worried about future deficits. My sources on the Hill tell me there aren't enough votes in the House to get either major bill through, even with a provision that would pay for it with a surcharge on the richest 1 percent of taxpayers. House members don't want to vote for a tax increase before their Senate counterparts commit to one. Yet the Senate continues to be in suspended animation because Max Baucus and his Senate Finance Committee still haven't come up with a credible way of paying for health care. In his testimony last week, Elmendorf favored limiting tax-free employer-provided health benefits, but organized labor remains strongly opposed.

I think this is very, very right, and I've been noticing that the deals made with stakeholders were beneficial to them compared to what Congress and the White House could have imposed. And while I'm not sure they've added significantly to the cost of the bill, they have restricted the cost controls that would make the bill easier to swallow for moderates and Blue Dogs.

This is the new debate, and time is running out. Obama has made deals to buy off everyone associated with health care, and now the fiscal scolds won't eat the costs. But any effort at controlling the costs will scuttle many of the deals. Labor won't allow touching the employer deduction, empowering MedPAC would probably flip providers from supporters to opposers, and going after other internal system costs would face resistance from pharmaceuticals. The coalition-building at work here certainly got health care reform this far, but it's starting to strangle it.

It doesn't mean that the President can't ram this thing through anyway. But it makes it harder when all these artificial walls have been set up.

Movement

Regardless of the Blue Dog pushback and all the other slings and arrows lodged at health care, some potentially big news has come down in the past 24 hours.

First, the Congressional Progressive Caucus has produced the names of 50 members who will not vote for health care without what they call a "robust public option." Robust is in the eye of the beholder, of course, and the one the House proposed would only cover 9 million or so people, which may not be enough to reverse incentives in the industry, but they drill down pretty far into the meaning of robust:

Enact concurrently with other significant expansions of coverage and must not be conditioned on private industry actions.

Consist of one entity, operated by the federal government, which sets policies and bears the risk for paying medical claims to keep administrative costs low and provide a higher standard of care.

Be available to all individuals and employers across the nation without limitation

Allow patients to have access to their choice of doctors and other providers that meet defined participation standards, similar to the traditional Medicare model, promote the medical home model, and eliminate lifetime caps on benefits.

Have the ability to structure the provider rates to promote quality care, primary care, prevention, chronic care management, and good public health.

Utilize the existing infrastructure of successful public programs like Medicare in order to maintain transparency and consumer protections for administering processes including payment systems, claims and appeals.

Establish or negotiate rates with pharmaceutical companies, durable medical equipment providers, and other providers to achieve the lowest prices for consumers.

Receive a level of subsidy and support that is no less than that received by private plans.

Ensure premiums must be priced at the lowest levels possible, not tied to the rates of private insurance plans.

In conclusion, the public plan, like all other qualified plans, must redress historical disparities in underrepresented communities. It must provide a standard package of comprehensive benefits including dental, vision, mental health and prescription drug coverage with no pre-existing condition exclusions. It must limit cost-sharing so that there are no barriers to care, and incorporate up-to-date best practice models to improve quality and lower costs. All plans, including the public plan, must include coverage for evidence-based preventive health services at minimal or no co-pay. All plans, including the public plan, should be at least as transparent as traditional Medicare.

I now think that the public option will be a feature of whatever gets signed by the President. The House is providing a progressive firewall, and most of the objections of the Blue Dogs and others are over other aspects of the bill. What's more, the American Medical Association, scourge of universal health care for decades, has blessed the House bill, which is remarkable.

And that makes it a pretty big deal. No, the AMA is not as powerful, nor as representative of the medical community, as it once was. But an unqualified endorsement for the most liberal plan out there has large symbolic value, given the role AMA played in killing health care reform for most of the 20th Century.

So what's in it for the docs? The medical community came into this debate with two big concerns. One is the financial and emotional burden of malpractice lawsuits. The other is the annually scheduled reduction in Medicare payments, known as the Sustainable Growth Rate (SGR) formula, that the AMA and other physicians lobbies end up fighting every summer when it's about to take effect [...]

Changing the SGR is expensive, probaby $200 to $300 billion over the course of ten years, depending on the details. And that's on top of the cost of expanding insurance coverage. But, to be clear, the SGR adjustments were becoming a farce. If they are part of a package that includes payment reforms designed to improve quality and reduce health care costs over the long run, it'd be money well spent.

Nobody in Washington supports legislation without getting something for themselves, but I agree with Cohn that this looks like a decent enough deal.

And now, the Senate Finance Committee thinks his committee will have a deal on his bill by the end of the day.

Senate Finance Committee Chairman Max Baucus (D-Mont.) said Thursday that he hopes to have a bipartisan deal on a health care reform bill by the end of the day.

He made the remarks after huddling for about two hours with five Finance Committee members most closely involved in the negotiations. It was the first time Baucus acknowledged a time frame for reaching an agreement.

“We are meeting very aggressively today,” Baucus said of the bipartisan group, which plans to meet again at 1:30 p.m. “We will keep meeting all day long. I hope we can reach some kind of agreement by the end of the day, but having said that, it depends on what kind it is.”

If the Finance Committee can get a bill reported out, suddenly the chances of a bill become much greater. What form that bill will take, of course, is open for debate.

Slightly Less Queasy On Health Care

The House health care bill has been received favorably by advocates and, more importantly, the President:

Today, the Chairs of several Committees in the House of Representatives unveiled their health care reform proposal. This proposal would improve the affordability, availability, and quality of health care and represents a major step toward the our goal of fixing what is broken about health care while building on what works.

Jon Cohn has more. At some point, Obama needs to stop giving favorable nods at the Congress and step hard into this debate. But I feel better about this today than yesterday. Doctors are nodding toward working with Obama, and they are the most respected constituency on this issue. Just getting the AMA to back off and not follow the Chamber of Commerce, wackjob Betsy McCaughey (it's amazing she's running the same shtick from 1993 all over again) and other right-wing groups who want to keep the status quo would be positive.

Igor Volsky has a great comparison of the three bills - the House tri-committee bill, the Senate Finance Committee and the Senate HELP Committee. If we can get it through HELP, two of them will include a public option. Basically it comes down to a freshman Democratic Senator fulfilling Ted Kennedy's lifelong dream:

With Ted Kennedy too sick to come down to DC and make the committee vote, Democrats will need every Senator on the HELP committee to produce a strong bill, a bill that fights for what Teddy Kennedy has been fighting for his entire life. The last holdout is Kay Hagan, who represents a state (NC) that is one of the worst in the country in terms of percent of people without health insurance. The insurance companies are lobbying Hagan against the bill, because they don't like having to compete with a public option. My simple question is this: Teddy Kennedy is too sick to be there, Senator Hagan, so he is relying on your vote for the issue that he has fought for passionately his entire life. Will you betray him to help the insurance companies? You need to make up your mind now.

Sounds like a simple question for Kay Hagan.