Is Meaningful Health Care (Or Any Other Kind Of) Reform Possible?

Those who wait, ever hopefully, for real health reform might want to take a deep breath and take stock of a few realities.First, think about the fact that when the Democrats retook Congress, they tweaked but did not fundamentally change the lobbying rules that trade money for influence over policy. In fact, most contributors have now adjusted their contributions to favor the current, rather than the past, majority party. As it turns out, Democrats, like Republicans, are only too eager to allow special interests to trump the common interest, so long as the transactions fetch a good price.

Take a long hard look at the chart below, taken from an April 15th report published by OpenSecrets,
which tracks the impacts money has on politics and policy, put
together by the Center for Responsive Politics. In 2007, the health
care industry spent $445 million lobbying Congress, providing 16
percent of the total $2.8 billion spent to sway Congressional actions,
more than any other economic sector for two years running.


million, or 51% of that $445 million, came from the drug, device and
medical products sector. General Electric alone spent almost $24
million courting our Senators and Representatives. PhRMA, the drug
industry association, contributed another $22.1 million. The AMA also
spent $22.1 million.

These dollars are spent to obtain specific
results. David Beier, Amgen’s head lobbyist and, formerly, Vice
President Al Gore’s chief domestic policy advisor, explained his
company’s 2007 $16.3 million lobbying expense very nicely in a Washington Post article last April. "We face a lot of legislative and regulatory issues. We resourced our advocacy to match our challenges."

Anyone watching the lobbying frenzy leading up to last week’s vote, the President’s veto, and Congress’ rejection of that veto, pitting funding for Medicare Advantage plans against funding for physician reimbursement – the blow-by-blow was eloquently described by Bob Laszewski – could only marvel at the resources that can be brought to bear when money or other perceived interests are on the line.

course, there’s nothing new here. For decades, the health care industry
has leveraged its money and influence, shaping policy to its own ends.
Last December I recounted that, upon hearing that the US Department of
Health and Human Services had appealed a court ruling calling for CMS to release Medicare physician data,
American Medical News quoted the AMA’s Board Chair Ed Langston MD, "The
Association is pleased that HHS is taking its advice." (This quote has
since been expunged from the online version of the article.)

Or remember when the Employers’ Coalition on Medicare,
a powerful business interest group, teamed with PhRMA and the
Republican Congress to pass Medicare D? The resulting legislation
provided for a significant portion of the largess to be allocated to
large firms (in the form of retiree prescription subsidies) in exchange
for their support for the program. Retirees and taxpayers, of course, didn’t fare quite as well in the deal.

Then there is the longstanding sole-advisor relationship between CMS and the AMA on the issue of physician reimbursement,
in which the specialist-heavy society has continually called for, and
CMS has continually delivered, increased reimbursements to specialists
at the expense of America’s primary care physicians, who are now in
deep crisis as a result.

There are endless examples, all of which beg a couple important questions. Let’s take the health care question first:

a policy-making environment that is so clearly and openly influenced by
money, how likely is it that Congress will pass be able to achieve
health care reforms that are in the public interest?

is broad expert consensus that one-third to one-half of all health care
expenditure is waste. Talk privately with most health care
professionals – physicians, hospital execs, health plan administrators,
benefits managers, supply chain execs – and there is reasonable
agreement on critical principles that are necessary to re-establish the
system’s stability and sustainability: some form of universal coverage
for at least basic health services; a comprehensive and compatible IT
infrastructure; a transition from fee-for-service to some form of
performance-based reimbursement; pricing and performance transparency;
and much more.

Such changes could drive tremendous savings for
individual, corporate and governmental purchasers, but at significant
cost to health care firms and professionals. Revenues and profitability
would plummet. As the struggles over health care resources intensify,
the efforts to protect and enhance each interest’s position through policy will intensify as well.

isn’t as as though there aren’t credible and influential people
sounding the alarm. Take this comment from Peter Orszag, Director of
the Congressional Budget Office, while testifying to the US Senate
Finance Committee in June 2007.“If [Medicare and Medicaid’s]
costs continue growing at the same rate over the next four decades [as
they have over the last four decades, at 2.5%/year higher than per
capita GDP], federal spending on those two programs alone would rise
from 4.5% of GDP today to about 20% by 2050. That amount would
represent roughly the same share of the economy as the entire federal
budget does today.”

Alarming? Sure. But that kind of "let’s
not burn the house down" warning tends to get lost against arguments
for more dollars, backed by the nearly half-billion dollars the
industry spent last year – an average of about $832,000 for each
Senator and Representative!

Pass real reforms? I’d be surprised. Delighted! But surprised.

But that brings us to the biggest question.America
has a slew of important problems that cry out to be
addressed: the obesity epidemic, energy, education, the environment, poverty,
infrastructure replacement. What will it take for Congress to mount
serious, public interest efforts that focus on these issues?
a one, these problems are structurally identical to those we face in
health care. Congress’ current lobbying system means that
money-for-influence relationships with lawmakers continually spin
policy to favor special interests rather than the common interest.

the obesity epidemic. Here’s a wonderful graphic I show in all my
presentations. It shows that 31% of adult Americans are obese, with a
body mass index of greater than 30. We’re the leaders among developing
countries on this problem. Mexico and England are a distant 2nd and
3rd, at 24% and 23%. The ridiculously industrious Japanese and Koreans
are at 3%. I have two arguments here.


First, we have the worst
obesity of any country because agribusiness and the fast, prepared and junk food
industries have convinced Congress to provide
concessions, ranging from corn subsidies to open-field running with
advertising techniques that seduce our children. Sure, individual
choices by parents factor into this, but whatever your philosophical
position on that point, it is important to acknowledge that the current
approach isn’t working and we’re losing the battle. And nationally, we
HAVEN’T drawn a line in the sand as, for example, the Japanese recently did
in deciding to mount an effort that measures waistlines. From their
perspective, that effort is undoubtedly an investment in their national

Second, since weight is important to fitness, fitness is
important to overall health, health is an important component of
productivity, and productivity drives competitiveness, the US’ future
prospects are already lousy and headed south. In terms of our health AND
our competitiveness, we’re committing slow suicide.

And we
can’t seem to mount approaches like the Japanese seemingly did so
easily. We’re stymied due to policies that thwart the common interest
in favor of the special interest. We wouldn’t want to reduce choice for
our consumers or our vendors, or be forced to reinvest in exercise
programming, or compromise the profitability of agribusiness or the
prepared food sectors.

And so we are paralyzed in our ability to problem-solve in virtually every area of
societal endeavor.

As far as I can tell, there are two – and only two – solutions here. Both are highly improbable.

is for America’s largest corporations, the organizations that drive
national policy through lobbying now, to galvanize to preserve the
common interest. This is tough. Currently, most organizations focus
their lobbying within their own core competency areas. Microsoft
lobbies on IT, but not health. Marriott lobbies on hospitality policy,
but not education.

What’s needed is a national business
coalition that collaboratively focuses on what’s good public policy for
the country – what’s in our common short- and long-term interest. It
could both support democratic institutions and, equally important,
place sanctions on rogue organizations, like Enron, that
would hurt the system through excesses or very poor performance at
public expense. (By the way, I’m not advocating for government run by
corporations – the formal definition of fascism. I’m simply explaining
how things appear to already work, and how they might be redirected.)

might do this because they realize that, if the components of the
fabric that has made America strong – a focus on education and an
informed populace, fairness and social justice, creativity, financial
independence, productivity – are lost, then it will be more and more
difficult to successfully pursue the special interest, at least from here.

The other
solution would require a new Congress, under new leadership, to resolve
to rid itself of its lobbying cancer, and to do so in a way that is
highly visible and publicized. There would be ferocious opposition from
industry. Hence the need for visible, articulate leadership from key
political and business leaders.

Like I said, both are improbable. But they’re also key our ability to turn the nation around.

In the meantime, we’re all health care people. Go to the New York Times Health Page, and you’ll see five sub-sections. The center one is "Money and Policy." Think that’s clever, or simply precise?

Livongo’s Post Ad Banner 728*90

Leave a Reply

27 Comment threads
0 Thread replies
Most reacted comment
Hottest comment thread
16 Comment authors
Outraged by EntitlementGreg MDBarry CarolTerry Gardinerhoosier Recent comment authors
newest oldest most voted
Outraged by Entitlement
Outraged by Entitlement

Healthcare is broken because YOU are not in charge of how your money is spent. You are forced into a “plan” (read: rationing system) that controls doctors and hospitals by denial of services or by arbitrarily reducing “claims” payments AFTER services have been rendered. Because you get forced to participate in plans centralized by around an employer, you don’t actually influence what that plan offers. You either take it, or leave it. Worse, the insurers are beyond the law! They can relentlessly raise premiums, without justification, and slash payouts of your premium dollars. The government is no better, with a… Read more »

Greg MD

Strategically, whether the government implements some type of health relief. The overall health care system needs to be overhauled in a way that barely be imagined. Since government dollars are due to run critically short for Medicare by 2015-2019, waiting for the government is like picking your seat on the Titanic. This unprecedented crisis is going to have to be approached with unprecedented action. In a Democratic Country with a capitalistic economy we can probably do better. By the way when I say health crisis, I mean U.S. crisis since other countries are outperforming the US by considerable margins and… Read more »

Gregg Masters

Just follow the money…..aka, the “trickle down” version as it relates to US healthcare a la “economics 2.0”. I am not buying the “impossible do do” agenda, and admonitions to not over-reach pessimism. As if there isn’t enough $$ cash in the beast already! A re-engineering of the “non” system’s thirst that merely focused on downsizing that portion of premium/AAPCC/other top line provider revenue stream, which goes to admin vs. direct patient care, will free up enormous sums which can be redirected to the key drivers or reform: “effective medical homes, bundled payments and accountable organizations” (as so eloquently outlined… Read more »

Barry Carol
Barry Carol

Historically, we have not been very good at tackling issues in this country that are seen as significant problems in the long term but are not a crisis in the short term. To a politician, if the problem is not about to blow up on his watch, it is hard to get him to vote for tough choices that many of his constituents may not like. However, we’ve found ways to deal with tough issues before. The Greenspan Commission in 1982 provided the framework for Social Security reform that passed the Congress the following year. After a couple of years… Read more »

Terry Gardiner

As a lifelong business owner I agree with your summation and call to action. We do need to change our Executive and Congressional leadership and direction COMBINED with the business community, both large and small business sectors stepping up and playing an engaged and constructive role in finding a solution to our broken health care system.
In 2020 when we hit 20% of GDP for US health care expenditures, China will surpass the US in GDP and become the largest economy in the world.
Are we content to let the unsustainable trends continue?


I am skeptical that very much will come from the new (very likely Democratic administration) in the term of health reform. overall I believ the system should be most easily tweaked than completely revamped. a simple solution ( however not easy to push through the Congress) is to unify Medicare and Medicaid and then let people who are willing to do so to sign up for this program. signing premium could be for example the annual spending per capita and this could be annually updated. then the Medicare administration should decide what services it can afford to cover for all… Read more »


This is the standard entrenched interest/rent-seeking barrier combined with the collective action problem, that I often think is underestimated.
There are plenty of countries with decent healthcare systems, so I don’t think, in the end, that the problem is insurmountable from a purely operational aspect, it is one of succeeding in implementation. The ideal way would be something similar to what is required in other reformation tasks (like development which often requires land reform or other ways to shake up the entrenched powers)- dissolution of the system entirely. So, I don’t think reform will happen until the system collapses spectacularly.

BIll Bennett

Right on target! If we stop looking through the keyhole and get on the other side of the door, we will realize the complexity of the issue and know we need to attack segments to solve issues and not lump them all together. Pharmacy alone would make a huge difference if transparency were required – those entities, PBMs, who began as a friend to corporate medical programs, now find themselves with criminal profits at the expense of employers, employees and pharmacies without any research, manufacturing, warehousing or distributing a product. Executive salaries rivel those of the oil companies. One look… Read more »

Gregg Masters

On point with original REFORM theme though, at least we can credit to the Bush crowd, perhaps due to the law of unintended consequences, since I doubt any benefit advancing health care reform or an alternative fuels based economy agenda could have been a conscious intention of this corrupt and inept bunch; is we are likely approaching a “flash point” where the sheer weight of 47 million uninsured, another 50 or so under-insured due to rapid re-writes (as in reductions) of corporate benefit plans, etc., has created a “tsunami like” force of will that can influence a political agenda –… Read more »

maggie mahar

Peter– I agree that the real estate industry has brought this on itself. But many people will suffer who weren’t involved in the hype (construction workers who had jobs building new homes, for example.) I also agree that the Bush admnistration is lying to us–this is partially due to incomeptence (very, very few people in the administration understand int’l finance or global economics) plus the fact that these people are arrogant enough that they feel they have a right lie to us. This makes it hard to know just how bad things are, but I’m afraid the next administration is… Read more »


But the Cubs have the best record in the major leagues. How bad can it be?


I think tcoyote has a point about how bad we should think things are. This country has a huge amount of wealth, but it is distributed unevenly and I guess if we do get to a point of turning things around what income levels are going to do the paying, and who’s going to benefit the most and suffer the most. If as tcoyote says, it’s not as bad as we think, and Bush says the financial system is sound, then why is the government bailing out financial companies (and their shareholders) that got into bad situations because of their… Read more »

Jack Lohman

I might add that we already had a drug distribution system in place. It’s called drug stores. All they had to do is allow Medicare patients to take their prescriptions to the druggist and have him send the bill to the Medicare administrator, just as the doctor does. But that would have negated the need for yet another insurance industry, which incidentally, can give campaign contributions.

Jack Lohman

>>> “as well as institute the Medicare prescription drug benefit decades worth of Democratic Congresses and a lot of liberal hot air specialists could not give us.”
Uh, hey, tcoyote, the Dems wouldn’t give us that because it was a $780 billion giveaway to the pharmaceutical industry that funded the campaigns of the Republicans. No wonder Bush signed it into law so quickly! He could hardly contain himself.

Jack Lohman

Wow. Yeah, our farm economy is booming because the cost of corn and food has gone through the roof, and export manufacturing is up because the dollar has tanked. And yes, Wal-mart sales are up because people are getting desperate. And jobs? Yeah, more people working at Wal-mart. GM closing plants, and maybe even the start of something bigger. Here’s a piece you may have interest in called “It’s the Jobs, Stupid