The Other Health Care Fires

The public option vote was expected, and we'll see a lot more wrangling and floor amendments and other votes before that's done. Supporters picked up Tom Carper and Bill Nelson, so progress was made, actually. I'd like to look at some of the other aspects of the bills moving through Congress, which also have important implications, and what the progress looks like on those fronts:

• Byron Dorgan, Kent Conrad's colleague from North Dakota, will fight to stop the White House/Big Pharma deal from getting implemented. He's going to offer amendments to the final bill to allow reimportation of prescription drugs from Canada, at a savings of $50 billion dollars over 10 years. Surely the free-traders won't have a problem with that, and if they do, they can put a pool together and find the $50 billion that we're otherwise wasting by restricting such a common-sense measure.

• Jay Rockefeller is looking to extend the bill protections to "self-insured" health plans. I just found out about this a couple weeks ago. Apparently, 70 million people in America work for large corporations which self-insure. They have health insurance companies to administer the billing, but the corporation is taking on all the risk themselves. And, they reap the profits, too. These corporations have essentially turned their employee health care into a small profit center. And none of the regulations in the bill would impact these 70 million, simply based on who their employer is. Those employees should have the same protections, regardless of how "well" the self-insured market is working currently.

• In terms of pernicious amendments, anti-abortion activists want to block the exchanges from providing reproductive choice as part of their health care coverage. That would include private companies, and would represent the government telling private insurers what they cannot cover. That's fine to free marketeers because it would restrict legal medical services like reproductive choice. It's complicated, but the anti-abortion types want to use the Hyde Amendment to say that anyone getting subsidies to use the exchange couldn't buy a plan which covers abortion. Thing is, Jon Cohn writes that taxpayers already subsidize plans that offer reproductive choice:

Remember, the single largest tax subsidy in health care today is the tax break for employer-sponsored insurance. If you have insurance through your job, then you're getting government assistance just as surely as if Washington wrote you a check. And if your policy happens to cover abortion services--which about half of you do, according to the Kaiser Family Foundation's annual benefits survey--then the taxpayers are helping to subsidize it.

I'm not trying to accuse abortion rights opponents of hypocrisy or inconsistency. I'm sure they'd eliminate everybody's subsidy if they could. By trying to keep funding out of the exchanges, they're trying to hold the line--to keep more abortions from happening. I don't agree with their position, but there's nothing illogical about it.

But I suspect a lot of voters think the distinction makes sense for a different reason. They have mixed feelings about abortion, so they like the idea of supporting choice in principle while opposing taxpayer funding. The trouble is, it's not a meaningful distinction because of the employer tax subsidy, which (much to my regret, for unrelated policy reasons) is here to stay.

This is a larger attempt to overturn Roe v. Wade without going to court, basically.

• House Democrats will probably add the tax on high-dollar insurance plans into their funding mechanism for health care. Unions hate it, because they've given up wage increases for high-quality health care. But the employer deduction, as Cohn says above, is very pernicious and inefficient, and taxing insurance plans is a way to get at it. I would think that companies would welcome cash payouts over maintaining such high-price health care benefits. Hijacking health care reform to save parochial interests, when we should be moving away from employer-based health care entirely, doesn't make sense.

The Art Of The Deal

The Senate Finance Committee preserved the White House deal with Big Pharma yesterday, but the vote was extremely close. So much so that I'm not convinced they'll be able to hold that deal on the Senate floor.

During the third day of the committee’s markup of the legislation, the vote on the Medicare amendment introduced by Sen. Bill Nelson (D-Fla.) provided the most awkward political moment yet for committee Chairman Max Baucus (D-Mont.) — not to mention the White House, which made a deal with drug makers to limit their exposure.

Baucus and Democratic Sens. Tom Carper (Del.) and Robert Menendez (N.J.) joined the panel’s Republicans in beating back the amendment on a 10-13 vote.

Despite Nelson’s failure to attach the language to the committee’s bill, the argument among Democrats is far from over. Senate Majority Leader Harry Reid (D-Nev.) promised to support the amendment when the bill reaches the Senate floor, Nelson said. The House’s healthcare reform bill includes similar provisions.

Maybe Ben Nelson or Evan Bayh or Mary Landrieu agree with these three - Delaware and New Jersey are big pharma states, but I don't see Ted Kaufman (who's a short-timer and who voted for cramdown in bank-heavy Delaware) or Frank Lautenberg giving in on this. I'm just not seeing 10 votes among Democrats against this policy. Blanche Lincoln voted for this in committee. So did Kent Conrad. It was Bill Nelson's amendment. Who are the conservaDems left?

I wouldn't be surprised if the White House twisted enough arms to get their deal, but I don't see a whip count that gets them there. We'll see.

Rotten To The Core

So Senate Democrats on the Finance Committee offered an amendment that would enable the federal government to bargain for lower drug prices for their bulk purchasing, a direct assault on the White House/Big Pharma deal from a few months back. Basically it would shift poor seniors back onto Medicaid for their drug purchasing, where the government can negotiate discounts. This would save the government over $80 billion dollars.

And Tom Carper of Delaware defended the secret deal in the most amazing of ways:

I was not involved in negotiations with PhRMA but I believe that the administration was, obviously PhRMA was, and I presume this committee was involved in some way in those negotiations.

And what PhRMA agreed to do through those negotiations is to pay about
80 billion dollars over 10 years to help fill up half the donut hole. That's my understanding. And they are prepared to go forward and to honor that commitment. As I understand it, the commitment from our colleague Senator Nelson would basically double what was negotiated with PhRMA.

And whether you like PhRMA or not -- remember I talked earlier today in our opening statements, I talked about four core values, and one of those is the golden rule, treat other people the way I want to be treated?

I'll tell you -- if someone negotiated a deal with me and I agreed to put up say, 80 dollars or 80 million dollars or 80 billion dollars and then you came back and said to me a couple of weeks later -- no no, I know you agreed to do 80 billion and I know you were willing to help support through an advertising campaign this particular -- not even this particular bill, just the idea of generic health care reform? No, we're going to double -- we're going to double what you agreed in those negotiations to do. That's not the way -- that's not what I consider treating people the way I'd want to be treated.

That just doesn't seem right to me.

This is incredible. The deal is transparently one to protect drug industry profits. There's just no doubt about this. Carper is saying that it's more important to get a few generic ads in support of health care reform than to save the US taxpayers $80 billion dollars. Backroom deals must be honored even if they hurt people. That's the "golden rule" in Washington.

Did Carper not know that cameras were rolling when he said this?

Coinkydink

Ryan Grim has been all over the story of Big Pharma's deal with the White House and Max Baucus, and despite the denials from everyone, Grim notes that the language in Baucus' draft matches the terms of the deal.

In August, the Huffington Post published a memo that outlined exactly what each side was going to do for the other. And Big Pharma was getting a lot more than they were giving up.

Pharmaceutical Research and Manufacturers of America senior vice president Ken Johnson said that the outline "is simply not accurate." White House spokesman Reid Cherlin concurred: "This memo isn't accurate and does not reflect the agreement with the drug companies."

But now that the bill is out, let's fact check those denials.

1) The memo said that PhRMA would "[a]gree to increase of Medicaid rebate from 15.1 - 23.1%".
The finance bill, on page 56, increases the Medicaid rebates for patented drugs from 15.1 to 23.1 percent.
Check.

2) The memo said that the parties had agreed "to get FOBs done." FOBs refer to follow-on biologic drugs - vaccines and other drugs made from living cells that are the fastest growing field of pharmaceutical research.

PhRMA wants extended patent protections from generic biologic drug makers. A finance committee aide said that the Baucus bill doesn't address biologics, leaving that to the Senate health committee's bill. The health committee bill gives drug makers 12 years of market exclusivity -- five more than the White House proposed -- and allows a 12-year extension with a minor tweak to the drug. The protection is worth billions to drug makers and is entirely unnecessary to encourage research, according to the Federal Trade Commission, which recommended zero years of market exclusivity.

"Already biologics take up at least 30% of Medicare part B spending and this proposal has been rolled into the overall health care reform bill, which is meant create cost savings, which it will not do," Jane Andrews, a medical student at the Johns Hopkins University and a member of Universities Allied for Essential Medicines, wrote in an e-mail to HuffPost. "It's simply a giveaway to BIO/PhRMA from Congress supported by the American Association of Universities."

Check (more or less.)

There are more, just go read. Baucus actually doubled the fee on the industry, from $1.2 billion a year to $2.3 billion, but the rest pretty much matches up. No importation of drugs from Canada, no negotiating with drugmakers for cheaper prices on prescription drugs, no shift of drugs into Medicare Part D.

There's no denying that this deal has been made, and the consequences are also clear. Right now, Democrats are worried about the coverage subsidies in the bill, believing they don't make health care affordable enough. One reason for the constraint is that these deals artificially limit the amount of money that can be wrung from inside the system. Because it's an article of faith that you cannot say the word "taxes" in Washington, as a result poor people who can't afford health insurance may pay the price for deals with Big Pharma, a kind of tax on the lower classes.

I hope avoiding the Harry and Louise ads were worth it. Fortunately, no groups on the right managed to make any headway attacking the overall plan.

I'm sorry, "death panels"? Never heard of it.

Deal Of The Century

So Max Baucus will reveal his long-awaited wet kiss of a bill tomorrow, with subsequent votes in committee in the coming week. We've already seen an outline of it, so we know that it would still cripple people financially who have the temerity to get sick, it would criminalize people who do not buy inadequate private coverage from the insurance industry, it would incentivize employers to offer crappy coverage and discriminate in hiring against people who have no coverage from a family member, and it would not include a public insurance option to compete with private plans. It won't even include a trigger, because the original trigger backer, Olympia Snowe, has decreed that it's a dead letter. Those weak state-based co-ops designed to allow nonprofits like Blue Cross, some of which control 90% of the insurance market, to access billions in government seed money, will be as close as we get in the Finance Committee to a public option. Seemingly, the only reason for the death of the trigger is that Susan Collins said they might lead to a (horrors!) public option, and Snowe probably wants her along as cover for a final bill.

You can pretty much tell what a steaming pile of garbage the Baucus bill would be by the fact that the drugmakers are going all in to support it.

The drug industry’s trade group plans to roll out a series of television advertisements in coming weeks specifically to support Senator Max Baucus’s health care overhaul proposal, according to an industry official involved in the planning.

The move would be a follow-up to the deal that drug makers struck in June with Mr. Baucus and the White House. Under that pact, the industry agreed to various givebacks and discounts meant to reduce the nation’s pharmaceutical spending by $80 billion over 10 years.

Shortly after striking that agreement, the trade group — the Pharmaceutical Research and Manufacturers of America, or PhRMA — also set aside $150 million for advertising to support health care legislation.

President Obama has cited the deal with the group as signifying a new era of cooperation. But some critics say the advertising fund could be wielded against alternative approaches to health care legislation. Some House Democrats, including Henry A. Waxman of California, are seeking drug industry givebacks not covered in the deal with Mr. Baucus and the White House.

You rarely see bribes like this spelled out so succinctly and directly. $150 million is certainly more money than has been spent on health care advertising to date. And it's all going toward the Baucus plan, based on a quid pro quo agreement. Other committee chairs like Henry Waxman want to find more savings that what Big Pharma agreed to by letting the government to bargain for lower drug prices, like many other industrialized nations. But Baucus dutifully abided by the deal, and so his plan will get the ad backing. Matt Taibbi further explains.

The $150 million it committed to support Obama’s bill is now being rolled out in pro-reform ads, which are being aired mostly in the districts of freshman congressmen. The ads are cheesy, half-hearted tripe blandly supporting the weak-as-fuck remnants of Obama’s health care plan, an example being this “Eight Ways Health Reform Matters To You” ad that salutes the end of coverage denials for those with pre-existing conditions.

Now we’re also seeing pressure from a group of freshmen and Blue Dogs, who have composed a letter to a quartet of House Committee chairs requesting that the Waxman language be removed from the health care bill and replaced with the PhRMA language, which happens to be the language the White House is pushing and which will appear in the Baucus bill in the Senate. The pro-PhRMA language retains the preposterous government subsidy to the pharmaceutical industry in the form of laws banning Medicare from negotiating market rates. It is completely useless and of no possible social benefit to anyone except pharmaceutical companies, but this group still managed to get 60 people to sign this bill.

What does this letter say? Does it argue that the PhRMA language is better for America than the Waxman language? Does it say it will cost taxpayers less and provide cheaper drugs to more people? Hilariously, no. What it says is that this PhRMA language, while worse than the Waxman language, is not quite so bad as you think (it doesn’t save as much as the Waxman language, but it still has a 50 percent price reduction, which isn’t terrible!). Moreover, the letter says, substituting this language will help the bill get passed! Here’s the actual language, addressed primarily to Waxman:

“Your efforts to remove this onerous burden on Medicare beneficiaries… are to be greatly commended. However the commitment by President Obama and the AARP to support legislation that would provide a 50 percent reduction is a dramatic step forward in helping fill the doughnut hole. Equally important, it moves us toward our goal of health care legislation.”

In other words, your attempt to put in a real reform is cool and all, but PhRMA has us by the balls, so help us out.

At the same time, the drug industry is employing scumbag from way back Tony Coelho, who may be single-handedly responsible for Democratic silence in the face of the decimation of American manufacturing in the 1970s and 1980s, to attack comparative effectiveness research, another part of the Obama plan. I guess there's nothing two-way about that loyalty.

While we were going back and forth on a public option, this backroom deal to fund future Democratic campaigns (I don't believe for a second that the $150 million will be spent now, but on protecting conservative Democratic incumbents who protected drug industry profits next year) in exchange for backing off a huge subsidy to giant corporations was put into motion. Baucus' delay actually may have crimped this and forced Big Pharma to start spending now. With industry out in front, however, a bill will probably pass.

Just don't read it so closely.

$2.3 Billion Settlement From Pfizer

Say what you will about the Obama Administration, but they did manage to squeeze $2.3 billion out of Pfizer for violating FDA regulations. The investigation occurred mainly during the Bush Administration, but let's just say I'm less confident that a follow-through like this would actually occur. And with the President engaging in backroom deals with industry to keep their guns silent on health care reform, it comes at an opportune time.

“It’s another step in the administration’s ongoing effort to prosecute any individual or organization that tries to rip off health care consumers and the federal government,” said Kathleen Sebelius, secretary of health and human services.

Republicans and Democrats on Capitol Hill have accused the Obama administration of failing to crack down adequately on health care fraud, arguing that huge savings in government health programs could be found with better enforcement. The settlement had been expected. Pfizer, which is acquiring a rival, Wyeth, reported in January that it had taken a $2.3 billion charge to resolve claims involving Bextra and other drugs. It was Pfizer’s fourth settlement over illegal marketing activities since 2002.

“Among the factors we considered in calibrating this severe punishment was Pfizer’s recidivism,” said Michael K. Loucks, acting United States attorney for the Massachusetts district.

For context, the $80 billion in savings negotiated over 10 years from the pharmaceutical industry would translate to $8 billion annually, so the White House picked up 1/4 of the annual savings just from this settlement (not that it would be applied, I'm just adding for context).

I don't think the Big Pharma deal is worth it and will cost consumers in the long run. But a commitment to actual regulations might force the drugmakers into compliance, and provide even more savings at the high end.

Of course, if we start actually regulating drug companies or work to cut into their record profits, we'll stifle their innovation and ruin their made-up market share:

Atlantic blogger Megan McArdle wrote a post on pharmaceutical companies last month, and while replying to one of her commenters, she said this:

The United States currently provides something like 80-90% of the profits on new drugs and medical devices. Perhaps you think you can slash profits 80% with no effect on the behavior of the companies that make these products. I don't.

Last week, during a Washington Post online chat, this exchange took place:

Anonymous: You said that medical innovation will be wiped out if we have a type of national health care, because European drug companies get 80% of their revenue from Americans. Where did you get this statistic?

Megan McArdle: It wasn't a statistic--it was a hypothetical.

You'd think McMegan would agree to resign at this point.

How The Media Actually Can Help Bring About Change

While I agree that too many traditional media stories fail to offer context and explain the nature of the policy, those stories can be found if you know where to look. For instance, Jonathan Cohn offers a pretty comprehensive look at the White House's ill-fated deal with the pharmaceutical industry, where drugmakers traded an insignificant hit to their bottom lines for the protection of their record profits far into the future.

The drug industry was first in line, according to several sources familiar with the discussions. But its list of demands was long. It strongly opposed letting the federal government negotiate directly with drug companies over price, the way governments in other countries do; it didn't want to give the government rebates on drugs it purchased for Medicare recipients; and it didn't want to let Americans buy cheaper drugs overseas. All three positions ran counter to Democratic Party orthodoxy. (Later, the industry made clear its opposition to a public insurance option, as well.) Pressed to give up something, the drug-industry officials indicated that they would be willing to put up with several other changes designed to reduce its revenues--like giving the government a larger rebate on drugs purchased for Medicaid recipients--but only to the extent they reduced revenues by $50 billion over ten years. Anything more, they said, was unacceptable.

Neither the staff of Baucus's Senate Finance Committee, which had been leading the discussion with PhRMA, nor officials from the administration, who had since joined the talks, were thrilled with this offer, according to people with close knowledge of the negotiations. For one thing, the administration and Baucus believed the drug industry would ultimately make money from reform, since more people with insurance coverage was bound to mean more people buying drugs. (PhRMA countered these arguments with a dubious analysis arguing that reform would not mean much new business, partly because most of the newly insured would be relatively healthy and thus need few drugs.) Obama and his allies also thought $50 billion over ten years just wasn't a lot of money, particularly for an industry that has consistently ranked among the most profitable in the country. They had a bigger number in mind--something closer to $100 billion.

A breakthrough finally came when Obama and his allies indicated they wanted to fill in the "donut hole"--the gap in coverage for seniors who opt for Medicare drug coverage. At that point, the drug industry volunteered to sell its name-brand drugs at a discount to consumers, worth about $30 billion over ten years. It wasn't much of a sacrifice for the industry; the discounts would come almost entirely out of new drug sales, not existing ones. But it helped seal the deal.

The White House would tell you - in fact, they told me - that it's better to have Big Pharma on the side of reform, and $80 billion is a significant savings for the government and its people, and it's better to get that than to get no reform at all. But the measure of how this deal resonated with the public, which did actually find out about it, is how Congressional leaders have walked away from it ever since.

Senate Majority Leader Harry Reid said Friday that he was not bound by a controversial deal negotiated between the White House and pharmaceutical companies, telling thousands of Nevada voters on a conference call that “I have not agreed with anybody to do that.”

The drug industry told the White House this summer that it would cut future drug costs by $80 billion in exchange for assurances that any health care legislation would prevent the government from negotiating for lower drug prices. As a result of the deal, the industry is bankrolling an ad campaign touting Barack Obama’s health care overhaul.

But Democrats in Congress have balked at the agreement.

“I’m a Democrat in the Senate, and I haven’t agreed,” Reid told a caller.

Guess what, in the end, this pharmaceutical deal will probably be in the final bill, they will give up a minimum of profits, and we won't import drugs from Canada, or negotiate on prices, or restrict patents on biologics. Because corporations still rule our government, and their power has grown immensely over the past several years. But if it holds that the drugmakers take a real hit, that would be entirely because the media reported on this, and made it an issue (helped along by some Democrats, like Henry Waxman, who yelped about it). That's the value an aggressive press could add to this debate.

Obama And The Base

Everybody has gotten to this before me, but I did want to say a few words about Obama and the progressive base. You can see in recent polling that the slide in the President's numbers is coming not from the right, who have already lined up against him, but from the left. Liberals and Democrats are not seeing the change they voted for, and are responding by rejecting this President. Liberals tolerated a lot of the slow-walks and aping of Bush policies in the areas of civil liberties, gay rights, the banks, and other realms, but the wobbling over the public option was the last straw, as they say. Digby explains it well.

There have been a series of issues, one on top of the other and each one more distressing, in which the fundamental principles on which Obama ran have been either betrayed or compromised. It's been too much, too many, in too short a time, from civil liberties to secrecy to cozying up with industry behind closed doors. These aren't minor issues --- they go directly to values and principles.

He's losing trust among the base because he appears to believe that those constituents have no serious claim on his agenda. Even the appointment of Sotomayor did not reflect a liberal commitment beyond the breaking of ethnic barriers, which is wonderful, but cannot be seen as a substitute for progressive principle. Bargaining away the one substantial progressive demand in health care reform is seen as simple bad faith.

I'm not one to trust politicians, but I recognize that most people do, even ardent partisans. They are busy, they don't want to have to follow every detail of the political sturm and drang or try to read between the lines of the NY Times every day to try to figure out what's going on. They more or less inform themselves before an election about what their representatives say they believe in, they assess their sincerity and commitment to certain broad principles and values, and then they leave the governing in their hands, trusting them to do what they said they would do to the best of their ability. Obama promised a lot. A whole lot. And he garnered the trust of many millions of liberal minded folks. When that kind of trust is betrayed, it's very hard to get it back.

I certainly hope they are not fighting the last war. Bill Clinton did not suffer a backlash in his base because he was operating in an environment of conservative dominance and a very weak left flank. The base was desperate and demoralized. But it's not 1996 anymore and that strategy just won't work this time. The conservatives are a clownish group of know-nothings whose approval ratings are in the single digits. They should not, in a democratic society, have the power to shape strategy to the extent they are and the president should not be empowering them. Big business and finance is even more discredited and has no trust among the poeple whatsoever. Openly catering to them in this environment is nothing short of defiant (and politically suicidal.)

Glenn Greenwald and Joan Walsh make largely the same points. I want to say a few things about it.

• There is no question that the Obama Administration isn't getting a lot of credit among the public at large from essentially preventing a Great Depression. If the environment was such that the crises happened a year earlier, and Bush's bumbling put us firmly into Depression, Obama would probably have received a lot more credit for digging us out that preventing things from getting to that point. You can argue with his team's methods for preventing such a crisis, namely shoveling all kinds of money to the banks. But EJ Dionne is right - this prevention has led conservatives to go right back to talking up deficits and spending and big government, as if big government didn't just prevent the worst economic calamity in post-war history.

• That said, Obama isn't blameless for the problems with the base. Indeed he has cozied up to industry in unseemly ways - playing golf with the head of UBS, a company his Justice Department is trying to investigate for harboring illegal tax shelters, is just a metaphor. Bungling multiple gay rights issues and the open hostility of the DOMA brief was just stupid.Joe the Nerd was correct when he told the President on Michael Smerconish's radio show that his "knees were buckling" a bit by trying to compromise with people who have no interest in such a compromise. And the civil liberties outrages are truly contemptible, amounting mainly but not totally to covering up the sins of the past, and in turn abetting them.

• The actual tipping point for all of this was not necessarily the weak-kneed language on the public option, but something that happened a little before, when it came out that the backroom deals Obama cut with industry would save them plenty in the health care reform and shield their profits. Bob Herbert wrote about this last week, but it's been rumbling under the surface for a while. In fact, it was my question to the President at that blogger conference call a few weeks back:

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."

He's basically admitting that he allowed industry to cut favorable deals to keep them on the side of reform. This is still reverberating. Today's New York Times has hospital associations crowing about the benefit to their members over the 10-year window in the form of reimbursement payments for the newly insured. Drug companies are seeing a freer hand to deny access to affordable drugs abroad so they'll keep their end of the bargain on health reform. When people started to put two and two together, and realize that the health reform bill looked more like a giveaway to the stakeholders, they got extremely upset. I don't begrudge hospitals and drugmakers the ability to make money if they are healing more people, but there's a real disconnect when the groups who profited from the broken system stand to profit more off of something called reform. THAT was the moment things went off the rails.

• Nevertheless, I think that Obama has a chance to turn this around. It's not just about progressive outreach, however; it's about the actions he will take, or be forced to take. The President late last week started to use forceful, moral language about the need for health care reform, and that's great too.

It has never been easy, moving this nation forward. There are always those who oppose it, and those who use fear to block change. But what has always distinguished America is that when all the arguments have been heard, and all the concerns have been voiced, and the time comes to do what must be done, we rise above our differences, grasp each others’ hands, and march forward as one nation and one people, some of us Democrats, some of us Republicans, all of us Americans.

This is our chance to march forward. I cannot promise you that the reforms we seek will be perfect or make a difference overnight. But I can promise you this: if we pass health insurance reform, we will look back many years from now and say, this was the moment we summoned what’s best in each of us to make life better for all of us. This was the moment when we built a health care system worthy of the nation and the people we love. This was the moment we earned our place alongside the greatest generations. And that is what our generation of Americans is called to do right now.

But actions will now drive the outcomes, because liberals have heard enough talk throughout the campaign and the first seen months of the first term. Whether the White House likes it or not, the public option has become central to most progressive conceptions of the health care debate. Calling it a source of confusion or a sliver or reform simply won't work. And liberals who are needed at the end of this fight will not work for a policy in which they do not believe. The President put himself down this rabbit hole, and only he can bail himself out. Because progressives are going their own way.

For many Obama supporters who supported President Obama's candidacy because they believed he would rally the public to pass a reform agenda, the White House focus on legislative chess in the healthcare debate has resulting in grumbling about whether or not President Obama is the President they voted for. Fairly or unfairly, Obama now faces a rising tide of doubt in his administration from the very supporters who have backed him most steadfastly since the election.

Many of these supporters are now using internet tools and small donations to signal that their support of healthcare reform anchored in a robust public option would be stronger than their support for an Obama administration willing to negotiate away or weaken a public option.

Thus, weeks before any final bill has actually been written, the healthcare debate has already brought about the most significant change in the American political landscape since Obama won the Iowa caucus to become the leading contender for the Democratic nomination.

The idealists who elected the President are siding with their ideals rather than their candidate.

Obama can choose to live up to those ideals, and turn the tide at this stage of his Presidency, or he can play the same games he's been playing, and lose the base - perhaps permanently.

...Arianna has some very good thoughts on this.

The Single Payer Vote

I think it's great that single payer will get a vote on the House floor. It's important to set a marker for the future and separate friends from enemies (although, it being a free vote, you'll have more support than probably exists - see the Employee Free Choice Act free votes in 2007-2008). But this line troubles me:

In another part of the deal, the House bill would allow the federal government to negotiate prescription drug prices and use the savings to lower insurance premiums in the health exchanges that would be established in the bill, according to a copy of the agreement obtained by The Hill.

Another provision calls for finding additional savings through other methods by simplifying Medicare and Medicaid administrative costs.

The cuts sought by the Blue Dogs would remain in place unless the drug negotiation and other initiatives yield savings. But any savings would be used to lower premiums.

I believe that negotiations on drug prices will yield savings. So this could work out fine. But there's a strong implication there that the single payer vote was traded in exchange for keeping the Blue Dog-Waxman deal intact. That would be a mistake and a shame, with real-world implications for the middle class and the poor. We'll know when Nancy Pelosi merges the bills, at any rate.

Given the reality of this vote, the biggest thing single payer advocates could get out of it is a full analysis of HR 676 from the Congressional Budget Office. Incredibly, despite the amount of sponsors and the fact that it's been around for years, there has been no CBO analysis of the bill yet, and I think that a score showing that single payer would cost less than the Rube Goldberg plan under discussion and cover more people definitively would be fairly powerful and useful. In a perfect world we would pay a portion of taxes and get insurance coverage, period, end sentence. It appears we're going the route of unwinding an inefficient system slowly. The more information gleaned about the better option, the faster that unraveling can take place.

But if subsidies are more meager as a result of getting a vote, I'm against punishing those who can't afford insurance for the sake of symbol. Especially when Democrats are trying to foreground a message of taking on the insurance companies. Lawmakers are in broad agreement on regulating the insurance market and providing subsidies to those who can't afford insurance. Those also happen to be the two most popular and tangible elements of any bill. They shouldn't be messed with.

Tax-Free Ads

The more we wade into this health care debate, the more we uncover things that simply astound. In an article about curbing prescription drug ads on television, there's this nugget:

Meanwhile, Representative Jerrold Nadler, Democrat of New York, has introduced a bill called the Say No to Drug Ads Act. It would amend the federal tax code to prevent pharmaceutical companies from deducting the cost of direct-to-consumer drug advertisements as a business expense.

“You should not be going to a doctor saying, ‘I have restless leg syndrome’ — whatever the hell that is — or going to a doctor saying, ‘I have the mumps,’ ” Mr. Nadler said in an interview. “You should not be diagnosed by some pitchman on TV who doesn’t know you whatsoever.” [...]

Representative Charles B. Rangel, Democrat of New York and chairman of the House Ways and Means Committee, said last month that legislators would consider ending the tax break for drug ads as a way to raise money to pay for the health care overhaul. But, after lobbying from broadcasters and newspapers, Mr. Tauzin said, legislators quickly abandoned the idea, concluding that such a measure would not raise significant money.

With lawmakers still fighting over how to finance health care reform, Mr. Nadler said he hoped his bill might find an audience.

“On First Amendment grounds, I am not going to say we will ban” drug advertising, said Mr. Nadler, who represents parts of Manhattan and Brooklyn. “But they should not be able to get taxpayers to subsidize it.”

Meanwhile, Representative Daniel Lipinski, Democrat of Illinois, is pushing his own bill that would end the tax deduction for drug company spending on advertisements.

Drug companies get a TAX DEDUCTION for running ads for their drugs. Is this true of Frosted Flakes? Audi? Xerox? Does any other company in America get subsidized for airing commercials to get America to buy their products? It's not "significant money," though, so ending this direct payout from taxpayers to drug companies got shelved.

Set aside for a second the hypochondria that a nightly barrage of ads telling you that you have restless leg syndrome or iron-poor blood or any of a thousand ailments induces. Set aside the self-medication and the boiling down of complex medical issues into 30-second spots showing couples running through a field. Set aside how drug ads increase demand for medications and thus the costs. Set aside that some of these ads run before the Food and Drug Administration even completes their studies of the side effects. You mean to tell me that I'm helping PAY for these things, too?

Fun fact in the article: only the United States and New Zealand allow direct-to-consumer drug advertisements.

...and here's the part where I revise and extend my remarks, as the deduction under discussion is about business expenses and not a straight tax deduction. Maybe I should put a big blinking banner at the top of this one saying IGNORE. They ain't all gems, folks. I will take solace in the fact that, contra Mitch Albom, I know what marginal tax rates are. But just a little solace.

I think the point of having advertisements for prescription drugs at all can still be debated, however, for reasons described above.

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.

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.)

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.

Wanted: More Reform In This Reform

For liberals, the public option has become a line in the sand. Given that the public option is carefully circumscribed and not open to everyone who may want to choose it, I find that more curious than ever.

President Obama and leading Democrats have stressed that people who like their employer-sponsored insurance would be able to keep it, under a health care overhaul. But they haven't emphasized the flip side: That people who don't like their coverage might have to keep it.

Under the main health bills being debated in Congress, many people with job-based insurance could find it difficult to impossible to switch to health plans on a new insurance exchange, even if the plans there were cheaper or offered better coverage. The restrictions extend to any government-run plan, which would be offered on the exchange [...]

Democratic lawmakers and administration officials say the restrictions are critical to maintaining a strong employer-based insurance system, which covers 158 million Americans.

But critics argue that the rules run counter to suggestions from health care reform advocates that an overhaul could provide people with a broader choice of insurance options. The rules, they say, could be especially unfair to some lower-income workers who are enrolled in costly job-based insurance. Also, they argue, the restrictions would hurt the proposed public plan by limiting enrollment.

Why are the Democrats putting up these firewalls? For years now, they have professed to have learned the lessons of 1994 by stating that "if you like what you have, you can keep it." That's been called the "beauty" of the current plan by people like Howard Dean. But what it means on a practical level is that the employer-based system, with all its inefficiency, must be sustained, in this case through forcing workers to accept their employer-based coverage. There are other reasons, too, which Ezra Klein lays out.

The political reason is that people like what they have, or are at least scared of what they don't know, and are thus skeptical of any health-care reform plan that would change their current arrangements. One of the goals of health-care reform, in fact, is to maximize employer-based coverage, which will be accomplished through the employer mandate. If employers could simply move over to the exchange -- which would probably be quite a bit cheaper for them -- then a lot of people will find their current insurance changing, and reformers don't want that.

The economic reason is that the exchange is where the subsidies live. If you make $30,000 but you work full-time for The Washington Post, The Washington Post pays for the bulk of your health-care coverage. If you were moved over to the exchange, you'd be eligible for pretty significant subsidies. That would make health-care reform costlier to the government, which would in turn make it tougher to pass. Another way of putting this is that the fewer people on the exchange and using subsidies, the cheaper health-care reform will be.

And the policy reason is that if the exchange is open to all employers in the first year, it's likely that the employers having trouble affording health-care insurance -- that is to say, the employers with sicker and older workforces -- will quickly buy in, while the young, cheaper employers won't. That could leave the exchange with a bad risk pool and thus high costs.

It's important to note that Ron Wyden is trying to change this. He's trying to allow individuals who get coverage through employers the choice to buy coverage through the insurance exchange. It's technical, but something that progressives ought to get behind.

But this issue with the insurance exchange firewalls is symptomatic of a lot of the moving parts of the health care debate. Reformers want to cut the internal costs from the current system, and are making deals with providers to do so. But in so doing they're giving up even bigger potential cost savings.

If only that were true. Far from being "game-changers," those agreements are the same old Washington game of bribes, backroom deals, profiteering and protectionism -- and a harbinger of what health care will look like if the president’s reforms succeed.

In June, the pharmaceutical lobby PhRMA agreed to give 50 percent discounts to seniors in Medicare's "doughnut hole," where enrollees now pay 100 percent of their drug costs. President Obama hailed the agreement as a "significant breakthrough," while PhRMA spun it as their $80 billion contribution toward health care reform.

Yet the PhRMA agreement would not save taxpayers $80 billion. It would cost them $80 billion, and then some.

Under the agreement, the full price of each drug would continue to count toward seniors' catastrophic deductible. As a result, even more seniors would exceed that deductible, after which taxpayers would pay 95 percent of their drug costs. Obama also agreed to oppose stricter price controls for government purchases. PhRMA members agreed to cut their prices for seniors only because Obama agreed that taxpayers would buy more drugs at higher prices.

I know, it's from Cato, but the guy's not totally wrong. For instance, in the Senate HELP Committee markup, biologic drugs were given 12 years of patent protection before competition from generics kicks in. This was a defeat for the Obama Administration, but even the victories have strings attached.

Even the revenue mechanism in the House, a surtax for the wealthy, is the result of a political concession, albeit one that Republicans walked into and ought to own (Republicans demonized sensible taxes for so many years that wealth taxes are really all that's left). The truth is that we have this fundamental paradox in the health care debate.

And that's pretty much where we are now. Democrats are making a lot of bad policy compromises because doing so is good politics. They're trying to fund the bill in the way pollsters would advise rather than policy wonks would choose. They're leaving the employer-based system alone. They're letting everyone keep what they have, even though what everyone has is expensive and inefficient, and is in fact the reason we need health-care reform.

Is it worth being disappointed about that? Sure. But legislation cannot be understood in a vacuum. The place to change the tax argument isn't in final days of health-care reform. It's in the intervening years when Republicans are attacking the very idea of taxation. Any given piece of legislation is only as good as the political culture that's produced it. Right now, our political culture isn't that good. The question is whether legislators are getting the best plausible outcomes out of a badly compromised process.

As Ezra says, we have a terrible political culture, and you're starting to see the results. If 30 million Americans get health insurance and you don't add a penny to the debt, you make that deal. And cementing something like a public insurance option into policy, given that it can only expand, which is an easier lift politically, is a good bargain as well. But the counter-intuitive compromises are a bit hard to take.

No Right To Keep A Job You Don't Want To Perform

A federal appeals court ruled that pharmacists cannot refuse to dispense the Plan B "morning after pill" regardless of their religious beliefs:

Family-owned Ralph's Thriftway and two pharmacists employed elsewhere sued Washington state officials over the requirement. The plaintiffs asserted that their Christian beliefs prevented them from dispensing the pills, which can prevent implantation of a recently fertilized egg. They said that the new regulations would force them to choose between keeping their jobs and heeding their religious objections to a medication they regard as a form of abortion.

Ralph's owners, Stormans Inc., and pharmacists Rhonda Mesler and Margo Thelen sought protection under the 1st Amendment right to free exercise of religion and won a temporary injunction from the U.S. District Court in Seattle pending trial on the constitutionality of the regulations. That order prevented state officials from penalizing pharmacists who refused to dispense Plan B as long as they referred consumers to a nearby pharmacy where it was available.

On Wednesday, a three-judge panel of the U.S. 9th Circuit Court of Appeals lifted the injunction, saying the district court was wrong in issuing it based on an erroneous finding that the rules violated the free exercise of religion clause of the U.S. Constitution.

My freedom ends when I violate yours, essentially. If pharmacists don't want to distribute legal drugs to their patients, and cannot provide them with any recourse to obtain those drugs, they can find other work. I think the cost of denying legal medical treatment to women supersedes pharmacists' discomfort.

Two Bush 43-appointed conservatives and one Clinton appointee made this ruling, by the way.

A Thousand Or So Words Of Despair On Health Care Reform

I may have dismissed the difficulties in paying for health care and the time frame a little prematurely. To be sure, it's a problem. Not the nature of the revenue ideas themselves - a surtax on the wealthy may work, although I'd prefer to go back to President Obama's idea to lower the charitable deduction, and Matt Yglesias explains why:

When possible, it’s better to raise money by broadening the tax base—curbing loopholes, deductions, and exemptions—than by simply raising the rates. The reason is that higher rates on a narrow base do a lot to encourage people to shift income into loopholes, which both undermines your revenue-raising efforts and also distorts the economy. Both the employer tax exclusion proposals and the itemized deductions proposal fit that good model.

The problem is that we're pretty far down the road on the various bills and we're still trying to figure out how to pay for it, which suggests to me that Congress doesn't want to make any hard choices on it. They have a bunch of ideas, but no real strategy. And they've taken the employer deduction off the table because unions don't want to give back what they already have, which makes sense for them but not necessarily the country.

One related point I'd make on this is that there is, in progressive circles, a tendency to confuse the interests of labor unions and the interests of progressivism. The two things often overlap. But they are not, in fact, the same. And that's okay. But this is very much one of those cases. The employer tax exclusion is regressive. It gives employers more power over workers. It reduces choices, fractures the system and increases health-care costs (which in turn decreases wages). Unions are protecting what they have, and that's their right. But protecting the employer-based health-care system, particularly at the expense of a regulated and integrated alternative, is not a terrifically progressive thing to do.

And without changing the incentives in health care and reversing the dynamic of doctors ordering more, insurance companies trying to pay for less and employers still paying the bulk of the costs in an inefficient way, we're not reforming health care. We're just expanding coverage and heading toward the same fiscal iceberg. Which is important in its own way, but not a full solution.

And meanwhile, as the timing of the bill slips, conservatives get emboldened and start running ads in the districts of key Senators. Blue Dogs and Conservadems get cold feet and start looking for ways to deep-six the bill. The problem in that case is that the answer to the Blue Dogs' entreaties would be more reform, which they don't want either.

The emerging bill "lacks a number of elements essential to preserving what works and fixing what is broken," 40 members of the Blue Dog Coalition of moderate to conservative Democrats wrote in a letter to party leaders. To win their support, they said, any legislation would need to be much more aggressive in reining in the growth of health care.

A public option and capping the employer deduction would go a long way for that, but they're against that, too.

Meanwhile, the White House is making all these deals with stakeholders that may have strings attached that would preserve their revenue streams and fail to rein in health care costs. Take a look at this, for example:

The Wall Street Journal reports: "Industry representatives met at the White House Tuesday with officials to consider specifics of a cost-saving agreement the industry reached last month with health-care negotiators and to discuss other concerns that the pharmaceutical industry has with the larger health-care overhaul being considered by Congress. As a presidential candidate, President Barack Obama endorsed re-importation, an idea the industry opposes. White House officials have told the industry if the larger health care bill passes, the cost savings will be so great that reimportation will be unnecessary, according to Billy Tauzin, president of the Pharmaceutical Research and Manufacturers of America." Some of the pharmaceutical companies represented at the Tuesday meeting included Merck & Co., Pfizer Inc., Amgen Inc., Abbott Laboratories and AstraZeneca.

The Wall Street Journal notes: "Sen. Bernie Sanders, an independent from Vermont, said he disagrees with any move to drop the reimportation idea. He has pushed to import drugs from Canada, where they are cheaper because of price controls" (Mundy, 7/7).

Are we going to side-deal ourselves to death here? Will we assure medical equipment makers that we will not ensure comparative effectiveness research that would align costs with results instead of the mish-mash we have today? Will we deal with hospitals but leave the full picture of how they rein in costs unanswered? Who will decide the limits to the system, and the tough choices around end-of-life care, now managed by insurers?

The major problem we are running into with health care is that the political class is so obsessed with allowing everyone to keep what they have, and not putting enough emphasis on the system's unsustainable course, that they risk wringing all the benefit for real people out of the bill, and at that point, it can tip over and die.

This isn't terribly surprising: it's not obvious what health-care reform will do for the average American. I could give you a long answer about delivery system reforms and so forth because it's my job to know these things. But it would have to be a long answer. The basic structure of health-care reform has been specifically built to avoid changing people's existing arrangements. The hope was that Americans would be convinced that their health-care coverage wouldn't change for the worse. But that's also made it hard to explain why it will get better.

One of the president's health-care reform principles is that everyone must be able to keep what he or she currently has. But that means we're not really going to change, or improve, what they have. And that means they're not getting much in the way that's new. Higher taxes aren't buying them obvious benefits. Instead, they seem to be paying the health-care bills of poorer Americans.

If support for the overall effort were more robust, the polling on the tax exclusion would matter less. People are willing to pay for things they want to buy. But though they might abstractly favor health-care reform, it doesn't seem directly related to their lives.

This is the problem of liberalism since the Great Society - people don't feel like they're getting anything for their payments to government, because Democrats have stopped pushing for anything tangible for everyone. A reform constructed to expand coverage for the poor without something tangible for everyone - like a public option to bring down premium costs and not wed people to their job for the health benefits - just will not pass. It has no shot. Because the public needs convincing that they have something at stake in this reform.

Holding Back The Tide

The White House has done a pretty good job of rolling out these deals with the health care industry. They made the main announcement of $2 trillion in savings months ago, and that got a large news hit. Then they've been dribbling out each element of the industry and their pledges to lower costs. We haven't reached $2 trillion - in fact, we haven't come close - but every time they do it, the White House gets another news hit. It's pretty brilliant.

The latest is an agreement with the hospital industry to give back $155 billion in profits over a decade, on the heels of an $80 billion dollar agreement with the drugmakers to help fill the dreaded donut hole for prescription drugs for seniors. Because of the way in which Max Baucus (who is brokering most of these deals) and the White House have done it, assenting to changes in how they are paid, this money can be used to help pay for reform, unlike the $2 trillion, which was outside the purview of the CBO. But they seem to be bargaining, like the drug industry, for the best deal they can get, instead of designing the policy and forcing the various industries to accept it.

Still, you have to wonder: Could these industries be giving up more? The drug deal, at least, doesn't look all that great--except, perhaps, to the drug industry. My reading of the agreement--and, to be clear, there's still a lot of ambiguity here--is that the drug industry has agreed to kick in some of its own money to help fill in the "donut hole" in the Medicare drug benefit.

That's very nice and will, I think, make it easier for seniors to afford their drugs. But it also seems that, as part of the deal, seniors have to buy more drugs from name-brand manufacturers rather than generics. It's entirely possible that the name-brand drug industry--that is, the companies represented by PhRMA--could actually come out ahead [...]

The expected hospital agreement seems may be more signfiicant--and, for liberals, more encouraging. Although it's impossible to know without seeing the details, $155 billion is a decent chunk of change. That could represent a serious sacrifice on the part of the hospitals.

On the other hand, it's not clear whether, perhaps, this is an example of some hospitals effectivelly cutting a deal that hurts others. Insofar as the savings come from reduced payments for charity care--payments that now flow through Medicaid--is this a case in which suburban and speciality hospitals actually do just fine but charity hospitals take a hit?

Perhaps the most important question to answer is what these industry groups are getting in return. Changing payments to the health industry isn't simply about generating savings that can finance expansions of insurance coverage. It's also about changing the behaviors of these industries--and, in so doing, creating a health care system that offers better quality care for less money.

To accomplish that, reform should ideally include measures like strengthening the hand of the Medicare Payment Advisory Commission (MedPAC), developing more data on comparative effectiveness (CE), or building a strong public insurance plan. But hospitals don't like the idea of a stronger MedPAC, drug makers are pretty hostile to good CE, and insurers (among others) hate the idea of a public plan. When the industries cut these deals, are they prying promises from Baucus--or the White House--not to push too hard on these levers?

The effect has been to set a ceiling for what the drugmakers and the hospital industry and the other stakeholders will accept, brokered through the most conservative and industry-friendly committee in Congress, Max Baucus' Senate Finance Committee. Any committee that seeks more savings from industry immediately gets attacked, even though they never made such an agreement.

Having struck a bargain with Senate Finance Committee Chairman Max Baucus (D-Mont.), the industry is aggressively targeting individual House Democrats, warning of repercussions in the 2010 elections if they go along with a tougher set of savings advocated by House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.).

PhRMA, the powerful Pharmaceutical Research and Manufacturers Association lobby, is openly playing one chairman against the other. Billions of dollars are at stake; a politically sensitive population, the elderly, is caught in the middle. With House Democrats expected to finalize their bill this week, President Barack Obama could face pressure to come off the sidelines and spell out better where he stands.

What Baucus agreed to specifically in his June 20 bargain is still in some dispute. But PhRMA is bluntly telling House moderates that the senator will oppose the rebates demanded by Waxman and that the smart move is to kill that provision outright and save themselves political pain in 2010.

Then there's the effort in the Senate Finance Committee to deny women legal medical services inside any insurers operating inside the Health Insurance Exchange:

The Senate Finance Committee has been writing a health care reform bill and struggling to create legislation that will have bipartisan support. Chairman Max Baucus considered several compromises to win Republican support, so they can claim it is bipartisan legislation. One of these potential compromises comes in the form of an abortion exclusion, which would prevent abortion services from being covered by some or all insurance plans in the Health Insurance Exchange. We fear that members of the Senate Finance Committee are considering such a compromise.

Remember, most of the groups inside the insurance exchange are private companies. I thought conservatives didn't want to put a government bureaucrat between the patient and the doctor. I guess when it comes to reproductive choice, that's OK.

The Senate HELP Committee's favorable budget score raised hopes that a workable solution was on the way, which was affordable and used a public health insurance plan to increase that affordability. But there's a whole maze of committees and votes to maneuver through. And the Senate Finance Committee is really building a dam to hold back the tide of a legitimate overhaul. Must be all of that industry money.

...see also the tactic of arbitrarily lowering the cost of the bill for no real reason other than $1 trillion is a nice round number.

Filling The Doughnut Hole

Insurance companies are not the only bad actor in the health care industry. To a degree all of them are. Some doctors overtreat and order up unnecessary tests. The medical device industry pushes their products even if they have no utility. Hospitals charge exorbitant rates. The incentives in the system are entirely wrong. And of course, then there's the pharmaceutical industry. And in 2002, they negotiated with President Bush and the Republican Congress to put the doughnut hole into the Medicare Part D bill. What was that? Well, your prescriptions were covered up to the first $2,700, and then you had to pay full price until you hit $6153.75, essentially offering no benefit to the elderly who consume enough drugs to meet that lower bound. It was a forced gap put in by an industry looking to make a buck, since the consumer has no bargaining power in that doughnut hole, while the government does. And under the current President and the Democratic Congress, they returned to the negotiating table and said end this now. So the industry will.

Drug manufacturers have tentatively agreed to provide as much as $80 billion worth of discounts on medicines purchased for government programs such as Medicare, providing a bit of cash for President Obama's expensive and ambitious attempt to give health coverage to every American.

The accord, approved yesterday by the board of the Pharmaceutical Research and Manufacturers of America (PhRMA), is a voluntary pledge by the industry to reduce what it charges the federal government over the next 10 years, according to a source close to the negotiations who spoke on the condition of anonymity because of White House sensitivity about the talks.

If health-reform legislation is enacted, the agreement would bring financial relief to about 3.4 million elderly and disabled Americans who currently fall into a coverage gap known as the "doughnut hole." Medicare recipients must now pay the full price of brand-name medications after they have incurred a total of $2,200 in drug expenses, until reaching an outer limit of $5,100.

Under the proposal, U.S. drug companies would provide half-price discounts to Medicare recipients in the "doughnut hole" and provide other unspecified discounts and rebates for a total of $80 billion in savings to the government.

"This is real money on the table," the source said.

The White House put out slightly different numbers for the doughnut hole, but basically it means that Medicare would purchase those drugs in the middle, and they can get more for their money. This leads to lower costs. The President released a statement, and here's part of it:

"As part of the health reform legislation that I expect Congress to enact this year, pharmaceutical companies will extend discounts on prescription drugs to millions of seniors who currently are subjected to crushing out-of-pocket expenses when the yearly amounts they pay for medication fall within the "doughnut hole" - any payments by seniors not covered by Medicare that fall between $2700 and $6153.75 per year. The existence of this gap in coverage has been a continuing injustice that has placed a great burden on many seniors. This deal will provide significant relief from that burden for millions of American seniors.

"The agreement by pharmaceutical companies to contribute to the health reform effort comes on the heels of the landmark pledge many health industry leaders made to me last month, when they offered to do their part to reduce health spending $2 trillion over the next decade. We are at a turning point in America's journey toward health care reform.

It doesn't seem like much of a deal for the pharmaceutical companies, but if you add 30 million or so Americans to the rolls of the insured, that's a big ol' market for new prescription drugs. Plus, Medicare, the largest purchaser of drugs in America, has a certain amount of leverage. I don't mind them making a profit - but they must offer fair and equitable prices for their work and try to create products people need to alleviate pain and disease instead of hair growers and boner pills.

The doughnut hole has long been one of my biggest bugaboos about the power of industry, and I'll be happy to see it cut in half. That's a tangible benefit for seniors and something around which they can rally for comprehensive reform.

Anti-Effectiveness Conservatives

Here we go again with conservatives trying to deep-six comparative effectiveness research in medical treatments, throwing up all kinds of horror stories about "Federal Health Boards" that would dictate to people what they can and cannot receive from their doctor. First of all, if we had to pay for the time and effort to manage 300 million individual health care treatment outcomes, we would need more money than exists in the entire world. Second of all, it's completely bogus, as Ezra Klein explains wearily.

The apparent fear here is that the evidence from comparative effectiveness will be, well, used to make treatment decisions. But that can't be quite right. We use evidence all the time. Your insurer won't pay for a leg amputation when your symptom is a headache. Medicare doesn't cover a wheelchair if you're diagnosed with acute constipation. No one whines about that.

The fear, rather, is that the existence of more evidence will somehow qualitative change the way government uses evidence. The government will decree, in other words, that their testing shows back surgery ineffective, and back surgery is now illegal. Put slightly differently:

Step 1: Comparative effectiveness review.
Step 2: ????
Step 3: Authoritarian medical system

It's sort of what would happen if you applied The Road to Serfdom to the comparative effectiveness debate.

The industry's fear is quite different: This is the profit objection. Right now, most research on, say, drug effectiveness is funded by the pharmaceutical industry. That presents obvious advantages for them and problems for us. The concern here is that if they cease controlling the flow of evidence, then new studies will show that certain treatments don't work. For instance: Claritin goes off patent. Generic versions emerge. They're very cheap. Claritin's manufacturer changes the chemical composition slightly and comes up with Clarinex. They apply for a new patent. They sell it at a heavy mark-up. But it probably doesn't work much better. If there's credible evidence out there showing that it doesn't work much better, that's the end of that business strategy.

Business interests are using the ideological objection to scare people into advocating against comparative effectiveness research, so they can maintain their profit motive. I would imagine that the drug industry could care less if we were in a single payer health care system, as long as they got their drug monopolies and increased their profits. They only use the ideological objection to their own ends.