This week's story was the faltering momentum of health reform, tending to contradict the argument I advanced on Monday. Despite the ongoing Congressional tussles, which are exactly what one should expect, I stand by my prediction that health reform will pass this year. There might not be a measure by the August recess--a phony deadline if ever I saw one--but there will be by the end of the year. I have three main reasons for thinking this. 1. So far as substance goes, the differences between the various bills are pretty small, and the financing gaps are bridgeable. A House-Senate deadlock is easily avoidable. 2. Obama has come close to staking his presidency on this. On Friday, reacting to a couple of perceived setbacks, of which more in a moment, he doubled down on that commitment in an unscheduled press conference. 3. Most important, Obama has said he is willing to sign more or less anything and declare victory. If a Democratic Congress cannot oblige him even to the extent of giving him some bill, any bill, to sign, when failing to might sink his presidency, I will be astonished.
Whether it's a good bill is of course an entirely different question, and I would say the odds on that are now slim. We will get a substantial increase in coverage, which is good, but without meaningful action on cost control, and the necessary revenue will be raised, if at all, in stupid ways.
One thing that surprised me about Obama's statement today was that he continues to emphasize cost control, as opposed to wider access, as the principal driver of reform. It is obvious by now that Congress has no stomach at all for cost control, and is arguing mainly over how to raise the taxes necessary to pay for wider coverage. Obama's selling proposition, so to speak, is therefore beside the point; moreover this rhetorical defect is obvious, which is not like him at all.
Douglas Elmendorf's statement in Congressional testimony on Thursday only underlined the point. The CBO director said the bills barely even try to address costs in a meaningful way--"In the legislation that has been reported, we do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount"--and on the whole push in the opposite direction. This should have surprised nobody: the CBO has been saying the same for weeks in its various efforts to score the bills. Be that as it may, Elmendorf's testimony was widely called "devastating" and was greeted as a crucial new development.
This was the setting for Obama's remarks on Friday. With the CBO critique fresh in people's minds, what did the president say? That we must have health reform to control costs! With the best will in the world, you have to call this strategy puzzling.
What would be so wrong with saying we must have health reform to address economic insecurity--note this is not just about the 40m uninsured; people with insurance are worried about losing it--and that the price in higher taxes is worth paying. It happens to be true, after all. That should count for something. Is it really so hopeless a platform?
Max Baucus,
chairman of the Senate Finance Committee seems to get it. He is keen on
rolling back the tax deduction for employer-provided insurance, a move
that, outside union circles, is universally regarded as a great idea.
So far, the White House has said no. Noting that Obama is apparently
willing to say yes to everything else, his objection to the most straightforward financing solution is difficult to understand. (Well, he promised not
to raise taxes for non-rich Americans, you say. That's true. So he did.
But he knows that he will have to break that promise regardless. The
payroll tax component in the bills breaks it. The tax penalty on
individuals defying the mandate breaks it. Why not start work right now
on explaining, um, what the pledge really meant?) The second thing that
surprised me this week was Baucus's open criticism of the president.
"He is not helping us," Baucus said. My word. Three cheers for Baucus.
Obama should listen to him. Three cheers for CBO as well. Where would
fiscal policy be without it?
My column for NJ this week looks at France's wonderful healthcare system, and says why it may not be much use as a model for US reformers [link expires in two weeks]. A mandatory read if you follow this subject at all is the piece by the invariably excellent Marilyn Werber Serafini, also in this week's NJ. The real model for what the US is going to do this year is the Massachusetts health reform. "Not an unqualified success," says Marilyn. Do yourself a favor and read her article.
It seems that President Obama could have a better understanding of cost control than you might think. He espouses reforms consistent with the core principles of market capitalism: respect for the needs of the customer, transparency and alignment of economic interests. Ultimately these are the primary drivers of effective cost-control in any economic system. Their inclusion in the Obama administration's proposals would imply cost-control and bring comfort to at least one aged conservative (me).
RESPECT FOR THE NEEDS OF THE CUSTOMER
President Obama understands that Mayo Clinic's comprehensive care models focus first on patient need. And produce higher quality outcomes at lower costs and patient satisfaction ratings that are off the charts. His proposals would celebrate and proliferate Mayo's successes and similar patient-centric innovations.
TRANSPARENCY
President Obama understands the positive cost-slashing effects of transparency. He proposes a universal digital records system that would expose preventable medical errors and their associated economic waste. According to the Institute of Medicine of the National Academies of Science these preventable errors result in the deaths of over 200,000 Americans every year. Eliminate waste. Not the customer. President Obama understands this.
ALIGNMENT OF ECONOMIC INTERESTS
President Obama understands that our convoluted economic healthcare model pits the interests of patients against those of commercial insurers. An employed diabetic is a profit center to the commercial insurer. The fact of his diabetes raises his premiums and the premiums of all of his co-workers. The health insurer merely collects the increased pooled premiums and passes along the costs to providers. While netting 20% of every dollar it touches. When the diabetes advances to the point of debilitation, the diabetic loses his job and goes on disability.
The fact of his disability then pits the interests of taxpayers against the interests of commercial insurers. While the diabetic is employed, he is a low-risk, high-income enrollee of the commercial insurer. Debilitated and unemployed, he is a burden to the tax payer. He no longer pays premiums. He no longer pays taxes.
As long as tax payers are going to be on the hook for the diabetic's higher, end-of-care costs while he is contributing neither income taxes nor premiums, tax payers deserve to reap the profits associated with his care while he is employed, paying taxes and paying premiums.
The public payer option merely aligns the economic interests of all the parties, starting with the customer and ending with the tax payer.
Respect for the needs of the customer. Transparency. Alignment of economic interests.
Pure market capitalism.
It is my view, at least, that cost control will follow necessarily.
Whether the reader accepts any of these arguments, I would encourage the reader to look deeper, to give President Obama the benefit of the doubt. He seems a gifted leader. Humble. And committed to a free and fair society to a degree unequaled in modern times.
Obama should just stop pretending he wants to reduce costs. He doesn't. He wants to increase access.
It's silly for him to stick to his "deficit-neutrality" and "cost reduction" claims when evidence is being presented to the contrary.
Ditto for his claim that he wants to "reform" health care. If that were the case, we'd be having a debate about reforms. We are not. Instead, a bill that provides access is being rammed through.
As is always the case with Obama, it's not his words that one has to watch, it's his actions.
And then they whacked hard poor Baucus! How brutal and inhuman. He was forced to apologize by evening. I just wish Sen. Baucus showed some spine here and stuck to the TRUTH he uttered and did favor to us all. Whichever way one looks at it President Obama is ideological, irrational and head strong in this regard when he opposed taxes on health care benefits above Federal level. Washington Post reports that generally it is Police and Firefighters who have these 'gold plated' plans; the staple diet of campaign contributions to Democrats. Hence reluctance from House Dems members for such taxes and inclination to go for totally unfair, unwarranted and devastatingly foolish 'surtax' on rich people. Do Pres.
Obama and Geithner have guts to put cap on salary of folks working at Goldman Sachs of the world if they are so against super rich? Are they ready to align compensation so that risks to banks are reduced? No, leaving risky behavior of Wall Street rich guys unchanged but to simply tax them is very easy.
If you have war or natural calamity; one can understand additional taxes on rich. Also if these taxes were to fund general deficit, at least one can be sympathetic with it. Here these rich tax payers are not going to get any benefit out of such surtax. How this cannot be anything other than 'brutal, misguided' Socialism? How do we know that it will not stop average income people like me too getting taxed to fund some other fantasy of Charels Rangel of the world? Such taxes are scary, immoral and totally crippling for Economy. We would cross the point of no return here.
President Obama is contradictory here. He just wants to give beautiful speeches about 'shared sacrifices' but simply want to set in motion a train to tax people irresponsibly, starting with super rich today. Well why am I hesitating to say - he does not sound sincere when President is squandering so many opportunities 'to walk the talk'.
What we have seen this week is McCarthyism of Liberal kind. Anyone who dares to talk against the prevailing orthodoxy of reckless government spending is forced to shut up. Politically this may the earth shaking event for Democrats. Unless they go away from this cliff and show some sanity; 'Barracuda Palin' is back man! Heck, may be I will vote her too!
Clive we agree a bill will pass but I think you are misreading what's going on here and seem to be disregarding some of the earlier and basically wiser comments in your previous piece. Obama is not going to sign any bill, he's going to sign a bill that essentially gives him all he wants. He's an accomplished poker player and he's got a very good hand as EJ points out in today's Wapo. You are also I think overestimating the extent to which this is on the public radar. I don't think it is to a large extent although there is still a broad public desire for it to happen. Returning to the poker metaphor Obama's strategy has been to leave assembling the ingredients to congress. He needs to get a series of bills that collectively contain all the elements he wants. So far we have two bills out of committee in the house and voted on, and one in the senate not yet voted on. These basically contain all he needs and the differences as you point out between senate and house are very bridgeable. The push over the next two weeks will be to get the remaining bills out of committee in house and senate, get them voted on and into conference where the rules of the game change completely. It's quite clear the Republicans are going to totally oppose in the senate although he might pick up the odd vote. He also may lose the odd one but you can't underestimate the pressure that is going to be on any Democratic dissenters and at the end of the day he has the votes to pass on reconciliation if he has to. And the notion that he's going to eschew that weapon on what will be his presidency's defining piece of legislation is naive in the extreme. Once in conference the game changes completely. All of a sudden it's reduced to a small handful of negotiators with the white house as the major player. Provided all the ingredients are there Obama can then make an omelette of any flavor he likes. And it will be a flavor to his liking. Then the final push to pass the bills which when their inevitability becomes more obvious by the day, might mean some Republican defections......hell these guys have electors to face next year.
While Mass health reform may not be "an unqualified success" to date, check out the unanimous recommendations of MA's Special Commission on the Healthcare Payment System, centering on replacing fee for service with a "global payment system" that pays by the patient, creates "Accountable Care Organizations," and rewards performance. This is a real bid to cut the Gordian Knot of skewed incentives. Full report here .