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Health Reform is Possible; Voters Still Hold the Power

In a post originally published here on The Health Care Blog and reprinted Health Care Policy and Marketplace Review health care analyst Brian Klepper asks: “Is Meaningful Health Care (Or Any Other Kind Of) Reform Possible?”

His answer: “I’d be surprised. Delighted! But surprised.”

Klepper believes that the lobbyists are just too strong. Always incisive, he pulls no punches: “In a policy-making environment that is so clearly and openly influenced by money,” it’s just not likely that “Congress will be able to achieve health care reforms that are in the public interest.”

I disagree. I believe economic pressures are pushing us toward a political turning point. (If you want to understand what is happening in history or in politics, follow the money.) The Bush administration has been thoroughly discredited. Americans are ready for change. Health care reform will not happen tomorrow; it will require a bare-knuckled political fight. But it will happen, and this is why: Although lobbyists are powerful, so are voters. And they realize that we are approaching a flashpoint: middle-class Americans are being priced out of our health care system.

But let’s begin with the lobbyists. Klepper asks readers to examine a review of lobbyist spending that appeared in an April 15th report published by OpenSecrets.

The numbers are, indeed, daunting. Last year, health care lobbyists spent nearly a half-billion dollars wooing Congress — “an average of about $832,000 for each Senator and Representative.” Though as Klepper points out, “Of course there’s nothing new here. For decades the health care industry has leveraged its money and influence, shaping policy to its own ends.”

And what are the industry’s “ends?” Growth. Like any business, health care businesses want to grow. Their aim: ever-rising sales and profits.

But as former NEJM editor Marcia Angell has pointed out: from society’s point of view, we do not want to see health care spending continue to spiral faster than GDP. Americans cannot keep up with runaway health care inflation. There is an inherent conflict between the lobbyists’ goals and society’s need to make health care affordable.

Meanwhile, the players in the health care industry who are bent on growth are always selling — and selling hard. Yet, too often, their products and services provide no health benefit. “There is broad expert consensus that one-third to one-half of all health care expenditure is waste,” says Klepper. “Talk privately with most health care professionals – physicians, hospital execs, health plan administrators, benefits managers, supply chain execs and there is reasonable agreement” on what is needed.

Put simply, we need to squeeze the waste out of the system. “Such changes could drive tremendous savings for individual, corporate and governmental purchasers,” Klepper writes, “but at significant cost to health care firms and professionals. Revenues and profitability would plummet.”

He then turns to the possibility of finding a solution: “What will it take for Congress to mount serious, public interest efforts that focus on serious issues?”

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

One is for “America’s largest corporations, the organizations that drive national policy through lobbying now, to galvanize to preserve the common interest. . . . 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. This is tough.”

Tough indeed. Klepper is suggesting that the very corporations that have persuaded Congress to ignore “the common interest in favor of special interests now” get together to advise Congress on the public good.

His second proposal is, as he acknowledges, equally improbable. “It 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.”

Once again, Klepper turns to “business leaders” to lobby for “the public good.”

But this is not their job. Nor is it their area of expertise. This is why we have government. By law, a corporation’s first obligation is to make a profit for its shareholders. It is expected to reach for the highest profit possible. Government is assigned the task of overseeing and, when necessary, regulating businesses when they over-reach, to ensure that their efforts do not interfere with our rights as citizens.

Particularly when we are talking about necessities — such as heat, electricity, or health care  — government is supposed to represent the interests of customers or patients, pushing back when the corporate “me-over-we, money-over-people” philosophy threatens the rest of us.

Corporate America was not always so obsessed with profits. But sometime in the 1980s, CEO’s became hooked on growth, and for more than two decades, their mantra has not changed. Plenty is never enough.

I have written in the past about how, when it comes to health care, more is not always better: excess capacity in the form of too many hospital beds, too many MRI units, and too many specialists. Over two decades of work done by researchers at Dartmouth shows that in regions of the U.S. where patients receive more aggressive, intensive and expensive care, outcomes are not better. Often they are worse.

One cannot expect the lobbyists for a growth industry to be enthusiastic about containing costs. But this does not mean that reform is impossible.

A Turning Point

I agree with Klepper that, for decades, corporate interests have been shaping public policy. During nearly thirty years of conservative rule — interrupted by eight years of initially liberal, but ultimately centrist government — lobbyists have accumulated more and more power.

But American history is a story of pendulum swings. Today, I believe we have come to a turning point, not unlike the inflection point we reached in 1980 when Ronald Reagan was elected president.

One piece of evidence: the vote, earlier this month, on the Medicare bill, which surprised many observers. On his blog, Bob Laszewski called the landslide House vote, which went against the insurance industry, “the most amazing turn of events I have seen in 20 years of following health care policy in Washington, DC.”

When legislators saw powerful lobbyists representing for-profit insurers lined up on one side, and seniors and the AARP on the other side, they knew who to fear: the seniors.

Voters still have tremendous power. And as we head toward Medicare reform — and eventually toward national health reform — legislators are going to have to weigh the power of the vote against the power of the lobbyists’ dollar.

Voters are tired of being gouged by drug-makers, device-makers, and some health care providers. Taxpayers, who pick up more than half of the nation’s health care bill can no longer afford levitating medical expenses.

Moreover, there is no reason why health care costs need to continue to climb year after year, faster than GDP. As I have written here aging boomers are not pushing prices higher. The median age in the U.S. will rise just three years, to 39, over the next quarter century — and only then will the aging of America begin to accelerate. (Even then, boomers will age just as they were born, over a period of decades.)

There is nothing inevitable about soaring health care prices. We have models in other developed countries where health care inflation is not nearly the problem that it is here. Indeed, even at home, there are regions where Medicare’s costs are not spiraling. And, as noted, outcomes are just as good, often better.

Klepper is right: money is power. But so are votes. Legislators know that no amount of campaign contributions will save them if voters decide that they are putting corporate interests ahead of their health care.

Next year, Congress will once again be forced to revisit the question of reining in Medicare spending. Four years ago, Medicare’s hospital trust fund began to spend more than it takes in. In 11 years, it will no longer be able to meet its full obligations. Medicare needs to become more efficient, which means eliminating the waste.

In the vote earlier this month, legislators made it very clear that they do not want to take an ax to the fees that Medicare pays physicians with an across-the board cut. There are easier ways to put Medicare on a firm financial footing. And I predict that Congress will find some of the money Medicare needs by repealing the two most costly elements of the Medicare Modernization Act of 2003 (MMA).

First, that law agreed to pay for-profit insurers who agreed to offer Medicare Advantage a bonus of 13 percent to 17 percent over what it cost Medicare to offer the same benefits directly. Since then, complaints that Medicare Advantage is not delivering value for Medicare’s dollars have been mounting, and they’re coming both from seniors and from the Government Accounting Office. I predict that Advantage insurers are about to lose that windfall. (Indeed, just last week, Bob explained that even UnitedHealth realizes that “the days of higher Medicare Advantage payments are limited..”

Secondly the Medicare Modernization Act specifically prohibits Medicare from using its size and leverage to negotiate for discounts on prescription drugs. The Veterans’ Administration—which is allowed to bargain—pays 50 percent less for ten of the twenty drugs that are most popular among Medicare beneficiaries. My guess is that next year, Congress may well decide to let Medicare begin to use its clout.

It’s worth remembering that the MMA was not a popular bill. Indeed, the bill was pushed through Congress, under the cover of darkness, amid charges that one Congressman was offered a bribe to vote for the bill. (This was later confirmed by the House Ethics Committee).

Presidential candidate John McCain did not vote for the bill—which suggests that whoever wins the White House, the MMA is vulnerable.

If my predictions prove true, and Congress stands up to both insurers and drug-makers, this will, I think, set a precedent for meaningful national healthcare reform. The lobbyists do not own our government.

Maggie Mahar is an award winning journalist and author. A frequent contributor to THCB, her work has appeared in the New York Times, Barron’s and Institutional Investor. She is the author of  “Money-Driven Medicine: The Real Reason Why Healthcare Costs So Much,” an examination of the economic forces driving the health care system. A fellow at the Century Foundation, Maggie is also the author the increasingly influential HealthBeat blog, one of our favorite health care reads, where this piece first appeared.

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Tom ScannellCompletely FedupWendell MurraymaggiemaharPeter Recent comment authors
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Tom Scannell
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Tom Scannell

A letter to Sen. Snow from a constiuent MS Senator, Be the most influential member of the senate and work with the Democrats to craft the health care bill. Strip away the special gifts to LA and NB. Be sure that it is fiscally responsible. Be sure that the house isn’t given away in the bargain but don’t stop the bill. Despite what is screamed from AM radio. Despite what you are being told by the poles, we want this change. We need this change. As the job market shrinks, as the burden of health care grows too burdensome for… Read more »

Completely Fedup
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AND HERE IS SOMETHING CONCRETE YOU CAN DO THIS WEEK: In case you don’t already know, in Oakland, California – this coming Friday evening, a couple of the co-authors of California’s universal healthcare bill SB840 will be having a townhall. Included on the bill is Senator Sheila Kuehl’s Healthcare Consultant (who I think did most of the detail on writing the bill), Sarah Rogers and likely more key people. THIS NEEDS YOUR ATTENTION – it is CRITICAL that people show up and let the powers that be right now know that it is NOT ok to sweep this under the… Read more »

Wendell Murray
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Just discovered this weblog through a link in the NYTimes to a recent post by Scott Shreeve, then noticed this sequence originated by Ms. Mahar. A side note to Ms. Mahar that your book Money-Driven Medicine is on my recommended list of best books on healthcare policy. Outstanding content and particularly well-written. On the topic here: I have not read Mr. Klepper’s article, but will. Ms. Mahar’s comment in reference to part of the article reprinted below misses the point of USA business’s potential value as a “player” in healthcare policy. quotation start: “One is for “America’s largest corporations, the… Read more »

tcoyote
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tcoyote

Actually, I’m a vocal critic of the pharmaceutical industry, and neither own nor sell pharmaceutical stocks. They are a terrible investment. Since you probably don’t read the Wall Street Journal anymore, you probably missed their story about the number of prescriptions written in the US actually falling this spring, for the first time in fifteen years, and that a record 70% of those written were for generics. The private sector did that, not the government. The Medicare spending reports I look at (the ones which come out from CMS every January in Health Affairs) do not break out the portion… Read more »

maggiemahar
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Peter– Don’t lose hope. I truly believe that we are reaching a pendulum swing in American politics. This won’t make people smarter–but it will change the conventional wisdom, and I think, move it in a more intelligent direction. In 1980, we experienced one pendulum swing–when Ronald Reagan was elected. For the next 28 years, the U.S. would be controlled by conservatives–puncutated by 8 years when an initally liberal adminstration woudld become Centrist, running scared from the power of conservatives in Congress. Now, everything is turning in the other direction. Here, I’m not talking so much about Obama (though the fact… Read more »

maggiemahar
Guest

Tcoyote and Peter– Thanks for you rocmments Toycote– You write: “In 2006, drugs accounted for less than 10% of Medicare spending, not counting the part buriedin Part A (Hospital care), a number I don’t know.” If you are following Medicare spending closely, you realy should know how much of spending on drugs is hidden in hospital bills and doctors’ bills (for drugs administered in hospitals and the doctors’ office.) The fact that you don’t suggests that you may be either an institutional investor with major holdings in Pharma, or a Wall Street analyst promoting Pharma stocks. Fully 20 percent of… Read more »

tcoyote
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tcoyote

I’m actually a close follower of Medicare spending trends and Maggie is wrong about hospitals and doctors. According to HHS Actuary, hospital and physician spending accounted for almost 70% of the total Medicare bill in 2006. In 2006, drugs accounted for less than 10% of Medicare spending, not counting the part buried in Part A (Hospital care), a number I don’t know. The 2007 Medicare drug spend will probably be somewhat higher reflecting the complete phase-in of MMA. On out of pocket costs, consumers paid only about 12.5% of the nation’s healthcare bill directly, or about $256 billion, and of… Read more »

Peter
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Peter

Maggie, I’ve lost hope that there is enough intelligence in the American voter to force politicians to do the right thing. There was a discussion on NPR several weeks ago about the increasing stupidity of the American citizen. Look at the recent off-shore drilling debate. It caused the usual eloquent Obama to blink on his initial (and correct) view that drilling will not reduce prices and is not the solution. Americans think by drilling there the price of gas will be lower – without being smart enough to understand that the price of oil is set world wide and that… Read more »

maggie mahar
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Bev M.D. and tcoyote– Thanks for your comments. Bev, you’re entirely right, Congress doesn’t like big and complicated. But legislators also don’t like being trageted by angry seniors. Let me backtrack a minute to say that I don’t expect the full-scale national health reform that we need in 2009 or 2010. It’s going to take time. Things will have to get worse. But I do expect Congress to begin reforming Medicare in 2009 and 2010. The reason: they have no choice. Medicare really is running out of money. And while Congress may sit there and watch Fannie Mae head for… Read more »

bev M.D.
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bev M.D.

I would really like to believe that we have reached a tipping point. However, I have thought that we had reached a tipping point so many times over the last many years, and invariably the public’s and Congress’ attention has turned in other directions. Some time ago, a commenter to this blog indicated that most Americans engaged at all with the political process are still covered by their employers or Medicare/Medigap and are generally happy with their coverage. Therefore, the impetus from this group (who are the most likely to write their Congressmen) is lacking – in contrast with the… Read more »

tcoyote
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tcoyote

Maggie is right about the need to reform Medicare. The two main “battlegrounds” she has chosen, however, are classic liberal warhorses: undoing two symbolic neoconservative victories- promoting the outsourcing of the program to private plans with indefensible above-cost subsidies and preventing the federal government from directly bargaining with drug companies. Both are peripheral to the main challenge: reforming how doctors and hospitals are paid (for the 80% of the program which flows directly to them, not thru the health plans, which are still only 20% of Medicare enrollees) to correct the inflationary bias in the program and eliminate a lot… Read more »