The Senate HELP (Health Education Labor and Pensions) Committee has released the full version of their health reform bill, and pundits are applauding the cost savings scored by CBO.
In a piece published last night, Jonathan Cohn noted:
“CBO says the net outlays are around $600 billion. But that’s based strictly on what’s in the bill. It doesn’t appear to include the cost of the Medicaid expansion…if you want the true cost of reform, you have to account for that Medicaid expansion, too. If my back-of-the-envelope calculations are correct, that puts real price tag somewhere between $1 and $1.3 trillion. Again, that’s a rough guess, based on just a few conversations, although it is is more or less what the experts have predicted all along.
(On the plus side, also outside HELP’s jurisdiction–and thus not part of the CBO estimate–are Medicare/Medicaid savings. Those would offset some of the price tag, even before factoring in new revenue.) ”
That’s good – HELP’s bill is about $400 billion less expensive than the one authored in the Senate Finance Committee.
But it is still far too expensive and does not cover all Americans (leaving about 13 million without coverage, or three percent of citizens/documented workers). And most troubling it does little to reduce health care cost inflation.
The details are here; key provisions include:
– a strong public option (the Community Health Insurance Option) accessed via a health insurance exchange
– maintains current employment-based insurance system
– requires all employers (including ones with >25 workers) that don’t offer heath insurance to pay a $750 annual fee per FTE ($350 per PTE) to help pay workers’ health insurance costs.
(the employer mandate got a big boost yesterday from WalMart’s announcement that they would support a requirement that employers provide insurance for workers)
The public option all but ensures this bill will be voted on along party lines as GOP Senators continue to hold that the public option is a non-starter. There may be a couple of cracks in the united front, as Maine Sen. Olympia Snowe signaled that she may be open to the public option.
The big difference between the trillion dollar plus cost of the Finance bill and the $600 billion for the HELP bill looks to come from the public option. While I’m not sure exactly how the public option would result in a $400 billion differential, the CBO seems confident that it would.
I’d suggest the HELP bill is best characterized as ‘less unaffordable’. I don’t see how we can afford either version; deficits are growing dramatically, revenues are down, and further tinkering with monetary policy looks increasingly dangerous.
The American health care problem is straightforward – we cannot afford our current system, and must reduce the rate of inflation if this country is going to have a hope in hell of competing with other developed countries who spend half what we do on health care.
A third of what we spend on health care is waste. Playing with employer contributions and public plan options amounts to deck-chair rearrangement and nothing more; they do nothing to attack that waste.
Note to Republicans – there’s an opportunity staring you in the face – get serious about health reform by cutting waste instead of meme-ing on about the threat of big government. Alas, their needle seems stuck in that groove.

Bob Laszewski has an excellent post on one of the key lessons from the Massachusetts experiment – the dangers of allowing people to buy into and drop out of coverage whenever they see fit.
Evidently a number of people are buying coverage when they need care, then dropping it when the treatment is over. This is adverse selection from the consumer perspective; they can buy coverage when they need it and insurers are forbidden to do any medical underwriting or charge different premiums.
Before someone way overreacts and says “see universal coverage will never work”, understand that the issue here is very specific – the law in Mass allows this behavior. It is correctable (to a large extent) through two mechanisms:
1.) require everyone to have coverage, and
2.) prohibit members from enrolling and disenrolling except during designated times and require them to maintain enrollment with one plan for a minimum of twelve months.
And, no, the answer is not ‘health status insurance‘.

The Senate Finance and HELP committees are working feverishly to cut the projected cost if health reform to under a hundred billion a year, submitting various and sundry ideas concepts and proposals to the CBO for scoring, hoping that some combination of service cuts and copays will enable the bills’ authors to squeak in under “the trillion over ten years” bar.
Wrong question.
Have the Senators given up on the real issue, cost control? Or is that subject just too toxic, with lobbyists and interest groups lined up to attack any assault on their respective constituencies?
Instead of worrying about cutting benefits and increasing cost sharing the focus should be on a significant expansion of comparative effectiveness research and an overhaul of reimbursement to incent and motivate providers to better manage chronic conditions.
Sure there’s talk about thus, and there’s even a bill in the House to drop the SGR process in favor of a more rational approach to reimbursement. And I know these initiatives haven’t yet gotten much credit from the CBO. My sense is that is because there isn’t much in the way of teeth in the proposals to date. If and when fundamental change in these areas is proposed along with a structured implementation process, we may well see the CBO revise their estimates.
This is going to be very very difficult as many in the health care industry will get their wallets lightened. But without real, meaningful, and measurable cost reduction we can’t afford universal coverage.

The Committee for Economic Development announced earlier this month that they are endorsing the Wyden-Bennett Healthy Americans Act.
The HAA is a universal coverage, individual mandate program that delivers significant savings over the current system as well as most of the proposed reform initiatives.
The Committee is comprised of current and former business executives, including representatives from Wall Street, McKinsey, IHS Global Insight, Bausch&Lomb, Avaya, Burson Marseller, the Boston Consulting Group and others.
Notably, in a poll released yesterday by CED, sixty percent of business leaders polled agree that the current employer-based system is unsustainable.
They are right.
While my sense is a ‘passable’ reform bill will be based on the current system, my belief is that health coverage should not be linked to employment, as this limits portability, leads to job lock, and adds an unnecessary burden to most employers.
I’d add that the current system hasn’t worked to either improve health care quality or control prices. So expecting that a ‘new and improved’ employment based system will do better is rather speculative.

That’s what an airline pilot told me after he asked what I did for a living. To which I responded that France’s health care system costs a lot less than ours’ and delivers excellent results.
End of conversation.
I would have been happy to engage further but he wasn’t. The rest of the ride in the hotel shuttle was awfully quiet.
The mis- and dis-information spread by pundits and politicians about the Democrats’ plans for health reform is having its desired effect, at least on those predisposed to believe their claims. Whether the superficial ‘understanding’ evidenced by the captain’s statement will be affected is anyone’s guess but it is clear that reform opponents are ramping up their efforts to ‘Harry and louise’ the 2009 version of reform.
President Obama and his fellow Democrats have not done a very good job convincing Amerucan voters that they can keep the health care they have today-if they want to. The message discipline that typified Obama’s campaign has been noticeably absent in the health care reform discussion; if it doesn’t return and fast the chances of major reform becoming law are going to diminish by the day.
Fear is a powerful motivator, and reform’s opponents have shown themselves to be masterful in its use in the public discussion.

The feel-good talk about health reform – covering all Americans, reining in those nasty insurance companies, improving health through prevention and wellness – has all but ended, replaced by reality – as presently conceived, reform is unaffordable.
Now, PR firms are asking bloggers to encourage readers to sign petitions decrying taxation of health benefits, specialty medical societies are fighting to hold onto their high reimbursement, lobbyists for imaging companies want expanded coverage of MRIs (!?), employers are getting increasingly uneasy and budget hawks are amping up the volume.
As I’ve said for months, comprehensive health reform is a doubtful proposition.
Everyone wants universal coverage, but no one wants their taxes raised or their share of the pie cut.
While the latest polls indicate some willingness on the part of Americans to accept somewhat higher taxes to help fund universal coverage, on the expense side of the ledger there is precious little evidence of belt-tightening. Sure, pharma volunteers to cut $80 billion over ten years (remember the current annual health expenditure is $2.2 trillion); that’s a mammoth two-tenths of one percent.
And yes, we all recall the health care/union execs who promised to cut $2 trillion from the nation’s budget over ten years – and then stumbled over each other as they backpedaled away from that ‘promise.
The draft of the Baucus bill is a clear indication that some of the Senators ostensibly driving the health reform process have very little appetite for taking on the health care industry; the bill is all about coverage with almost no meaningful effort at controlling cost.
And this from the Chair of the Senate Finance Committee. The bill that emerges from the HELP Committee has the weight of Senator Kennedy behind it; that said early indications are it does not exactly take the long knives to spending. Kennedy may be the best hope; in a Nixon-goes-to-China way the ailing Senator has the political weight to win cost concessions that Baucus et al are avoiding like the plague.

As Bob Laszewski has been assiduously noting, all the happy talk will amount to naught if the CBO and OMB can’t find meaningful spending reductions.
Without a significant reduction in projected health care spending universal coverage is unaffordable. Fortunately OMB and the CBO are watching our pennies.
So, what could happen?
There are at least three potential results.
President Obama has proven himself capable of achieving the seemingly impossible. Think on this – which is more unlikely – America electing a black man to the Presidency or passage of health reform? Do not discount his ability to deliver.
Incremental reform has already occurred – SCHIP is but one example; there is also a bill before Congress to reform Medicare’s physician reimbursement process; ending medical underwriting and requiring community rating would dramatically alter the insurance system (leaving aside the problem of community rating without universal coverage, which should be inextricably linked). Big changes in drug and device approval and reimbursement are also likely, and hospital reimbursement is already on the chopping block. In any other environment, any of these changes would be big news. Together, they make for the biggest change in health since 1964.
There remains one plan that reduces cost, covers everyone, and already has bipartisan support – the Wyden-Bennett Healthy Americans Act.
I’ve long supported this bill, and believe it is our best chance for meaningful reform that addresses cost and coverage.