WHY is there resistance to a government-run plan?
WHERE will Congress find the money to fund an overhaul of the health-care system?
HOW MANY uninsured Americans will be covered when Congress is finished?
WHAT has to change to make health care more cost-efficient and effective?
WHICH types of services will be covered?
Max Baucus, the Senate’s point man on health care, sounds supremely confident when he talks about the odds that Congress will pass its most sweeping piece of social legislation since the New Deal. “Meaningful, comprehensive health-care legislation passes this year. That’s a given,” he declares, sipping a bottle of water in his functionally furnished hideaway office just steps from the Senate chamber. “It’s gonna pass. It’s gonna happen. There’s no doubt about it.”
The rest of us might be forgiven if we view Baucus’ prediction with a little more skepticism. After all, universal health care is a cause that comes around every 15 or 20 years in Washington, and Presidents as far back as Woodrow Wilson have tried and failed to make it happen. The last big effort, in 1993 and 1994, was a political disaster that set Bill Clinton’s presidency back a year or more.
And yet there are signals coming from Capitol Hill back rooms and corporate boardrooms that suggest things could be different this time. In recent weeks, health-care-industry leaders have pledged to cut their own costs by $2 trillion over the next 10 years (though they have yet to fill in the specifics). The insurance industry now says it is willing to make concessions it never would have considered before–like agreeing to set prices on policies without regard to an individual’s health history–in exchange for the access to the vast new market that would come with universal coverage. “Nobody here in our industry is defending or wants the status quo,” says Karen Ignagni, who heads the leading insurance lobby group. Perhaps most important, there is more agreement than ever before that for any health-care system to work, everyone–or nearly everyone–has to be covered.
It is now possible to glimpse the outlines of a Grand Deal among insurers, providers, business, labor and patients that would put most of its focus on lowering costs and establish a foundation for expanding coverage in years to come. The two key Senate committees expect to begin writing legislation this month, with the House also moving forward in coming weeks with what is expected to be a more liberal version. The Democrats’ goal is for both chambers to pass their versions by the end of the summer, work out their differences in the fall and have a bill on Barack Obama’s desk by the end of the year. “This window between now and the August recess, I think, is going to be the make-or-break period,” the President said on June 2, before a meeting with Senate Democrats. “This is the time where we’ve got to get this running.”
Obama, having studied the mistakes that Bill and Hillary Clinton made, has set broad goals but left it up to Congress to figure out how to reach them. “One measure of success is, Do we make the health-care system function better, more rationally, in a way that produces better outcomes and is less expensive?” says his chief political adviser, David Axelrod. “The point is the results.”
But even amid signs of a new consensus, there are at least five questions that must be settled before there can be meaningful reform:
1. Will there be a big, new government system?
No other proposal has generated as much controversy as the idea of giving everyone the option of being covered by a government-run plan similar to Medicare. To its opponents–and some of its more ardent supporters–the public plan looks like the first step toward a single-payer system like Canada’s or Britain’s. “Too many people are reacting like Pavlov’s dog,” says Senator Chris Dodd, the ranking Democrat who has been filling in on the Health Committee for the ailing Ted Kennedy.
If it paid for health care the way the Medicare program does, a public plan could charge premiums 30% lower than those of comparable private plans. And if it were open to all, about 131 million people–including two-thirds of those who now have private insurance–would take that deal, according to estimates by the Lewin Group, a nonpartisan research firm.
A public plan of this magnitude could be a powerful force to contain costs. But it could also destroy the private insurance industry, while doctors and hospitals say its lower fees would drive them out of business. Their combined opposition to this single issue could sink the chances of any health-reform bill’s passing. What’s more, many conservatives point out that the government can’t afford the Medicare program it already has, so why create a new one?
Who will win this battle? For now, it appears that lawmakers will ultimately go for a watered-down version of a public plan–one, for instance, that would have to operate like a private insurance company, sustaining itself with the premiums it brings in and paying doctors and hospitals higher reimbursem*nts than Medicare does. Or a public plan might be created only as a fallback if insurance companies fail to make coverage affordable and accessible.
2. How can a nation already deeply in debt afford health-care reform too?
This question has not gotten nearly the amount of discussion that the public option has, but it’s likely to be far more difficult to resolve. That’s because under the budget rules, any plan that Congress passes will have to pay for itself within 11 years without adding to the deficit. Passing muster with government bean counters is not the same thing as writing sound health-care policy. While many health-care-reform moves promise big savings in the future for the larger economy, they will require huge up-front investments, with only a small part of the savings ever accruing to the Federal Government’s bottom line.
So where will Congress find the money, especially for the government subsidies it would take to expand coverage to the 47 million or so Americans who now lack it? Lawmakers are reluctant to squeeze Medicare and Medicaid payments to hospitals and doctors much more than they already have. And while there’s talk of new taxes on cigarettes and alcohol–even junk food and soda–they are not likely to bring in anything close to the $1.5 trillion that outside experts say it could cost over the next decade to bring about universal coverage.
The targets of the moment are the health-care benefits that employers now give their workers tax-free–an income loophole that costs the U.S. nearly $250 billion a year. “There’s a lot of money there,” says Massachusetts Institute of Technology economics professor Jonathan Gruber. “There’s certainly enough there to get to universal coverage.” Even taxing only those benefits that are more expensive and generous than average, he says, could raise $360 billion to $500 billion over 10 years.
Arithmetic aside, the idea of taxing employer-provided health insurance as income has plenty of merit. The current system is regressive, with three-quarters of the tax break going to those who are in the top half of the income-distribution scale. And because these more privileged Americans are not buying health care with after-tax money, they have less incentive to use it carefully.
Taxing benefits has already run into opposition from unions that have given up wage gains in favor of health benefits in recent rounds of negotiations. There is also the inconvenient fact that Obama attacked John McCain in last year’s election for proposing exactly such a tax on something workers believe they get for free. Still, Baucus says, “Not all those benefits should be tax-free. The bulk should be tax-free, but not all of them. That’s part of the solution.”
3. Can we really cover everyone?
No issue did more to sink the Clinton health-care plan than its imposition of an employer mandate–a requirement that companies provide health insurance to their workers. And there’s little evidence it will be any easier to include one this time around. “It will be a job killer, because employers who cannot afford it will reduce payroll and not hire new workers,” warns Bruce Josten of the U.S. Chamber of Commerce. What business would prefer to see–and what Obama rejected during his presidential campaign–is an individual mandate requiring everyone who doesn’t get health coverage at work to go out and buy it, just as car owners have to carry automobile insurance. But that means the Federal Government would have to subsidize people who couldn’t afford it themselves, upping the health-care-reform price tag considerably. Obama says he can support an individual mandate only if it has a “hardship waiver to exempt Americans who cannot afford it,” and he also says small businesses face a “number of special challenges in affording health benefits and should be exempted.”
Without one mandate or the other, or a combination of the two, it will be impossible to get truly universal coverage. Some people–maybe a lot of them–are going to fall through the cracks. More pessimistic veterans of previous battles over health-care reform predict privately that even if a bill passes this year, more than half the nation’s uninsured could remain that way.
4. What will be covered?
For universal coverage to have any meaning, there will have to be a minimum set of guaranteed services. But what does that mean? Does it include preventive care? How about mental-health care? Abortion services? These are the kinds of decisions that will determine how expensive health-care reform will be for consumers, business and government. And what goes into the basic benefits package is a political minefield–which is why many health-care experts say they don’t want it left in the hands of Congress and lobbyists. “If you start fighting over whether chiropractors should be in the benefits package, this bill is dead,” says MIT’s Gruber.
It might make sense for Congress to turn over that power to an independent agency, something along the lines of the Federal Health Board proposed by former Senate majority leader Tom Daschle, who had been Obama’s choice for Health and Human Services Secretary until he withdrew his nomination amid a controversy over unpaid taxes. Conservatives charge that this would put Washington in the middle of decisions that are best left to doctors and patients. But would Americans really find a faraway government bureaucrat any more objectionable in that role than a faceless private insurance company that makes those decisions now? Either way, Congress is going to want to have a say in shaping the benefits package. What still needs to be resolved is how much congressional involvement it makes sense to have.
5. How will we bring down costs?
The problem with American health care, those who have studied the system will tell you, is not that we get too little care but that we use too much. By some estimates, as much as 30¢ of every health-care dollar is spent on medical treatment that is unnecessary, ineffective, duplicative or even harmful. Changing all that is going to require revamping health care from top to bottom, starting with the way health-care providers are reimbursed. While the current system pays them for the amount of care they provide, real reform would put more emphasis on the quality of that care and the outcomes it achieves.
If there is an ideal out there, Baucus says, it can be seen in the kind of medicine already being practiced by Kaiser Permanente, the Mayo Clinic, Intermountain Healthcare and Geisinger Health System, which manage to hold down costs and get better results. Their operations have fostered closer teamwork among care providers. Also important will be electronic record-keeping that saves time and avoids errors, and comparative-effectiveness research that gives doctors and patients a better sense of which treatments work best. And a reformed health-care system would put more emphasis on preventive care and managing such chronic conditions as asthma, heart disease and diabetes that now account for 75¢ out of every medical dollar spent. All these things would force a cultural and economic revolution on the health industry–and the patients who depend on it.
Can this country really afford to reform health care? What everyone seems to have concluded in the past five years is that we can’t afford not to. When Washington punts on health care, it only becomes more difficult to fix the system the next time it tries. “The reason why we’re going to pass it,” Baucus says, “is we’re not going to have this opportunity again.”
