Obama, Healthcare Reform, and the Baucus White Paper: Redefining the Center

November 13, 2008

A pattern is starting to emerge for the Obama Administration’s governing style: Look into all viewpoints on major issues, listen to as many perspectives as possible, then attempt to synthesize them and find common ground on which to build its initiatives. If that’s true, then one way to get a glimpse of its healthcare reform plan is to look for the center, the ground on which consensus can be built, and project from there.

Sen. Max Baucus, the centrist Democrat from Montana who chairs the powerful Finance Committee, issued a health reform white paper this week. Some are calling it the Baucus “plan,” but he disagrees with that label and so do I. It’s a statement of positions of key health policy issues, and overall it’s a compendium of some of the best “center-to-moderate-left” thinking on those issues. That means it’s politically achievable, and would be a significant improvement over what we have today. The Baucus paper may represent grounds for a new bipartisan consensus, and therefore may give a glimpse of what we can expect to see proposed in 2009.

Here are some of the key points raised in the Baucus White Paper:

Health reform can’t wait. Sen. Baucus makes clear that meaningful reform will cost money in the short run, but that the cost of inaction would be far greater in the long run. It’s implicit throughout the paper: Act now. That would please nonpartisan groups, the AARP, business/labor coalitions, and fellow Democrats who are urging President-Elect Obama to move quickly on health reform.

Press for “individual responsibility,” but only after costs come under control. I was one of the few health analyst types arguing against emphasizing health mandates during the election season. Sure, the logic for it is sound – if health insurance isn’t mandated, only sicker people will buy it, thus undercutting the solvency of the system. But without careful analysis and design, such mandates are likelty to be inherently unfair to the middle class – a regressive tax that’s unfairly distributed among working people based on who they work for, not income or ability to pay. (To a large extent that happened in Massachusetts, which many thought would be a model for the nation.)

Still, unless we’re ready to create a tax-based system of national health coverage for all (here’s how I’d like to see that work), we’re going to need some sort of requirement sooner or later. The Baucus paper suggests that cost control efforts be put in place first, with mandates reserved for a later period when the costs become affordable to all that might be required to participate. (Lower-income people would receive subsidies.)

This is a reasonable consensus position.

Emphasize primary care, preventive care, and wellness services: This is good common sense, sound thinking translated into policy. The Baucus paper calls for improved reimbursements for primary care through redesign of the Medicare payment system (which is often followed by private payers).

One of the Baucus paper’s best features is the creation of a “RightChoices” card which would give the uninsured guaranteed access to preventive and diagnostic care, with targeted subsidies to receive treatment for some of the conditions that might be discovered as a result. This is a discussion I’ve had with Washington types before, especially when there has been discussion of having the Federal government assume responsibility for catastrophic medical care. That may be worthwhile idea, depending on how its designed, but there’s a greater impact to be made by moving proactively to find and treat diseases before they become catastrophic.

Redesigning Health Delivery. The Baucus paper endorses integrated health systems, also know as accountable care organizations (ACOs). This is a good idea, too. But the language used to describe ACOs is virtually identically to that used thirty-five years ago when Richard Nixon signed legislation that created the HMO industry. For the ACO concept to succeed, further reflection and analysis of the successes and failures of the HMO concept will be needed.

Addressing the Underinsured. The Baucus paper raises the issue of the underinsured – those who have health insurance but still suffer from the costs of medical care – but offers no concrete suggestions. (The 25 million figure is from the Commonwealth Fund, but others would argue the number is low. As the Baucus paper notes, 47 million insured Americans with insurance are unable to pay their medical bills.)

One barometer of the “underinsurance” problem is a PriceWaterhouseCoopers survey which found that companies with slowed profit growth are more likely to offer “high deductible insurance plans” that provide no coverage for the first several thousand dollars of treatment. Another is a Kaiser Family Foundation study which showed that 36% of people nationally are skipping or delaying needed medical treatments because of cost (which can result in even greater costs down the road.)

Presumably the problem of underinsurance would be addressed by the institutions Sen. Baucus proposes, the Health Insurance Exchange and the Independent Health Coverage Council. But a similar institution was created in Massachusetts (the “Connector”), and was forced to dramatically reduce coverage requirements in order to make plans affordable enough to make a mandate feasible.

Which gets us to the issues the Baucus paper – and perhaps the new consensus view – don’t address. Statements of principle are worthy and important. But where health reform is concerned, the devil is very much in the details. I think it’s wise to say that mandates won’t be imposed until coverage becomes “affordable” – but who decides what that means? Some policy analysts have used 10% of income as a reasonable ceiling for premium costs before insisting that people purchase healthcare. But picture using the tax system to require a family of four earning $75,000 a year to pay $7,500 for healthcare. That could be burdensome – and politically unfeasible.

I would prefer an “open-source Medicare” approach. The Baucus paper allows people aged 55-64 to buy into Medicare. Why not allow all Americans to buy into it? I’ve supported that idea for a while. And I would strongly endorse Dean Baker’s “healthcare stimulus” package, which combines that Medicare option with tax incentives to subsidize near-universal healthcare coverage.

President-elect Obama isn’t likely to back such a plan, however, unless a new consensus forms around it. My guess is that he will take a rapid but incrementalist approach – call it “all deliberate speed” – built around a consensus (which the Baucus paper may represent). A number of these initiatives may well be put forward early in his Administration. Will they be presented as individual pieces of legislation, or as some sort of overall health package? Will they be introduced by the new President first, or by influential Senators like Max Baucus or Ted Kennedy (health permitting)? What is the likelihood of success?

The crystal ball is hazy. But it’s a good guess that consensus and collaboration will drive efforts in the first half of 2009.


3 Responses to “Obama, Healthcare Reform, and the Baucus White Paper: Redefining the Center”

  1. Mary Says:

    Why would a premium of $7500 for a family of 4
    be “politically unfeasible”? That’s $625 a month and that’s about what a group health insurance plan charges this year.
    That number might be a revelation to someone whose employer pays for his family’s policy but it’s not to those of us who pay for our own.

    One thing I wish we could all agree on is that the language for this debate needs more precision:

    “Health care” is something one gets from doctors and other medical personnel and institutions.

    “Health insurance” is a means of financing health care and spreading the financial costs of castastrophic illness.

    They are _not_ the same thing.

    The most effective and immediate cost reduction in health care would be to eliminate the excessive administrative costs caused by having multiple insurance providers.

  2. hag2 Says:

    The Call to Action/Health Care Reform 2009 proposal released 11/13/08 (http://www.finance.senate.gov/) by Senator Max Baucus is a disaster.
    The Baucus plan is an expansion and continuation of the status-quo mixture of a government subsidized ineffective private health maintenance insurance industry operating parallel to and within Medicare Insurance.

    7 Specific Reasons Why the Baucus Health Reform 2009 Plan Fails…..

    1) The Baucus plan fails to enroll all Americans in a single payer National Health Insurance such as the most efficient health insurance plan (Medicare) which is already contracted with most doctors, hospitals and clinics in the Country. Medicare has the lowest operating expenses and the best morbidity (sickness rates) and mortality (death
    rates) compared to all other insurance companies. The Baucus plan will therefore divert $700 Billion to $1 Trillion per year away from patients, hospitals, doctors, clinics, nurses, pharmaceuticals, therapist and researchers into the overhead pockets of health private insurance company administrators and executives.

    2) The Baucus plan fails to technologically upgrade, integrate and centralize medical billing and records systems in order to optimize examination of clinical outcomes, pharmaceutical efficacies and monitor fraud and abuse. In addition, by failing to centralize and technologically upgrade billing and records systems within a single National Health Insurance plan, America will be unable to instantly monitor disease outbreaks and instantly respond to natural and man made
    disasters or bio-nuclear terrorism..

    3) The Baucus plan fails to control drug costs by failing to allow a single efficient national health insurance company such as Medicare to bid on pharmaceuticals. In addition, the Baucus plan by failing to put all Americans on a National Health Insurance Plan such as Medicare does little to shrink the ‘risk pool’ of insured, thereby failing to decrease
    insurance premium expenses for all Americans.

    4) The Baucus plan fails to provide funding for scientific, clinical and epidemiological research and development by allowing private private insurance companies to divert funds from medical research and development to instead support their massive and profitable administrative and executive bureaucratic overheads.

    5) The Baucus plan fails to provide physicians with the same legal protection from malpractice lawsuits which have been established for commercial health insurance corporations during the last 3 decades.

    6) The Baucus plan fails to explain where to find the 1.5 million new health care workers which will be needed once 100 million new Americans obtain health care insurance. Health care workers can be found easily by shutting down the wasteful and inefficient private health insurance
    companies, putting all Americans on National Health Insurance such as Medicare. The 1.5 million former private insurance company bureaucrats can then be remployed to actually deliver health care in hospitals, clinics, nursing homes, assisted living facilities, pharmacies and home
    health services such as Alzheimer family assistance.

    7) The Baucus Plan fails to address this problem of disenfranchised physicians. Many physicians in this country have left the practice of medicine, or downsized their practices due to private insurance company abuses, malpractice threats and direct pharmaceutical marketing. A
    recent national poll of physicians based on the AMA database
    demonstrated that 60% of physicians support a single payer National Health Insurance such as Medicare. A continuation and technological upgrading of our most fair Medicare Health Insurance for all based on the concepts outlined above, would undoubtedly motivate those disenfranchised physicians to return to the profession and bright younger physicians to invigorate the field.

    The Baucus plan is wasteful, inefficient, fragmented, creates a new redundant bureaucracy and will continue to provide no potential future health improvements for America. Only an efficient National Health Insurance carrier such as a technologically upgraded Medicare Insurance company will be able to provide low cost health insurance and pharmaceuticals for all Americans while maintaining the quality of private physician practices and Hospitals.

    H. Green, MD, FACP, FAAD, FACMS

  3. […] Obama, Healthcare Reform, and the Baucus White Paper: Redefining the Center […]

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