The Top Ten Things Worth Fighting For

by Jonathan Cohn | October 13, 2009

It’s been almost a hundred years since progressives began the campaign to make health care a right. And never before has the campaign come this far. Five congressional committees have now had their say about health care reform. And, as of Tuesday afternoon, all five have said “aye.”

At this point, passage and enactment of health care reform seems not just likely but very likely. Barring unforeseen calamity, insiders say it should all be done by New Year’s and, just maybe, Thanksgiving, although the president’s trip to Asia in November could slow things down.

But if it’s hard to imagine a scenario under which health reform falls apart, it’s not hard to imagine a scenario under which health reform turns out to be something that makes reformers wince.

In order to get legislation out of the Finance Committee with not just Democrats but one precious Republican vote as well, chairman Max Baucus had to make many compromises. He had to deliver a bill that would spend no more than $900 billion, because his committee members wouldn’t support the revenue and savings measures necessary to spend more. As readers of this space know, that meant reducing what the bill provided--covering fewer people and promising those who are covered lesser insurance--at least relative to the promises made by three House committees and the Senate Health, Education, Labor, and Pensions (HELP) Committees in the summer.

To be sure, the Finance bill has its virtues. Alone among the measures going through Congress, the Baucus bill is projected to reduce federal expenditures relative to current projections, both in the immediate ten-year planning window and beyond.

The projections come from the Congressional Budget Office, which, like any group of well-intentioned experts, could be wrong. I still think CBO didn't give enough credit on cost savings to the House bill. But most experts seem to think that the Finance bill’s chances of bending the curve are better than those of its counterparts. And that seems like a reasonable judgment.

As deliberations continue, in the floor debate and eventually in the House-Senate conference committee, the question is how these bills will come together. The best case scenario is that we get the best of both approaches--the far-reaching coverage and insurance reforms in the House and HELP bills, combined with the CBO-certified cost control of Finance. The worst case is that we get cost control like House and HELP, with coverage that looks like Finance.

As a friend recently suggested to me, the choices are best understood in the language of grade school math. Will we get the union of the two approaches--or the intersection?

The former could be pretty good. The latter? A serious disappointment.

Most likely, of course, we’ll get something in between, worse than the best-case scenario and better than the worst. And that raises a question: What elements of reform are most important at this point? What needs fixing--and saving?

Below is my list of priorities, for whatever that is worth. (Click here for another wish list, from Timothy Jost.) Each one is somewhere within the universe of political possibility, at least according to the administration and Capitol Hill sources I consulted. But that's only if you consider the priorities individually. Getting Congress to embrace many of them, let alone all, seems highly unlikely.

1. Increase the subsidies. The House and HELP bill have sliding scale subsidies that extend to people making up to four times the poverty line, or about $88,000 a year for a family of four. Finance’s bill stops the subsidies at three times the poverty level, although there’s some assistance above it, and offers less help to even those who still qualify. This is a strength of the House and HELP bill and might, in theory, seem like an easy thing to save, since virtually everybody says they worry about reform not making insurance sufficiently affordable. But more subsidies require more money. The options are out there: A tax on sugary sodas, the House's millionaire surcharge, or President Obama's proposal to cap charitable deductions. But it's when you start talking taxes than the centrists start backing away from the table.

2. Bolster the protection against high expenses. There’s no reason anybody should face out-of-pocket expenses of more than a few thousand dollars. The House and HELP bills come closer to meeting this standard, although even the protection even in those bills could stand some improvement. This, too, is not so controversial in theory. Everybody, left and right, wants insurance that protects people. But establishing a higher baseline of protection will--like more subsidies--require more funding, to subsidize the more generous insurance. That's really where the challenge lies. There may be a way out of this. If you give insurers leeways for slightly higher deductibles, the money that frees up is enough to require much tighter limits on overall out-of-pocket spending. Or so I am told. It'd be better, though, just to come up with more money.

3. Get tough with providers and producers. Both the drug industry and the hospital industry got sweetheart deals. And since the White House was a party to these agreements, rewriting them may not possible, or at least politically realistic. But there may be chances to tweak them and, if so, Congress should take them. Under the current deal, it doesn’t appear either the drug industry or the hospitals will actually be giving up much revenue; if anything, they might come out ahead. Surely it makes sense to ask them for a larger financial sacrifice, particularly if it can be done in a way that fosters more efficient care that would help reduce overall health care spending down the road. Remember, the most important aspect of these deals isn't the cash it frees up in the short term but the behavior changes it fosters in the long run. By the way, while Congress is at it, it might want to look at the other key industry groups--namely, doctors and device-makers.

4. Get a public plan (or something that serves the same purpose). Passing a fully fledged public plan, the kind that has all of the bargaining power that its architects originally envisioned, still seems like a long shot. The Senate votes just aren’t there. But idea of a public plan, or something like it, is definitely getting a second look from lawmakers who once dismissed the idea out of hand. The reasons are pretty simple: The idea continues to poll well, at least in isolation, and it eases anxiety about the requirement that everybody get insurance. The most likely scenario, I continue to think, is to arrive at some sort of trigger. But a well-designed trigger might still do some good. The key is designing one that would actually scare insurers, enough to make them provide the kind of affordable coverage we all want.

5. Strengthen the exchanges. The House doesn’t get much credit for this, but it got the exchange structures almost exactly right. In their bills, the exchanges would be national, rather than state-based, with authority to police insurers aggressively and bargain hard for lower prices. The model here is the Massachusetts Connector’s management of the CommonwealthCare program, which has successfully held down premiums for its enrollees. This is not what the insurance companies want, which tells you why it’s so important. But the idea may yet win out. According to my colleague Suzy Khimm, Olympia Snowe is already thinking along those lines.

6. Preserve the Medicare Commission. Letting Congress micromanage Medicare payment policy is a bad idea, unless you’re a lobbyist looking to get special treatment for the hospital, professional group, or maker of medical ware that pays your salary. Let an independent commission make recommendations, and then force Congress to vote on them up-or-down, as they do for closing military bases. The Finance Committee endorsed this idea. So has the president. The House disagrees. And the lobbyists are doing their best to make sure the House prevails.

7. Save the benefits tax. This is another piece Finance got right and the House, in my opinion, got wrong. Taxing high-value health benefits does more than raise revenue that can, in turn, finance subsidies. It also sets off a chain reaction that, according to most experts, will lead to lower health care spending. The Finance bill has protections that exempt workers in high-risk jobs, as the unions (rightly) asked, but the unions are trying to kill it anyway. That’d be a mistake, unless they can present an alternative--a politically realistic alternative--that can both raise money and reduce federal spending in the long run. Personally, I'd love to see labor give on this in exchange for a public plan or better subsidies, two priorities they have--to their great credit--been pushing. (For more on the excise tax and why it makes sense, consult the Center on Budget and Policy Priorities.)

8. Stiffen the individual mandate. There’s a reason that Obama, after campaigning against the mandate as a presidential candidate, has changed his mind since taking office. It’s a good idea, for all sorts of policy reasons. (Chief among them: It guarantees a broad risk pool, in which we all share the burden of paying for the high medical expenses a few of us will be unlucky enough to face.) But nobody wants to make people buy insurance they can’t afford, which was something that worried Senate Finance members as the debate came to a close. The smart answer would have been to embrace generous subsidies and strong affordability protection. That’s what HELP and the House committees did. Instead, Finance took the easy way out and just started gutting the mandate.

9. Keep a real employer mandate. Here, again, a concession to centrists--and, in particular, Snowe--has substantially weakened the Finance bill. An employer mandate is essential not so much for the revenue it generates as for the role it plays in preserving employer-sponsored insurance, at least in the short term. (Letting it whither away in the long term would be fine with many people, including me.) Snowe’s aversion to the idea is a major reason why the Finance Committee opted instead to go with a “free rider” provision that could actually introduce some perverse incentives, like discouraging workers from hiring low income employees. (The way it works, companies who didn’t provide coverage would pay a fee only if their workers ended up in federally subsidized coverage--i.e., if they were low income.) The House and HELP bills have much stronger employer requirements--and should be preserved.

10. Open the exchanges. This is Ron Wyden’s idea, as popular among pundits as it is reviled by labor and business. Under his proposal, somebody with access to employer-sponsored insurance could decline it, enrolling instead in a policy made available through an insurance exchange. And, critically, they could take their employer contribution with them. Wyden says it would give all Americans more choices, which is true, and that it would introduce more competition to the insurance market, which is also true. It would have to be crafted very carefully, to make sure--among other things--that all the healthy people don't aggregate in either the employer plans or the exchanges. But that seems feasable.

One last note: I'm sending this list out to experts and insiders whose priority lists probably differ. If I get any particularly good responses, I'll post them.

Update: My original item said enactment of health reform was a "safe bet." I'm confident but not that confident. Plus I'm cautious by nature. So I changed it to "very likely." I also added some details to the section on provider deals, making clear that the ultimate goal of any industry deal should be to foster more efficient care (i.e., not simply raising cash to subsidize coverage).

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