So many said it would never happen. But now, on Sunday, March 21, 2010, it appears that reformers have the votes. Rep. Bart Stupak, the leader of the anti-abortion hold-outs, has announced that he will vote “yes.” – under the agreement, President Barack Obama will sign an executive order ensuring that no federal funding will go to pay for abortion under the health reform plan. This really doesn’t change anything. Stupak got nothing except face-time on television.
At last, Congress is about to take the first step toward transforming what we euphemistically call our health care “system.” In the years ahead, the laissez-faire chaos that puts profits ahead of people will be regulated, with an eye to providing affordable, evidence-based, patient-centered care for all.
Over the last three years, I have predicted that Medicare reform would pave the way for health care reform, and this bill makes that possible. Under the legislation, Congress will no longer be in a position to thwart Medicare’s efforts to rein in spending by eliminating waste. Not everyone is happy about this. Over at Politico.com former Republican Senator Bill Frist and former Democratic Senator John Breaux register their protest in a column titled “Keep Medicare in Congress’ Hands.”
Under reform, politicians and lobbyists will no longer have the power to decide what Medicare pays for and how it pays for it. Frist and Breaux put their finger on a critical change at the very heart of the legislation when they complain that an “Independent Payment Advisory Board,” made up of physicians and health care experts, will be able to propose changes in Medicare payments that “become law unless Congress enacts its own proposal to achieve the same level of cuts.” Legislators will be loathe to take responsibility for cuts. Moreover “Congressional leaders will have to muster . . . .a super-majority of votes if they want to overturn the board’s decisions.”
Medicare and the Public Option
Ultimately, Medicare will help set standards for better, more efficient medical care, and in that role, it could serve as a partial substitute for the public option. When Joe Lieberman decided to kill a government alternative to private insurance, saying “I’m not going to let this happen,” I couldn’t believe that one sanctimonious and spectacularly solipsistic Senator could do that much damage. But he did. The Democrats who followed him were too weak to take a stand on their own, but he gave them a faux leader. That made the difference.
Liberals were horribly disappointed by the loss of the public option. I myself had called it “the heart” of reform. But like many others, I took a deep breath and a long, hard look at what the legislation would still be able to do. At that point, I realized that Medicare, like a public option, could set a high bar for healthcare by insisting on value for our healthcare dollars.
As I explained earlier this month, under the reconciliation bill Medicare will have the power to roll out successful “pilot projects” nationwide—without waiting for Congressional approval. In the past, Medicare has launched many very successful “demonstration projects” that improved quality while cutting costs. But because these were “demonstration projects,” and not “pilot projects,” Medicare could not implement them without going through Congress.
And in Congress, demonstration projects that reined in spending were often unpopular. After all, whenever you save health care dollars, you cut into someone’s revenue stream. So, on more than one occasion, Congress has blocked Medicare reforms.
For example, one demonstration project “bundled” payments to doctors and hospitals involved in by-pass surgery at seven hospitals, encouraging doctors and hospitals to collaborate in figuring how to make care more efficient. As a result, Medicare saved millions; both hospitals and doctors actually saw higher profits, and patient satisfaction soared. Yet Congress never let Medicare implement the project on a larger scale.
Under the new legislation politicians and lobbyists will no longer be able to block change. Inevitably, Medicare reforms will ripple out into the private sector. Insurers would be happy to save money. They have made it clear that if Medicare leads the way in reining in health care inflation, they will follow.
Who Would Have Guessed?
This is just one of many provisions in the final legislation that will help rescue our health care system from the lobbyists. This may not be a great bill, but it represents a remarkably good start. As Bob Wachter, Associate Chairman of the Department of Medicine at UCSF, and a leader in the world of patient safety, pointed out yesterday on THCB: despite the insanity of the past year—the tea-parties, the lies, and the extraordinary display of self-interest exhibited by some legislators on both sides of the aisle—what has emerged is a surprisingly sane piece of legislation.
“Who could have guessed,” asks Wachter, “that in a year that brought us Death Panels, Pickup Trucks, ‘You Lie,’ The Cornhusker Compromise, Bart Stupak (boy, that must have been a tough name to grow up with), and the Senate Parliamentarian-as-Rock-Star, we would be on the cusp of passing a perfectly acceptable healthcare reform bill, a once-in-a-generation legislative achievement. )
“Unmistakably, the mojo has shifted back to the Democrats,” Wachter declares. “It is amazing how a dour and monolithic opposition can cause even Dems to unite for a common cause. Our President has also learned a few lessons, including the importance of symbols, populism, and singing with one’s diaphragm. (We knew we were in trouble a few weeks ago when Rahm started being criticized for not being sufficiently Machiavellian.)”
I wholeheartedly agree. Ultimately the Republicans did reformers a gigantic favor by presenting such unwavering opposition to reform. The bi-partisan Summit marked a turning point. At the time, I wondered what President Obama hoped to accomplish. It seemed obvious that the opposition was quite definitely not inclined toward compromise. But the summit dramatized that fact in a way that talking heads and talking points never could.
The president was patient. He listened calmly, while Republicans made it painfully clear that they just weren’t interested in universal coverage. They would be willing to cover 3 million, but not 30 million. Suddenly, all of the other details fell away. Those two numbers stood out in stark contrast to each other. Shall we save three million or thirty million? Not dollars, but human beings.
What is distressing is to realize that the conservatives do represent some part of the public—including many of those protesting in Washington yesterday. Jon Cohn, who was there, reports that to conservatives protesting on the Capitol lawn Saturday, Health care reform is “about having their money taken for the sake of somebody else’s security. When they hear stories of people left bankrupt or sick because of uninsurance, they are more likely to see a lack of personal responsibility and virtue than a lack of good fortune. As my colleague Jonathan Chait has observed, theirs is an extreme version of a view common (although surely not universal) on the right: That individuals can fend for themselves, as long as they are responsible and as long as the government gets out of the way.”
At a recent conference where I was doing a Q&A with the audience, a young man asked how I justify asking people to pay for someone else’s health care. My response: “There but for fortune.” He nodded. Somewhat to my surprise, he seemed satisfied with the answer.
Those who oppose universal coverage display a lack of compassion that I find baffling. To be fair, let me add: I’m sure that some conservatives in Congress do care about the suffering that the uninsured endure, but they—or their leaders– cared more about “breaking Obama.” For some, this was never about health care.
The Process was “Nauseating,” but the Policy That Emerged “Ain’t Bad”
Yet despite the rage, despite the ugliness of the political process, the legislation that has emerged “ ain’t bad,” Wachter observes. “To an impressive degree, the crazy deals, the budget sleights-of-hand, and the extremist positions have been or will be stripped out of the final text. The bill will manage to cover most uninsured Americans. Its new revenue streams are not magical: higher taxes on wealthy Medicare recipients, some take-backs from generously funded Medicare HMOs . . . The most heinous aspects of the under-regulated insurance system – particularly the exclusions for preexisting conditions and the possibility of losing insurance after becoming ill – will become memories of a crueler American past, like slavery and McCarthyism.” Wachter’s analogies are apt. With this legislation, we have declared an end to cruelties that have no place in a civilized society. We have decided, once and for all, that we, as a society, have an obligation to make medical care available to all, and that no one should be punished for being sick.
Over the long term, reform will save money, but the legislation does not pretend that insuring 30 million American won’t cost anything. The bill raises taxes on individuals earning over $200,000 (and couples earning over $250,000). In the midst of a recession, the middle-class is not in a position to help. But this lucky group–the top 3%– is. Over the past thirty years, those at the top of the income ladder have watched their marginal tax rate fall, while their incomes soared. (One way to measure the gains high-income Americans have made: in 1980, the top 5% earned 2.86 times median income; today they bring home more than 3.5 times median income.) The bill also saves billions by cutting back on windfall payments for insurers who offer Medicare Advantage—another sensible decision.
Keep in mind, even if we had not decided to protect the uninsured, we would have had to raise money to save Medicare from insolvency. Inevitably, we would have had to ask wealthier Americans to contribute more. Under reform, we can save Medicare, and expand coverage while squeezing waste out of the system.
We’re Moving In the Right Direction: Details That Have Been Overlooked
We all acknowledge that the bill is “not perfect.” As Wachter points out, “Not everyone is covered. The problems with the malpractice system remain largely unaddressed. . . Lots of newly insured people won’t be able to find a primary care doc. Care will remain fragmented and chaotic for the foreseeable future.”
This is all true—and is one reason why we’ll need three years before we can make full-scale health care reform a reality.
“But even in these areas,” he argues, “the winds are blowing in the right direction: support for comparative effectiveness research; experiments with bundling, Accountable Care Organizations, and Medical Homes; promotion of improved transitions; malpractice pilot studies; a small dose of steroids for MedPAC,” he adds, referring to the new power given to the Independent Payment Advisory Board. “And maybe, just maybe,” Wachter adds, “a renewed sense that Washington can tackle hard problems.”
During more than a year of debate, the media focused so intently on the political process (who’s winning? who’s losing?), that it often neglected the details of health care policy that make this legislation so important. There are many provisions in the final bill that have received relatively little attention. Did you know, for instance, that Medicare beneficiaries will be able to get preventive care recommended by the U.S. Preventive Services Task Force without paying a co-pay or worrying about a deductible? This provision goes into effect January 1, 2001. Six months after the legislation passes, private insurers also will be required to offer free preventive in any new plans that they offer to the public.
Insurers also will be asked to spend more on medical care, less on administration–or give money back to their customers. Under the legislation, plans in the individual and small group market will be required to spend 80 percent of premium dollars on medical services, and plans in the large group market (where administrative costs are lower) are expected to pay out 85 percent. Insurers that do not meet these thresholds must provide rebates to policyholders. Again, this will go into effective on January 1, 2011. (Thanks to Health Beat readers Walter Ballin, and “run 75441” who inspired me to do a little research by asking questions about these provisions.)
I’m sure that some of you are thinking that letting insurers keep 15 percent to cover administrative costs sounds overly generous. I haven’t done the numbers, but I wonder: could insurers make do with 12%.? What I do know is that today, some insurers spend close to 20% of premiums on advertising, marketing, lobbying, underwriting and salaries. So the new rule should lead to savings. Again, not perfect, but an improvement.
Moreover, the truth is that our insurance system is labor intensive—and paper intensive. We are told that Americans want “choices,” and as a result the insurance industry offers a smorgasbord that involves an enormous amount of paper work. We have many more different insurance plans than most countries (with many more reimbursement forms). And Americans are constantly changing policies, either because they change jobs, or because they are looking for a better deal. All of this shuffling around is expensive.
This is a major reason why the private insurance industry’s administrative costs are so much higher than Medicare’s. Under Medicare there is one package of benefits for everyone, and once a senior enrolls in Medicare, he usually stays put.
As single-payer advocates will tell you, this saves an enormous amount of paper work. Under a single-payer system, you can save even more if all doctors work for the government, all hospitals are owned by the government, and they all are required to charge the same fees—set by the government. But this point in time, most Americans patients and doctors are not ready for such a radical change. I doubt we ever will want to turn physicians into government employees who work for government-owned hospitals. Thus, we will spend more on administration than some other countries.
That said, I do believe that over the next three years, the odds are high that Congress will add a public option to reform legislation.
Today’s vote represent the beginning of a process- and there will be no turning back. Conservatives will rail on about repeal– they’ll scream “unconstitutional” until they are hoarse. But this is major legislation, like Social Security or Medicare, and it will not be overturned. It’s worth nothing that when Social Security was making its way through Congress, some insisted that it was unconstitutional to think about letting government go into the insurance business. (Thanks to HealthBeat reader Don Levit for pointing this out.) Then, as now, the naysayers had no legal ground for their claims.
Whatever the conservatives may say, the legislation that will pass today is far from extreme. As Wachter notes “The fact that it has no chance of attracting a single Republican vote speaks volumes about cold political calculation, and relatively little about the nature of the changes the bill will usher in. This is, in fact, a bipartisan bill – one that deftly splits the difference between lefties who want single payer and massive government involvement, and righties who want to ‘keep Government out of my Medicare!’
In the end, reformers stayed the course. As Dan Rather reminds us in the interview below, when Lyndon Johnson persuaded Congress to pass Medicare, the country was not nearly as polarized as it is today. I am sorry to see the nation divided, but in this case, I believe that such sharp differences provided clarity. The moral choice was clear—as clear as it was when Congress enacted civil rights legislation. To his great credit, despite an extraordinarily hostile environment, President Barack Obama persevered, and in the end he stood up. Last night, he quoted Lincoln: “I am not bound to win, but I am bound to be true.” Often, being true to yourself , and to principle, is the only way to win.
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.