Sunday, October 11, 2009

Health care endgame: lobbyist pressure vs. "deficit neutral" pledge

Raising a front-page alarm, the Times' David Kirkpatrick warns that lobbyists are knocking the teeth out of all the significant cost control measures in pending health care legislation. This narrative cuts against the grain of the media attention focused on the CBO's verdict that the Baucus bill would reduce the deficit by $83 billion over ten years and by more in the second decade.

While the Baucus bill seems also to be the White House's template, Kirkpatrick usefully points out that it's only one of five bills making their way through House and Senate, and that under intense lobbyist pressure House Democrats have lined up against two central cost-cutting measures, the independent "MedPAC on steroid" commission (dear to Obama's heart) empowered to make regular recommendations for Medicare cost savings, and the excise tax on so-called "Cadillac" health care (expensive) plans that some employers offer to (mainly unionized) employees. Resistance to lobbyist pressure against the MedPAC proposal has been undercut by the Obama Adminstration's side deals with pharmaceuticals and hospitals to limit the amount that MedPAC could cut their payments -- now all other interest groups are clamoring either for equivalent carve-outs or to kill MedPAC altogether.

Negotiation between the House and Senate could cut two ways. The House wants a public option -- arguably the strongest cost controlling measure on the table, which allegedly lacks support in the Senate. The Senate, in turn, is more amenable to the Baucus cost controls opposed by Democrats in the House. One would like to think that the natural compromise would be "both/and" -- a public option and an excise tax and MedPAC. Alas, that would mean frustrating all the lobbying interests. On the other hand, there is genuine pressure for the bill to be scored as deficit neutral -- so a compromise can't cut out all cost control measures regarded as credible by the CBO. So the worst-case compromise -- no public option and no MedPAC or attempt to tax expensive benefit plans -- is likewise hard to imagine. Perhaps we'll end up with a weak excuse for a public option (or potential, to-be-triggered public option), a wholly or partially neutered MedPAC, and other tax substitutes for the excise. That would mean getting two thirds of the way toward universal coverage in five years while leaving serious cost control to another, still-more-desperate day.

In fact, T.R. Reid's survey of national health plans that work makes it pretty clear that there can be no significant health care cost control unless the government sets the rates for all procedures offered by all providers, either through a single payer system or through a tightly regulated, probably nonprofit, insurance industry. As long as health insurance is dominated by for-profit insurers with the freedom to set their own rates and coverage rules, the U.S. will continue to spend twice as much as other developed countries on health care. The only hope I see is either a strong public option or other nonprofit alternative slowly killing off the health insurance industry -- or else, continued inflation so out of control that universal desperation finally becomes strong enough to legislate the death of the industry.

It should be remembered that Obama is a long-range planner, committed by philosophy and inclination to effect change by "turning the battleship a few degrees" at a time. Bill Clinton confessed, while chronicling other achievements, "We bit off more than we could chew on health care." Obama, using Clinton as cautionary foil as much as George W. Bush did his father, decided from the start to enlist the health insurance industry rather than fight it head on. I hope and trust that he recognizes that the U.S. will never have an efficient, affordable health care delivery system as long as private for-profit insurers are free to operate as they do now -- with broad freedom to set coverage rules and repayment rates (in the current legislation, there will be some curbs on their freedom to set coverage rules, but probably not enough). Newt Gingrich's long-range plan for Medicare -- "first we're going to cut it off, then we're going to kill it" -- should define Obama's approach to the U.S. health insurance industry.

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