Health Care Reform - Form vs. Function

With the Christmas Eve passing of Health Care Reform by the Senate, it is likely that early in 2010, we will get and actual bill signed into law by President Obama. The real sausage-making now happens as a committee made up of members of the House and Senate reconciles the differences between the 2 bills. This final version cannot be amended, only voted up or down by each Chamber.

There will have to be some resolution to the differences on the Public Option (House has one, Senate doesn't at least not in name), funding for abortions (they have different restrictions), and financing (House taxes additional 5.4% on incomes over $1Million for families and $500K for individuals, Senate taxes high cost health insurance plans).

While it is possible that the committee reconciliation may not be acceptable to be approved in one of the Chambers, that rarely happens. Nobody wants to be known as the politician who voted for a bill and then was reason it was defeated once it came back from reconciliation. In the minds of many Americans, this bill has already passed. Some members of the House or Senate may change their vote on the final bill, but NOT if it would change the outcome of the vote. Some politicians may want to be able to tell their constituents they took a stand against something in the final bill, but nobody who has already supported Health Care reform wants to be the reason it fails.

I think the financing difference will wind up being a blend of the 2 methods.

I am a bit concerned about what the committee can put together on abortion restrictions that can be supported by Ben Nelson of the Senate (who was the reason it is in the Senate bill in the first place) that doesn't effectively create State by State decisions on Abortion Rights. The Senate bill allows states to block plans that cover abortions from being allowed in the exchanges.

I do want to spend a little time going over the so-called Public Option that caused such a stink during the Senate proceedings. Due mostly to Joe Lieberman from the state of insurance companies, there is nothing labeled as a 'Public Option' in the Senate bill. This has caused great disdain among many on the Left.

It may be tough to put something in the final bill that uses the tagline 'Public Option'. Although the final bill cannot be amended, it can still be filibustered in the Senate and they are only one person away from having that happen on the final vote.

However, the Senate bill is not without some 'options'. The Senate bill would actually have the Office of Personnel Management oversee at least two nationwide health plans from private firms offered through the exchanges to individuals, families, and small businesses. Additionally, at least one of those plans would have to operate as a nonprofit organization. This isn't trivial. This doesn't have the NAME of Public Option (FORM), but we certainly start with some alternatives (FUNCTION) to existing for-profit run and un-moderated health plans. This is also ripe for adjustments, additions, etc. in the future and may very well morph into something resembling the House version of a Public Option over several years.

After reading a lot of progressive blogs on the topic, it seems to me that the biggest reason for really wanting a Public Option is to stick it to the Insurance companies and eventually put them out of business. That seems to be something that liberals and conservatives can agree on although they feel very differently about the outcome. I'm not sure hatred is ever a good reason to include something in a law and this is no exception. Even the Senate bill includes some options that provide a limited amount of competition to the existing for-profit companies. It is not clear that a pure Public Option would have the effect of lowering costs.

However, in the final attempt to get Ben Nelson's vote, the Senate implemented a measure that may wind up being more effective in reducing health insurance costs. Health Insurance companies must now spend 85% of premiums on patient health care. This will put a significant cap on runaway profiteering and runaway premiums.

The Senate bill and likely the bill that comes out of committee will not have something called a Public Option (FORM), but there will be several measures that will work together to provide health insurance options in the exchanges and keep premiums down (FUNCTION).

That is how good politics are played. You get the results you want in a way that upsets the fewest people and their pet concerns.

Senate Health Care Bill to be an Early Christmas Present

Barring any last minute roadblocks, the senate will convene at 8AM on 12/24/2009 to vote on their version of the Health Care Reform bill. Then they will all head out of town for the holiday break.

It has been a long road (almost 100 years if you go back to the first attempts at Health Care reform legislation) and it isn't over yet. There would still need to be a committee reconciliation resolving the differences between the House and Senate bills, which then would need to be voted on by both parts of Congress.

There are complaints on both the Right (this will destroy health care) and the Left (nothing should be passed without a public option), which instinctively leads me to believe that maybe we got this bill right.

Although this bill is "watered-down" from what Progressives want and is a horror story to conservatives, there are a few basic things that this bill will do that have been needed for a very long time:

1) Up to 30 Million US citizens who are not currently insured will be able to obtain insurance through exchanges, in many cases with public subsidies making it more affordable.

2) Insurance companies will not be able to refuse coverage for pre-existing conditions or terminate a policy due to illness/injury.

I covered these and a few other not so trivial benefits in a post almost 3 months ago.

What we may not get at this point is a Public Option. I had previously surmised that as long as a Public Option was part of the House or Senate bills, it had a good chance to make it into the final reconciled bill. Even though the Public Option was included in the House bill, I am no longer very certain it will be in the final bill. As I said in that post, I still believe the Public Option, although a great rallying cry for Progressives, would have minimal impact. I think the White House knows this. I think they also know that they can accomplish many of the same goals (function) with different pieces of this and future bills (form) that will not have a bulls-eye on them.

Some progressives have called for running a strong public option bill through the reconciliation process, calling the bluff of opponents and making them try a filibuster or just abandoning this "watered-down" Health Care reform bill. However, one of the original and loudest proponents of the Public Option, Yale Professor Jacob S. Hacker, writes that this bill should be passed now.

I agree.

Once passed, it is unlikely to ever get overturned unlike a reconciliation bill which just expires after 5 years (like the Bush tax cuts).

It will be much easier to add and modify pieces to an existing bill as nothing will attract anywhere near the public attention, with quite so much misinformation and differences of opinion on impact as the current Health Care Reform bill.

This bill will not be good as some people want it to be.
This bill will not be as bad as some people fear it will be.
It is a start. A good start and long overdue.

Election Day 2009

So we are finally here. Has it really been one year since Barack Obama was elected?

Off-year elections are always interest-challenged and in the wake of a national election, which is why the media will often pump-up the coverage of state and local races that would otherwise go unnoticed to most of the country.

The 3 races that received the most national attention are:

NJ Governor
VA Governor
NY-23 House Special Election

NJ is very close and I think it will tell us more about the polling on a 3 way race than the significance of the race. The incumbent governor, Jon Corzine is not well liked in the state, but is in a dead heat going into election day. Turnout and how those supporting independent candidate Chris Daggett wind up voting once they get in the booth.

The VA Governor race is following a VA trend of the governor race going to the party that lost the last presidential race. On top of that, Democrat Cree Deeds has run an awful race, showing that Dems can still be obstinate and ignore all good advice they are receiving.

NY-23 House Special Election is an oddity and too small to show much of anything other than how people outside that congressional district act. The spot is open because John McHugh left the post to become Secretary of the Army, so in a way, the Obama Administration has brought this about. This race is less a referendum on what is happening in the battle for the Republican party than it is a cross between a sociology experiment and a soap opera. The (one-time) Republican nominee, Dierdre Scozzafava was hand selected by the local Republican party, but her moderate views infuriated some local conservatives. They put forth and supported conservative candidate Douglas Hoffman. NY-23, a very Republican district which has not been represented by a Democrat in over 100 years, should have been a shoe-in for whatever candidate was on the ballot with an 'R' next to their name. However, for the last few months, it was a pretty even 3 way battle. Recently, Hoffman pulled ahead and Scozzafava slid into 3rd, behind Democratic candidate Bill Owens. In the last week, Scozzafava announced her withdrawal from the race and to magnify the 'Sweeps Week' style turn of events, also announced her support for Democrat Bill Owens. Now that is some prime-time drama!

If Bill Owens wins, that would be quite something in a district that is so predominantly Republican. However, whoever wins, will probably be spending most of their year in office campaigning and fund-raising for their defense in the 2010 mid-term elections. So don't expect the outcome to have much difference on the lives of people living in NY-23 during the next year.

Will There Be a Public Option?

I have waited a long time to even bother writing much about the "Public Option" because,

a) it may not even make it into a bill
b) will have minimal impact on most of us
c) you wouldn't know a) or b) going on the amount of news coverage about it

There are many really good as well as potentially problematic items that made their way into at least 1 of the 4 measures that were reviewed by the House or Senate. The "Public Option" has gotten a disproportionate amount of the coverage and most of it (on both sides of the issue) is misleading at best. I really don't think most of the public really understands much about the "Public Option", but be that as it may, according to a Washington Post/ABC News poll this week they are starting to become more in favor of it (whatever they believe "it" is).

Assume just for a moment that some form of a Public Option winds up being in the final bill signed into law by President Obama.

IF it winds up being "live" rather than waiting for a "trigger event"

IF it winds up being nationwide, rather than voted in or out on a state by state basis

It is still very unlikely that MOST Americans will have the OPTION of selecting the "Public Option" for their Health Insurance. It is very, very likely, that it will only be made available to those who do not qualify for insurance through their work or their spouse's employer. These people have already been able to get "private insurance", but in most cases it is very expensive. It is most likely that "Public Option" insurance will still seem expensive to those considering it, just less expensive than their other options.

A "Public Option" will NOT:

Incent businesses to drop their Health Care offerings (although the total upheaval of acquiring health insurance and making it more like auto insurance would dramatically reduce the overall cost).

Be selected by more than 10-15% of the populace.

Dramatically reduce health care rates (but it will keep them somewhat in check in future years)

Lead to the government takeover of the Health Insurance Industry

Lead to Socialized Medicine (if you hear anyone say this, remind them that the "Public Option" is for Health INSURANCE not Health CARE, and that they need to change the channel on their TV to something other than Fox News).

So, getting back to my topic today...Will there be a Public Option?

YES.

How we get there and what it will look like has very little to do with what is best for the country and everything to do with Politics and Money (this may be true about most laws).

The bill that passes in the House OR the Senate needs to have some flavor of the "Public Option" in it in order for the final law to have it. They do NOT both need to have it. In the final sausage making process of this law, the passed bills from the House and Senate get reconciled and as long as one of them have some language on a "Public Option" it is likely that the final bill signed into law will have something. So Harry Reid in the Senate and Nancy Pelosi in the House don't both have to be successful finding votes for the "Public Option", just one of them needs to get the right number of votes.

The Senate needs 60 votes to prevent a filibuster. There are 58 Dems, 2 Independents and 1 Mountain of Republican Snowe. There are a few conservative Dem Senators like Ben Nelson (NE) and Kent Conrad (ND) who are holding out on supporting a public option, mostly for the benefit of their political future. Harry Reid just needs to find a way of helping them keep face with their constituents. Enabling states to "Opt Out" will probably be enough for one or both of them. Senator Joe Lieberman (CT) the Independent who votes all over the place, but mostly for self-preservation, may not be as easily swayed since the Insurance Companies are clustered in his state. Which is why Olympia Snowe (R-ME) gets to control the final huddle in the Senate. Reid will giver her what she needs to vote for cloture and prevent a filibuster. Only 50 votes are needed for the bill once it comes to a vote (Joe Biden would break a tie) and I am guessing that some Senators (probably including Snowe) may vote for cloture to allow the bill come to a vote, but would then vote against the bill.

Pelosi needs about a dozen Blue Dog House members to vote for their bill (no filibuster in the House). It seems that it may come down to money as many Blue Dogs represent states with lower than average Medicare reimbursement rates - the guideline for payments in the currently proposed "Public Option" plan. Tweaking this or enabling hospitals to negotiate with providers could be enough to let out the Blue Dogs and get to the magic number of 218 votes. This Medicare rate issue is also probably the main sticking point for Senator Kent Conrad.

It takes money to make sausages.

Why Health Care Reform will Definitely Pass

Two big things have happened in the last 24 hours that basically bushwhack the way to getting some sort of Health Care Legislation to sit on the Resolute Desk by the end of 2009.

First, PricewaterhouseCoopers, who created a report sponsored by the insurance industry saying health care insurance premiums would rise faster as the result of Democratic reforms, put out a statement (thanks Politico) that let on that they weren't directed to evaluate the effects of the entire bill, just part of it. More specifically, just the parts that cost money, not the revenue generating portions to offset the costs. Oops! The fact that they are throwing their customer under the bus on this one means they are getting some serious pressure to come clean by the White House. If even a big accounting firm can't make your numbers look the way you want, you are out of luck. This 11th hour report seemed like it was going to cause a major problem with the passage of the Senate bill, but now it looks more like a desperate attempt by people who know they are on the wrong side of history.

Second, earlier today, Senator Olympia Snowe (R - Maine) announced that she would support the passage of the Baucus bill coming out of the Senate:

"When history calls, history calls. I happen to think the consequences of inaction dictate the urgency of Congress."

She also added:

"My vote today, is my vote today. It doesn't forecast what it will be tomorrow."

Which may mean she would vote against the final bill if it includes the public option, but her support means the Dems are almost certain to avoid a filibuster. Now the Dems technically already have 60 votes (58 Dems, 2 Ind). However, Snowe's support provides coverage for the more conservative/Blue Dog senators (Lincoln, Nelson, Conrad) to support it, at least to get it to a final vote.

As for what the final bill will look like, well, surprisingly, a lot like the Baucus bill looks now, and I don't think I would have guessed that 2 weeks ago. However, it is likely it will include some sort of Public Option. The first option is that there will be a triggerpoint of premium increases that would set in motion a Public Option. That threat alone is probably sufficient to keep rates lower, which is one of the primary goals of the public option (eliminating pre-existing condition exclusion would be the other). The second option I just caught wind of yesterday which is to have a Public Option as the default in all states, but that states can choose to not offer them. There is a wonderfully perverse justice wrapped into this one. Conservatives that don't want the Public Option can work toward making sure their state doesn't have one and really shouldn't care what happens in other states. However, once states without a public option see benefits occurring in neighboring states with the Public Option, they will clamor for it. This also utilizes the Behavioral Econmics concept of the Status Quo Bias, whereby people are less likely to change something that is already in place.

What Health Care Changes will we Get?

There is a lot and I do mean a lot that still has to happen before any bill is passed and signed into law, but if I had to guess, I think we will see the following changes:

1) Increased insurance provider options for some or most people
- I can't see through the cloudy crystal ball to determine whether there will be a public option, co-opts or enable health care companies to compete with one another nationwide, but competition and choice (limited) is a good thing and will reduce costs

2) Coverage for pre-existing conditions in almost all situations
- I hesitate to say ALL situations, but that is the goal

3) Assistance determining what health care insurance options are the best fit
- a relatively low cost item that will make life a whole lot better for those who struggle with such decisions

4) Premiums effectively lowered (through subsidies) for lower income families and individuals
- questions now are how much, to whom, what is the sliding scale and how would this be administered

5) Increased opportunity to get prescriptions at lower costs
- this may happen from non-government entities like Walmart and perhaps Shoppers Clubs like BJs, Sam's and Costco getting in on the potential increased revenue and membership.

Again, I am not sure what the price tag will be (but it will be lower than any number currently mentioned), whether or not there will be a public option or just the THREAT of a public option is certain triggers are hit (most likely compromise), whether some plans are taxed (unlikely since the premium isn't dependent just on value but also the actuarial expected cost of the insured) or even if health care is mandatory (unlikely unless heavily subsidized and the minimum requirement is very small).

But, if we get the items in numbers 1 through 5 (and we may not get much more), that will be a significant improvement without negatively changing the way most covered Americans get their insurance.