After the groups met with the president on May 11 at the White House, Obama said, "They're here because they recognize one clear, indisputable fact: when it comes to health care spending, we are on an unsustainable course that threatens the financial stability of families, businesses, and government itself." To one degree or another, except for a labor union (Service Employees International Union), the organizations that were represented -- the Advanced Medical Technology Association, America's Health Insurance Plans, the American Hospital Association, the American Medical Association, and the Pharmaceutical Research and Manufacturers of America -- all opposed the health care reform proposal of President Bill Clinton.
Obama said that savings of this magnitude would reduce the health care costs of a typical family by an average of $2,500 a year and accelerate an "aggressive effort" to move reform through Congress this year. Even though Obama pronounced himself "thrilled" by this development, others noted that the government has little leverage beyond the president's bully pulpit to enforce the voluntary pledge of the private interests that made it. Nevertheless, Robert Gibbs, the White House press secretary, said that Obama had told the health care executives in their private meeting, "You've made a commitment; we expect you to keep it."
An important part of the picture that led the private groups to offer their pledge was a recognition that the pace of reform was quickening and they wanted to be a full participant in the negotiations. Although they have engaged in open roundtable discussions sponsored by the Senate Finance Committee, three House committees have been crafting their proposals in secret, without much input from the private sector. The private groups have expressed their strong opposition to the proposal of Democrats to create a government-sponsored insurance plan that would compete against private carriers as a key component of their reform scheme. Congressional Republicans share their opposition, asserting that there is a slippery slope leading from such a plan through the crippling of the private insurance industry to Democrats' ultimate goal: a government-run, single-payer system.
With the battle joined at this early stage in what promises to be a year-long debate, Democrats have already shown that they are prepared to wield their majorities in the House and Senate to win enactment of health care reform legislation. Their political power was on display April 29, when without a single Republican vote, Congress approved a budget resolution that set the stage for consideration of Obama's top domestic priorities in health care, education, and energy. The resolution, which established a policy framework that committees are expected to follow as they consider legislation, calls for a 2010 budget of $3.5 trillion. At this funding level, the projected budget deficit for the next fiscal year would be $1.2 trillion, an amount that Republicans vigorously, but unsuccessfully, opposed.
What Republicans seemed to find even more infuriating was language allowing for the use of "reconciliation," a parliamentary procedure that would enable Democrats to enact health care legislation in the Senate with 51 votes, rather than the 60 necessary for overcoming a filibuster. Republicans successfully used reconciliation several times to win enactment of major initiatives sought by President George W. Bush. With the surprising party switch that longtime Republican Senator Arlen Specter of Pennsylvania announced on April 28, the Democratic majority in the Senate grew to 59 (including 2 independents), if no one breaks ranks.
Five congressional committees are involved in crafting health care reform legislation. The administration is participating in these efforts behind the scenes by reacting to provisions and offering technical advice. Although all five panels have held hearings, the Senate Finance Committee has engaged in the most open dialogue by holding three public roundtables with key stakeholders from the private sector that focused on delivery-system reform, insurance coverage, and financing issues. In the second roundtable on May 5, committee members sparred over the Democratic call to create a government-sponsored health plan that would compete with private insurers. Senator Max Baucus (D-MT), who chairs the Finance Committee, proposed the creation of a public insurance plan in a white paper he released last November,1 and he is under heavy party pressure to incorporate it into the committee's reform bill. However, Baucus is a moderate Democrat who is also striving to steer a bipartisan course, believing that some Republican support may be necessary to win enactment of reform legislation.
Recognizing the firestorm that is brewing, Baucus asked a senior Democrat on his committee, the more liberal Charles Schumer of New York, to craft an approach that stakes out a middle ground amid various proposals.2,3,4 No committee has actually introduced legislation detailing how a new public insurance plan would operate, so the protagonists make assumptions based on their own views. Addressing the Finance Committee's May 5 roundtable, Schumer outlined his vision, which would build on certain principles: a public plan would have to be a self-sustaining entity, drawing its revenues from premiums and copayments rather than counting on government subsidies; it would negotiate its payments with doctors and hospitals instead of relying on Medicare's administered pricing system; the government could not compel physicians and hospitals to participate in the new public plan; and the authority that regulates health plans could not be the same entity that manages the public plan.
Commenting on Republican opposition to any public plan, Schumer said: "Some of you don't want the public plan to have an unfair advantage; I'd agree, but just as bad as a public plan with an unfair advantage is a proposal with no public plan at all." He added that people "have problems with government sometimes, but they have a lot more problems with private insurance companies. And the bottom line is you need somebody who is not a private insurance company to be in the mix."
Republicans pressed roundtable participants to explain how a public plan could work without holding an advantage over private plans. The comments of Senator John Cornyn (R-TX) were blunt: "It's interesting how this public plan is now called the consumer-oriented plan. I think it's more descriptive to say it's a Washington-directed unfair-competition plan, because the government isn't a fair competitor. The government fixes prices, tells how much it is going to pay, take it or leave it."
Karen Ignagni, chief executive officer of America's Health Insurance Plans, also expressed strong opposition to a public insurance plan, arguing that a better approach would be a "fundamental" overhaul of government regulation of the insurance marketplace and correction of other shortcomings of private coverage -- reforms that are acceptable to her organization as long as all people are required to have coverage. In an exchange with Senator John Kerry (D-MA), who introduced a bill on May 5 to prohibit insurers from considering a person's sex as a factor in setting premiums in the individual insurance market, Ignagni conceded that the practice "should be eliminated." Others who spoke against a public-plan option were Stuart Butler of the Heritage Foundation, John Castellani of the Business Roundtable, Donald Danner of the National Federation of Independent Business, R. Bruce Josten of the U.S. Chamber of Commerce, and Scott Serota of the Blue Cross and Blue Shield Association.
Six days earlier, the Finance Committee had held its first closed-door discussion, focusing on policy options that were released that day by Baucus and the committee's ranking Republican, Senator Charles Grassley of Iowa.5 Their 48-page document outlined an array of recommendations, including proposals designed to improve the attractiveness of careers in primary care by paying primary care physicians a modest bonus, promote greater transparency in the relationships between physicians and manufacturers of medical products that sell to the government, and eliminate the regulatory exception that enables physicians to refer patients to specialty hospitals in which they invest (though existing specialty hospitals would be allowed to continue to self-refer, subject to certain safeguards).
No votes were taken on these and other policy options set out by Baucus and Grassley, but their views generally prevail when panel members cast their ballots. Baucus and Grassley also described two alternatives to fixing Medicare's flawed system of paying physicians, who face fee reductions of 21% in 2010 unless Congress eliminates the cut. Neither alternative satisfied organized medicine. The proposed bonus that was offered to primary care physicians (at least 5% over the fee-schedule amount) for specified patient visits pales in comparison with that sought by the American College of Physicians (annual increases of 7.5 to 8% in Medicare fees over a 5-year period).
As the reform debate continues, a challenge even more formidable to Democrats than the fight over a public plan will be finding the $1.2 trillion that a reformed health care system is projected to cost over a decade -- unless they decide, as the Bush administration did when it won enactment of Medicare's prescription-drug benefit, to leave the government with another unfunded, trillion-dollar liability. Given the already massive national debt, even some Democratic legislators would see failing to secure financing as an unacceptable alternative. In its preliminary 2010 budget, the Obama administration proposed reductions of $318 billion over 10 years in Medicare and Medicaid payments to an array of providers, health plans, and pharmaceutical companies. Most of these cuts will be resisted by the stakeholders they affect, although these stakeholders have held their fire to date. The administration's detailed 2010 budget, released on May 7, proposed the elimination or consolidation of 121 domestic and defense programs to save $17 billion. Such reductions represent a mere drop in the bucket, but they, too, will trigger opposition from legislators and private interests.
Any proposals that entail extracting savings from the medical economy or raising taxes will require Democrats to expend some of their considerable, though not unlimited, political capital. Nevertheless, Democrats remain undaunted by the challenges, believing that now is the time for reform because a majority of Americans currently place a higher priority on it than on a large and growing deficit.
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