Fines For Failing To Pay Insurance Companies

This was a spectacular headline to weather for a full day atop Drudge:

Americans would be fined up to $3,800 for failing to buy health insurance under a plan that circulated in Congress on Tuesday as President Barack Obama met Democratic leaders to search for ways to salvage his health care overhaul [...]

The latest proposal: a bipartisan compromise that Sen. Max Baucus, D-Mont., a moderate who heads the influential Finance Committee, was trying to broker.

Baucus, meeting with a small group of fellow senators, promoted a plan that would guarantee coverage for nearly all Americans at a cost to taxpayers of under $900 billion over 10 years.

Some experts consider that a relative bargain because the country now spends about $2.5 trillion a year on health care. But it would require hefty fees on insurers, drug companies and others in the health care industry to help pay for it.

Just as auto coverage is now mandatory in most states, Baucus would a require that all Americans get health insurance once the system is overhauled. Penalties for failing to get insurance would start at $750 a year for individuals and $1,500 for families. Households making more than three times the federal poverty level - about $66,000 for a family of four - would face the maximum fines. For families, it would be $3,800, and for individuals, $950.

As I've pointed out, the bill is a bargain because Baucus achieves it through allowing insurers to provide less comprehensive health coverage to practically everyone in the country.

This will, and should, be the next line of attack for conservatives - that everybody will have to pay $3,800 to the government if they don't buy health insurance. That's just the maximum fine, but that will become the individual fine for everyone in the country after a trip through the conservative puke funnel. And there's an exemption if you can't find insurance premiums less than 10% of your income. But I prefer to look at the other side of this. This bill forces you to give up to 10% of your income to insurance companies who have, as part of their business, lied their way out of paying for health care for decades. Health insurers can also charge individuals five times as much based on their age, under this plan, a stark difference from the 2:1 community rating in the other Congressional plans. And the coverage doesn't have to be very good, particularly for young adults, who can get "only-if-you're-hit-by-a-bus" coverage. I believe in an individual mandate to increase the risk pool to the maximum level, but the above headline is its threat - that it just looks like a stick-up.

If Baucus wants Olympia Snowe to sign on to this, and the bill appears to be designed that way, he's probably going to have to increase the subsidies to 400% of federal poverty level, or at least 350%. Of course, that would cost more money, and Snowe wants to pay for the bill entirely through internal system costs, which I don't think can fill that gap. Baucus' numbers on revenue don't even seem to add up. Maybe something like David Cutler and Judy Feder's plan could make it in:

Health policy experts David Cutler and Judy Feder, however, have an innovative proposal for making them count. In a paper for the Center for American Progress, they argue for the implementation of "failsafe" policies — crude, surefire interventions — that will kick in if the expected savings don't manifest. Limiting the growth of Medicare payments, for instance. Increasing the excise tax on insurers. Moving the public plan towards Medicare rates.

You can think of a dozen with little trouble. But if you kept them looming behind the curtain — the Oddjob to your Goldfinger — in the event that the expected modernization savings didn't manifest, it would make the anticipated savings visible to CBO, and free up money for affordability. Moreover, it would make those savings more likely to manifest, as insurers wouldn't want more of tax on their heads and hospitals wouldn't want lower rates, and so there would be more of an incentive to implement some of the softer, gentler reforms.

All in all, I understand why policy experts think the pendulum is swinging back toward reform happening. But without a public option, forcing people under penalty of fines (and what if they don't pay the fines? Prison?) to fork out a bunch of money to private insurance companies is just going to be flat-out unpopular. Especially if the help from the government to pay for that insurance is not affordable, which I don't believe it is in the Baucus plan. I guess Snowe's trigger would be tied directly to affordability, but it just seems like a trigger would be written so as to assure its never coming into existence.

Trigger Happy Jack

Over the weekend, Ben Nelson, the most conservative Democrat in the Senate and as such a decent bellweather for where the health care policy might go, appeared to support a trigger for the public option, as long as it wasn't a "hair trigger." DougJ surmised that his conception of a hair trigger would be one that might actually go off, and he would prefer a trigger that just remains hypothetical forever. And he's right. There's a trigger in the 2003 Medicare Part D bill that would allow the government to sell prescription drugs through a public option if the drug companies couldn't do it properly themselves. And that trigger never got pulled. So Ben Nelson wants that same dynamic play out in the overall health care bill.

Ezra Klein argues that the public option on offer would not equal cost control because it doesn't use Medicare bargaining rates and its own pool of customers is too small to bargain for anything meaningful. Which is true - ask Ian Welsh - and why I support both using Medicare bargaining rates and opening up the exchanges to those who get coverage from an employer. It's also true that getting a public option into place will increase the possibility that it can be opened up or paired with Medicare rates in the future, whereas no public option on this go-round will make it nearly impossible to get one later - basically the same exact heavy lift as we're seeing now. There's also a distinction to be made between cost control to the federal government and cost control to the individual premium purchaser. A non-profit public option that still uses the Department of Health and Human Services to bargain for rates will have a lower cost to the individual in that market. The CBO estimate of 10 million subscribers is just an estimate - but it should be said that even with those numbers, the CBO saw the public option as a net savings of $150 billion over ten years, contra Tom Brokaw. If the public plan can offer the same basic coverage at a lower cost, people will buy it. And insurers will lower their premium costs to capture more of the market share. They call it "price wars" in other industries, and it's been virtually non-existent in the insurance market forever. The Swiss version of regulated insurance mandates works because basic coverage is provided entirely by non-profits.

As Matt Yglesias says, Switzerland is a country which "came late to the universal health care game thus did it in a way that involves a lot of compromises with existing interest groups." The single-payer countries all enacted their proposals in the early postwar period at the latest, when the health industry wasn't as large and powerful and medicine wasn't as advanced. It has clearly gotten progressively harder to outflank the more entrenched special interests. That's what we're seeing today with the move toward a trigger that will never trigger itself. That may be evident in the House bill even though it has a public option, considering the meager nature of that option and the too-low coverage subsidies.

But this is a game of inches. And we need to enact as much as possible in this moment of opportunity, and move to the cost controls and refining of the elements later. We need to inscribe universal coverage in the American system with a major check on for-profit insurers. That's why the wavering from House liberals desperate to bargain is extremely troubling.

Amid fresh signs that the White House is preparing to back a scaled-down health care overhaul that would only include a public insurance option as a fallback plan, several House liberals told Roll Call that they could support such a bill depending on how it was structured.

The “trigger” approach has been considered a deal-killer by liberals on and off Capitol Hill, and the willingness of some Congressional Progressive Caucus members to entertain it reflects a recognition that a bruising August recess has imperiled prospects for reform and redrawn expectations for what is possible.

“This is a way to get a bill,” Rep. Bill Pascrell (D-N.J.) said. “I believe it’s worth listening to because I want legislation that is going to, in some shape or form, expand coverage and bring down the cost of health care.”

Liberals stressed that the shift does not amount to an abandonment of their commitment to a “robust” public insurance option. They said they would only support a trigger if that approach guaranteed the same access, quality and affordability.

“I don’t want to give the impression that I’m so flexible that I’m willing to compromise away meaningful reform,” Rep. Jim McGovern (D-Mass.) said. “But there may be a variety of ways of getting there than the one I originally formulated in my mind.” [...]

“We’re the caucus that least marches to a unified drummer — that’s not what we do,” Rep. Mike Capuano (D-Mass.) said. “I’m serious about increasing access and quality, but that doesn’t mean it has to be a grand slam home run. I’ll take a ground-rule double if that’s what it takes. I’m happy to compromise if that’s what it takes. But compromise is compromise — it’s not rolling over.” [...]

Rep. Sam Farr (D-Calif.), a Progressive Caucus member, said he did not support the approach but did not foreclose on it, either. “It depends on how strong that trigger is,” he said. Farr said he has seen triggers implemented effectively in California. “Triggers work, but they’ve got to be really clear as to how they operate,” he said. “The only way I could see it getting progressive votes is by making sure the public option is strong and goes into operation.”

(Farr's actually right, but he won't be writing the bill and the language on the trigger, and surely he knows it will be written to never come into existence.)

There's just no reason to even participate in an article like this. It only serves to weaken the position of the caucus. Mike Capuano in particular clearly has no negotiating skills whatsoever - telling the world that the Progressive Caucus has no unity?

I recognize that these members want a reform bill badly. But use your poker face, fercryinoutloud. The other side of the caucus certainly is.

...They could play it like John Conyers:

“It is clear that real reform means injecting real competition into the insurance market to improve affordability and drive down health care costs. The centerpiece of this reform is a robust Medicare-like public health insurance plan tied to the Medicare provider system. Like many of my colleagues in both the House and Senate, I will oppose any health care reform bill that lacks such a plan. I will also oppose any legislation that seeks to replace a robust public health insurance option with health care cooperatives or which ties the availability of the public option to a trigger mechanism. In this effort, I stand in solidarity with House progressives, the majority of my friends in organized labor, millions of health care providers, and 72 percent of the American people.

The "Insurance Companies Support Health Care Reform" Gambit

Angela Braly, the CEO of Wellpoint, called for health care reform at a meeting in Indianapolis.

One of them most powerful women in the nation is calling for health care reform. Wellpoint CEO Angela Braly says she supports guaranteed coverage for everyone - as long as everyone gets and stays covered [...]

"The high and rising cost of health care in America is just not sustainable," Braly said. She said the current system, including Medicare, which is administered by the federal government, was inefficient and promotes quantity over quality. She also said it posed "a real threat to the social and fiscal obligations of the government and to the health and prosperity of the American people."

"We believe insurance companies have a role to play. We can and are making a difference," Braly said. She said Wellpoint's strategy was moving beyond processing claims and managing risk, noting employee incentives when customers get healthy.

Braly says the what worries her most about the plan currently under consideration is the "public option."

This is, essentially, the insurance company-approved argument for health care reform. They see it as forcing everyone to buy their coverage, making refusal to buy their insurance a crime, and offering no competition to their monopoly over it. I'm sure they don't want to see that anti-trust exemption of theirs lifted either, the one that has led to 94% of the individual insurance market becoming "highly concentrated" in the hands of one or two companies.

Braly kept talking about how the current system is inefficient and leads to skyrocketing costs, as if she has no agency over that whatsoever. There are issues with how the fee-for-service system promotes quantity of medical care and not quantity, but that's due to the profit incentive, which is exactly the same in the insurance market. Braly's argument seems to be that it's doctors and hospitals at fault for chasing profit in health care, but insurance industry CEOs like her are good samaritans and innocent bystanders who just so happen to do the same thing. If a profit-driven health care system is wrong, then it's pretty much wrong across the board. And she actually advocated for an outcome where insurers would be "free to offer a range of choices," while worrying about a public option... which would just be another choice, one that could deliver quality coverage at a lower cost.

Braly tried to argue that health insurance profits aren't all that big:

According to Braly, the difference between the Medicaid or Medicare payouts and actual costs are shifted to the private plans, costing you $1,500 a year. Add that to the $1,000 a year shifted to the private plans to cover the uninsured and it costs you a total $2,500 a year.

"Sounds a lot like the Fannie Mae for health care and I think we all know how that experiment is going," Braly said [...]

"If you completely eliminated insurance company industry profits which is clearly the aim of some, you would pay for two days of health care in America and in the process you would eliminate the market mechanism to control costs and improve quality of health care being delivered," Braly argued.

I don't know what any of this means. The market mechanism in health care has not controlled costs in America whatsoever, yet throughout the industrialized world we see public programs that control costs and provide better health outcomes. Private industry has begged off completely from limiting health care costs through any means other than denying coverage to their customers and rationing. Health care spending in Medicare and Medicaid is lower than spending through the insurance market. And insurers have used the employer market effectively to confuse employers and employees alike about the true cost of their service. Braly throws out "Fannie Mae" for health care, but the current system is clearly "Goldman Sachs" for health care - where the relentless drive for profit at the expense of people creates a spending bubble that nobody ever bothers to burst until it's too late.

In the end, Braly calls Wellpoint a "supporter" of health care reform. That's funny, I would think that a company committed to health care reform wouldn't illegally force their employees to lobby against it.

Consumer Watchdog in Santa Monica has asked California Atty. Gen. Jerry Brown to investigate its claim that UnitedHealth Group and WellPoint Inc. pushed workers to write their elected officials, attend town hall meetings and enlist family and friends to ensure an overhaul that matches their interests [...]

WellPoint, whose Anthem Blue Cross unit is the largest for-profit insurer in California and employs 8,000, took a more overtly negative tack.

"Regrettably, the congressional legislation, as currently passed by four of the five key committees in Congress, does not meet our definition of responsible and sustainable reform," Anthem said in a company e-mail last week. The proposals would hurt the company by "causing tens of millions of Americans to lose their private coverage and end up in a government-run plan."

The appeals amount to illegal coercion under California law, Consumer Watchdog research director Judy Dugan said. "While coercive communications with employees may be legal, if abhorrent, in most states, California's labor code appears to directly prohibit them," said Dugan, citing sections forbidding employers from "tending to control or direct" or "coercing or influencing" employees' political activities or affiliations.

Insurance companies like WellPoint support health care reform, all right - completely on their terms, and guaranteed to provide them a financial windfall. Anything else would be unacceptable, and they will take any tactic - no matter legal or illegal - to stop it.

Co-Op'd

If you're going to create a substitute for the public option, it would be a good idea to know what it actually does before presenting it to the nation as the substitute.

The White House has indicated that it could accept a nonprofit health care cooperative as an alternative to a new government insurance plan, originally favored by President Obama. But the co-op idea is so ill defined that no one knows exactly what it would look like or how effectively it would compete with commercial insurers [...]

As the debate rages, lawmakers are learning that creating cooperatives — loosely defined as private, nonprofit, consumer-owned providers of health care, much like the co-ops that offer telephone, electric and other utility service in rural areas — will not be easy.

The history of health insurance in the United States is full of largely unsuccessful efforts to introduce new models of insurance that would lower costs. And the health insurance markets of many states suggest that any new entrant would face many difficulties in getting established.

Here's some more good news: Kent Conrad, the brainchild of this idea, admitted today that co-ops won't bring down the cost of premiums for individuals, unlike the public option. Which would be the point.

ROBERTS: What would they do to reduce costs? Because that is one of the central issues of health care reform.

CONRAD: Well, the important thing is they’d provide more competition. … Beyond that, I think it’s very important not to over-promise here. [...]

ROBERTS: So nothing really in driving down the costs of service then?

CONRAD: Uhhh, no. If you believe competition helps drive down costs, then they would certainly contribute to holding down costs.

A note on how these would affect "competition" - in Conrad's home state of North Dakota, Blue Cross Blue Shield emcompasses almost 90% of the health insurance market. And they're a non-profit that thinks they can qualify as a co-op, under Conrad's rules, making them eligible for some of the $6 billion in seed money, I presume. Amazing that Conrad's plan and the dominant insurer in his state match up almost perfectly, ain't it?

The co-op model should be seen for what it is, protection of the insurance industry. Which makes sense, considering how many Senators are in bed with those interests, in some cases quite literally. And given that the industry and their Republican representatives in Congress will STILL oppose co-ops, learning from the lesson that making a ruckus will cause Democrats like Kent Conrad to give up whatever benefit to the people can be managed in exchange for nothing, you can pretty easily see an outcome where even the weak co-ops are given no ability to come into existence, the way it happened in Iowa:

In the 1990s, Iowa adopted a law to encourage the development of health care co-ops. One was created, and it died within two years. Although the law is still on the books, the state does not have a co-op now, said Susan E. Voss, the Iowa insurance commissioner.

Wellmark Blue Cross and Blue Shield collects about 70 percent of the premiums paid in the private insurance market in Iowa and South Dakota.

Conrad keeps saying that there aren't the votes for anything but his favored idea, but no Senator has come out and said they would join a Republican filibuster of health care reform under any circumstances. Until we reach that point, 60 votes - and maybe some combination of the Maine two - remain in play. Sounds like a better scenario to me than one where 60 House progressives have already said they won't vote for anything without a public option. Mr. Emanuel, are you paying attention? Are you doing the math? Or are you reading the LA Times?

...By the way, here's a GAO report saying that co-ops wouldn't lower costs. And here are several experts saying how difficult it would be to start them up. And here's my favorite headline of the day:

Co-Ops Are the Single Dumbest Idea I Have Heard in the Health Care Debate in Twenty Years

OK, let’s start with the notion that a co-op can do a better job of negotiating prices and protocols. But wait, on day one how many members does the co-op have? Well it has no members on day one. So, the co-op's provider relations guy goes to the doctor and hospital administrator and demands better prices and protocols. My guess is the provider’s response would go something like this, “So you are here because your stated objective is to screw my reimbursement down more than it is, you have no members now, and if I give you the rates to take members away from the existing health plans you are going to make life even more difficult for me than those existing health plans have?" My guess is that when the provider stops laughing…

Energy And Commerce To Mark Up - HC Out Of All Committees By The Recess

After reports overnight of no deal with House Blue Dogs, now there are reports of a compromise being reached and a markup session in the Energy and Commerce Committee scheduled for just a couple hours from now.

Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) has cut a deal to reconvene his committee and vote on the Democrats' sweeping health care bill, with a goal of completing work by the time lawmakers leave town for the summer on Friday.

There won’t be a vote before the full House before the August recess, but the committee breakthrough – after tense negotiations with Blue Dog Democrats – is a significant step for the Democrats.

"After two weeks of very long and intense negotiations, I'm proud to report that we've reached an agreement that will allow health care reform to move forward," said Arkansas Rep. Mike Ross, a top negotiator for Blue Dog Democrats on the Energy and Commerce Committee.

After all this, the Blue Dogs will only allow four of their members to vote on this package in committee.

And here's what they got for their troubles:

The Blue Dogs also succeeded in cutting $100 billion from the overall cost of the bill, bringing the total price tag under $1 trillion. The legislation will now exempt small businesses with a payroll less than $500,000 from paying for any government-sponsored health coverage - double the $250,000 in the initial draft. Doctors and other health care providers would also be allowed to negotiate their payment rates with the government-sponsored health care arm.

The new version of the bill also has a breakthrough on the concept of health care “co-ops,” seen by some as an alternative to a public plan. States would be allowed to create co-ops for residents to buy private insurance. But the Waxman-Ross deal will also keeps the "public option" of government-sponsored health care.

That first paragraph has internal contradictions all over it. The Blue Dogs "succeeded" in cutting costs from the bill - but the two subjects mentioned ADD to the bill's costs. Exempting more small businesses from the employer mandate means less money from small businesses that do not provide insurance for their employees. And allowing providers to negotiate payment rates with the public option, as well as opt out of the network, means higher costs and less choice for individuals who purchase their plans. It's not really fiscally responsible. It also doesn't explain where those cuts came from. I'm hearing that this comes through "enhanced delivery system reforms" and cutting the expansion of Medicaid as well as the "affordability credits" for those who lack insurance. I'm guessing that they lowered the subsidy level to 300% of the federal poverty line. Matt Yglesias argues that not many people in between 300-400% FPL lack insurance, but it would still provide an additional burden on their bank accounts.

Where would this compromise leave health care reform? All three committees in the House will have passed their bills, but members would go home for recess while those bills get merged by the leadership. That puts the House trajectory on line with the Senate, where the Finance Committee is making progress toward a goal of passing their bill out before the recess. So in that intervening month, while progressives and conservatives do hand-to-hand combat in town hall meetings and on the airwaves, Nancy Pelosi and Harry Reid have to figure out what to keep in and out of the various bills, for floor votes in September.

Meanwhile, the White House has released eight guarantees that would emerge from any health care bill, which all sound like insurance reform, the line they've been using recently, and which don't include anything to really transform the system.

* No Discrimination for Pre-Existing Conditions: Insurance companies will be prohibited from refusing you coverage because of your medical history.

* No Exorbitant Out-of-Pocket Expenses, Deductibles or Co-Pays: Insurance companies will have to abide by yearly caps on how much they can charge for out-of-pocket expenses.

* No Cost-Sharing for Preventive Care: Insurance companies must fully cover, without charge, regular checkups and tests that help you prevent illness, such as mammograms or eye and foot exams for diabetics.

* No Dropping of Coverage for Seriously Ill: Insurance companies will be prohibited from dropping or watering down insurance coverage for those who become seriously ill.

* No Gender Discrimination: Insurance companies will be prohibited from charging you more because of your gender.

* No Annual or Lifetime Caps on Coverage: Insurance companies will be prevented from placing annual or lifetime caps on the coverage you receive.

* Extended Coverage for Young Adults: Children would continue to be eligible for family coverage through the age of 26.

* Guaranteed Insurance Renewal: Insurance companies will be required to renew any policy as long as the policyholder pays their premium in full. Insurance companies won't be allowed to refuse renewal because someone became sick.

OK. These are all solid reforms that would help a lot of people. But they are incremental reforms at the edge of the policy. I understand the thinking - these are the consumer-based reforms people will actually see. But they'd see a public option in competition with an industry that currently denies coverage and does everything they can to get out of paying for treatment. I fear that nothing more fundamental is being attempted out of a fetishistic need for bipartisanship that trumps common sense and the actual prevailing political reality.

Over at Senate Finance, judging by the reports coming of the committee, a solonic gang of six -- three Democrats, including chairman Max Baucus of Montana, and three Republicans, including ranking member Charles Grassley of Iowa -- are turning out a bill whose resemblance to anything the president has championed is accidental and incidental. To secure Republican support, they oppose a public plan. To secure Republican support, they oppose employer mandates, even on the largest corporations. (And many of America's biggest employers are retailers with a proven record of not providing coverage to their workers: Wal-Mart, our largest, employs 1.4 million Americans, most of whom it does not cover.) The solonic six may end up requiring employers to fund subsidies for employees who need them, but that could create the bureaucratic nightmare to end all bureaucratic nightmares -- 700,000 Wal-Mart employees, say, bringing their tax returns to work so management can investigate ("You sure you reported all your income?") and stall ("Doesn't your spouse work at Home Depot? Why don't they pay the subsidy?") and investigate and stall.

Sounds like a plan to secure universal coverage by the middle of the next century [...]

Problem is, bipartisanship ain't what it used to be, and for one fundamental reason: Republicans ain't what they used to be. It's true that there was considerable Republican congressional support, back in the day, for Social Security and Medicare. But in the '30s, there were progressive Republicans who stood to the left of the Democrats. Nebraska Republican George Norris, who for decades called for establishing public power companies to compete with price-gouging private companies, was the father of the Tennessee Valley Authority. In the '60s, Rockefeller Republicans supported civil rights legislation and Medicare.

Today, no such Republicans exist. In New England and New York, historically the home of GOP moderates, Republicans occupy just two of 51 House seats. Nationally, the party is dominated by Southern neo-Dixiecrats. In their book "Off Center," political scientists Jacob Hacker and Paul Pierson compared congressional Republicans of different eras and concluded that a Republican House member in 2003 with a voting record that placed him at the median of his party was 73 percent more conservative than the median GOP member of the early '70s.

Max Baucus, then, isn't negotiating universal coverage with the party of Everett Dirksen, in which many members supported Medicare. He's negotiating it with the party of Barry Goldwater, who was dead set against Medicare. It's a fool's errand that is creating a plan that's a marvel of ineffectuality and self-negation -- a latter-day Missouri Compromise that reconciles opposites at the cost of good policy. Obama should thank the solonic six for their work, and, as much as is politically practicable, ignore it.

Exactly. You don't negotiate with crazy.

There's still a fight to be had on the public option, the design of the insurance exchanges in which a public option sits, and several other features. Ultimately the Blue Dogs appear more nervous than obstructionist, so August will be consequential. I hope OFA is ready.

...Really, negotiate with this?

This unidentified man decided he was doing the Tea Party-anti-reform effort a real solid by hanging freshman Maryland Democratic Rep. Frank Kratovil in effigy [note the creepily expert knotted noose] with a placard "Congress Traitors The American [and a word that looks like "idol"].

The event — a rally in Salisbury, Md. on the Eastern Shore — was attended by members of the business-funded Americans for Prosperity, a group that includes James Miller, a Federal Trade Commission chairman and budget director during the Reagan administration.

...More info on the Waxman-Blue Dog deal. They lowered the rate of the subsidy between 300-400% FPL, rather than eliminating it. And as stated above, the public option remains, albeit weakened because it can't use Medicare bargaining rates at all, but rates negotiated by the Health and Human Services Secretary.

Mad Max

Sen. Baucus emerges from the bipartisan crypt and comes up with a health care bill that cannot possibly work.

After weeks of secretive talks, a bipartisan group in the Senate edged closer Monday to a health care compromise that omits a requirement for businesses to offer coverage to their workers and lacks a government insurance option that President Barack Obama favors, according to numerous officials.

Like bills drafted by Democrats, the proposal under discussion by six members on the Senate Finance Committee would bar insurance companies from denying coverage to any applicant. Nor could insurers charge higher premiums on the basis of pre-existing medical conditions.

But it jettisons other core Democratic provisions in a reach for bipartisanship on an issue that has so far produced little.

Amusingly, at this moment the Chamber of Commerce and PhRMA jumped in to call for passage of health care reform. Probably because this bill wouldn't touch their profits or do anything for the consumer.

We expected Baucus' bill to have co-ops substituted for the public option. It's one of the three bills out there, and was always going to be the worst. But they jettisoned the employer mandate, taking the "shared" out of the shared responsibility that most reform bills have offered. Even WAL-MART supports an employer mandate. They did include the MedPAC proposal and the excise tax on insurance companies offering expensive plans and even a potential fee on medical device manufacturers and drugmakers.

This is precisely the kind of proposal you would expect from Baucus, some Republicans, and the head budget guy in Congress sitting in the room:

They have met for hours in recent weeks in Baucus' office, joined by aides and outside advisers such as actuaries summoned to explain arcane details of insurance. Douglas Elmendorf, head of the Congressional Budget Office, has also attended.

It's all driven by costs and not people, so the coverage subsidies are lower (300% FPL). And yet, the money that would be gained from an employer mandate is foregone because Baucus doesn't want to upset corporations. The money that would be saved from a robust public option is foregone because he doesn't want to upset the insurance companies. As long as the arbitrary $1 trillion dollar number is reached and the special interests made happy, Baucus can live with a forced mandate to the people to buy unaffordable insurance with crappy benefits without the choice of a government-run option. And of course, we're not even coming close to talking about the kinds of real savings that would come with health industry providers accepting less in reimbursement payments. Nor are we talking about radical change to achieve savings, like ditching the fee-for-service model.

Even when doctors order costly treatments with serious side effects and little evidence of their being effective, as studies find is common, patients are loath to question the decision. Instead of blaming such treatments for the rising cost of medicine, many people are inclined to blame forces that health economists say are far less important, like greedy insurance companies or onerous malpractice laws [...]

Medicare data shows that (the Mayo Clinic and the Cleveland Clinic) generally provide less expensive care and appear to deliver better results. Armed with this data, the doctors who run the groups have been lobbying Congress to make their model a bigger part of health reform. Two weeks ago, 13 such groups released a letter saying that recent versions of proposed legislation did not control costs enough.

Their goal is to weaken the fee-for-service system. In its place, doctors might receive a lump-sum payment to treat a patient with a certain condition, based on average costs elsewhere and on what scientific evidence had found to be effective. Hospitals with especially good outcomes might earn bonuses.

Advocates say such a system could ultimately give doctors more control. Rather than having to organize their schedules around the tests and procedures that insurers agree to reimburse, doctors could opt for the treatments they deem most effective. “It’s a lot more accountability, which is why it’s scary for physicians,” said Dr. Mark McClellan, a former head of Medicare under George W. Bush. “But in some ways it’s also more autonomy.”

If Max Baucus and his compatriots were intellectually honest about controlling costs, they would offer this. Instead, he neglects elements that would cut costs, unless they have to do with restricting access and making ordinary Americans suffer, in which case he enacts them gladly.

I hope that, once this bill is out of Baucus' hands, that we can understand he doesn't run national health care policy. The Senate can actually vote for better alternatives if they choose.

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.

The End Around The Blue Dogs

One of my co-guests on NPR today was Henry Cuellar, a Blue Dog. And 30 minutes goes fast with three guests, so I didn't get to confront him and his arguments as much as I wanted. For instance, McAllen, TX, is in his district, and that was the subject of the widely touted Atul Gawande piece in The New Yorker about disparities in health care delivery and effectiveness. But Cuellar pretty much harped on costs, costs, costs as an impediment to getting something done. I countered that cost control and expanding access, in many cases, are complementary. This makes the Blue Dog argument incoherent. They want to cut costs, but they are reluctant to enact the reforms that actually would do it. Not to mention the fact that they talk of fiscal responsibility while trying to carve out funding for rural health care, for example, which is the exact opposite of cost-cutting. And Steven Pearlstein picks up on this today.

The challenge for the Blue Dogs is that they want an America where everyone has insurance but are reluctant to force workers to buy it or employers to help pay for it.

They understand that achieving universal coverage will require subsidies for low-income workers and small businesses, but they insist that none of those changes add to the federal deficit or raise anyone's taxes.

They want to introduce more competition into the private insurance market, but not if it comes from a government-run insurance plan.

They complain constantly about the need to rein in runaway Medicare costs while at the same time demanding higher Medicare reimbursement rates for doctors and hospitals in rural areas.

You see what I mean about mushy centrism?

Yes. Yes I do.

The truth is that the Blue Dogs are slaves to entrenched power, serving the interests of powerful lobbies rather than the middle-income voters in their districts. Cutting subsidies to 300% of poverty level from 400% would make health care less affordable to working people - and it's only being considered in the House because Blue Dogs want to protect those making half a million a year from a surtax.

Henry Waxman refuses to let the Blue Dogs make chicken salad out of the House plan. He's talking about bypassing his committee entirely and bringing the bill already voted out of two other committees to the floor.

Chairman Henry Waxman (D-Calif.) says there is "no alternative" but to have healthcare legislation bypass his Energy and Commerce Committee if Blue Dog Democrats don't accept a deal worked out Friday.

Waxman is now playing a game of legislative chicken with the Blue Dogs. He's hoping the inclusion of a study on Medicare reimbursement rates in the healthcare overhaul will be enough to placate the centrist Democrats, who say the government program short-changes hospitals and physicians in their rural districts.

If that’s not, the seven Blue Dogs could join with the committee's Republicans to "eviscerate" healthcare reform, and that’s something Waxman will not tolerate.

"I won't allow them to hand over control of our committee to Republicans," Waxman told reporters.

Just like that, this morning, word leaked that Democrats in the House have agreed to include President Obama's "MedPAC on steroids" proposal to assemble a team of health care policy experts to make annual recommendations about Medicare, including reimbursement rates and delivery changes, that would face an up or down vote in Congress. This deal was the result of late night negotiations between Rahm Emanuel and the Blue Dogs. But they do not seem to have fully satisfied them.

At some point, I think you do have to pull the trigger. Matt Yglesias makes the moral case, that good legislation matters more than good process.

Something a lot of progressive legislative leaders seem to have forgotten until this Congress actually got under way is that historically congressional procedure is a challenge to be surmounted when you want big change to happen. It’s not actually a fixed feature of the landscape that people “have to” accommodate themselves to. For years you couldn’t get a decent Civil Rights bill because segregationists controlled the Judiciary Committee that had jurisdiction. This problem was “solved” by just deciding to bypass the Judiciary Committee. When you decide you want to get things done, you find a way to get them done. Even the allegedly sacrosanct filibuster rule has been changed repeatedly over the years. The law is the law and the constitution is the constitution, but the rules of congressional procedure are not law. They’re internally made rules, they’re subject to change, and the criteria for a good set of rules is that you want rules that produce good legislation and good governance.

If the internal rules are in place you should work to change them if they obstruct a change both the majority of Americans and the majority of the Congress clearly want.

...by the way, I agree with Pearlstein that Medicare might not be the best program to use for reforming the system:

The problem with using Medicare to serve as the leading edge of reform, however, is that it relies on a patient population, the elderly, that is least able and willing to embrace change. A better vehicle would be the new government-run insurance option that has become a political must-have for House leaders and President Obama. In return for dropping their opposition to such a "public option," the Blue Dogs could have insisted that it not be structured as a fee-for-service plan along the lines of Medicare but rather offer services through a network of high-quality, lower-cost hospitals and clinics that use teams of salaried doctors to provide coordinated care, along the lines of the Mayo and Cleveland clinics that Obama is always touting. In a competitive market, the success of such a government-run plan would force other insurers to follow suit.

...so the Blue Dogs claim that talks broke down today to resolve differences with Waxman, and I have to say he appears to be full of it. He says that Waxman took things off the table that, an hour before, Waxman was hailing in public as part of a breakthrough agreement? Doesn't pass the smell test. Someone's lying.

70 Cents An Hour

As the final phase from a bill passed back in 2007, today the federal minimum wage rises to $7.25 an hour from $6.55 for workers across the country. This brings the federal minimum wage, adjusted for inflation, back to where it was in the 1990s. It's hard to determine how many minimum-wage employees there are out there, but the best guess is that five million people get a raise today. Here's one of them.

While those workers include thousands of financially secure students still living with Mom and Dad, they also include thousands of the most impoverished and vulnerable members of the workforce – those who sink further into debt each month as ordinary expenses outweigh their meager paychecks.

April Greer, 36, is one of them.

Her troubles began in December, when her husband was sent to prison for a parole violation, leaving her the sole provider for her three teenage children who live with her.

In January, she was fired from her job at a cellular provider. She said she was late for work because her sister-in-law commandeered her car.

She spent early spring trawling East Dallas for a new job, but, like millions of Americans, she found none.

In early May, Greer's electricity provider finally turned out the lights. A few days later, her landlord changed the locks. She and her children crowded into the South Dallas bungalow of her husband's parents.

She finally caught a break two months ago, when a nonprofit agency helped her land a part-time, minimum-wage job at T.J. Maxx, taking home about $800 a month.

Two weeks ago, after she started having dizzy spells at work, she collapsed and spent two days in the hospital.

Doctors aren't sure what's wrong with her. Maybe diabetes. Maybe her heart. Maybe just stress.

Greer knows she can't afford $434 a month for the medication her doctor says she needs. She can barely afford the $100 a week she's been paying her in-laws to cover their ballooning utility bills.

She wants to find a second job, but doesn't know if her body can take it.

"Since I'm the only one right now for my kids, I have to take care of my health," she said.

Those with the lowest incomes are often those who have the most health issues. That comes from stress, overwork, the lack of a nutritious diet, living in low-income environments where more pollution exists, and a variety of other factors. In this most cruel of American landscapes, the poor and the sick often are the same person.

But what we'll hear today is how adding 70 cents an hour will bankrupt businesses. In actuality it will act as a mini-stimulus, giving the poor about $28 more a week for necessities that will almost certainly get spent and cycled into the economy.

What we certainly won't hear about is how the struggle of these minimum-wage workers fits into the health care debate. Many are probably already on Medicaid, but a provision in the bill would limit out-of-pocket costs for everyone, and expanding access would help make sure nobody who needs health coverage slips through the cracks. The air-blown press corps may have thought Obama's press conference was bor-ring, but the issues discussed directly affect the lives of people like April Greer. It would be nice if they could take up the debate with some inkling of concern for her, rather than acting like theater critics critiquing how folsky or animated the President was during his press conference.

Republicans and fiscal scolds say we just cannot afford to help someone like April. She ought to just get a job with the government. But Krugman says something important today - contrary to conservative belief, access and cost control are complementary.

Why does meaningful action on medical costs go along with compassion? One answer is that compassion means not closing your eyes to the human consequences of rising costs. When health insurance premiums doubled during the Bush years, our health care system “controlled costs” by dropping coverage for many workers — but as far as the Bush administration was concerned, that wasn’t a problem. If you believe in universal coverage, on the other hand, it is a problem, and demands a solution.

Beyond that, I’d suggest that would-be health reformers won’t have the moral authority to confront our system’s inefficiency unless they’re also prepared to end its cruelty. If President Bush had tried to rein in Medicare spending, he would have been accused, with considerable justice, of cutting benefits so that he could give the wealthy even more tax cuts. President Obama, by contrast, can link Medicare reform with the goal of protecting less fortunate Americans and making the middle class more secure.

As a practical, political matter, then, controlling health care costs and expanding health care access aren’t opposing alternatives — you have to do both, or neither.

April Greer probably just wants the peace of mind that she can get treatment when she needs it, without going deeply and overwhelmingly into debt in the process. Long-term budgetary constraints and bending cost curves matter less to her. But Krugman is right that the two are not in conflict, and must be packaged together.

I'm happy April is getting a small raise for her troubles today. I want her to get a health care system that honors her struggle and provides her security. But Senators need a three-week recess, so she'll have to wait.

Health Care Notes

Just a few things I saw today:

• Orrin Hatch will no longer participate in the Senate Finance Committee's bipartisan discussions on health care reform. I'm surprised he hung in as long as he did. If Ted Kennedy came to him and asked to vote for cloture, I think it'd be 50/50.

• Olympia Snowe has become queen of the weasel words. In her district she had a statement read supporting a public option;



But back in Washington, she adds an extra line that wasn't read that turns it into a trigger. Now THAT'S weaselly.

• In the Nancy Pelosi interview I noted before, she has some interesting comments on MedPAC reform:

MedPAC has been an idea out there for awhile. There have been some concerns about it among many of us because it's a big transfer of authority to the executive branch. I myself could have argued the issue both ways. Do I want my members figuring out how much oxygen people need or do we want to pass it on? But how we pass it on was important. Does Congress participate in appointing membership? Do we establish criteria to make sure we bend the curve in a way that protects people?

Steny [Hoyer] and Mr. Waxman and Mr. Dingell and, I think, Mr. Rangel were among those who did not fondly receive this proposal at first. It became more of an issue when we were seeing what CBO was going to score. When we found out they could score that, we thought okay, with the proper criteria, this is something we could probably live with.

They mention the Defense Base Closure and Reauthorization Commission. But leadership has appointments to BRAC. We want to see representation, not some ex officio group we have no say over.

That's probably a fair compromise. And it's vital to get the kid of cost savings many seek.

• Michael Steele actually doesn't know what kind of health insurance he has. This is the leader of the Republican Party. And the RNC doesn't have a choice of plans, either. Some free market.

• John Kerry's proposal in the Finance Committee is pretty interesting:

Orszag also said the White House is open to a proposal by Sen. John F. Kerry (D-Mass.), a Finance Committee member, to tax insurers for very generous health policies. The idea is a variation on a provision that Baucus, Grassley and others on the committee had pushed: to tax beneficiaries who receive generous policies through their employers.

Obama staunchly opposed taxing beneficiaries as a candidate, and on Monday he threatened to veto a bill that targets individuals. But Orszag said that the White House is open to the Kerry alternative, noting that a fee on high-value policies would "create an incentive for companies to create more efficient plans."

A senior House leadership aide said Democratic lawmakers there are keenly interested in the Kerry provision, along with other revenue measures with consensus support in the Finance Committee, to replace the wealth surtax that Baucus and others have already declared dead on arrival. "Our guys want to see some movement there," the aide said. "They're loath to vote on a tax increase if it is not going anywhere in the Senate."

It's a shame that nobody's willing to say that America is worth paying for. But I'm with Digby. As long as we're stuck in this paradigm, with the old dialogue about taxes, you might as well try to accomplish the same goal - reducing incentives for "Cadillac" health care plans - as limiting the employer deduction through a tax on the insurers. In the end it's the same deal.

• It's sad that the White House won't release the documents of which health industry stakeholders they've met with. It reverses the expressions of transparency he vowed in the campaign and continues to vow. CREW is suing and I hope they win - secret government should not become precedent.

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.

Brooks Takes To The Schoolyard

Look, David Brooks is an ass, and a dishonest one at that, and we all know that. But his little taunt at Obama for being weak with liberal lion Congresscritters rings incredibly false to me:

The House bill adds $239 billion to the federal deficit during the first 10 years, according to the Congressional Budget Office. It would pummel small businesses with an 8 percent payroll penalty. It would jack America’s top tax rate above those in Italy and France. Top earners in New York and California would be giving more than 55 percent of earnings to one government entity or another [...]

Who’s going to stop this leftward surge? Months ago, it seemed as if Obama would lead a center-left coalition. Instead, he has deferred to the Old Bulls on Capitol Hill on issue after issue.

Machiavelli said a leader should be feared as well as loved. Obama is loved by the Democratic chairmen, but he is not feared. On health care, Obama has emphasized cost control. The chairmen flouted his priorities because they don’t fear him. On cap and trade, Obama campaigned against giving away pollution offsets. The chairmen wrote their bill to do precisely that because they don’t fear him. On taxes, Obama promised that top tax rates would not go above Clinton-era levels. The chairmen flouted that promise because they don’t fear him.

Last week, the administration announced a proposal to take Medicare spending decisions away from Congress and lodge the power with technocrats in the executive branch. It’s a good idea, and it might lead to real cost savings. But there’s no reason to think that it will be incorporated into the final law. The chairmen will never surrender power to an administration they can override.

I don't even know where to begin. The House bill is deficit-neutral and Brooks is simply lying about the increase in the deficit by relying on a partial score of it. Obama has vowed repeatedly not to sign a bill without deficit neutrality. The top tax rate nonsense comes before deductions, and whatever his magic calculator says, the effective tax rate for the rich has been dropping consistently over the past decade in the age of Bush, and returning to a real progressive tax system and adding brackets, wherever they fall, while moving away from the historically low tax burden on the wealthy is simply what needs to be done to fix the crisis of the uninsured and repair the nation.

But beyond that, Brooks engages in this taunt about Obama not being feared by liberal chairmen who overreached on the bill. That's just an ignorant statement. Americans, even with softening approval ratings for Obama's handling of domestic issues, still find him eminently superior to Republicans on virtually every score.

I think the straightforward reading of this survey data is that congressional Democrats ought to ignore congressional Republicans and pass the ideas Barack Obama has proposed. And, again, the straightforward reading of November’s election results was that the public wanted (1) Barack Obama to be President and (2) members of congress sympathetic to Barack Obama. Congressional Democrats are good at overthinking political issues, and at coming up with rationalizations for why giving in to special interest demands are the only politically feasible option, but the evidence suggests that the public remains enthusiastic about Obamaism.

Never do we hear a word about "conservative overreach" from our media, only that the liberal hippies are daring to try and deliver some measure of security and stability into American's lives.

But moving on to Obama's "capitulation" on this issue, Brooks might want to look at the calendar. The bill hasn't gotten through Congress yet. It certainly hasn't congealed into a final version. The MedPAC proposal which Brooks praises, that the CBO won't really score, is dismissed by the journalist because "the chairmen will never surrender power". How the heck does he know? I don't think the liberals in the House wanted 40% tax cuts in the stimulus - the White House got their way (I completely disagreed with it, too). Likewise, Obama basically said yesterday not to worry about some provisions of the bill, because in conference, he'll take care of it.

The House bills and the Senate bills will not be identical. We know this. The politics are different, because the makeup of the Senate and the House are different and they operate on different rules. I am not interested in making the best the enemy of the good. There will be a conference committee where the House and Senate bills will be reconciled, and that will be a tough, lengthy and serious negotiation process.

I am less interested in making sure there's a litmus test of perfection on every committee than I am in going ahead and getting a bill off the floor of the House and off the floor of the Senate. Eighty percent of those two bills will overlap. There's going to be 20 percent that will be different in terms of how it will be funded, its approach to the public plan, its pay-or-play provisions. We shouldn't automatically assume that if any of the bills coming out of the committees don't meet our test, that there is a betrayal or failure. I think it's an honest process of trying to reconcile a lot of different interests in a very big bill.

Conference is where these differences will get ironed out. And that's where my bottom lines will remain: Does this bill cover all Americans? Does it drive down costs both in the public sector and the private sector over the long-term. Does it improve quality? Does it emphasize prevention and wellness? Does it have a serious package of insurance reforms so people aren't losing health care over a preexisting condition? Does it have a serious public option in place? Those are the kind of benchmarks I'll be using. But I'm not assuming either the House and Senate bills will match up perfectly with where I want to end up. But I am going to be insisting we get something done.

I'm not really endorsing a closed process where activists have little influence. The point being, Brooks is being disingenuous claiming that Obama is getting steamrolled by the Congress. He is using the Republican block-and-tackle strategy to attack Obama by attacking this bill. And most of the traditional media is following along.

And really, if ANYONE is going to talk critically about deferring to the "Old Bulls on Capitol Hill," it shouldn't be David Brooks.

The Blue Dog Ransom Note

Politico Pulse published the "list of demands" from the Blue Dogs on health care. Here they are:


--Effectively bend the cost curve 

--Realign incentives to reward high quality, efficient health care; include value-based purchasing, value index, innovation center for Medicare and Medicaid, and other delivery system reforms

--Increase small business exemption and adjust for inflation 

--Address end-of-life care

--Adjust the value and cost of subsidy levels

-- Provide affordability credits on a sliding scale from 100-300 percent FPL 

-- Public option must negotiate rates with providers, provide greater clarity on opt out, compete on a level playing field, and be available as a fallback 

--Establish consumer-driven, state-based co-ops 

--Create state-based exchanges with a federal fallback 

--Maintain current state-federal partnership with Medicaid, while implementing reforms that increase its value and effectiveness

"Bend the cost curve" is a buzzword and not a negotiating point. Realigning incentives is great - I think that cost controls should be taken up by the bill. But as Jon Cohn says, the rest of these are not serious proposals.

Politico this morning published a list of their demands. It included more aggressive efforts to control costs, which is great. But it also included cuts to the subsidies that would help people afford insurance, which is the opposite of great.

I suspect the House leadership will discuss the former request, but not the latter. Nor should they. They are committed to passing a bill that makes sure everybody can get affordable insurance. They've written a bill that, although not perfect, accomplishes that. That is a good thing.

Increasing the small business exemption will drain the system of funds. Lowering subsidies will do nothing but make the bill less popular to the public in order to achieve some arbitrary cost. It will not lower costs to the individual, which in the end they care about more than costs to the government. Making the insurance exchanges state-based reduces competition, and the same with making the public option a fallback. That will increase costs. As Obama said yesterday in his conference call with bloggers, there's no evidence that a co-op plan will work at all to keep insurance companies honest. In order to change incentives for insurers, you need scale and resources. The Blue Dogs want to strip those and also change incentives?

One reform you do not see on the Blue Dog's list is capping the employer deduction. Harold Pollack and Nate Silver have compelling pieces today making the case for the employer deduction as a way to curb spending, move away from an inefficient system of providing insurance, and improve the possibility of joining the civilized world in guaranteeing not-for-profit health care for all. There are ways to cap this deduction, and not eliminate it, that would satisfy unions who don't want to see their generous benefits go away (I'd prefer paying them out, actually) and start to reduce costs. The Blue Dogs aren't all that concerned with it.

Which shows me that they're simply not serious about this effort. They want to either delay reform indefinitely or come up with something that they can bring to their districts and tell independents and conservatives that they got for them, probably in the form of a direct payoff. They have been so incoherent about costs that they cannot be operating from any position of principle. They just don't want to do this bill.

Obama Blogger Conference Call On Health Care

I had a chance to participate in a conference call with President Barack Obama and some bloggers today about the health care debate. Clearly the very fact of this conference call's existence shows that the White House is leaving no stone unturned in searching for allies to help sell reform, and that the President is ready to step forward in this debate. That's a good thing. He still has enough political capital to manage the process where he wants it to go, and if he wants certain elements of the policy included in the final bill, provided that there is a final bill, I wouldn't bet against them getting in there. And the result of the conference call was interesting.

The President spoke for a few minutes, then took about 15 minutes of direct questions. In his opening remarks, he said that now was a critical time for the bill, and that we're closer to passage than we've been in the last 50 years. Those who are opposing have offered no credible alternative but the status quo, which he termed "unacceptable". He hoped that the blogs would help him in "debunking myths," for example the notion that this bill, which is entirely paid for as a package, would spread record deficits. He said that the default position in Washington is one of inertia, and that pressure must be kept on members of Congress - not Republicans, but members of Congress - to move the process forward. He made sure to highlight - as did David Axelrod in a short Q&A afterwards - the words of Sen. Jim DeMint, calling health care Obama's "Waterloo." Clearly that will be used by the White Hosue as a badge of honor and a rallying cry in the weeks ahead, because it evokes the same concept as the leader of the GOP Rush Limbaugh saying he hopes Obama fails.

With that, the President took questions, and it was truly unlike most press conferences you'd see by the heavily pancaked White House press corps. Bloggers wanted to know about two things - the tactics for getting a bill through, and the substance of that bill. For example, John Amato from C&L asked if the President would call on Congress to forego the August recess if they didn't reach a floor vote by the deadline, which the President pretty much dodged. He acknowledged that we cannot delay any further and that we've been debating this for 50 years, and that those who are calling for delay are doing so deliberately in order to kill any hope of passage, but he would only commit himself to working as hard as we can to see "serious forward motion" by the recess, and never fully answered what I think could be a good tactic Amato brought up, to ask the Congress to finish their work and keep reform on track. In a similar kind of question about reconciliation, Jonathan Singer from MyDD asked at what point we move to using budget reconciliation if a Senate bill stalls, and the President kept that stick of reconciliation in his back pocket, saying that they expect a bill by mid-October, but failing that, "we'd look at all options including reconciliation." He admitted that reconciliation wasn't the preferred option but that the status quo cannot continue. That speaks very well to the probability that something will pass this year.

What I wanted to ask about was something that Robert Reich wrote about today. The White House and Congress have made all these deals with key stakeholders, which do provide for hospitals, drug companies and doctors to give back some profits, but preserve additional costs that could be wrung from the system. And these "legacy costs" are making it very hard to provide the kind of controls that reformers seek and Blue Dogs pay lip service to.

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.

I asked the President about this tension between these buyoffs to stakeholders and his goal to "bend the cost curve" and make health care cheaper and more effective in this country, and here's a paraphrased version of his answer.

I cannot expect the hospital association, for example, to sign up for something they don't think is right for hospitals and exepct them to back reform. So I understand what they're doing to protect their interests. I think we can negotiate and find a good way to go about this. In theory we could cram down additional savings, but to have the American Medical Association, the American Nurses Association, the drugmakers, the insurance companies, all of them on our team, that does help us move the process forward. Theoretically, there should be enormous savings inside the system. We all know that we pay more for health care than we should, and we shouldn't need additional revenue. But that's harder to do in practice, because all these powerful interests block the efforts. What I think is that we can get a framework where reform begins, one with an insurance exchange, and a robust public option, concrete reductions in cost, prevention, health IT, comparative effectiveness research, and it will be possible to achieve greater savings with a more efficient system down the road. And we can revisit the policy 10 years from now and possibly see even more savings than what was scored and anticipated.

I found that to be both a decent and a deeply unsatisfying answer. I understand that you don't want the stakeholders bringing in the Howitzers and seeding massive attacks against any reform, so keeping them on the same side is important. At the same time, with these groups bought off, and indeed knowing that they will get an ultimately good deal from Washington, the transition from the broken system we have to that theoretical one that Obama discussed gets delayed. I agree about getting a framework in place, something to tweak down the road. But we spend so much time in our politics bowing to powerful interests that it's very frustrating to concede that as a political reality. Especially when drugmakers and insurance companies are pretty reviled in the populace (though doctors really are not). Obama seems to know that there's an easy path for real reform, but it's complicated by a real control from special interests of the levers of the political debate. So we keep the dogs at bay, but in the process, we don't reform health care to the extent that we could. That animates the "if you like what you have, you can keep it" mantra (even if what you have is ultimately inefficient), and these deals with stakeholders. Then the fiscal scolds can talk about how the bill costs too much even while resisting those cost control methods because they would hurt these same stakeholders! It's maddening.

There is a bright spot, however. Obama went pretty far in support of a public option, a fairly tangible reform effort, on the call. He doubted the evidence that a co-op plan like that pushed by Kent Conrad would work, citing past experience that showed them having trouble getting off the ground. And he then said that the House and Senate bills would not be identical, that a conference committee would certainly be required. And at that point, the White House would engage in serious negotiations, with the President's fundamental principles and benchmarks in place. The House and Senate bills would not match up exactly, but that would not mean that the final bill wouldn't include certain elements, he essentially said. The President was basically saying: get it to conference, and we'll straighten it out. That probably doesn't mean that the President gets everything he wants, but it means that the big issues will be at his determination and discretion, almost certainly.

I think that's an important reminder. Past White Houses have used the conference committee very effectively to make sure bills matched preferences. Obama signaled his willingness to do that. Which means that, while we can have a role in getting this bill through each chamber, the White House will be able to make their presence felt to a degree at the finish line. In effect, he will take ownership of the policy and ensure it beats the status quo.

(UPDATE: C&L has the audio.)

Beyond The Public Option

Take a look at this ad from America's Health Insurance Plans, the insurance industry lobby.



See what's missing? The words "public option." Or really, any attack on the current plan in Congress at all. The spot associates AHIP with a reform banning denial of coverage for pre-existing condition in exchange for getting every American covered, gently asks for the final bill to be bipartisan, and... that's it.

Similarly, Olympia Snowe, who signed on to the letter calling for a delay in the deadline for reporting a health care bill out of the Senate, positively called for a public option on day one in a speech this weekend in Maine.

What this shows me is that we have now moved beyond the public option as the fulcrum point for the health care debate. We don't know what form it will take or how accessible it will be to all Americans, but if there's a bill signed by the President, it will include a public option. The major players have given up on that score and moved on to other issues to try and derail health care, particularly costs. We've seen much more criticism about cost controls and surtaxes on the wealthy over the last week than any discussion of the public option.

That's because those other facets of the policy don't poll very well, certainly not as well as a public option does. And the forces defending the status quo have found a much easier path by arguing for more delay, raising questions about costs, claiming that Democrats are engaging in class warfare, raising specters about rationing, and generally using that fiscal scold pose, saying we cannot pay for health care reform while protecting federal health care funding for their districts and localities. On the far right fringe you have lies about how the bill "outlaws private insurance," but in general, the status quo forces think they can trap the bill with a discussion about its cost, not its function.

Of course, the larger effort here is to destroy the Democratic agenda and basically ensure a first term without substantive accomplishments. And Obama is right to use Jim DeMint's "Waterloo" line against him, make it famous, and condemn those who would turn an urgent need for tens of millions of Americans into a game of political hardball:

Just the other day, one Republican Senator said, and I’m quoting him now, “if we’re able to stop Obama on this, it will be his Waterloo. It will break him.” Think about that. This isn’t about me. This isn’t about politics. This about a health care system that is breaking America’s families, breaking America’s businesses and breaking America’s economy. And we can’t afford the politics of delay and defeat when it comes to health care. Not this time, not now. There are too many lives and livelihoods at stake.

What we may see is a brief scaling back on the deadline, which should still leave enough time to report a bill out of both houses in September and reconcile them by October. But the fights ahead for health care appear to be playing out over cost and who pays. The public option is in the bill, as long as it gets dragged over the line.

An Evolution In Health Care

I think it's clear that this health care reform bill will not be the last one ever passed by the US Congress. Once certain mechanisms get set in place, they become hard to dislodge, and further actions will refine them and improve them. That's the feeling behind the progressive push for the public option. If that gains a toehold, in the future we can expand access or change the delivery system. I fear that a carefully circumscribed public option may never get off the ground, but I think that's the theory.

And that theory got more credence with an action by Massachusetts on Friday. They implemented their universal health care plan, not totally different than the Democratic plan in Congress, which expanded access but didn't have any cost controls. So the costs have continued to rise, forcing a choice from the state - scale back the program, or apply enough cost savings to keep it going. They opted for the latter, in an interesting way:

A high-level state commission recommended Thursday that Massachusetts seek to rein in health care costs by radically restructuring the way doctors and hospitals are paid.

The commission’s action kicks off the second phase of a health care overhaul that has succeeded in covering nearly every resident of the state but done little to slow the relentless growth of spending.

The recommendations, if approved by the legislature and Gov. Deval Patrick, would make Massachusetts the first state to end the practice of paying health care providers for each office visit, laboratory test or procedure.

Instead, primary care physicians, specialists and hospitals would group themselves into networks that would be responsible for a patient’s well-being and would be compensated with a flat monthly or annual fee known as a global payment.

That would be remarkable, to end fee-for-service medicine in the US. And because Massachusetts has expanded access, there may be enough patients to keep doctors in the state, instead of them all fleeing to where they can get paid per treatment. If this works in Massachusetts, then I would really be excited about getting any reform done and managing some of the details later. We need to look at this as the means to an eventual end of the US joining the community of industrialized nations providing decent care for their citizens at an affordable price.