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The New Landscape of the Health Reform Debate

Bill KramerIn the recent publicity about President Obama’s budget and health reform initiative, an important issue 
has not received enough attention.  Most reporters, analysts, editorial writers and bloggers have focused on the proposed $634 billion reserve fund, the aim for universal coverage, the reduction in Medicare Advantage payments, the tax on families with incomes over $250,000, and other key features.   In the view of many Republicans and others opposed to this approach, the proposal looks like just another version of a “tax and spend” strategy to fix our health care system.  There is something different, however, and the health reform battle is moving into new terrain.

In the past, advocates of health reform focused on need to provide access to care for the uninsured.  This was (and is) a moral issue – “How can the richest nation on earth let millions of people go without access to decent health care?”  To provide universal access, however, required a lot more government spending.  This set up a conflict, because every reform proposal had a big price tag, and few politicians were willing to support a program that dramatically enlarged the federal deficit.   Many advocates believed that expanding coverage was worth it, but it faced very difficult obstacles due to concerns about the rising government debt load.

In the current debate, many people have been repeating the mantra that “we must expand access and contain costs”, but this often seems to be simply a convenient way to broaden the goals and make it look like they are being more fiscally responsible.  The Obama administration is taking a different path, however, and it is changing the debate in a fundamental way.  The President has stated that rising health care costs are the most important problem for future federal deficits. Peter Orszag, the OMB Director, makes a convincing case that we face an unsustainable trend in government spending for Medicare and Medicaid in the absence of health reform.   As a December 2008 CBO report stated:

"The rising costs of health care and health insurance pose a serious threat to the future fiscal condition of the United States. Under current policies, CBO projects that federal spending on Medicare and Medicaid will increase from about 4 percent of gross domestic product (GDP) in 2009 to nearly 6 percent in 2019 and 12 percent by 2050."

This means that health reform – if done right – won’t make the deficit problem worse; in fact, we need health reform in order to tame the long-term deficit.  This has transformed the debate about health reform.  It’s not just a desirable social policy; it’s a necessary tool for fiscal discipline.  Traditionally, “entitlement reform” has meant cutting benefits or shrinking eligibility for Medicare and Medicaid in order to hold down costs.   The new approach, however, looks at expanding health coverage as a key element of reducing the deficits. 

Is this really a new approach, or is it simply clever re-framing or wishful thinking?  There are three key elements that make it worthy of serious consideration.  -    First, the OMB and CBO are taking a long-term view of the federal deficit.  While expansion of coverage and investment in electronic health records and research will cost more in the short-run, comprehensive reform has the potential to “bend the cost curve” over ten years, thus putting the federal budget on a more sustainable course.  -    Second, the President’s recent budget proposal includes specific revenue sources, e.g., the tax on families with incomes over $250,000, which offset the increased expenses.  In the budget proposal, the net cost of the health reform reserve fund is zero.  -    Third, and perhaps most importantly, there is a much broader view of what is needed to contain health care costs.  Instead of relying on politically unpopular cost reductions such as moving Medicare eligibility to age 68 or slashing payments to physicians, the plan recognizes that system changes can drive lower costs.  For example, giving employees of small businesses a choice of health plans through an insurance exchange would introduce healthy competition, which should spur insurers to improve efficiency.  Similarly, prohibiting the use of medical screening to deny coverage would also create incentives for insurers to find more appropriate ways to reduce costs.

As the health reform debate heats up during the next few months, there will be some who attack health reform as “too expensive”.  In the past, this might have been sufficient to stop any plan to expand access to care.  The landscape has changed, however, and the battle will now be fought on different grounds. Politically, the new approach allows fiscal conservatives to line up with social liberals to support health reform.  Quietly but powerfully, this change has improved the prospects for health reform.

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henrylowRobert WilliamsAlexandra EvansBill KramerKaiserdoc Recent comment authors
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henrylow
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henrylow

Having been a part of the Online Universal Work Marketing team for 4 months now, I’m thankful for my fellow team members who have patiently shown me the ropes along the way and made me feel welcome
http://www.onlineuniversalwork.com

Robert Williams
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Robert Williams

It would be very interesting to see a list of health insurance increases by companies around the county for the coming year.
Debate by opponents has focused on the costs for a government plan and have ignored the cost increases for private insurance for the next 10 years. People should be reminded they pay, through taxes, the health costs for federal, state and local governmental workers; teachers, cops, firemen etc. The costs are high and will add more agony to budget makers. Even with the increases more will loose coverage.

Alexandra Evans
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Alexandra Evans

One of the major problems with the health care system is that the Health insurance companies are mostly for profit organisations. I’m from Australia and here most of the health insurance companies are membership based not for profit organisations who spend all their contributions to payhealth benefits to members after they maintain their reserves and business related costs.Such companies could compete with the existing for profit companies and eventually establish themselves as the best value for consumers and give doctors the discretion to decide the best health care for their patients.

Bill Kramer
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Thanks to all of you who commented on my original post. In the spirit of the one who said, “Keep the conversation going”, I’d like to respond to some of the comments. Rick Lippman said that we need to get basic coverage for every U.S. citizen immediately. I agree – health reform doesn’t mean much if millions of people are left out. He also lists many key elements of system change and sustainability, including strengthening primary care and improving chronic disease management. To his list, I would add provider payment reform – this is a key important lever to get… Read more »

Kaiserdoc
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Kaiserdoc

Primary care needs to step up and reform from within. We need to actualize several well-established principles that have coalesced from throughout the world regarding primary care, and TAKE ACTION rather than continue to talk: 1) A large percentage of day-to-day minor medical problems (“the sniffles”, musculoskeletal complaints) do not need MD input to assist the patient; in the U.K. and Sweden, RNs and other trained health coaches do the bulk of this work, shifting it away from the MDs. We need to do that here in the U.S. This means, that when someone calls for an appt with the… Read more »

Philip Micali of bWell-informed
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What’s most fearful is how much our current system costs individuals and hurts economic security. The US is fatter than any other nation because people don’t have relationships with general doctors, rather they use the expensive specialty care system to ameliorate symptoms. The foundation of any reform needs to emphasize prevention and primary care and convey the benefit of doing so, both in terms of cost savings and productivity. The ‘culture’ of medicine will change only if, like in the financial markets, incentives are aligned properly. Will healthcare finances be the next expose` on cable news shows like we have… Read more »

Nate
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Nate

Peter if Private HC is so bad why is Obama trying to force them to pick up the tab to treat wounded soliders? Obama has hit bottom as a president trying to make american soliders, injured protecting this nation, pay for their own care or make their private insurance pay for it. If single payor and public plans are so efficient why are they always shifting cost to private insurance? The only way private HC collapses is if the morally bankrupt disgrace of a president we have now dumps all of the public responsibilities on them to drive them out… Read more »

Peter
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Peter

We just need to wait until private run healthcare collapses, then pay pennies on the dollar to shareholders, or even better, wait until the companies disappear into bankruptcy. The system is not sustainable, and that will work in favor of single-pay.

Deron S.
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“Maybe the same entity now trying to save the financial asses of shareholders of these companies:”
Ok, well I hope you’re ok with that “entity” spending another few hundred billion. That’s what your beloved single-payer option will require.

Peter
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Peter

“Who’s going to buy out the shareholders of United Healthcare, Aetna, etc.”
Maybe the same entity now trying to save the financial asses of shareholders of these companies:
http://money.cnn.com/news/specials/storysupplement/bankbailout/

Zorza
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Zorza

Our country needs healthcare coverage for everyone, now, not later. By taxes paid in by everyone.
This is the only fair way that EVERYONE can receive medical services, reducing the overall cost with inherent efficiencies, while raising the quality of service, and with everyone paying their fair share. Employers should not be involved in an individual’s private medical information in any way.

Nate
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Nate

“Opt for single payer which can be simply implemeted and will require NO NEW MONEY!”
Every single payor type plan in the US has double digit fraud and abuse rates. Without question moving to a single payor would substantially increase claims cost as they have no utilization or spending control. Any perceived savings from simplified administration is spent 2 to 3 times over on waste and fraud.
The biggest failure in US Healthcare is Medicare and that is your proposed solution.

Deron S.
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Harriet – Single payer will most definitely require new money. Who’s going to buy out the shareholders of United Healthcare, Aetna, etc. They aren’t just going to go away. If you have a 401k, you probably own shares via a mutual fund. I’m not going to donate my retirement plan money to Uncle Sam, knowing that he’s going to tax the hell out of me later. Buying out the shareholders of these corporations will cost in the $100s of billions alone. That doesn’t even take into account the transition costs. The transition to single payer will cost a lot of… Read more »

Harriette Seiler
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Harriette Seiler

If the Blue Dog Dems want a cost-neutral plan, and everyone want a fiscally reponsible plan, and the complicated mandate plans in MA and San Francisco aren’t working to the benefit of small business, if the MA plan can’t control costs, if the private insurers don’t want to “compete” with the public option–what’s a reformer to do?
Here’s the solution–Opt for single payer which can be simply implemeted and will require NO NEW MONEY!
Once again, we need to ask CBO to “score” HR 676–the single payer bill. See the text at http://www.thomas.loc.gov

Jeffrey Luther, MD - President, California Academy of Family Physicians
Guest

I agree that “we need health reform in order to tame the long-term deficit.” Pursuing health care reform during this economic downturn is essential as more people lose their jobs and cannot afford, or even find, insurance. A key element of national health care reform must be universal access to a primary care medical home for all our patients. President Obama signaled his support for putting primary care at the center of health care reform by inviting the President of the American Academy of Family Physicians, Ted Epperly, MD, to the Health Care Reform Summit held at the White House… Read more »