Public Plan
Does President Obama Have ANYTHING New to Say on Health Care?
Published September 01, 2009 @ 10:57PM PT
The rumor mill is churning. A blog post by Marc Ambider and a White House Message Guru David Axelrod quote to the Associated Press suggest that within the next week, President Obama is set to “get specific.” There will be details. There will be preferences. There may even be a televised speech. The goal, as described by Ambinder, is to give Congressional Democrats “a true presidential plan that they can sell.”
But will there be anything new? My Magic 8 Ball tells me, “All signs point to no.”
For one thing, these two articles don’t even suggest anything new is being considered. The AP quotes Axelrod as saying, “The ideas are all there on the table. Now we are in a new phase, and it's time to pull the strands of these together.” Doesn’t exactly sound like we’re in for a lot of surprises, does it? Ambinder suggests the specificity will focus on overall goals, insurance reform regulations, the level of subsidies given to the uninsured, a way to pay for the package, and an income level from under which new taxes should not come. The problem is – Obama has already been specific about nearly all of this -- frequently! The 8 insurance regulations he favors are not only in both bills, they’ve been the centerpiece of the “Health Insurance Reform” attempt at rebranding in August. Obama has already specified his preferred way of paying for reform -- a cap on charitable deductions for those making over $250,000. And he spent an entire presidential campaign saying that he didn’t want to raise taxes on those making less than $250,000. None of these items are particularly suspenseful, and it would indeed be a surprise if he deviated from what’s been his normal script.
Granted, he hasn’t before specified the level of subsidies he wants to give to the uninsured. But if it’s 400% of the federal poverty line ($88,000 for a family of 4), it’s no surprise as both the House and the Senate Health, Education, Labor and Pensions Committee provide subsidies to that level. If it’s less than that – say the 300% that the Senate Finance Committee is rumored to be toying with – then it would be a surprise. It would also be a bad policy concession.
And then there’s the public option, an item that Obama has expressed a strong preference for, yet always couched in terms of “Unless you people have a better idea.” I’ll let the bizarre verbal contortions of Ambinder speak for themselves: “he will say that his preferred mechanism remains a government-subsidized public health insurance option, but he will remain agnostic about whether the plan must include a robust public option. Officials won't say whether the president intends to endorse a specific ‘trigger’ mechanism if the competition mechanism fails, but they say he will make it clear that the final bill must contain language that increases competition.” Gosh, thanks; that’s about as clear as mud.
The armchair quarterbacks suggest that Obama hasn’t “owned” the details of the bills in Congress. These trial balloons in the press are obviously in reaction to that criticism. And of course, Obama has had an uncanny ability to make the big speech when he needs to in order to rally support to his cause. But with 4 out of 5 committees in Congress already returning bills easily recognizable as matching the Obama campaign blueprint, I wouldn’t expect anything new under the sun.
(Photo credit: The Official White House Photostream on Flickr.)
Grading the Public Option
Published August 20, 2009 @ 05:07PM PT
If it’s August, that means that people are releasing somewhat longish reports on health care policy. The most interesting one comes from the guy who looks like Tobey Maguire’s older brother – if his older brother was an influential economist. Dr. Jacob Hacker, who first published a paper in 2001 suggesting a “public plan” (the ancestor of the public health insurance option) based on the infrastructure of Medicare could create real, meaningful competition with private insurance, is back. In today’s paper, he grades how well Congress did translating his principles into actionable legislation. As you could guess, the results are solid but not exceptional -- with one big exception.
Today’s report, “Public Plan Choice in Congressional Health Plans: The Good, the Not-So-Good, and the Ugly”, reads at times like a professor checking in on his students. If that’s true, the House version of the public option looks like it got a B+. This version of the public option would have started with Medicare rates for the first three years, until it was on its feet. Then it would negotiate rates directly with providers, when it already had millions of customers. This version would also piggyback off the Medicare provider network, by offering Medicare rates +5% for those who accept both Medicare and the public plan. It’s not a home run because the Health Exchange which allows for direct head-to-head competition is closed off to all but businesses under 50 employees and individuals, although the bill allows for that requirement to be loosened at a later date to include larger employees. Given Hacker's dynamic tension model of competition between public and private, the more individuals that are able to make that choice, the more public and private will try to improve to view for customers. And, incidentally, the better deal the American people have, no matter which option they choose.
The House version after the extraction of a pound of flesh by the Blue Dogs, however, would be a C. This public option starts off with negotiated rates with providers on day one, meaning it’s negotiating before it knows how strong its customer base is. That gives providers a huge leg up – the government needs them more than they need the government. Hacker also notes the folly of claiming that negotiating rates puts the public option on a level playing field with private insurance companies who frequently does not have to do so: “Although we know very little about private plan payments due to their proprietary nature, we do know that many large private insurers do not ‘negotiate’ in the sense of bargaining directly with providers. They provide a price list to providers who have the option of accepting it or not.” It’s worth noting that Hacker's consistently says the point is not to have a mega-strong public option. He wants to give private insurance the ability to change and improve in the face of competition. As he writes, “It is healthy competition in which all plans are pressed to improve their weaknesses and build on their strengths. If public and private plans are competing on fair and equal terms, the choice of enrollees between the two will place a crucial check on each.” But you don’t get healthy competition if the public option has to give away the farm just to get started.
The Senate Health, Education, Labor and Pensions version, dubbed the “community health insurance option,” would get a C-. It’s nearly identical to the House version after the Blue Dogs deal, but the language of the bill spends a little too much time talking about what the Gateways (the Senate state-based version of the Exchange) and the community option can’t do than it does guaranteeing what they can. Most notably, the Senate is ambiguous on whether only individuals and microbusinesses will be allowed to buy from the Gateways (it leaves that decision up to the states), and it doesn’t explicitly give the public option the ability to negotiate for the best pharmaceutical rates like any other insurance plan. Being able to negotiate for discounts on prescription drugs is a necessary tool to make the public option more like the cost-efficient VA and not like the budget-busting Medicare Part D (thanks again, lead negotiator and now head of PhRMA, Billy Tauzin).
The health co-op is the last to be graded, and I won’t ruin for you the delight of reading how Hacker deconstructs the half-backed concept. Suffice to say, the likely grade would be, “Did you even read the assignment?” Or, as Hacker puts it, “The Senate Finance Committee’s cooperative model is not good, nor even not-so-good. It is ‘ugly.’”
Of course, these are just mid-term grades. When Congress returns in September, we’ll see if they’re able to bring their average up or if we’re going to need to punitively take Baucus, Grassley and the Senate Finance Committee out of the lineup for Saturday’s big game...
(Photo credit: House Committee on Education and Labor on Flickr.)
Things You Might Not Know About the Lewin Group and the Public Option
Published August 19, 2009 @ 11:11PM PT
You’ve seen this as many times as I have. Some big Republican – Orrin Hatch or somebody – goes on television and talks up the problems with having a public health insurance option competing against private insurance plans as a choice in the Health Exchange. They’ll normally cite a study by the Lewin Group purported to show that 83.4 million Americans would “lose their coverage” and join about 20 million other people in the public option. There are a few faulty assumptions, a dash of conflict-of-interest issues and one rather sizable problem with this analysis: they’re describing a public option that no longer exists in bill they're analyzing.
Let’s start with the biggest problem: the Lewin Group version of the public option doesn’t resemble the HR 3200 version. They base their modeling on this notion of provider payment: “The public plan would pay health care providers using the Medicare payment methodology, with an additional 5 percent for those agreeing to see both Medicare and public plan enrollees.” The Lewin Group calculates savings in the 20-25% range. That would certainly give a public option a huge price advantage. To be fair, this reimbursement scheme was part of the original draft of the bill in June… except not quite. Even there, the Medicare rates were a crutch to get the public option up and running. They would give way after three years to a plan that negotiated rates directly with providers, like any insurance plan. At that point, you’re not even getting close to 25% savings. In fact, the CBO estimates it will be closer to 10%.
Thanks to the Blue Dogs, though, the whole point is moot – after amendment, the public option negotiates rates with providers from day one. So the crux of the argument just went bye-bye.
But let’s press on with their inaccurate model for pricing. After all, the questionable assumptions don’t end there. The Lewin Group presumes private insurance won’t be able to keep up and therefore won’t try. The CBO, on the contrary, presumes that in the face of competition, private insurance will practice some cost-containment – hence only 10% difference between public and private, and a net win for the rest of us. For another, the Lewin Group runs its calculations by the classical economics model that price is the only decision point – if I’m an individual, I’ll only buy the cheaper plan; similarly, employers will discontinue their current contracts, having done that to purchase coverage in the Exchange for their employees, will only buy the public plan because it’s cheaper. Speaking as a human being who’s drinking a $1.69 bottle of Coke Zero because the store that sells it for $1.50 is an extra two blocks away, I do not share this assumption that price is all that matters in making a decision.
Furthermore, the Lewin Group presumes that “about 89.5 million people would become covered under the public plan with an employer paying a share of the premium.” That actually represents “a net increase” of nearly 2 million people in employer-based insurance (pg. 18) – interesting for a study that often gets cites as proof that having a public option will unravel the employer-based benefits system. (Btw, the CBO sees a slightly bigger increase in employer-based coverage). So it admittedly doesn't even directly support the talking point that millions would lose their employer-based coverage.
In closing, let me speak directly to those who are planning to trot out this faulty and inaccurate study in the future – please, please, for the love of God, please find someone else to crunch your numbers. The Lewin Group is a wholly-owned subsidiary of Ingenix, the database company that provides information on provider rates for most of the major insurance companies, and is itself a division of UnitedHealth, the nation’s largest insurer. This is the same UnitedHealth urging its customers to go to anti-reform tea party rallies. This is the same UnitedHealth, the subject of a congratulatory profile in Business Week showing how the insurance industry has subverted and manipulated the legislative process on health care.
Really? You can’t get someone else to come up with a study based on several odd assumptions and a misreading of the public option provider rates? You can’t cite some other study to say that the employer-based insurance system will unravel (despite the study suggesting it will actually be strengthened)? Really?
(Photo credit: live w mcs on Flickr.)
What Is the Health Care Co-Op?
Published August 18, 2009 @ 06:46PM PT
Due in equal measure to Sen. Kent Conrad making the rounds (and some provocative statements) on a Sunday talk show pitching his idea of a co-op, and the White House’s confusing signal on whether they support a public health insurance option to compete with private insurers or not, the co-op is back in the news. But what is it? Sen. Conrad, who came up with the idea apparently in an afternoon with his staff (I’m not actually joking) describes it this way: “The co-op plan aims to achieve the same benefits for consumers as a public option without government control of health insurance.” I prefer my description: “it serves no particularly impressive purpose, it raises my blood pressure automatically whenever I see or hear a reference to it, and yet it’s oddly popular to the extent that I can’t seem to turn my TV on without seeing it.”
Why are we talking about this?
Conrad claims to have come up with the idea in face of Republican resistance to the public option – specifically the Republican members of the Senate Finance Committee, on which Sen. Conrad sits. Fine, Conrad said, if Sen. Grassley et al. won’t vote for a public option to compete with private insurers, let’s use a model familiar to many Midwesterners: a consumer owned and operated co-op. Clearly this is a political solution—when asked why he advocates one, Conrad doesn’t argue it’s merits. Instead he says, “This really isn't, to me, a matter of right or wrong. This is a matter of: Where are the votes in the United States Senate?”
We’re guessing at the details, since they haven’t been divulged. How it would work? Does the government give seed money in the form of grants to set these up? Does it give loans? Who, pray tell, does it give this seed money to? How long would it take to get one of these co-ops up and running? How long would it take them to get a network of doctors? Since the co-op would start with no customers and presumably no bargaining power, how long would it take for insurance companies to be quaking in their boots?
That said, we do know a lot about them:
- We know that we used to have health care co-ops in this country. What happened to most of them? As Professor Timothy Stoltzfus Jost explains, “The Farm Security Administration withdrew support in 1947, and they collapsed. They had a hard time getting going anyway.”
- We know the ones that have been relatively successful have had their own network of providers, like Kaiser or the VA. However, the best of them took decades to develop – up to 60 years.
- The GAO looked at health insurance co-ops in 2000. These weren’t the same idea – they would allow small businesses to pool their employees in a co-op to shop for insurance. The GAO’s conclusion? They don’t work very well and did nothing to lower costs.
- The fact that a health co-op is a non-profit won’t in and of itself yield competition. As I pointed out earlier, “Conrad’s home state of North Dakota has 475,000 people enrolled in the not-for-profit North Dakota Blue Cross Blue Shield. That’s not just competition – it’s a monopoly, 60% of the market. Guess what? It hasn’t helped. Premiums jumped 74% in the past seven years.”
- Most co-ops won’t be as successful as already-existing Blue Cross plans, which means they won’t have market clout to lower costs or change the game for private insurance. Which is, you know, the whole point.
- Conrad introduced the co-op in June to solve a political problem – find common ground to allow the Senate Finance Committee to release their bill. So far, the Finance Committee remains at impasse, we’ve seen no bill, and every other committee has been done for weeks now. Great job.
- By the way, Republicans aren’t biting. They say the co-op is a public option in sheep’s clothing. So they’re against it.
- And, of course, progressives are furious at even the hint that there won’t be a public option, so they’re against it, too.
I guess Conrad succeeded in uniting the left and the right. Unfortunately, they seem to be united against his idea – the same idea whose sole existence is not to make American health care better but to win votes.
(Photo credit: kylelocket on Flickr.)
Guess Who Else Is Backing Off the Public Option?
Published August 17, 2009 @ 12:12PM PT
On the heels of some confusing “on again/off again/on again” signals about President Obama’s support for a public health insurance option to compete side-by-side with private insurance, I was shocked to learn about another possible defection. Although far, far less prominent than the president, this person’s abandonment of support was more disturbing. After all, he had written in defense of public health care coverage in the form of Medicare, Medicaid, the VA, had presented the arguments for Medicare for All and the public option, and had even laid out some of the benefits of national health insurance in other countries. He had usually been a reliable foe for Congressional gimmicks like the co-op and the trigger. So it’s a real surprise that this guy now seemed to be signaling he was no longer interested in giving people the choice of public coverage.
But the biggest surprise of all is that it’s apparently me!
I was working on the first draft of a writing assignment for a client. It contained a list all of the benefits of health care reform as spelled out in the proposed legislation: from increasing quality of care, to helping small businesses, to producing more primary care doctors, to consumer protections for private insurance to remove the most abusive practices. But during a meeting about my draft this morning, I faced all kinds of questions. Why did I leave out the public option from the list? Was this in reaction to the White House story over the weekend? Did I really think this meant it was dead, and we needed to move on? Shouldn’t we be rallying around it? In short, why was Tim Foley giving up on the public option?
Of course, I wasn’t. I was pretty surprised I had left it out, too. I certainly hadn’t meant to, and it likely got lost in the shuffle of a long list of health care reform benefits. I had written it last week, before the latest round of the public option “two step,” so there actually was no larger strategic significance. I just goofed up.
One of the real challenges is the policy importance and political importance do not necessarily synch up in what passes for a health care debate in this country. As estimated by groups ranging from the Congressional Budget Office to the Lewin Group, the public option would only have 5-10% of the country enrolled in it, and hopefully it would have reach beyond that and influence private insurance through competition. But a cap on out-of-pocket expenses as part of insurance reform would, by contrast, affect everyone not already in Medicare or Medicaid. No one’s talking about that cap, though. Everyone’s talking about the public option – so much so that it’s become a political proxy fight for health care reform as a whole. As a direct result, both sides are on a hair trigger.
I suppose it could have been worse. I could have accidentally suggested I was in favor of death panels.
(Photo: your humble author, on a tour of the White House press room in 2008.)
What the Hell Is with the White House and the Public Option?
Published August 16, 2009 @ 06:53PM PT
A Unitarian once told me this joke: “Why do Unitarians make lousy choir-singers? Because they’re always looking ahead to the next verse to see if they agree with it.” The problem for progressives advocating for health care reform during this period of sausage-making legislative deals within Congress is similar: there’s a growing sense that we don’t know when the next verse is going to be erased before we get there.
Putting it mildly, the White House's support for the public option is bipolar. There’s been a wearying two-step going on month after month with regards to whether the public health insurance option that would exist alongside private insurance, be freely chosen by consumers in the Health Exchange, and offer real competition with private insurance.
Step number one involves a high-ranking official. Usually, it’s HHS Director Kathleen Sebelius, whose wishy-washy and occasionally confusing expressions of support for the public option date back to her confirmation hearing, when she suggested that maybe state-based weak public options contracted out to insurance companies might be acceptable. Sometimes it’s White House Chief of Staff Rahm Emanuel, whose mantra on health care reform, as described by the Wall Street Journal, is “the goal is non-negotiable; the path is negotiable.” This official says something suggesting that the public option isn't the be-all and end-all of health care reform, or fails to draw a line in the sand. Soon we get a flurry of headlines saying, “White House Open to Deal on Public Health Plan” or “Emanuel Suggests White House May Support Public Option Alternatives" (both of these articles are from a month ago).
Step two happens the next time President Barack Obama gets asked about a public health insurance option in public. Then he always, always, always launches into an explanation of what it is and is not, and why he thinks it’s important. He had three town halls this week. He was asked about it three times. He defended it three times. In the transcript of his event just yesterday in Colorado, his defense of the public option goes on for 15 paragraphs and contains this statement: “a public option… a government-run non-for-profit… if it could keep its costs lower and provide a good-quality service and good benefits, then that would help keep the insurance companies honest.” This was just yesterday.
But today we’re back to step one. Sebelius said that a public option “is not the essential element” on the Sunday talk shows. Press Secretary Gibbs refused to draw a line in the sand on the public option. And, for the gazillionth time, we’re back to more headlines like “White House Appears Open to Insurance Co-ops” and “White House backs away from public option in healthcare.” Many of the headlines are even more colorful.
Which of those steps is the real one? Which is the posturing? Is this like the other handful of times when we’ve gone through the exact same media drill? Is Mark Halperin right when he summarizes it as, “Nothing new, but news-starved Sunday press corps goes hog wild”? Or is what’s prompting respected blogger Nate Silver to post an analysis titled “Life After the Death of the Public Option” mean that this is really the Big One? Is the White House actually prepared to suggest it’s time to pack up the tent and go home on public health insurance, and deal with the massive disillusionment that't about to sock progressive and liberal advocates?
I don’t have any idea. And although you won't be able to swing a dead cat without hitting a pundit who will have an opinion, the truth is no one does. We’re dealing with the Administration that cried “Concession Wolf!”
Update (7:54 pm PT): Thanks to Janice Caswell in the comments below for pointing this out: we've apparently moved on to Step 2 already. Marc Ambinder on The Atlantic has a new article up entitled, "Administration Official: 'Sebelius Misspoke.'"
(Photo credit: jamesomalley on Flickr.)
Top Five Health Care Lies -- and How to Fight Back
Published August 12, 2009 @ 10:44AM PT
[Editor's Note: This guest post from Nita Chaudhary, Campaign Director at MoveOn.org Political Action, tackles a number of the strangest fabrications about the health care reform proposals moving in Congress, as well as a bevy of primary sources so you can read and decide for yourself. It was originally posted here.]
The health care fight has turned ugly, fast. And lies about reform are spreading via anonymous email chains. Here are the real facts that you need to know:
Top Five Health Care Reform Lies—and How to Fight Back
Lie #1: President Obama wants to euthanize your grandma!!!
The truth: These accusations—of "death panels" and forced euthanasia—are, of course, flatly untrue. As an article from the Associated Press puts it: "No 'death panel' in health care bill."1 What's the real deal? Reform legislation includes a provision, supported by the AARP, to offer senior citizens access to a professional medical counselor who will provide them with information on preparing a living will and other issues facing older Americans.2
If you'd like to read the actual section of the legislation that spawned these outrageous claims (Section 1233 of H.R. 3200) for yourself, here it is. It's pretty boring stuff, which is why the accusations that it creates "death panels" is so absurd. But don't take our word for it, read it yourself.
Lie #2: Democrats are going to outlaw private insurance and force you into a government plan!!!
The truth: With reform, choices will increase, not decrease. Obama's reform plans will create a health insurance exchange, a one-stop shopping marketplace for affordable, high-quality insurance options.3 Included in the exchange is the public health insurance option—a nationwide plan with a broad network of providers—that will operate alongside private insurance companies, injecting competition into the market to drive quality up and costs down.4 If you're happy with your coverage and doctors, you can keep them.5 But the new public plan will expand choices to millions of businesses or individuals who choose to opt into it, including many who simply can't afford health care now.
Lie #3: President Obama wants to implement Soviet-style rationing!!!
The truth: Health care reform will expand access to high-quality health insurance, and give individuals, families, and businesses more choices for coverage. Right now, big corporations decide whether to give you coverage, what doctors you get to see, and whether a particular procedure or medicine is covered—that is rationed care. And a big part of reform is to stop that.
Health care reform will do away with some of the most nefarious aspects of this rationing: discrimination for pre-existing conditions, insurers that cancel coverage when you get sick, gender discrimination, and lifetime and yearly limits on coverage.6 And outside of that, as noted above, reform will increase insurance options, not force anyone into a rationed situation.
Lie #4: Obama is secretly plotting to cut senior citizens' Medicare benefits!!!
The truth: Health care reform plans will not reduce Medicare benefits.7 Reform includes savings from Medicare that are unrelated to patient care -- in fact, the savings comes from cutting billions of dollars in overpayments to insurance companies and eliminating waste, fraud, and abuse.8
Lie #5: Obama's health care plan will bankrupt America!!!
The truth: We need health care reform now in order to prevent bankruptcy—to control spiraling costs that affect individuals, families, small businesses, and the American economy. Right now, we spend more than $2 trillion dollars a year on health care.9 The average family premium is projected to rise to over $22,000 in the next decade10—and each year, nearly a million people face bankruptcy because of medical expenses.11 Reform, with an affordable, high-quality public option that can spur competition, is necessary to bring down skyrocketing costs. Also, President Obama's reform plans would be fully paid for over 10 years and not add a penny to the deficit.12
P.S. Want more? Check out this great new White House "Reality Check" website: http://www.whitehouse.gov/realitycheck/ or this excellent piece from Health Care for America Now on some of the most outrageous lies: http://www.moveon.org/r?r=51729
Sources:
1. "No 'death panel' in health care bill," Associated Press, August 10, 2009. http://www.moveon.org/r?r=51747
2. "Stop Distorting the Truth about End of Life Care," Huffington Post, July 24, 2009. http://www.moveon.org/r?r=51730
3. "Reality Check FAQs," WhiteHouse.gov, accessed August 11, 2009. http://www.whitehouse.gov/realitycheck/faq#i1
4. "Why We Need a Public Health-Care Plan," Wall Street Journal, June 24, 2009. http://www.moveon.org/r?r=51737
5. "Obama: 'If You Like Your Doctor, You Can Keep Your Doctor,'" Wall Street Journal, 15, 2009. http://www.moveon.org/r?r=51736
6. "Reality Check FAQs," WhiteHouse.gov, accessed August 10, 2009. http://www.whitehouse.gov/realitycheck/faq#r1
7. "Obama: No reduced Medicare benefits in health care reform," CNN, July 28, 2009. http://www.moveon.org/r?r=51748
8. "Reality Check FAQs," WhiteHouse.gov, accessed August 10, 2009. http://www.whitehouse.gov/realitycheck/faq#s1
9. "Reality Check FAQs," WhiteHouse.gov, accessed August 10, 2009. http://www.whitehouse.gov/realitycheck/faq#c1
10. "Premiums Run Amok," Center for American Progress, July 24, 2009. http://www.moveon.org/r?r=51667
11. "Medical bills prompt more than 60 percent of U.S. bankruptcies," CNN, June 5, 2009. http://www.moveon.org/r?r=51735
12. "Reality Check FAQs," WhiteHouse.gov, accessed August 10, 2009. http://www.whitehouse.gov/realitycheck/faq#c1
Sources for the Five Lies:
#5: "Obama's 'Public' Health Plan Will Bankrupt the Nation," The National Review, May 13, 2009. http://www.moveon.org/r?r=51744
#1: "A euthanasia mandate," The Washington Times, July 29, 2009. http://www.moveon.org/r?r=51732
#2: "It's Not An Option," Investor's Business Daily, July 15, 2009. http://www.moveon.org/r?r=51743
#3: "Rationing Health Care," The Washington Times, April 21, 2009. http://www.moveon.org/r?r=51742
#4: "60 Plus Ad Is Chock Full Of Misinformation," Media Matters for America, August 8, 2009. http://www.moveon.org/r?r=51734
(Photo credit: matthileo on Flickr. Please note, image not used in MoveOn's original post.)
