On educating voters

The Times' Robert Pear reports that labor leaders are backing away from the pre-Scott Brown compromise forged between House and Senate Democrats over the excise tax in the health care reform bill, on grounds that "the proposal is too high a price to pay for the limited health care package they expect to emerge from Congress."

If that's true, it would seem that labor leaders don't expect the House to pass the Senate bill with a "reconciliation sidecar," which is very bad news.   Also striking, though, is the article's snapshot of the extent to which attacks on the bill from all sides have penetrated voters' perceptions, whereas its virtues have not. The attacks cross-fertilize: 

At meetings of the House Democratic Caucus, lawmakers from Massachusetts, including Representatives Edward J. Markey and Richard E. Neal, said they were struck by the vehemence of opposition to the tax in their districts.

Mr. Markey recalled that a constituent had poked him in the chest and said: “Eddie, I’ve voted for you my whole life. But if you think you will tax my benefits and give the money to Ben Nelson in Nebraska, you’re crazy.” Senator Nelson, Democrat of Nebraska, voted for the bill after it was rewritten to provide extra Medicaid money to his state.

To which there's an obvious response: if the excise bill is in there, the Nelson giveaway won't be. Even Nelson has asked that the special deal for Nebraska be removed from the bill. So any deal that House Democrats cut that allows a portion of the Senate bill's excise tax to remain in place would entail getting rid of the Nelson deal.

Markey does not say that he did not make that point to the voter. But so many Democrats seem so cowed by every line of attack, no matter how partial, trivial, misleading, disingenuous  -- it's agonizing to watch them cringe.

I disagree, Mr. President

Obama is offering another olive branch to Republicans -- or is he trying once again to outflank them?  His message, as always, is subtle -- I think too subtle. It may not be quite what it seems, but it doesn't satisfy. Here's his exchange with Stephanopoulos regarding partisanship:

OBAMA:...I noticed that some of the Republicans are saying well, we actually wanted to do health care. We just didn't want...


STEPHANOPOULOS: Michael Steele said that to me this morning.
 
OBAMA: Exactly. So now in fairness, I think it's important to remind everybody that part of this process was having conversations with Republicans for months and asking them what exactly they wanted to do and what their solutions were to these problems.

Obama's healthcare priorities

Ezra Klein brings into sharp focus an aspect of Obama's approach to healthcare reform that he has repeatedly noted in its component parts:

This is one thing that the Obama administration doesn't get enough praise or criticism for. The only ideas they've introduced into the debate, and the only ideas they've really stood and fought for against serious opposition, are cost-control ideas. Namely, the excise tax, the Medicare Commission, the insistence on deficit neutrality and the $900 billion price tag, none of which have a natural majority on the Hill, and all of which the Obama administration has kept in the game through direct advocacy.

I see this focus as an instance of Obama's propensity for "the long game."  The Administration probably calculates that Congress will inevitably expand coverage and subsidies as the inadequacies of the initial allotments become obvious -- whereas the architecture for beginning to bend the cost curve has to be in place from the start or the whole package will swiftly become unaffordable. Atul Gawande's vision -- of a potpourri of cost control measures, pilots and demonstration projects out of which at least a few will have a dramatic impact -- is also Obama's.  Here is how Obama described the process to Fred Hiatt, focusing on one potential meta-enabler of such methods, the MedPAC commission:

At this point, I am confident that both the House and the Senate bills will contain what we've been calling MedPAC on steroids, the idea that you continually present new ideas to change incentives, change the delivery system, understanding that because this is such a complex system we're not always going to get it exactly right the first time, and that there have to be a series of modifications over the course of a series of years, and we have to take that out of politics and make sure that an independent board of medical experts and health economists are providing packages that are continually improving the system. So I think there's general consensus that that is one of two very powerful levers to bend the cost curve.

I can see two strong objections either to Obama's strategy or my understanding of it.

AHIP Report: Disingenuous, but pushing toward broader coverage?

Ezra Klein and Jonathan Cohn fisk a PricewaterhouseCoopers study commissioned by the America's Health Insurance Plans (AHIP) purporting to show that the Baucus bill will drive up insurance premiums by a) not putting enough teeth in the individual mandate to purchase insurance, b) imposing new taxes on insurers that will be passed through to customers, and c) driving "cost shifting" from cost-cutting public plans to private plans that will allegedly pick up the slack in payments to providers. Klein and Cohn point out that lower fees paid by public plans should drive the for-profit competition's prices down, not up; that excise taxes on expensive plans should push companies into cheaper plans; and that PwC conveniently omitted the bill's likely impact on buyers' behavior.

All that said, this AHIP response is interesting:

Karen Ignagni, head of America's Health Insurance Plans, the trade group that released the report, stood by its findings. The CBO estimated that the Finance bill would cover 94 percent of legal residents by 2019, but Ignagni said insurers prefer coverage levels in the "high 90s."

Well, so do I, and so do most House Democrats, including the leadership -- who, for that matter, also want to get rid of the excise tax that the AHIP-commissioned report takes aim at. The report may be disingenuous. But it's actually trying to push reform to the left to the extent that doing so means stimulating more spending on health care -- by individuals, the government and employers.

Of course, AHIP is dead-set against the public option, which is designed to drive premium costs down; the argument that it would have the opposite effect on private plans seems particularly disingenuous. Still, the net effect of the pressure effected by this 'research' could be to strengthen and accelerate the move toward universal coverage, through stricter individual mandates softened by more generous subsidies. If the insurers gain those points, and lose on the pubic option, the result could indeed by "coverage levels in the high 90s." Which is still a few points short of where they should be.

UPDATE: Ezra Klein nicely encapsulates AHIP's argument: they want more customers dragooned via a strong individual mandate, but also want to kill all the proposed taxes and cost control measures that make the mandate viable.

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.