None of the current health care bills/measures/concepts are likely to pass the Senate. And that means health reform is not going to happen.
As I’ve noted ad nauseam, the current efforts don’t do enough to control costs, and without cost control there won’t be moderate Democratic, much less bipartisan, support. And they certainly won’t get by OMB boss Peter Orszag. We’re left with measures to pay for the new entitlement by increasing taxes on the wealthiest Americans, a funding source that President Obama has ‘set aside’ for overall deficit reduction.
If rich folks’ contributions go to health care, there won’t be a deficit reduction. And if health reform as currently conceived passes, we’re going to have expanding, not decreasing, deficits.
As an object lesson, remember Part D – the legislation that dealt only with prescription drugs for seniors – compared to universal coverage, a relatively modest effort. It also left us with an $8 trillion unfunded liability. (note that the current GOP deficit hawks were the ones who passed Part D; perhaps they now see the error of their ways…)
(Let us not forget that the Bush/GOP tax cuts were written and passed with a sunset provision; Bush and the GOP Congress are responsible for their termination, not the current Congress/Administration)
The resistance by the Blue Dogs and Orszag is necessary and appropriate. We don’t need, and can’t afford, health reform that merely perpetuates the dysfunctional, corrupting, and hugely inefficient system we have today.
To date, the Dems have not found the political will to make the changes we need. The ‘concessions’ by hospitals and pharma and the insurance industry are far too modest, include too many concessions by the Administration/Congress, and don’t recognize – or address – the core issues. Congress’ refusal to consider taxing health benefits – at any level – is unhelpful and unrealistic.
It also didn’t play well in the health care industry, where they perceive their efforts to commit to cost reduction, however modest, as an honest effort to contribute to the solution. There’s a sense that all have to feel some pain, and the outright refusal by Congressional Dems to consider taxing health benefits at some level makes a mockery of ‘shared sacrifice’. Instead, they’re looking to jack up taxes on the wealthiest Americans – a relatively small – and these days not-too-popular group.
President Obama has yet to (really) weigh in on health reform. He’s dipped into and out of the discussion, sticking primarily to goal-setting and photo-op’ing. If reform is going to happen, the following will have to occur:
1. Meaningful, score-able cost reduction.
2. A way to pay for the additional coverage that can garner 60 votes in the Senate.
So far, we haven’t gotten close to either. Now’s the time for the President to step into the fray and push the hard choices.
Clearly the current bills are DOA. If we do get health reform, it won’t look much like any of the bills currently under consideration.
And that’s good – very good.

Word from Washington this morning is the 52 members of the House Blue Dog (moderate Democrat) caucus are none too happy with the high cost, employer mandate, and public option provisions of the House bill.
Meanwhile, Politico is applauding the Senate Finance Committee for actually making progress on a bill that they admit will never pass the full Senate. That’s laudable? Seems more like Politico is awarding a medal for showing up for practice…
Among the Blue Dogs there are both short term concerns (can I get re-elected if I vote for a bill that’s going to either a) add a trillion dollars to the deficit over ten years; b) raise taxes to avoid a deficit explosion, or, heaven forbid, c) both, and long term concerns – adding 50 million more people to the rolls of the insured would drive up demand, increasing the nation’s health care costs, and there are no credible cost containment measures in any of the bills (except Wyden Bennett’s Healthy Americans Act) under serious consideration.
It is likely the Blue Dogs, and perhaps a few Republicans as well, could hold their noses and vote for a bill that had a mandate if there were savings that were scored as such by CBO.
Most think there’s going to be a comprehensive health reform bill.
I’m less sure – much less.

Without meaningful cost containment, Senators and Congresspeople will balk at the price tag, and the long term implications for the deficit. As well they should.
The deals struck to date with hospitals and pharma are nowhere near enough to get us where we need to be – a dramatic reduction in medical cost trend. There’s a lot more heavy lifting to be done before we have a bill that’s viable.

In Washington, it’s what between the lines that counts.
Today is a prime example. The NYTimes’ article on the latest from the White House today was entitled “Obama Overrides Aide on Health Insurance ‘Public Option”.
But reading the article, and talking with folks inside the Beltway reveals a different angle.
President Obama did NOT override his Chief of Staff, but rather reinforced Rahm Emanuel’s Monday statement, where Emanuel stated “‘The goal [of health care legislation] is to have a means and a mechanism to keep the private insurers honest. … The goal is non-negotiable; the path is’ negotiable,” (as reported by The Wall Street Journal)
“Mr. Emanuel said one of several ways to meet Mr. Obama’s goals is a mechanism under which a public plan is introduced only if the marketplace fails to provide sufficient competition on its own”. In his ‘override’, Obama said:
“I am pleased by the progress we’re making on health care reform and still believe, as I’ve said before, that one of the best ways to bring down costs, provide more choices, and assure quality is a public option that will force the insurance companies to compete and keep them honest…[I] look forward to a final product that achieves these very important goals.”
Note the careful parsing of words – the President wants a final product that achieves those goals (cost reduction, choice, quality); Obama does not say the public option is the only way to get us there, but rather “one of the best ways”.
Which means there are other ‘best ways’.
I’m hearing that the public option does not have enough traction in the Senate, and Sen Conrad’s co-op plan is not going anywhere.
The moderate Democrats (Ben Nelson (Neb.), Mary Landrieu (La.) Evan Bayh (Ind.), Blanche Lincoln (Ark.) and Mark Pryor (Ark.)) may be supportive of health reform, but are not enthusiastic about the public plan, and neither is Joe Lieberman (I CT). According to a source familiar with the situation, “[the] Blue dogs have specifically written a letter against a Medicare-like plan. Big issue for them. With everyone focusing on the Senate people are missing the opposition in the House. Pelosi plans to strong-arm. We’ll see…”
But without their support, reform’s chances drop from solid to slim. While some may think the reconciliation process can be used to ram through reform, that may well be a false hope. Again, according to someone knowledgeable about the process; “Reconciliation is not the issue it would seem to be. A Senator can object to any non-budget item in a bill under reconciliation rules as not a budget item. Insurance exchanges, underwriting rules, mandates etc [which are critical to reform] get tossed. This will take at least 60 votes. Moderate Dems are not onside on many of these items.”
While the White House’s plan is to stay out of the public fray, draw no lines in the sand, and do the serious arm-twisting once a bill is on the floor, it’s anyone’s guess as to how a mammoth thousand-page bill will fare. Harry and Louise clones will come out by the dozens, the various interest groups will ramp up their donations, and the longer this takes, the less likely it succeeds.
That leaves us with no health reform, unless Congress decides there is another ‘best way’.
I’ll suggest that Laszewski’s Affordability Model is entering the discussion at the right time.
Because as things look now, without it, or some other mechanism that will address the cost issue while avoiding ideological non-starters, we aren’t going to have reform.

Hospitals have agreed to accept cuts in reimbursement from Medicare and Medicaid totaling $100 billion over the next ten years, with most of the reductions coming several years from now. Another $55 billion or so will be saved from several other measures.
In return, the White House and Senate Finance Committee have agreed that a public plan option will not reimburse facilities at Medicare rates. Reportedly, the three big hospital associations agreed to the $155 billion deal after President Obama’s June announcement that his team had identified more than $200 billion in payment reductions.
The associations were also leery of the proposal to move the power to set Medicare reimbursement rates from lawmakers to a muscled-up MedPAC (Medicare Payment Advisory Commission). The current rate-setting process is controlled by Congress and subject to intense lobbying by all parties, including hospitals and sub-groups of hospitals, intent on preserving and increasing their reimbursement. An independent board modeled on the Federal Reserve would eliminate much of the industry’s influence, a situation that likely terrifies the hospitals.
As Maggie Mahar recently noted; “[MedPAC has] digested the Dartmouth research revealing that when patients in some parts of the country receive more aggressive and more expensive care, outcomes often are worse. They realize that doctors and hospitals should be rewarded for the quality of the care they provide, not the quantity.”
Yikes, that’s scary stuff. It clearly illustrates the challenge of health reform – reducing waste, which everyone agrees is rampant, means reducing revenues, in this case for hospitals. Empowering an independent commission to reduce waste would be a death sentence for many cherished hospital programs and more than a few hospitals.
The watering down of the Rockefeller bill may well be the most important piece of the deal – for both sides.
A little perspective here might help.
First, note that these savings are accruing to governmental programs.
Second, we’re talking about $15 billion in savings per year.
Third recall that hospital costs account for about a third of total expenditures, or about $700 billion per year.
I just can’t get that excited about a deal that reduces costs by two percent, especially if it eliminates/reduces our chances of saving really big dollars by not paying for lousy health care.
While the President may not be directly involved in negotiations or policy writing, he is definitely wielding the big stick. I’d respectfully suggest he use it to keep the MedPAC independence bill moving, regardless of what hospitals want.

Last week Bob Laszewski proposed requiring health plans achieve cost control or lose their tax preferred status.
A commenter referred to this as cost control with teeth – the teeth of a pit bull. I agree, and while it has all the subtlety of a pit bull, it also has that canine’s simplicity.
We health policy folks tend to get all intellectual and esoteric, arguing about nuance and subtlety and discoursing about the intricacies of the French system vs the US system and the correct way to measure live birth rates and the merits of evidence-based clinical guidelines and whether and how our current system is rationing care and what if it is.
Losing 99.9% of the population in the process.
Bob’s idea – the Affordability Model – is to require all health plans meet pre-determined inflation targets set by an appointed health board or forfeit their tax-preferred status. They could continue to sell health insurance, but buyers wouldn’t be able to deduct the premiums from their taxes. Yes, that would mean the death of that plan – chewed to death by the very sharp teeth of fleeing customers.
Here’s what that means:
1. we don’t need a public plan option – and don’t have to fight that fight.
2. health plans finally have a reason to control costs – they have had none to date.
3. we avoid the arguments about taxing benefits.
4. it is easily attached to existing proposals – I suggest the Healthy Americans Act as the best foundation.
5. it appeals to ‘fairness’ – if healthplans meet the target, they survive and prosper. If not, the market kills them.
6. it is non-ideological – neither liberal or conservative, rather pragmatic and workable.
7. it is simple and easy to explain.
There’s still some work to be done – the implications of the Affordability Model on chronic conditions and vice versa need more thought.
But for the first time, I’m hopeful.

From most Democrats in DC, the reform discussion to date has focused on expanding coverage, and to hell with the financial consequences. On the R side of the aisle, the chorus has wailed endlessly, uselessly, and moronically, about ‘government run health plans’.
Its enough to make anyone throw up their hands and move to…any place where we can avoid watching health reform head off yet another cliff. But just when you’re about to collapse in despair, something that is actually promising comes along.
An intriguing new proposal hit my inbox this morning, authored by the very-well-connected Bob Laszewski.
Bob’s idea is to require all healthplans to restrain the rate of increase in health care costs to a level set by an independent board; failure to do so results in that plan losing tax-exempt status (and then rapidly going out of business). Here’s the intro:
“Health plan networks made up of insurers and providers would be required to first begin to stabilize and then control their costs. Failure to do so would mean the loss of their federal tax qualification. Premiums for a non-qualified health plan would no longer be tax deductible for individuals or plan sponsors who used these unqualified plans.
The Affordability Model would create an unambiguous reason for each of the stakeholders to finally work together to get America’s health care system under control. The Health Care Affordability Model creates unavoidable incentives for health plans and their provider network partners to maintain their tax qualification.”
There’s a lot more to this, and Bob has thought it through carefully. And knowing Bob, he’s been talking with others – influential others in key roles in DC – about this for some time. This is an elegantly simple, yet very effective way to blunt the rise in costs without alienating too many stakeholders.
There’s no need for a public plan if the industry constrains costs. Healthplans will find it rather difficult to oppose Laszewski’s Affordabilty Model, because by doing so they would admit they can’t control costs and increase quality (tough for even marketing types to spin that…).
And there’s lots of waste out there, lots of opportunities to reduce costs. (the Dartmouth Atlas has been publicizing this for two decades). Yet to date, no one has made any credible effort to do anything with all this knowledge – we know where the waste is but neither providers nor payers had any incentive to do anything about it.
The problem with the healthplan industry has been and continues to be simple – they have few incentives to restrain much less reduce costs. As costs go up, so too do their top lines, commissions for brokers, and in many cases margins. They add precious little value, acting more as network aggregators and marketing agents for providers than ‘care managers’. And without any change in their incentives, private insurers are not going to impact costs.
For some reason the Republicans mindlessly continue to laud the free market, despite thirty years of evidence that private insurers can’t control costs. The definition of insanity indeed.
But their Democratic colleagues are equally blind, worried way more about coverage than about long-term cost control. Frankly, the plans coming out of the HELP and Finance Committees to date are recipes for disaster.
Except for the Wyden-Bennett Healthy Americans Act, which promises to actually reduce total health care spending. The HAA was missing an ‘enforcement mechanism’, some way to force private insurers to get serious about cost control. Laszewski’s contribution does just that.
His effort is well worth your consideration.

is made here by AirAmerica’s Sam Seder, as he responds to Sen. Olympia Snowe’s (R ME) argument against the public option…