The case against incremental reform
Posted on January 22nd, 2010 by Jason Rosenbaum in Congress Watch
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The news today is full of analysis and commentary against incremental reform.
As I explained yesterday, Democrats won't win politically by scaling back (have you seen even one Republican who's said they're interested in a bipartisan health care bill in the Senate?), and they won't solve the crushing moral and economic problem that is our health care system without systematic change. But I'll let others take up the argument.
The Associated Press' news analysis is almost all you need to read:
Trimming back the 2,000-page, trillion-dollar Democratic health care bills to the parts that average folks understand and like may not be as simple as it sounds.
A complete ban on insurance companies denying coverage to people with medical problems would be out of the question. Forget about guaranteed health insurance for all Americans - it costs too much. Still, Congress might be able to craft legislation that takes some rough edges off today's coverage problems and makes progress in controlling costs.
That's if Democrats and Republicans can call a truce.
Republicans, who for months have been urging "commonsense" alternatives to the Democrats' sweeping overhaul plan, may still be unwilling to help pass anything that lets President Barack Obama claim an election-year victory. They'll have 41 votes in the Senate to block it once Massachusetts' Scott Brown is seated.
Yet the nation's health care system is unlikely to heal itself. The number of uninsured will rise above 50 million unless government steps in, while ballooning costs could leave the baby boom generation with a bare-bones Medicare.
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Obama has suggested shifting the focus to popular proposals like banning denial of coverage to those with medical problems. That particular fix is unlikely because it would encourage people to put off getting insurance until they're sick, driving up premiums for everybody else.
"In health care, everything fits together," said Sen. Jay Rockefeller, D-W.Va. "It's very hard to say we can cut this out and do that." Banning pre-existing condition denials would have to go hand-in-hand with coverage for all.
Karen Tumulty echoes the point in Time:
The basic premise of insurance is shared risk. But if a disproportionate number of the people who have it encounter a catastrophe, everyone ends up paying so much that they might as well not be covered at all.
Take the "community rating" laws that five states have passed. They sound great; everyone pays the same premium, regardless of their individual health history. But absent a requirement that everyone have insurance, what they have done is drive up the price of premiums–an additional 40%, estimates Massachusetts Institute of Technology economist Jonathan Gruber, who is also a technical consultant for the Obama Administration.
That is because these kinds of well-intentioned smaller reforms create a vicious cycle:
*Sick people buy insurance. What choice do they have?
*Healthy people, knowing they won't be discriminated against if they get sick, decide to go without coverage.
*Insurance companies, which are footing the medical bills for a lot of sick people without offseting premiums from healthy ones, raise their rates.
*Even more healthy people decide to drop their insurance.
* With an even sicker pool of people, proportionately, insurance companies raise their rates more …
The lesson has been that, unless you have pretty much everyone covered, insurance reforms won't work. "What many people don't understand is there is a very high level of interdependence among the parts. The legislation that is in front of Congress now is incremental reform," says Princeton University public affairs professor Paul Starr. "You just can't go down much further than this."
Say, for instance, you pass a bill that makes it impossible for the insurance companies to discriminate against sicker and older people. "You're going to make it expensive for young people to get insurance, especially with the inefficient individual insurance market we have today," says Starr. "Basically, health insurance becomes just a very bad deal for young people." And without healthy people in the pool of those covered, it also becomes unaffordable for sick people, too.
Steven Pearlstein backs them up from the Washington Post opinion pages:
One reasonable-sounding idea is that the president should reduce it down to just a few of its most popular provisions, such as the one requiring that insurance companies be barred from refusing to cover people with preexisting conditions or charging them sky-high premiums.
The problem with that, of course, is that if you don't require everyone to buy insurance, then there will be lots of people who will wait to buy their policies until they get sick and then demand coverage at the "community" rate. That's a great way to drive up premiums, which in turn will drive even more healthy people to drop coverage, which will raise premiums even further.
To prevent this kind of debilitating "insurance spiral," you could add one more feature — a mandate requiring everyone to buy at least a basic insurance package. Unfortunately, there are lots of low-income households for which the newly mandated premiums could eat up as much as a half of after-tax income, which hardly seems fair. So you'd probably want to make sure that there's enough competition among insurers to keep premiums down, which is what those government-supervised exchanges are all about. And you'd want to have some subsidies to limit the financial hit to low-income families. To pay for the subsidies, you'd either have to raise taxes or cut spending in other areas.
And that, basically, is the outline of Obama's health plan, just as it was Clinton's health plan and the Nixon plan before that. In fact, if you want a health-care system that's universal and affordable and based on a competitive market of private insurers and health-care providers, that's pretty much where you have to start. There is no simple solution to this puzzle.
That's the policy argument. But there's airtight political reasons Democrats must pass real, comprehensive reform that works for everyone in America, too. We'll start with David Axelrod, the President's own political adviser:
We need to move forward aggressively, continuing on job creation, and on financial regulatory reform. But we should finish health care because the caricature of that bill is there and everyone who voted for it will have to live with that. The way to deal with that is to pass the bill and let people see… the value of it.It is not just getting the achievement under the belt. I think there are tangible benefits that people will accrue across this country as soon as this bill is signed. They will have more leverage, have more prescription drug coverage, Medicare is going to be extended by a decade… If we don't pass it and [Obama] doesn't sign it than the caricature created by the insurance industry and opponents in Congress will prevail and everyone will have to live with that. There is no political sense to that and I hope people will see that and move forward.
Jon Cohn has a letter from a "veteran Democratic strategist" saying the same thing:
Now is the time to write stories about how strategically and politically insane it would be for the House to not find a way to pass the legislation.
If they fail to do so, the Republicans will be the writers of history–because the victors, not the vanquished, get the pen and the paper to do so. They will get to define what was in it and why it died. And this will have implications not just about the past but the future. Republican will say, and more effectively (but no less inaccurately) than ever, that, given the chance, the Democrats will be right back at it again with their "evil, secret fantasy to take over the health care system." They will more successfully (and inaccurately) define "it" as being a deficit busting, government take-over that will ration care and harm seniors.
Democrats have to understand that virtually all of them have already voted for a bill that will therefore be defined by the Republicans. As such, they–and even those Democrats who did not vote for the bill–will be linked to that party that embraced to "Obamascare." And, for those who are completing embracing a fall-back, small-ball approach, think again. That seductively tempting option won't come to pass either. Why? Because the Republicans will work to ensure it does not.
If the Democrats turn from this path and give up on comprehensive reform after spending the last year working on it and coming so close, it would be one of the greatest tragedies in American history, a historic failure of nerve so unforgivable that I think it might literally break the party in two. If after spending a year on this, and putting Democrats' votes on the board in both houses in favor of it, they walk away and get nothing, they would be seen as utterly incompetent by swing and base voters alike. And don't think that going back to the drawing board and trying to get a scaled back bill that "everyone is in favor of" gets anything done. Having been successful by being the party of no, what exactly is it that the Republicans- any of them- would agree to? Olympia Snowe got every single thing she asked for in the Senate bill after delaying the bill for six months, and she still voted no. What makes anyone think she or any other Republican would vote yes for anything in an election year when it's working so well for the Republicans to say no to everything? And how long would it take to work out a deal with Republicans when we tried for a year and not one of them agreed to anything? While I'm asking questions, let me ask another: exactly which voters do Democrats think we pick up by walking away from health care reform after a year of work and already recorded votes on it in both houses? Certainly not the desperately disappointed base. Do Democrats think swing voters will reward them for spending a year on something, and then giving up on it and getting nothing? Swing voters are wanting results and real change. How does delivering nothing changing nothing on the main thing they have worked on the last year help them with those voters?
And Ezra Klein makes the point that if Democrats can't do this, they probably can't do anything:
It's worth taking a step back from health-care reform for a second. What Democrats are doing isn't just abandoning a particular policy issue. They're proving themselves unable to govern.
Democrats spent most of 2009 with 60 votes in the Senate and about 256 in the House. They had a popular new president who was following a disastrous Republican administration and a financial crisis. The opposition party was polling somewhere between foot fungus and spoiled meat. You don't get opportunities like this very often. The Senate majority, in fact, was larger than either party had enjoyed since the 1970s.
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If Democrats abandon health-care reform in the aftermath of Brown's victory, the lesson will be that they can't govern. No majority within the realm of reason will give them the votes to move their agenda swiftly and confidently. Even the prospect of the most significant legislative achievement in 40 years, an achievement that will save hundreds of thousands of lives, will not keep them from collapsing into chaos when they face adversity.
At that point, what's the pitch for voting for Democrats? That they agree with you? A plumber and I both agree that my toilet should work. But if he can't make it work, I'm not going to pay him any money or invite him into my home. Governance isn't just about ideology. It's also about competence and will. That's where Democrats are flagging.
In 2008, voters across this country voted for change. They voted to end the gaping moral failure of our time - the fact that 46 million Americans lack health insurance, the fact that we spend one out of five of our dollars on health care, the fact that businesses are going out of business and those with insurance going bankrupt because we can't get the insurance companies in line. There is no question that voters want Congress to deliver on sweeping health care reform that finally enshrines health care as a human right in this country.
Congress must deliver. They can't deliver small - you can't do the "popular" things without going big. And Democrats can't under-deliver (or fail to deliver) for the American people if they expect to keep their jobs.
There is no excuse. Democrats have a huge majority in both Houses of Congress, and both Houses have already passed a health care bill. We simply need to finish it right - fix the excise tax so we don't tax middle class workers, fix subsidies so health care affordable to everyone, hold insurance companies accountable with strong regulations and a public option, and make sure health care is affordable at work by asking employers to pitch in their fair share.
It doesn't much matter how reform gets fixed and passed (the reconciliation fix going through with the Senate bill seems the most likely right now), only that it's fixed and passed now.
If the health care bill is not good for government, do you think the government will approve it?
Reform should not mean cutting behind the door deals with labor unions.
Reform should not mean cutting medicare.
Reform should not mean taxing private business additionally for providing employees insurance.
Reform should not include funding for abortions.
Reform should be transparent!!!
There's no back door labor deal, just a deal to reduce taxes on the middle class.
There are no cuts to Medicare's services, just waste.
Shouldn't businesses have to provide good health care to their employees? What's so wrong with that?
Reform does not fund abortions at all.
And reform is transparent. What don't you know?
If any of you want to know who is between you and your Doctor read this article from the New York Times posted on Yahoo today:
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January 25, 2010
In Standoff, Insurer Seeks More Control Over Costs
By ANEMONA HARTOCOLLIS
A front in the national health care battle has opened in New York City, where a major hospital chain and one of the nation’s largest insurance companies are locked in a struggle over control of treatment and costs that could have broad ramifications for millions of people with private health insurance.
The fight is between Continuum Health Partners, a consortium of five New York hospitals, including Beth Israel Medical Center and St. Luke’s-Roosevelt Hospital Center, both major teaching hospitals, and UnitedHealthcare, which includes Oxford health plans and has 25 million members across the country, one million of them in New York.
While Congress has been haggling over covering as many as 15 million uninsured Americans, the prestigious hospitals and the major health insurer have been in bitter contract negotiations, not just over rates but also over UnitedHealthcare’s demand that the hospitals notify the insurance company within 24 hours after a patient’s admission. If a hospital failed to do so, UnitedHealthcare would cut its reimbursements for the patient by half.
UnitedHealthcare says the proposed rule is meant to improve the quality of care and cut costs by allowing insurance case managers to jump in right away. The hospitals say that having their reimbursement cut in half is too much to pay for a clerical error, and that the drain on their revenues would ultimately hurt their patients.
UnitedHealthcare is negotiating or imposing similar rules at hospitals across the country, and often meeting fierce opposition. Tennessee passed a law saying the penalty would not apply on weekends or federal holidays, when hospitals are short-staffed. Florida hospital officials said that the new rule could play a role in coming contract negotiations there, and that the state hospital association had asked Florida’s insurance regulators to monitor the situation.
The dispute signals a “ratcheting up” of a long tradition of insurers trying to cut costs, said Jeffrey Rubin, an economics professor at Rutgers University.
But Dr. Rubin said UnitedHealthcare’s approach is particularly aggressive and might be part of a wave of pressure insurance companies feel from employers to cut costs and to keep premiums lower to avoid penalties, like the “Cadillac tax” on expensive insurance plans.
“It’s an example of the insurance company getting between you and your doctor,” Dr. Rubin said.
Disputes between insurers and providers have flared up before, and it is rare for them to ultimately part ways. But the negotiations in New York have become especially tense. UnitedHealthcare has sent letters over the last few weeks to tens of thousands of patients, warning that they could be cut off from coverage at Continuum hospitals and affiliated doctors, and advising them to start shopping for new ones. Last year, 85,000 UnitedHealthcare customers received treatment from Continuum.
The hospital system went to court and got an injunction preventing the insurance company from cutting access to Continuum doctors until the matter could be arbitrated. And the Greater New York Hospital Association, a trade group, has complained to the state attorney general that the 50 percent penalty would be “confiscatory.” The attorney general’s office said it was reviewing the matter.
Health care analysts say that such battles could become more common if federal policy promotes competition among insurance companies, perhaps including insurance exchanges, as an important engine for driving down health care costs.
The fate of health care reform in Congress is unclear now that Democrats have lost their filibuster-proof majority in the Senate. The House and Senate have not reconciled their disparate bills, but both proposals would prevent health insurers from excluding people with pre-existing conditions, which is one way they hold down costs.
So the insurers will need to find other ways to control expenses, said Sean Cavanaugh, an analyst for the United Hospital Fund, a New York-based research institute. “That means you try to negotiate price reductions and control utilization, which is the hardest way for insurers to hold down costs,” he said.
The UnitedHealthcare-Continuum dispute may also be a sign of the times, a showdown between corporate oligopolies reminiscent of the recent fight between Time Warner Cable and the Fox Broadcasting network, only with the spoils being doctors and patients rather than cable television subscribers and “American Idol.”
UnitedHealthcare’s New York chief executive, William Golden, said in an interview that the tension had been fanned by a greedy and intransigent hospital system that had been seeking unseemly rate increases of more than 40 percent. Mr. Golden said it was the toughest negotiation he had seen in 13 years.
“This negotiation is really coming down to affordability,” Mr. Golden said. “These are kind of unique circumstances for all of us involved. It’s probably not surprising in this economic climate. There are tremendous pressures on all of us to make health care more affordable.”
Kristin Binns, a spokeswoman for WellPoint, which runs Blue Cross plans in more than a dozen states and has more subscribers than any other company, said, “We are not enforcing any sort of penalty” like UnitedHealthcare’s, and a spokeswoman for the American Hospital Association said that it knew of no other major insurer that did so.
Officials from Continuum Health Partners acknowledge that they are looking for rate increases to pay for rising costs of technology, drugs, overhead and union contracts.
The hospital chain said that after initial tough-guy posturing — including a demand from UnitedHealthcare for a 7 percent to 10 percent cut — both sides have narrowed the gap in their demands. But Continuum says the crux of the standoff is its refusal to bend to UnitedHealthcare’s notification rules.
Some plans already ask patients and hospitals to notify their insurance companies of hospital admissions, but officials at Continuum and some other hospital systems say the penalty for noncompliance is either minimal or rarely enforced. In memos outlining the new policy, UnitedHealthcare officials have said that patient compliance with notification rules is erratic.
Dr. Sam Ho, UnitedHealthcare’s chief medical officer, said the company wanted to work with hospital staff to reduce the amount of time patients stay in the hospital, which is associated with complications like infection, and to prevent readmission, a major cost.
“If you had a car that needed to be repaired and then it had to go back in the garage within a week, then a month, then again in two months, then perhaps the original quality of the work that was done was substandard,” Dr. Ho said. He said that UnitedHealthcare’s push for notification was not motivated by money and that it would be happy if it never had to impose a penalty.
“Absolutely, honestly, sincerely, this is a genuine attempt to try to improve outcomes for patients,” he said.
But Ruth Levin, Continuum’s chief contract negotiator, said that the hospital chain did not believe that UnitedHealthcare could do a better job of reducing readmissions than its own medical staff could. Her account of negotiations on this point shows just how caustic they have become: “When we say, ‘Show me where you went to medical school,’ then they back down,” she said.
”It’s the ridiculous punitive nature of this,” she said. “If we provide a medically necessary service, we should be paid at the medically necessary rate.”
UnitedHealthcare has been rolling out a similar policy across the country since 2007, but has repeatedly postponed deadlines and penalties in the face of opposition. Most recently, it postponed a Jan. 19 deadline to begin imposing the 50-percent penalty. (UnitedHealthcare documents suggest that in some cases, the full penalty would kick in only after 72 hours, but Continuum officials say that UnitedHealthcare is forcing them to negotiate such terms.)
Integris Health, an 11-hospital system based in Oklahoma City, has tried to meet the notification requirement and has been frustrated by the administrative burden, even using electronic notification, said Greg Meyers, vice president for revenue integrity. “That doesn’t feel to us like cost control, it feels like a revenue stream enhancement to the insurance companies,” Mr. Meyers said.
Continuum officials say that cutting reimbursement in half would mean the loss of at least $25,000 for a patient who had bypass surgery and $15,000 to $20,000 for elective joint replacement.
Dr. Gary Burke, a doctor affiliated with St. Luke’s-Roosevelt Hospital Center, said the letters warning that coverage with Continuum doctors could be cut off left some of his older patients panicked at the prospect of losing a long-term relationship with a doctor they trusted.
“They’re kind of like, ‘If I get sick, does this mean I can’t see you?’ ” Dr. Burke said.
Continuum says it believes that some larger hospital systems have been able to negotiate immunity from the penalty. UnitedHealthcare officials refused to say whether that was true, saying that their contracts were subject to confidentiality agreements. Likewise, several other hospital systems, including the city’s Health and Hospitals Corporation, which runs its public hospitals, and NewYork-Presbyterian Hospital, declined to discuss the terms of their contracts with UnitedHealthcare.
“When all the other hospitals are doing it, we’ll do it,” Ms. Levin said. “If you go out there and succeed with NewYork-Presbyterian, we’ll do it. Then I think it’s unreasonable for me to stand out there and say, ‘Well, I can’t.’ ”