Panicky People Make Bad Decisions : Salvaging Health Reform after Scott Brown

Panicky People Make Bad Decisions : Salvaging Health Reform after Scott Brown

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Jeff goldsmith

The shocking surrender of Ted Kennedy’s Senate seat to an insurgent Republican state legislator, Scott Brown, has imperiled President Obama’s health reform initiative. The Massachusetts “massacre” has unleashed a tidal wave of second guessing from Democratic pundits. Obama, the left argues angrily, got what he deserved for trying to find a bipartisan solution to health reform, for abandoning the beloved “public option” and snuggling up to the corporations they wanted to punish. If only he’d remained pure to their ideals, Martha Coakley would be a Senator and he’d have a bill on his desk by the end of the week. General Custer could not have gotten worse advice.

It’s possible that the loss of Ted Kennedy’s Senate seat might end up saving both health reform and the Obama Presidency. The President seems to understand what happened in Massachusetts better than his more ideological brethren. Disarmingly, he argued the day after Brown’s victory that it was produced by the same popular anger as his own election, though it’s worth noting an important qualitative difference. The 2008 election coincided with a full blown market panic, which the President’s calm and policies helped quell; What he is now facing is much closer to voter despair, as the domestic economy digests a huge overhang of debt, and unemployment lingers above the toxic 10% level.

His focus on health reform through his first year shouldn’t have been a surprise. It was a pivotal theme of his campaign. Rather than postpone health reform until the economy recovered, Obama connected the two – that we couldn’t have an economic recovery without reforming healthcare- without successfully explaining the connection to voters. Apparently, the political types in the White House prevailed over the economic types in the President’s decision to press ahead.

His transition and White House staffs were drawn heavily from the Clinton White House staff, who were haunted by the Clintons’ failure to accomplish health reform. They resolved not to write the bill themselves as the Clintons had done, but to manage the Congressional process from behind the scenes. They chose a popular former Senate Majority Leader, Tom Daschle, to be the manager. This was a brilliant appointment, not only because of his credibility and relationships, but because he brought with him a sensible roadmap, outlined in his book, Critical: What We Can Do about the Health Care Crisis.

The decision to throw Daschle under the bus in early February after ethics concerned surfaced was in retrospect extremely costly. It not only cost the White House nearly four critical months as they searched for replacements, but it also untethered the Congressional relationship and handed the initiative to Congress, particularly the House of Representatives. The two people chosen to replace Daschle, while knowledgeable and capable, lacked the political relationships and gravitas to manage the Congressional relationship. It ended up politicizing the process by handing the reins to Rahm Emanuel, who had both relationships and domain knowledge, but neither the time nor the position to chair all the key meetings. The illness and death of Ted Kennedy also crucially deprived the process of a senior Congressional diplomat capable of helping broker a solution.

The larger strategic problem was the inherent asymmetry between those who benefit from health reform and the core constituencies of the Democratic party. Those core constituencies already have coverage: organized labor, the “elderly”, the poor, etc. Their main concern throughout the process was in not losing any of those benefits. On the other hand, the main beneficiaries of health reform- young people, widows, homeless people, immigrants, both legal and illegal, etc, -had neither the voice nor the resources to advocate on their own behalf.

Political calculation led the White House to engage the major health care stakeholders (hospital, physicians, health plans and pharmaceutical companies), limiting their liabilities in exchange for neutralizing their opposition to the process. As health reform unfolded, core elements of the Democratic base felt increasingly alienated by the inevitable compromises. Single payer types felt betrayed by the failure of the White House to fight for the “public option”. Hispanics were infuriated by the House bill’s provisions definitively denying coverage to illegals (6-8 million of the uninsured). Womens’ groups were enraged by the extension of abortion restrictions to private insurance purchased through the exchanges. The unions were infuriated by the proposed tax on “Cadillac” health plans

.

With each successive iteration, the bills grew fatter, less comprehensible and less lovable. As it stood on the brink of reconciliation, the legislation had grown into a gigantic, hairball with the throw weight of a cinder block, laden with special interest favors, pet projects and carve-outs of various kinds. Despite the spin from the White House, it also represented a nearly open-ended, if delayed, spending commitment, and abjectly failed to alter the health system’s fundamentally inflationary payment ground rules. As concerns about the bill grew, a frustrated Emanuel lashed out at the policy community, reminding them that his goal was to get a bill passed, not to garner the approval of the Brookings Institution or the Aspen Institute.

By the late fall, most of the core Democratic constituencies, the policy community and the commentariat all hated the legislation, while its intended beneficiaries were either terminally confused, or had tuned the process out, convinced that it wasn’t going to help them. The White House’s sense of urgency was well placed, because the longer the process stretched out, the more vulnerable it became to political brushfires like the loss of the Kennedy seat. It’s not like the Democrats are exactly helpless with 59 Senate votes and an eighty plus vote majority in the House. It’s rather that the year-long process has not only alienated the core of the President’s party, but also angered the public, which saw only a lot of “inside baseball” special deals and non-transparent policymaking.

Can progress on health reform be salvaged post Scott Brown? Absolutely, but at a price. One major problem will be finding a trash can large enough to stuff the two Houses’ grotesque bills into. Several red bags will be needed. Then, the political question will be: who can the President afford to piss off now?

The President yesterday indicated the possibility of scaling back from achieving quasi-universal coverage to accomplishing a few major goals with broad support: health insurance reforms, small business coverage subsidies, perhaps a modest Medicaid expansion and some cost containment measures (pilot projects, a Medicare Commission?). As we will discuss, these are not political “gimme’s” by any stretch.

If the White House did not want to let go of the goal of universal coverage , it could take a big political risk by advocating passage of Wyden Bennett (S 334, the Healthy Americans Act), the only health reform proposal with bipartisan sponsorship. S334, which CBO scored as deficit neutral in its first full year of implementation, would create a national, consumer choice market for health insurance supported by federal vouchers. It would also fold Medicaid into a national voucher program for private coverage, permanently ending a fiscally explosive welfare program (and bringing US health policy in line with that of most European countries, who do not separate low income people from the rest of the covered population).

However, Wyden Bennett severs the tie of health coverage to employment, and is thus anathema to the labor unions. The unions have played a major, if unscripted, role in shaping the administration’s policies. Preserving public sector union jobs (in higher education and healthcare) consumed a major fraction of the unpopular American Relief and Recovery Act, at the expense of infrastructure spending, green energy and a host of other job creating programs. The unions also shaped the auto industry bailout and were rewarded with majority ownership of Chrysler. Is achieving universal coverage at the price of alienating his union supporters worth the price? That’s a question that only the President can answer.

If Wyden Bennett is too big a stretch, even the partial reforms the President is considering would carry political costs. For example, imposing “patient protection” measures like restricting pre-existing condition exclusions or lifetime benefit caps, or cutting Medicare Advantage payments without the healing balm of millions of new customers will definitely alienate the health plans. (The Democratic base as well as many Blue Dogs and moderate Republicans will cheer lustily. . . )

Hospitals, doctors and pharmaceutical firms will step up their opposition to a Medicare Commission, or to future restraints on Medicare payment increases, absent the prospect of millions of new customers. A split with the medical industrial complex is inevitable. As things were going, however, this was going to happen shortly after health reform was enacted, when the White House turned its attention to deficit reduction.

Other measures could bring major reductions in uninsured people with very little cost. If you don’t require community rating, covering millions of people in their teens and twenties could be accomplished for $60 a month, with affordable subsidies for lower incomes. At low enough rates, many parents would voluntarily cover their kids. Doubling community health center funding would cost only about $2 billion a year, extending the healthcare safety net. Voluntary Medicare buy-in could cover a lot of the 11 million uninsured boomers with modest subsidies for the lower income folk (an trial balloon shot down in October by the hospital industry and their buddy, Joe Lieberman).

The crucial thing is that the President must rigorously limit what’s in the bill to things that directly reduce the uninsured population with as little collateral fiddling as possible, or which create immediate, tangible benefits for people than can be explained in, at most, two PowerPoint slides, and do it in about 300 pages of legislation. As the bills in Congress metastasized into the present monstrosities, these tangible benefits were either postponed five years or became largely unexplainable, squandering the President’s formidable capacity to persuade. A major reason why I voted for Obama was that because I thought he’d be a good teacher- a calm, reasonable person who could explain to us in English how we stood to benefit from a reformed health system.

To overcome the obstacles that lie in his path, he’s going to have to shed the arrogant misreading of the 2008 election as somehow “transformational” -a call for government to “rescue us”. His election, like the 2006 Congressional election that preceded it, was a “throw the bums out” election. Most of the “bums on the bubble” are now members of his own party, will have controlled Congress for four long years. And if the Democrats cannot defend Ted Kennedy’s seat, how many of their seats are really safe in 2010 or 2012? Unlike Clinton, Obama does not seem driven by the compulsive drive to have everyone love him. Some cold calculations about who you can afford to piss off is the key to making the right choices.

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61 Comments on "Panicky People Make Bad Decisions : Salvaging Health Reform after Scott Brown"


Guest
Kim
Jan 26, 2010

Vikram C – I don’t think I can quite summarize the state of the industry on publishing cost or quality results. Anthem has been putting out market-specific (ranges of) costs by provider for several years, for a limited set of procedures. Aetna similarly has done provider-specific costs for many outpatient procedures in many markets, again going back several years. Many smaller or more regionally based health plans are doing similar things.
Nate – There are vendors such as Healthgrades or WebMD that have a business aggregating & publishing provider data, primarily with hospital data and based on either Medicare data or (for states that collect the data) all payer data, and that health plans display on their websites. That’s fairly common for the major Blues and commercial plans. Info on physicians is hardest to come by and least likely to be published (aside from directory-type info), both because it isn’t commonly collected and there are not widely agreed-upon measures for quality.
The theory behind these is that consumers will act more prudently when they know in advance more of the cost & quality data, especially in an era of higher deductibles. Obviously, if someone is having a heart attack they can’t comparison shop, but if someone is going to get a more elective procedure or something with a longer time horizon, then one hopes that consumers would care. The danger of attitudes that “more expensive is higher quality” is a very valid concern.
Health care is very complex and the data are poor, but it’s very paternalistic to say consumers can’t understand and shouldn’t have the data. Consumers are hungry for more & better info on health care, as evidenced bny the popularity & growth of health sites.

Guest
Nate
Jan 25, 2010
Guest
Nate
Jan 25, 2010

spend a couple minutes on google you will find them. The PPOs will be harder as that happened back in late 80s early 90s so PPOs stopped.
“Patients commonly share opinions of doctors on online review sites like AngiesList.com. The reviews help to keep doctors honest and on their toes, according to patients. But a handful of doctors call the ratings unfair and they’re fighting back by requiring patients to sign contracts that bar them from commenting on their care. Patients say these contracts – usually known as “Mutual Privacy Agreements” – violate free-speech rights. Hear from all sides about a topic that’s generating buzz nationwide. “

Guest
Vikram C
Jan 25, 2010

Nate- where exactly was Angie’s list or Aetna sued for rating providers? As I see Angie’s list members were sued but not related to health care issue.
Same goes for PPO. Which insure got sued for star remarks for provider?
Please provide links.

Guest
Peter
Jan 25, 2010

“A more efficient way to compare providers would be independent publication of outcomes.”
That would punish providers willing to take on difficult or complex cases because it would affect their aggregate rating. Outcomes don’t tell the whole story, especially in healthcare, like how sick was the patient when they came in for the procedure. How many variables to you want to include.

Guest
Nate
Jan 25, 2010

Margalit, make a deal liberals call off the attorney’s and I’ll give you everything you asked for. It’s not fair to blame insurers for not doing what the courts have told them they can’t.
Patient rating has gotten the aggregator sued. Angie’s List, Aetna and a couple others did it, not tried but it was actually done, and they got sued.
Marking providers with a star is an implicit suggestion to see those providers and when one of those providers performs malpratice the PPO/insurer is also sued for suggesting them. Giving those stars based on cost would be guaranteed loser under our current tort system.
A more efficient way to compare providers would be independent publication of outcomes. Why have 10,000 insurers each republishing the same info when you can have 4-5 aggregators publish it? The information would also be considerably more trusted comming from an independent third party then from the insurer.
Insurers should publish what they pay per procedure but it is the responsibility of the provider to publish what they charge.
I don’t think the public, especially the left, has any clue how bad government has restrained innovation in insurance.
Rein in your attorneys and I would gladly do everything on your list.
“I would love to sum it up and compare to premiums collected.”
You can do this on yahoo or any finance site now. THis info has been esily available for 50 years, not by provider but summed up it is. Payments to premium is loss ration and not only published for every company with stock but every insurance department I am aware of collects and publishs it as well.

Guest
Peter
Jan 25, 2010

“Popular convention is most expensive is best”
Yes, they say you get what you pay for, so if insurance is paying either the high or low price I’ll take the high price. Look people can’t even pick a good mechanic, contractor, or investment “professional”, do you think they have enough insider insight to pick a good doc – when failing even once can be a big hurt. My wife is a nurse and we still have trouble assessing medical professionals. No one can read a few “ratings” and get any idea as to how that doc/hospital will function for THEM, only constant assessment and use will give anyone any idea and comfort as to outcomes.

Guest
Vikram C
Jan 25, 2010

Kim- What is the current status of procedure specific cost information and quality information? I just never found it on any my insurance websites. And what exactly are they to achieving by putting price on websites? Popular convention is most expensive is best and it just might increase the total claims bill.

Guest
Kim
Jan 25, 2010

Margalit – several insurers (including but not limited to Wellpoint and Aetna) have been putting out provider and/or procedure-specific cost information for several years now, with an even longer history of quality information (especially for hospitals, where there is better data). Wellpoint even partners with Zagat’s on consumer ratings. Not all procedures/providers and not perfect by any means, but making progress.

Guest

Why did Scott Brown win? An answer from 2500 years ago. See http://bit.ly/64qwGg

Guest
Margalit Gur-Arie
Jan 24, 2010

Nate, if you seriously want people to actually do comparison shopping then this is what they will need:
An insurer website where you can search by service/procedure and get a list of providers with appropriate contractual prices that the insurer actually pays. Also on that page, there should be outcomes information (i.e. 1000 CABG 75% dead in a month, or something like that). patients rating would also be nice to have.
Consumers should be able to sort by quality, by price and by distance from home.
Insurers could mark some of the cheaper providers with a star, meaning that if consumers select that provider, there is a rebate, or copay waved, or whatever.
Will insurers agree to do that? If yes, show me! If not, then don’t expect consumers to have any ability to help contain costs and let’s stop talking about “healthy competition”.
There should be public disclosure for what insurers are paying each provider, per unit and total per year. I would love to sum it up and compare to premiums collected.

Guest
Nate
Jan 24, 2010

Medical outcomes are readily available for every major hospital. US News uses it to Rank them every year. CMS uses it, and some insurers use the data as well.
If your insurance pays 100K in claims when they could have paid only 75K that is likly to have an adverse effect on your rates. If your insurer offered to waive your deductible and co-pays that would be even more incentive.
You seem to be arguing that consumers knowingly waste money, that would seem to fortail a failure of any public plan since they exercise no control over utilization. Medicare has proven rationing by reimbursement rate doesn’t work. Paying less for proper care and wasteful care is not more efficient then paying well for proper care and not incurring wasteful care.
seeing as how a very small amount of total care is spent on emergency care its a non squater question.

Guest
Vikram C
Jan 24, 2010

Dave Brown- Very good comments. However let me just point out a few things.
Unit cost per procedure may be high but a better strategy is to shift utilization to lower cost procedures and lower overall utilization. As an example choosing Chiro over back surgery. Fran just referred to 3K pages of HC bill. The thing that has to be understood is that if the requirements are complex and multi-faceted the solution will be complex as well. All regulations are there for a reason. Removing a regulation is easy but what do you do with those societal requirements around safety, fairness etc?
Now the beauty of lowering utilization or severity thereof is that vested interests cannot oppose it easily. That battle is in the minds of the people. It is not imposed on anyone. We may not be able to reduce per unit cost except that of drugs so easily, however that ain’t our goal. Our goal is reducing total national spend. Once it is proved that expensive isn’t necessarily better, hopefully some procedures’ price will automatically go down. Demand-price elasticity can be established only when there is willingness to try alternatives.

Guest
Guest
Frank
Jan 24, 2010

WHO HAS READ THE BILL?
Talking about nearly 3,000 pages, with supplementals.
That’s insane. No one but a JD/PhD with six months of 18×7 work could figure it out, with any sense of authority.
It has failed because it is too complicated for 99.99% of the population.
U.S. Sen. Snowe suggests starting over. Yup.