HPI associated director Tom Smith looks at the battleground of US healthcare reform - a totem to the Obama presidency, and a target for Republicans and large parts of the US's mighty healthcare industry. This could make the Boston Tea Party look sedate ...
After months of discussion, the battle is accelerating and the key disputes are becoming clear. The politics are ‘messier than ever’, the FT says, while The Economist says the next few weeks are critical for how the politics play out.
This A-Z of the key issues aims to map the critical issues in debate about US healthcare reform.
AUGUST DEADLINE FOR A WAY FORWARD
The President has been campaigning for health reform ever since he became president and, in earnest, since he addressed the American Medical Association back in May. He has not set out a particular plan; just a key goal - to achieve universal coverage.
Obama has been prepared to engage stakeholders in broad terms. He told the AMA that his design was not out to introduce government-run healthcare. He hinted that part of constraining costs was changing over-ordering of tests and fee-for-service - i.e. doctors' behaviour.
Most recently, Barack Obama appeared on all three main US TV networks to explain the overall plan for health reform (July 23rd).
The president had previously raised the stakes by making it clear he wanted a healthcare bill by August 3rd, when American politics takes its month-long summer break. He worries that if a bill is not agreed momentum will be lost.
He has accused opponents of deliberately stalling so that the moment cannot be seized. "The need for reform is urgent and it is indisputable," Obama said. "We've talked this problem to death, year after year."
BILLS, BILLS, BILLS
The Economist says the summer is a crucial to healthcare forms as it is when the politics will play out. There is lots of room for that to happen in American politics with two legislative houses and many, many committee rooms, many with a key influence on the bills.
Finalising legislation in the States is a pluralistic process. Probably the hardest thing for British people to understand is just how fluid the legislative process is, with views within, across and outside two legislative bodies. It is a very political political system.
Several bills have been working their way through Congress and there are a lot of competing ideas. Both the Senate and the Congress have been racing to complete a health bill, with Congress narrowly winning.
CONGRESS PLANS AND CONGRESSIONAL BUDGET OFFICE CONSTRAINTS
Barack Obama has already called on Congress to move ahead and pass the proposals in the bill.
The bill plans to cover 97% of the population. It proposes levying taxes on high earning households and forcing companies to make schemes available. According to the Washington Post, the tax would place the burden of reform on the 2 million richest Americans.
It would come into place in 2011 and target families on more than $350,000 per year or $280,000 for individuals. The surtax would begin at 1% for these groups and rise to 1.5% for families earning more than $500,000. It would step up to 3% for families earning over a million dollars a year.
The Congress plan will make insurance purchase mandatory. As the Post explains, ‘under the plan, individuals who did not purchase insurance by 2013 would face a penalty of 2.5 percent of their income, and employers that did not provide coverage to their workers would be fined as much as 8 percent of their payroll, a provision the CBO estimates would generate $30 billion a year.
The beauty of this plan for the left is that the poor will not pay for universal coverage. Its proponents say it will raise $550 billion over 10 years, more than half the amount needed through a single measure. They even suggested the surtax could increase again if not enough money were being raised.
The Congress would expand insurance coverage by increasing Medicaid eligibility and delivering tax credits to people earning 133 percent of the poverty level. Small businesses and individuals who had trouble buying insurance would be able to shop for plans through new purchasing groups dubbed "exchanges".
Opponents are not impressed, and point out that the overall effect would be a 45% tax rate for the wealthiest in society. A senior fellow at the Tax Foundation believes, “one has to decide whether the health-care reform package they’re talking about is worth imposing such high tax rates on the most productive members of society”. Others claim it will hit small businessman disproportionately.
House leaders defend themselves by saying they are targeting those most able to pay. Even so, not all Democrats are pleased by the idea of taxing the wealthy – and on this issue there are key differences between Democrats in the House and the Senate. The Democratic representative for Nebraska, Senator Ben Nelson says, “tax is a four-letter word” with his voters. Even families not ranking in the top 1 percent of earners "hope they're going to be there someday, so they don't necessarily think it's fair."
Whatever solution is arrived at the plan will have to pay for itself over a ten-year period. The Congressional Budget Office (CBO) has ruled that any plan must be cost-neutral. The CBO is the statutory official arbiter for the cost of any legislation. It is a critical body on the eventual shape of legislation.
DEMOCRATS DO NOT ALL AGREE
Democrats in the House of Representatives are more left leaning than their Senate colleagues. Their majority that means they do not necessarily need to work with Republicans as their colleagues must do in the Senate. Within this atmosphere, the idea of taxing the rich is a unifying factor amongst House Democrats. “It’s where the votes are” one House leader told the Washington Post.
The last couple of months has seen some intense debate between left and right wings of the party. The left-leaning plan may be a reaction to the pressure brought to bear during the lost couple of months.
A piece in the Washington Times last month reported that liberals were putting pressure on Democrats felt to be overly conservative .
Bloggers, unions and campaigners for reform have named and criticised five or six Democrats in the Senate they believe are forming barriers to reform. Typical of US politics, the campaigns are very direct. One Internet advert asks, “will Mary Landrieu sell out Louisiana for $1.6 million? A TV advert suggests the contributions she has received from the medical industry explain her reluctance to back the creation of a government sponsored insurance plan.
The Washington Post does not expect the Senate to back the wealth tax and politicians are instead looking for other ways to raise the shortfall in the reform plan. The favoured option is a tax on the benefits that are received by employees, about which more below.
ECONOMICS AND EFFICIENCIES
An absolute essential of the health reform plan is that it pays for itself over a ten-year period.
Arguments about the financing of reform exist because some of the assumptions are questionable. The president has argued that the adoption of a large-scale IT programme could save money in the system, over the long-term (yet in England we have learned that this wholly depends upon how the system is set up and run).
Some of the assumptions in the Congress plan were immediately questioned – large savings in Medicaid payments, for example.
The director of the Congressional Budget Office, Douglas Elmendorf cautioned that the $1 trillion costing of the plan is impossible to accept with any certainty without more information on the changes that are proposed to Medicare and Medicaid.
When subsequently questioned by the Senate Finance Committee, Elmendorf said the Congess bill did not equate to “the sort of fundamental changes” necessary to reign in the cost of healthcare spending. Not only that, but the plan could increase costs by expanding access to the uninsured.
Although the Congress plan makes provisions for expanding provision at current demand, there are factors that mean they are underestimating the total cost. As Elmendorf himself put it, “the curve is being raised” suggesting that the measures could make the bleak budget outlook even worse.
According to the Washington Post, the blunt language used by the CBO director will ‘galvanize the growing number of Democrats agitating for changes in the [Congress] bill’.
When CBO Director Douglas Elmendorf was asked how he would raise money, he suggested ‘changing the way Medicare reimburses providers to create incentives for reducing costs’. He further suggested ‘ending or limiting the tax-free treatment of employer-provided health benefits, calling it a federal "subsidy" that encourages spending on ever-more-expensive health packages.’
Healthcare in the US uses up 16% of economic output. There are wide variations of costs across the US. Healthcare in Miami costs twice as much as in Minnesota, for worse care.
There is no doubt that money can be saved if, for example, ways can be found to decrease the number of tests that are ordered. The Economist notes that five times as many MRI scans are ordered in American than in Germany, per head of population. But that would involve embracing radical incentives, which at present encourage over production of care and over-consumption.
One of the reforms in Massachusetts would get into these issues, but is not on the agenda for national change. It is a switch away from fee for service in the State towards a form of capitation. Providers join networks of providers and are paid per enrollee. This provides incentives for the hospital system (a collection of institutions) to reduce costs, for example caring for people in different settings as their condition changes.
It is likely that the detail of resource distribution will be left to states and given over to expert agencies who will make recommendations. National political debate has focused on the broader finance of the system and not how finance is distributed within the healthcare system.
The basic difference between Congress and the Senate is that while the former propose increased taxes for the wealthy the latter want to raise more money for reform from the insurance system. Fees on insurance companies are becoming the favours way of financing the plan.
A popular option within the Senate is to tax health benefits provided by employers. At the moment these are exempt, giving an advantage over those individuals who do not have employee schemes and have to pay for provision from their own pocket and after-tax cash. It is further argued that tax exemption encourages more expensive plans.
The problem for Obama is that when John McCain suggested doing this during the presidential race, he opposed the idea.
The FT and Economist propose an alternative way of taxing health insurance, from the corporate end of health benefits – ‘limiting the amount of health expenses a company can deduct for each worker. The FT says ‘this is messier than taxing benefits, but would have similar economic and revenue effects’.
GOVERNMENT INSURANCE OPTION – THE PUBLIC PLAN
One of the biggest debates in the US is whether there should be a government insurance option and a public plan.
Under the plan from Congress, the public option would pay hospitals at Medicare rates and doctors slightly more, which many providers say would not be enough to cover their costs.
Some Republicans are still saying that the public option is a deal-breaker.
After the unveiling of the Congress bill, there are reports that a growing number of physician groups are also objecting to the House package. Although the chief executive of the American Medical Association pledged yesterday to "help build support" for the legislation, as many as 20 state medical societies have drafted a letter to congressional leaders vowing to fight creation of a government-sponsored health insurance program that could compete with private firms.
Opponents have also argued that any government plan will enjoy an unfair advantage and could drive private firms out of business.
Tom Daschle who would have been Health Secretary but for a careless approach to paying taxes, has put forward the idea of a ‘fallback’ position. He means that the private sector should be given five years to sort the situation out; and in the meantime the government should work on a plan that can be introduced very quickly should the private sector fail.
Barack Obama’s chief of staff, Rahm Emanuel has hinted that the public option is a fallback position in case the industry cannot reform itself. He says “the goal is to have a means and a mechanism to keep the private insurers honest …The goal is non-negotiable; the path is”. It gives the impression that the White House could be dissuaded from the public option.
At the time Emanuel made these comments, the president was away in Moscow. He took the unusual step of issuing a statement from Moscow correcting his chief of staff. He wanted to say that the government/public option was not negotiable.
A Democrat in the Senate, Kent Conrad (D-North Dakota) has offered a compromise on the government-run option that is winning some support, even if only it is a compromise position. He has suggested ‘member-run health-care cooperatives that could provide local coverage. They would negotiate rates locally and be regulated the same as any other provider. It is an idea that is gaining support from Republicans, but crucially it is not backed by Max Baucus, the chair of the Senate Finance Commitee.
The president has public said that any public plan will exist to keep the private insurers “honest”. The plan could use its buying power to squeeze costs; and yet this is seen as a threat by many of the stakeholders in the US health system. Baucus, and others, question whether Kent Conrad’s cooperative idea could work together to gain large buying power.
HOSPITALS CONTRIBUTE TO THE COSTS OF REFORM IN RETURN FOR REDUCED COMPETITION
Three national hospital associations have agreed with the White House to contribute $155 billion of savings over ten years. This is 15% of the $1 trillion needed to finance reform.
A significant part of the savings will come from universal coverage, which is said to end the high costs paid for emergency treatment of the uninsured. The Economist pointed out that as hospitals only receive 10-12% of the cost of emergency treatment so it is in the interests of hospitals to take more emergency cases.
The Economist says the deal is in hospital interests for other reasons. Supporting compulsory insurance will be a boon to business if more people access healthcare. It also suggests that the hospitals gained other concessions from the White House deal. They will face less competition from retail health outlets through an agreement to force stronger regulation and limit fee for service payments.
The insurance industry is cast as the bad guy in US health reform and it is easy to see why. Left-leaning Democrats believe it is time industry contributed because of profits ‘that would make big oil companies blush’. Premiums have been doubling every nine years and it is now common for middle-class Americans (working class British) to pay $2,000 a month (or £1,400).
Another reason the insurance industry is cast as a bad is its role in helping to defeat the 1994 Clinton proposals to reform healthcare. They produced the famous 'Harry and Louise' adverts, highlighting the risk of limited choice and higher costs from growing government intervention.
The advert now seems dated, according to the Washinton Post; a point that Democrats are looking to amplify. Barbara Mikulski (D-Maryland) says that Harry and Louise are now 58 years old, Harry is a diabetic, needs prescription drugs and has no health insurance. She is a member of the Senate Health Committee and says the economic case for universal insurance is irresistible.
And yet there are still fears about shifting the mix from private to public. Chris Ayres is an Englishman in America and understands the urge to a more socialised system; and yet he says he would rather get prostate cancer in America where the survival rate is 92% compared with 57% in Britain. He is cynical about how you overcome a consumer culture that is so entrenched.
There is a paradox in how people feel about the current situation. Nearly 70% rate their own care highly; while more than half are concerned about quality as a whole. According to The Economist, polls show that only 25% would say ‘the system works pretty well’.
The insurance industry has expressed a willingness for reform, but is concerned about creating a program that will compete directly with private insurers.
It is difficult to know how the private insurance industry will react to the government insurance option. Will they sell themselves as better and charge higher prices? Or will they lower their charges, as many Democrats hope?
The insurance companies have some common cause with the legislators. They are fighting pharma over its lobbying for longer patent protection, keeping prices higher for longer, ‘wringing money out of patients and taxpayers’.
JOBS ARE THE CRUX OF THE PROBLEM – COSTS AND COVERAGE
At the crux of the argument over how America pays for reform is the issue of jobs and the extent to which health insurance is linked to the labour market.
In the FT, Clive Cook argues for a decoupling of health insurance and jobs.
‘Getting employers out of health insurance should be a goal, not something to be feared. Tying insurance to employment worsens the insecurity many US workers complain of: lose your job and your health insurance goes with it. The policy hides the rising cost of health benefits from workers, who perceive it as stagnating wages instead. It encourages overconsumption of medical services twice over, first because the link between the consumer and the cost is broken, and second because the tax treatment is a subsidy.’
At the moment health insurance is tax-free in the United States if provided by an employer: an individual purchaser has to buy it with after-tax dollars. This means that those with generous employment packages face advantages. While many think health insurance should be taxed, the move is opposed by the unions who fought hard for health benefit entitlements in employee’s terms and conditions.
Democrats in the Senate are looking at taxing health insurance entitlements in employer-provided plans.
Barack Obama opposed this idea when running for president. This is because 180 million Americans have insurance through employers. He feels that a tax on plans will undermine a key part of the US health sector.
KENNEDY, EDWARD (D-MASSACHUSSETTS)
Edward Kennedy is a huge political figure in the States. Currently battling brain cancer, he has made it known that healthcare reform will dominate the remainder of his life. He is chair of the Senate Health Committee.
Kennedy could not attend the Senate vote that passed a bill because he was receiving treatment. The American media treated the proposal as Kennedy’s plan. A common thread through all proposals for reform is a plan to make insurance mandatory, a scheme adopted in Massachusetts (Kennedy’s home state).
The Washington Post explains, ‘the concept is modeled after a requirement instituted in Massachusetts three years ago as part of that state's broad health-care overhaul. And like the Massachusetts law, the individual mandate proposed by congressional Democrats would be paired with a much more controversial new requirement that nearly every employer contribute to the total cost of care’.
Many of the elements of healthcare reform are linked. "Without an individual mandate, you're never going to get to universal coverage," says Bradley Herring, a health economist at Johns Hopkins University.
A quarter of those that are uninsured can afford healthcare but choose not to, which adds to the argument that making healthcare affordable will involve widening the insurance pool.
The Economist notes that ‘nearly one-third of the uninsured in the United States in 2007 were between the ages of 19 and 29, and 42 percent were between 30 and 54, according to the Kaiser Family Foundation. A fair number of young, healthy workers choose not to purchase insurance, believing they do not need it.
The insurance industry say they will accept changes if there is a mandate for universal coverage. The Economist suggests that some will see this as insisting on more customers, but it says there is logic in wanting to widen the risk pool.
During the race for the Democratic nomination, Obama was against the mandate. However, he has since been persuaded so long as there are “hardship exemptions” for the poorest. He says that he has "been persuaded that there are enough young, uninsured people who are cheap to cover, but are opting out. To make sure that those folks are part of the overall pool is the best way to make sure that all of our premiums go down."
It may be over-egged, but the Washington Post claims that a thousand lobbyists ‘fanned across the capitol’ after Congress passed their bill. The lobbying group America’s Health Insurance Plans warned that a new tax would make coverage more expensive.
Because the bill has many elements, there are lots of opportunities for special interests to influence the various debates.
At the beginning of July, the Post reported that insurers, hospitals and medical groups had hired more than 350 former congress members and government staff. ‘The tactic is so widespread that three-quarters of companies have at least one former insider’.
It is difficult for lawmakers to resist lobbyists, says the Post. Concerns are often conveyed to politicians by lobbyists who are former colleagues or aides who have joined industry ranks. One analyst told the Post, “they really know their stuff, and they understand the process. They know what the life cycle of a bill is, they know who to talk to, they know what they're talking about- and they reach everybody."
MEDICARE AND MEDICAID
Medicare and Medicaid spending already accounts for 5 percent of US GDP, and if they continue to grow at the same rate as they have for the previous four decades over the next, they will consume 20 per cent. Democrats believe this itself makes the case for reform but they worry whether plans will really constrain public spending or actually expand it.
The Congress plan offers two new entitlements: expanded to all earning 133% of the poverty level and all newborn babies for the first three months.
The Post notes that ‘White House officials and Democratic fiscal hawks worry that Congress could provide coverage to millions of uninsured people, expand the government's role in health care, and yet fail to "bend the cost curve," creating a fiscal disaster for the nation and a political disaster for their party.’ Republicans have begun to warn that Democrats are charting a ruinous path, and the Post says ‘those criticisms are beginning to resonate’.
Obama is not just facing pressure from national politicians. The cost of any reform will be shared between federal and state government. The states are worried that they will be stuck with huge costs because of federal legislation.
At the summer meeting of the National Governors Association the Republican Governor for Vermont explained, “what we don’t want is unfunded mandates”. Although states have received stimulus money to temporarily extend Medicare entitlement the funds run out in 2010.
The health secretary Kathleen Sebelius is a former governor of Kansas. She acknowledges that “it is difficult to send states a bill if they don’t have the money”.
Democrat Bill Ritter Jr of Colorado says “there’s a concern about whether they have fully figured out a revenue stream that would cover all the costs, and that if they don’t have all the dollars they need it will fall on the states”.
NOBODY SINCE LBJ (LYNDON B JOHNSON) HAS REFORMED AMERICA’S HEALTH SYSTEM TO ANY GREAT EXTENT
Healthcare reform has long been a key issue in US politics but nobody has managed any large-scale reform since 1964.5 when Lyndon B Johnson built on John Kennedy’s push to create Medicaid.
The only serious attempt since came from the Clintons in the 1990s which, of course famously failed. A feature in Time (27 July 2009) says that Obama’s strategy is to do the opposite of the Clintons'. ‘Where Bill and Hillary Clinton delivered a byzantine bill of more than 1,300 pages to Capitol Hill, only to see it shredded once it got there, Obama has kept his distance from the fine print’.
The Times says today that the fight over health care is the first true test of Mr Obama’s political muscle. ‘Failure to achieve healthcare reform could doom the rest of his domestic agenda.'
Some Republicans sense Obama is on the back foot. The Post says ‘Senator Jim DeMint was recorded in a conference call discussion saying that Republicans should block healthcare reform to undermine the president. “If we're able to stop Obama on this, it will be his Waterloo. It will break him".
OBAMA IS LEADING REFORM, BUT PITCHING INTO DEBATES RATHER THAN SETTING OUT THE DETAIL OF THE REFORM PLAN
Barack Obama is the key figure in healthcare reform. As the FT notes, he has staked his presidency on it.
On Wednesday last week (15 July), the White House started to run advertisements on TV full of stories from people who had been let down by the American insurance system. The aim was to build a sense of urgency around Congress and Senate plans to extend coverage to (almost) all Americans.
Until recently, Barack Obama’s plan was working because Congressional chairman would rather not be told what to do by the White House. Time makes the point that ‘the legislative process is already further along than it ever got under Clinton’.
Plans to reform healthcare have come from all sides. Although the Democrats in Congress have tabled a bill, it is unlikely that it will pass without the support of moderate Democrats and Republicans.
Public debate on healthcare is partisan to the extent that the extremes of left and right hold fundamentally different views on the role of the state in healthcare. Recent elections also mean that votes in Congress and the Senate have been along party lines. There is very little chance of agreement without some negotiation and yet there has been little negotiation between parties.
Talking about Congress plans for health reform Republican Mike Ross (Arkansas) says “there's no way they can pass this bill on the House floor. Not even close”.
QUICKENING? QUAGMIRE? QUICKSAND?
Barack Obama’s push for legislation may not be compatible with the lack of engagement with Republicans. Some Republicans say the questions being raised should mean the whole process is slowed down for further thought.
Last Thursday (16 June), Republican Senator for Maine Olympia Snow, said she had delivered the same message directly to Obama at the White House and ‘strongly urged him to give up his August deadline so bipartisan negotiators in the Senate Finance Committee can craft a new reform plan that does more to control costs’. She continued, "I think it would be prudent for the president to be patient". Bipartisan approval of a finance bill "can provide huge impetus for the success of this legislation and achieve broader support as it goes through the legislative process."
Barack Obama’s team worry that missing the August deadline ‘could throw the entire exercise off track because it would give opponents a month to undermine it – during the summer recess.
Senior Democrats, Joe Lieberman included, say the reforms are “enormous and complicated”, and shouldn’t be rushed.
The Republicans have been excluded from the drafting processes in the House and Senate simply because of the majority held by the Democrats in each house.
The Washington Post reports that agreement will be difficult: ‘to avoid the hard-nosed budgetary tactic known as reconciliation–in which Democrats could pass a health measure with a simple majority vote–the Democrats would need 60 Senate votes to advance the health care bill. To get that, they must either ensure unanimity in their own party or win over Republicans to make up any gap. And so far, even the most centrist Republicans, Olympia J. Snowe and Susan Collins of Maine, have shown no inclination to break with their Republican colleagues on the health care measure.’
The popular US blog The Huffington Post, has published what it claims is a private Republican memo. outlining ‘strategies to defeat Obama's proposals through delay. These include a publicity campaign that claims the reforms will deepen the national debt; that the president is endangering healthcare and the economy by experimenting with change; and that the government will take over control of patient care and medicines.’
SENATE STRUGGLES FOR CONSENSUS
The Senate’s bill was passed by four committees - Health, Education, Labor and Pensions - along strictly party grounds, 13-10.
The Senate is struggling with the same issues as The House – consensus and cost – but in the Senate the Democrats lack the votes to take forward reform without some Republican or independent support, that is if all of the Democrats vote the same way. This makes Senate Democrats more interested in collaboration.
There are bipartisan issues. In his closing statement, Senator Michael B. Enzi of Wyoming said that Republicans had been forced to offer more than 100 amendments to the bill because Democrats had largely shut them out of the drafting process.
The figure in the Senate who has taken responsibility for a bipartisan solution is the Senate finance committee chairman, Max Baucus (D- Montana). Baucus says the group is considering about a dozen options to cover the estimated $1 trillion cost of its package. They are not tied to Congress plans.
The Senate is where the deal-making will be done. Kent Conrad is the chair of the Senate Budget Committee. He says negotiators are still discussing a possible compromise on the government option.
Reminding us of the politics, the Post pointed out that ‘both Republicans and Democrats acknowledged that the health committee bill was just part of what will eventually be a single Senate measure once the Finance Committee completes work on its version of the legislation.
Some senators are worried whether the health and finance component bills can be successfully welded. It will be difficult to combine the Congress plan with an add-on financial solution before the end of August and some senior Democrats believe the detail should be delayed until later this year.
Delivering a blow to the president on July 23rd the Senate Majority Leader Harry Reid announced that the Senate will not vote on health care legislation before the summer recess. He says that a bipartisan agreement on finance will emerge by August 8th, but that the summer will be spent merging that agreement with the Senate bill.
TRILLION DOLLARS: TAXATION, TRIMMING OR BOTH
The crux of healthcare reform is how to raise the £1-1.5 trillion dollars the plans are estimated to cost over ten years. The hospitals are committed to saving $155 billion and pharma say they will make a contribution too. All in all these moves raise half the fund, but debate still rages about how to raise the second $500 billion.
It is interesting that political debate is centring on individual taxations. Earlier suggestions that the administration will raise taxes on alcohol and soda drinks have not been taken up in either Congress or Senate plans. There was also talk of introducing a value added tax (VAT).
At the end of July, the key debate in the US is how the trillion dollars needed should be put together.
Obama could be accused of ducking the issue of whether he sides with support for increased taxes on the wealthy or on health benefits. His health secretary Kathleen Sebelius says “what the president supports is paying for this; he has said it will not add a dime to the deficit.”
Time magazine makes the point that ‘fault lines are opening up everywhere you look’. People worry that different views cannot be brought together. Liberals are worried that Obama will back away from the government-run “public option”. Conservatives are warning that the legislation will not control costs, making a strong case for further delay while the technical assumptions are tested.
Politically vital, state governors are worried that the proposed Medicare cuts will leave them in a worse financial position, shouldering an increase in entitlement passed from federal government.
Politicians are going to have to determine which taxes they will use; how other reform will be paid for; and what businesses and individuals will be required to do.
Now that the Senate have announced they will not vote on a health plan before the summer recess, it gives longer for the politics to play out. All through the summer, lobbyists and politicians will have more time to argue for various elements of reform.
The key question is whether the five-week delay will derail the push for healthcare reform.
On the 23rd July, House leader Nancy Pelosi said that she still hopes Congress will vote on its bill before the summer recess. She acknowledged that the process had slowed because of concerns from Democrats about the plan to tax the wealthy.
The New York Times does not believe, however, that ‘rank and file Democrats’ will agree to vote on ‘such a broad-based tax increase without knowing if the Senate will include the provision in its bill’. As The Times notes, ‘so far the Senate has expressed no interest in the idea’.
VOICES OUTSIDE THE LEGISLATURE
It is late in the piece to say so and a bit of a twist in the story, but the latest polls suggest that there is growing public concern over the plan to provide insurance to the whole of America. Support for Obama on healthcare reform has fallen to less than 50%. Concerns about cost have translated to public opinion.
A Washington Post survey found that athough most people want reform, they fear its side-effects: higher costs borne by taxpayers and fewer choices in care. They are worried more by high costs than they are by wide coverage.
The president’s biggest fall in support has come from moderates and independents, who played a large role in his election victory.
Barack Obama chose Green Bay, Wisconsin to trumpet the benefits of significant health reform because it has a system that has been widely lauded for having high quality and low costs.
Those involved in the system say it is testimony to the value of ‘digital records, physician collaboration, preventative care and transparency’. Physicians work in networks. Physicians are fed back regular data. There are large scale screening programmes and lower hospitalisation of the elderly.
Critics say the system works well because of being largely white and middle-class.
(E)XCHANGE INSURANCE SCHEME
While admitting slight cheating to have eXchange as an X, this element of reform is important and supported by all. It could help patients compare health costs and entitlement, especially if a government option is included as a benchmark for other costs.
What is unknown is what impact the exchange will have. Will it drive insurers to specialise in better packages, charging and offering more than the public schemes? Or will they develop basic packages that compete with (or undercut) the government option?
It is not certain how the exchanges will work or whether they work in the same way in each state. Each state could see a government-option or some could use non-profit co-operatives to provide competition.
The philosophy behind the exchange is interesting. Although he has been reticent to get into the detail, the president believes that some competition to the private sector is needed to reign in costs.
It is possible that exchanges could see more people opting for the public option. This could destablise private providers. The government option could then fall into financial trouble if it fails to gain enough members to pay for its obligations.
There is a lot more debate, lobbying and politicking to be done before we can be sure about what reform in the US system will look like.
The US system is very much more political than the UK. Much more than in the UK, legislation can be changed significantly in the States.
When asked about the opposition to Congress plans and the lack of cost savings, Nancy Pelosi, the House leader (and Democrat) said, “Can there be more [savings]? I think so. And that is what the legislative process is about. You don't write the whole bill, introduce it and then go to the floor. This is the time now for an open process of bipartisan review of the bill in the committees."
White House officials claim to be relaxed about the debates that will rage until bills are passed. “The process will play itself out”.
The New York Times reported Barack Obama’s reaction to the Senate decision to delay the vote. “We’ve just heard today that we may not be able to get the bill out of the Senate by the beginning of August. “That’s O.K. I just want people to keep on working. Just keep on working.”
The president said, “I want it done by this fall”.
The chances of health reform are at their highest for decades. There are several parts of the plan that are agreed in principle. The task now is to weld these together.
Has the president been right to leave it to House and Senate politicians to work out the detail or should he playing a larger role?
Many commentators have noted that Barack Obama is keeping out the detail for feat of making the same mistake as the Clintons 15 years ago.
Writing in Time, Karen Tumulty believes that ‘if the President wants to accelerate the process, he may have to abandon his original hands-off strategy and start getting more deeply involved: ‘growing numbers of Democrats are arguing behind closed doors that Obama could east their qualms if he were clearer about where his red lines are for health-care reform’.
It could be that Obama is playing the long game and is waiting to weigh in on many of the more contentious issues until a bill has been passed in the Senate and the issue is presented at a conference committee in the autumn.
It is going to be an interesting summer of US style political debate. By September, we should know the elements that can attract bipartisan support. Will it be enough to change American healthcare?
HPI associated director Tom Smith looks at the battleground of US healthcare reform - a totem to the Obama presidency, and a target for Republicans and large parts of the US's mighty healthcare industry. This could make the Boston Tea Party look sedate ...