On Thursday, February 25, 2010 President Obama chaired a televised discussion about proposed healthcare legislation. In attendance were the leaders of the House and Senate from both parties and a number of members of both parties chosen by their party leaders. Vice-President Biden and Secretary of Health Sibelius were also at the table.
The main objectives of healthcare reform are to lower and control costs for people covered by private insurance as well as Medicare and Medicaid, and to help get every American access to reliable healthcare.
Aside from my general interest in this important topic and my interest in whether this Congress could get anything done, I was also interested because of my experience as a consultant to the insurance industry. What I've seen reported on the few TV news and opinion shows gives a different picture than what I observed, so I'm writing about my impressions from what I observed.
When I was working with insurance companies I used to joke that what they needed to develop was "just in time insurance," a product that people could buy when they needed it but not have to pay premiums until they needed the insurance. One insurance executive said they could offer such a product, but no one would be able to afford the premium. That joking suggestion is very relevant to the discussion that went on at the conference.
Some of the attendees, maybe most of them, tried to be helpful as the President tried to get agreement on the large number of things that are included in the House bill and in the Senate bill. A handful were not helpful. Republican Representative John Boehner was grandstanding, and not very effectively. He stacked up about five copies of the House bill and five of the Senate bill in front of him so that he could have a pile of paper to lean on and to point to as a graphic to claim that the bills were unwieldy. Rather than cooperate or look for opportunities to cooperate, his comments were always that the work done to-date should be thrown out and that health reform should start from scratch. He refused to acknowledge the significant agreement between what is in the bills and waht Republicans - and the country - want. He refused to make suggestions about what things in the bills should be eliminated or even modified. He missed an opportunity to be useful.
Republican Representative Eric Cantor took the same approach and the same tactics as Boehner, although he is probably smarter than Boehner. Republican Senator Mitch McConnell was similarly unhelpful, although less vocal.
Sadly, Senator John McCain made the most useless comments, and did it more than once. McCain wanted to discuss the process that had been followed over the past year, rather than discuss content or make progress. The President rightly told McCain that people might care about the process, but they cared a lot more about getting something done about the healthcare crisis.
But some Republicans were helpful in trying to make progress, or so it seemed to me. To my surprise Republican Senator Tom Coburn was helpful. He is opposed to aspects of the current bills, but he was fairly specific in his objections and for putting forth reasonable suggestions. Lamar Alexander delivered the opneing remarks for the Republicans and was opposed to the bills and advocated starting over, but he did so in a reasonable, logical way and left me with the impression that you could work with him if he wasn't unreasonably pressured by his party's political objectives.
Democratic Senator Harkin explained why a piece-meal approach to health reform was not workable, that the parts are intertwined. That with one of the objectives being to provide health insurance for people with pre-existing conditions you couldn't wait until those people needed insurance before they bought. Like everyone else, they need to buy it when they can so that it is there when needed -- in other words they can't buy "just in time" insurance. Insurance doesn't work that way. Insurance is a sharing of risk across a larger body of people, and it works best when that universe of people is a normal mix.
Sibelius and others explained what is worng with "high risk pools". They should have mentioned the analogy to automobile insurance where high risk drivers are in high risk pools and pay high premiums -- because they are more expensive to insure. It is the opposite of sharing risk across a "normal mix". Unlike auto insurance though, people don't have choices over whether they will be healthy or sick or have an accident that requires medical treatment.
Everyone agreed on the need to regulate health insurance, as the President pointed out several times, although several Republicans wanted to ignore that need.
When participant pointed out that the Medical Loss Ratio (the amount of premium dollars that are spent on medical benefits) is about 85% for large companies that have a lot of people being covered, but only 60-70% for small business and individuals. That is consistent with the 1/3 that Colburn says is not being used to provide benefits.
Democrat Jay Rockefeller said that the objective for regulation is to protect consumers, and Obama comapred it to food and drug regulation.
Republican Paul Ryan was opposed and could cite lots of numbers, but I think he could be helpful in reaching compromise -- if his party would let him.
Biden explained why Medicare Advantage plans )Medicare Part C) were setup with a higher payout to private insurance companies -- to see if they produced better outcomes. They don't. That is why the bills eliminate the 15% subsidy for Advantage plans and propsoe to use the $500B annual savings to reduce Medicare D or elsewhere.
Senator Grassley made the surprising, to me, comment that future Congresses wouldn't be any braver than this Congress a d wouldn't address the problem -- indicating that this Congress shouldn't do anything!!! He also said that 75% of of Advantage dollars go to benefits and 25% go to the government. He couldn't be peruaded that that was impossible since his numbers allocated no money to the insurance companies that administer Advantage plans.
Boehner and McCain wanted to focus on limiting medical liability claims which they say wil lower malpractice insurance costs and thus lwoer medical costs. But doing that, while saving a lot of money, abut $50B. it is only 0.2% of the medical spending, much smaller than other factors.
Democrat Charles Rangel said that people don't care about how thick the bill is nor about the process. They care about producing results.
Obama tried to get people to agree that the bills include provisions that almost everyone seems to want: cover people with pre-existing conditions; eliminate rescission (canceling policies after they are issued, often when they are needed); eliminate annual and lifetime caps on coverage; expand coverage to more people; extend the life of the Medicare fund.
But the session ended without agreement and I'm skeptical that there will be any movement by Republicans to work toward compromise. Lamar Alexander and John McCain wanted assurances that the Democrats in Congress would not use a technique to bypass a filibuster and pass the legislation anyway. Obama would not give that assurance, saying if they couldn't reach an agreement then the majority party would have to look at their options. I hope they do.
