No, that’s not my entry for understatement of the decade. It is a follow up to my post last week about the impossibility of comprehensive health care reform given today’s rather difficult environment.
Yet a recent editorial in the New England Journal of Medicine says Congress and the President-elect can deliver on reform, if they move quickly, act forcefully, and ignore costs. The piece is an excellent analysis of how Medicare came to be, paying particular attention to political maneuvering and manipulation.
As good as it is, I have a major bone to pick – the authors’ rather cavalier approach to the cost issue.
Here’s how they put it:
“The expansion of health care to large populations is expensive, and presidents may need to quiet their inner economists.[emphasis added] [then-President Lyndon] Johnson decided, in effect, to expand coverage now and worry about how to afford it later. Accurate cost estimates might very well have sunk Medicare. In fact, this generalization holds across every administration from Harry Truman to George W. Bush. Major expansions of health care coverage rarely fit the budget and generally drew cautions (and often alarms) from the economic team. Of course, under current federal budgetary circumstances, managing the economics of health care reform may be more difficult than ever before.”
Well, it’s safe to say we know a heckuva lot more about costs, drivers thereof, and implications of governmental programs than they did forty-five years ago. As an example, I give you Medicare Part D. After Part D, the largest expansion of government-assisted health care since 1964, went into effect drug manufacturers raised prices by an average of 7.4%. Why? Because they knew there was a large new customer base, eager to get drugs, that was not very concerned about cost.
The passage of Part D was a boon for big pharma, as the industry enjoyed a substantial increase in profits and revenues attributable to Part D. Part D did not benefit the managed care firms; many have not profited from their offering, and more than a few (see Humana) got hammered. For 2009, the big Part D carriers are raising premiums significantly; Humana by 51% and United Healthcare by 18%, with copays also on the rise.
On a national scale, the program is a disaster. The ultimate liability for Part D is $8 trillion, a liability that is unfunded. This is what we can expect if Congress passes and President Obama signs into law national health reform that does not aggressively, and forcefully, address cost – a deficit explosion that will make the cost of the current bailouts look like lunch money.
Simply put, you just can’t ignore cost. Even if the Democrats tried to push thru universal coverage without strong cost controls (which they won’t) the Republicans would crucify them (which they should).
But, with one exception, the current bills before Congress and ideas floating in Washington don’t address cost. There’s talk about fraud and abuse, electronic medical records, prevention and wellness – all the usual sound bites. What there is not is any meaningful discussion of cost control.
(The Wyden-Bennett Healthy Americans Act was carefully analyzed by the Lewin Group before it was released (the analysis indicates it will actually reduce costs). Sen Wyden (D OR) is astute enough to understand that any reform bill that does not explicitly address costs is a waste of time, dead before it even hits the floor.)
So what do we do? We obviously can’t rely on private insurers, as they have demonstrated absolutely zero ability to manage costs. I’ll take that up tomorrow.

In the three and a half years I’ve been publishing MCM, I’ve been labeled a conservative, libertarian, apologist for the insurance industry, socialist, leftist, liberal, and other less printable terms.
It’s nice to be part of so many seemingly diverse groups.
Yesterday the Center for American Progress (a progressive organization) called me out for my statements that we won’t see big health reform any time soon. They make a rather compelling case for health reform, citing all the good reasons for the ‘big fix’.
While I applaud their motives, perspective and logic, I would also note that their piece completely misses the big point, a point they themselves explicitly acknowledge. None of the health care reform initiatives presently before Congress (except for the Wyden-Bennett bill), nor President-elect Obama’s health reform platform address costs.
Folks, wake up! We cannot afford to cover 50 million more Americans unless and until we do something meaningful about costs!
Once people get insurance, they tend to use it. And as we’ve seen with Part D, once the medical/pharma/device/hospital industry figures out there are a lot more people with coverage, they will raise prices, buy more technology, and build more capacity to service those new customers
Obama’s campaign speeches and white papers acknowledged this central issue. Yet he has yet to come out with anything remotely addressing cost savings initiatives. The contention that his plan will save the average family $2500 is simply not credible; there is no backup for that claim.
There’s a very good reason for the absence of cost cutting; politically it would make the Obama plan dead on arrival; or more accurately, dead before conception.
The combination of the political impossibility of keeping every health stakeholder happy, today’s economic situation, the wars in Iraq and Afghanistan, Russian and North Korean belligerence, energy, and the world wide implications of the recession and credit market collapse leave no oxygen for major health reform. Yes, there will be incremental initiatives (see here) and these incremental improvements might actually be big changes.
But anyone who wants to see the whole mess fixed at one fell swoop is going to be sorely disappointed.

For the first time since the first two years of the Clinton administration, Democrats are going to dominate the House, Senate, and occupy the White House, giving Capitol Hill a decidedly blue tint. There’s lots on the agenda, but three factors weigh against much in the way of health reform in the next Congress.

First, there’s little money to spread around.
Second, there are big problems that demand immediate attention – the collapsing economy, rising unemployment, Iraq and Afghanistan. Russian President Medvedev’s sabre-rattling yesterday is another signal that international issues will require significant attention from the executive branch. These meet the definitions of both ‘important’ and ‘urgent’ and will likely dominate the agenda for the next few months.
Third, the Democrats will not have a veto-proof majority in the Senate.
Despite the presence of these rather large obstacles, I’d bet we do see meaningful steps towards health reform in the next Congress. First, something has to be done to show progress on key issues. Second, several policy initiatives can be enacted that don’t ‘cost’ anything, and other measures can be funded with cuts in current programs. Third, I’m not so sure the Dems will need 60 votes from Democrats to pass health reform. Susan Collins and Olympia Snowe from Maine are generally well-disposed towards health reform, and the independents will likely vote with the Democrats as well.
And most importantly, Pres-elect Obama’s newly designated Chief of Staff, Rahm Emanuel, is a hard-nosed centrist who knows how to get votes for his boss. Emanuel was instrumental in getting welfare reform passed for Clinton; that success coupled with his experience in the House and high level of respect he commands in both the House and Senate stack the deck in favor of reform.
Let’s not forget Sen Kennedy’s ongoing efforts as well; his standing and longevity in the Senate make him a very powerful force.
Here’s what I’d expect we’ll see in 2009 – 2010 from Congress and the new President.
SCHIP will be first out of the blocks. The expansion of coverage for kids is a central piece of Obama’s platform on health reform, and with a Democratic Congress the chances of meaningful expansion of this program are pretty good. And it won’t just be Democrats voting ‘aye’. After the back and forth battles, marked by confusion and consternation from Republicans who felt Pres. Bush threw them under the bus by vetoing a bi-partisan bill to extend SCHIP earlier this year, enough Republicans are likely to cross the aisle to support funding of a somewhat-expanded program.
The fall will be highlighted by a debate over Medicare physician compensation. With docs scheduled to see their reimbursement drop by around 20% in 2010, the caterwauling will be heard loud and clear inside the Beltway. Don’t look for a major policy change, but rather something to satisfy the physician community and build a little equity for the future. Where will the money come from?
Do not be surprised if CMS is expressly ordered to negotiate prices with big pharma in the near future. The Part D program is a budget buster, big pharma has few political allies (despite big contributions) and reducing the cost of drugs will save CMS budget dollars that can be spent on physicians.
Also on the table will be reduced funding for Medicare Advantage, a program that has long struck Democrats as a giveaway to big healthplans. Foolishly. the insurance industry worked hard, and effectively, to block reductions in MA this year. As Bob Laszewski notes, with Congress and the White House changing hands, the bill they stopped this year will look great compared to what they’ll get next. Expect MA subsidies to be slashed, in what could, and should, be seen as a shot across the bow of the insurance industry.
What does this mean for you?
Politics is the art of the possible. And even now, meaningful health reform is, indeed, possible.

Today was another day of ‘dropping lit’ – this time myself and an attorney from Manhattan were tasked with hanging signs on doorknobs in a typical spread-out suburban community in Bucks County PA. The signs were specific to the polling place for each address, and also listed what voters needed to bring and polling hours. The signs, 146 to be exact, and the combination of big lawns, a highly targeted list of addresses, and a desire to not walk on lawns made for about seven miles of trudging around cul de sacs and wyndy roades (that’s how they spell in parts of Bucks). Spoke to several potential voters, including one irate McCain supporter who was apparently incensed at the idea that people would actually walk thru his neighborhood in an effort to encourage his neighbors to vote.
Truth be told, there were also two Obama supporters who seemed to have had just about enough of door-to-door canvassers…
Spent several hours this evening (thankfully sitting down) getting trained to be a poll observer. I’ll be working to help voters figure out where to stand in line, how to make sure each vote counts, and watching for any attempts at voter suppression. I can honestly saw I know way way more about the Danaher voting machine now then I thought needed knowing.
It is not exactly a triumph of technology – the machine uses a printed piece of paper that overlays rows of buttons which the erstwhile voter has to press – through the paper – to indicate his/her choices, and then confirm the vote by pressing another button.
like this…

There are counters, and accumulators, and figures that have to be cross checked against each other. And it seems these triumphs of American ingenuity break down fairly regularly, which then results in voters filing out paper ballots. Unfortunately, through the wisdom of the election officials in Bucks, each polling place will only have fifty (50) paper ballots on hand. Not to worry, they have another fifty for each polling place secured in an undisclosed location, which they will transport to any affected polling place pdq. This in a county where turnout is expected to top 75% of eligible voters, a county that is also deemed to be one of the key counties in the nation.
Tell me again, how is it that we have the gall to send people to oversee other countries’ elections to make sure they are fair?
I learned a lot of other interesting stuff about subtle means of voter suppression, how vote tabulation works, appellate court rulings on voter identification, and what defines ‘electioneering’ and why you can’t do it within ten feet of a polling place (definition of where that ten feet is measured from to be determined arbitrarily by the boss of each polling place.)
For now, I’m just thankful this only comes every four years. And after fourteen hours at my assigned polling place tomorrow, I’ll likely be even more thankful.

Today, tomorrow and Tuesday I’m in Bucks County, PA, volunteering for the Obama campaign. No, its not glamorous, I won’t be appearing on NPR or the Nightly Business Report. I will be being doing whatever the caffeine- and cheesesteak-fueled twenty-somethings running the local Obama campaign GOTV (get out the vote) team choose to delegate to me.
Got to the office (one of many in Bucks County, which is north of Philly) I was assigned to early this morning, and was immediately put to work doing menial clerical work by local boss John, who looked like he’d been awake for quite a while (as in days, not hours). About ten am, a bus arrived and disgorged about 60 New Yorkers. The seating capacity of the bus was 53, so seven stood all the way here from NYC (about 90 minutes). And they each paid $30 for the privilege of spending their Sunday working for Obama. And a couple dozen volunteers were left curbside in Manhattan as there was no more room on the bus.
They paired up those with cars (e.g. me) with those without (two recent Barnard graduates and a retired cellist), handed us a detailed, coded, yet simple map and materials and directions and sent us out to place literature on doorknobs of previously identified likely Obama supporters.
These people are organized. I mean, really, really organized. Organized like big businesses are supposed to be, but rarely are. There were over 120 of us there this morning, and all of us were trained, out, and canvassing within a half-hour, with computerized lists coded with directions, separated by odd and even house numbers so we could work both sides of the street most efficiently. They are also frugal – no one offered to pay for gas or tolls or lunch, there were no piles of buttons and swag laying around for the taking.
Yesterday (Saturday) was door knocking and contact day, when canvassers tried to engage those still undecided voters. Obama canvassers knocked on 69,000 doors yesterday. That’s not a typo – 69,000 doors in one day. In one county (Bucks), in one state, albeit a critical swing state (PA). Today and tomorrow are reminder days – voting times, polling place locations, specifics on what you do and don’t need to bring to vote. Tuesday is an 8-8 shift, making sure all potential Obama supporters get to the polls. And rest assured they’ll know precisely who makes it to vote and who doesn’t, and for those is the ‘doesn’t’ camp, some smiling Obama volunteer will be on their doorstep offering to drive them to the polls by early Tuesday evening.
Pennsylvania is supposed to be tightening up. The GOP’s vaunted 72-hour program has delivered in the past, and McCain is going all in in PA. The Senator from Arizona has to win Pensylvania to have any realistic chance of beating Obama.
From what I can tell, I don’t think McCain has a chance.
Admittedly I’m only seeing one tiny part of one candidate’s campaign, and I’m certainly no expert in these things. I do know Obama’s Get Out The Vote effort is extremely well run, efficient, and very focused. Obama also benefits from his volunteers’ weird combination of enthusiasm, paranoia, and sense of self-responsibility. To a person, everyone I spoke with or heard in passing believed it was their responsibility to do everything they could to get Obama elected. That includes the mom from Weston CT with two kids in boarding school, the high-school kids from the neighborhood, the retired veteran, the pipefitter, the farmer from rural western Massachusetts and two residents taking a day off from medical training.
This wasn’t a lark, it was a personal responsibility.
I’m going to be reporting from/commenting on the experience – be forewarned, MCM likely won’t have much to do with managed care until Wednesday. For those incensed/outraged/angry as my keystrokes meander away from the mainstream of managed care, I’ll be glad to send you a full refund.

For several months rumors have been floating around Capitol Hill about efforts by Sen Ted Kennedy to get legislation to the floor of both houses early in the new year. With the Senator’s recent move back to his DC home from his residence on Cape Cod, the talk is the discussions are accelerating in anticipation of a big win for his party (that would be the Democratic party) next week.
To date, meetings have included the usual suspects – AARP, the AMA, Consumers Union, Families USA, and the NFIB. Notably, some ‘unusual’ suspects have also been in attendance, an occurrence that may bode well for chances of something actually happening. According to the Boston Globe and other sources, meetings have included staffers from both parties, including staff from Mike Enzi’s office (R WY). This bipartisan participation, along with ‘pre-meeting meetings’ with staff from the two key Senate committees (Kennedy’s Health, Education, Labor and Pensions, and Max Baucus’s (D MT) Finance) reflects Kennedy’s desire to not repeat the mistakes of the past.
The Clinton efforts were partially undone by intraparty infighting, a situation Kennedy et al are working hard to prevent at the outset. His efforts will likely build on the heavy lifting already done by Wyden and Bob Bennett on behalf of the Healthy Americans Act, a bipartisan initiative that has gotten positive reviews by a number of analysts, including me. HAA has been in the works for almost two years, and in that time the two originators have been able to garner support from equal number of GOP and Democratic Senators, an amazing accomplishment when one considers the partisan rancor that has smothered DC for the past six years.
Kennedy was one of Sen Obama’s early endorsers, a move that may well help push health reform to the front of the list in the next Congressional session.
What the sausage will look like after it comes out of the factory is impossible to know, but here’s a couple of predictions.
First, there will be some form of Medicare opt-in for individuals who want to buy into the program instead of dealing with individual insurers (sign me up!).
Second, expect a minimum set of benefits to ensure health plans don’t ‘underwrite’ via benefit design.
Third, don’t expect to see medical underwriting continue much longer.
Beyond that, it depends on who gets to throw the last ingredients into the sausage grinder.
That is, of course, if Kennedy et al are successful and health reform actually becomes law. While my gut tells me there’s just no money, my other organs are thinking ‘hell, if we can afford to give AIG an eighth of a trillion dollars, we can definitely afford big-time health reform’.
What does this mean?
Don’t think this as the last gasp of an aging, sick man. It may well be the final roar of the Lion of the Senate.

Central to Sen McCain’s health reform initiative is his plan to eliminate the tax deduction for employer-paid health insurance, replacing it with a $5000/family $2500/individual tax credit to help individuals buy health insurance.
There’s nothing in McCain’s plan that would force employers to stop providing health insurance. The question is, would they drop coverage?
Because there’s no way to know, we have to look at what employers are saying about the plan – understanding that 71% of Americans with health insurance get their coverage thru their job.
The New York Times surveyed several employer coalitions/groups earlier this year; here’s what they learned.

• A recent survey of 187 corporate executives by the American Benefits Council and Miller & Chevalier, a consulting firm, found that three-fourths felt the repeal of the tax exclusion would have a “strong negative impact” on their workers. Only 4 percent said they would provide additional pay to fill any gaps.
• Business Roundtable, an association of leading chief executive officers, said his group instead supported extending the tax exclusion to those who bought coverage on their own.
• American Benefits Council, said concern that the tax credits would not keep up with inflation was a primary reason his 280 member companies “take a very dim view” of repealing the tax exclusion.
• “There are huge questions about the $5,000 per family being an insufficient amount in terms of being able to purchase the same coverage,” said Mr. Josten with the Chamber of Commerce.
• National Business Group on Health, a coalition of 300 companies, agreed that many workers would face a net loss.

Smaller employers are not fans of the McCain plan; 70% of those surveyed by the NFIB oppose the plan to eliminate the tax deduction.
Not exactly conclusive, but nonetheless revealing. More significant is the longer-term perspective – as McCain’s plan indexes the tax credit to inflation and not medical inflation, it will very likely not keep pace with trend. And that may be the bigger issue.
According to Paul Fronstin , a senior research associate at the Employee Benefit Research Institute “What you’ll see happening is average cost in the employer-market will go up and average cost in the individual market will go down,” Fronstin said. “You’ll start to get into a cycle where people at the margin start to leave employer coverage for individual coverage [emphasis added]. At some point, employers will start to ask: Why am I doing this if my workers don’t value it anymore? If I don’t need to do this to be competitive in the labor market, why should I do it?”
Fronstin’s point is all the more germane when the economy is in a recession and unemployment is rising. In a soft job market, employers will find it easier to drop coverage, and once it’s gone, it isn’t likely to return.
One signal that the McCain health plan may not be too popular was the recent ‘de-endorsement’ of the plan by Texas Sen John Cornyn (R).
What’s the net?
We don’t know if the McCain health plan would result in a rapid decline in employer-based coverage. But employers clearly don’t like the idea of losing the tax deductibility of health insurance premiums.

It’s not hard to figure out what message is working best for Barack Obama – look at his ads. By an overwhelming margin, they are about health care.
The Democratic candidate has spent $113 million on political ads focused on health reform to date, eight times Sen McCain’s expenditure. Fully two-thirds of Obama’s ads have featured health care compared to one-eighth of McCain’s.
And that trend is accelerating, as Obama’s stance on health care has resonated with likely voters, he has pitched his health reform message almost exclusively – 86% of his recent ads focus on health care compared to 1.5% of McCain’s.
A substantial majority of likely voters is paying attention to the candidates’ positions on health care, and this is not good for McCain. According to a recent poll, 54% of voters are not confident he would make the right decisions about health care. This issue resonates particularly loudly among women, who make up a majority of the electorate.
McCain’s plan includes the elimination of the tax break for employer-funded coverage, a position that likely scares the hell out of many folks afraid that their bosses will use this as a reason to drop their health plans. With the press chock-full of stories about the high cost and lousy coverage offered by individual plans, coupled with stories of sleazy insurers canceling coverage for folks audacious enough to get sick, this is a losing position for McCain.
Health care won’t decide this election by itself. But what the candidates are saying about health care will be one of the major contributors to what looks like a big win by the Democrats and Obama.