A New Consensus on Universal Health Care

By Steven Pearlstein
Wednesday, January 17, 2007

On the surface, it looked to be just another Washington news conference, part of the white noise of the political and policy process.

But this one was different. There, at the National Press Club, stood the president of the Business Roundtable, representing the country's largest corporations; the president of the Service Employees International Union, the country's most vibrant union and one of its fastest-growing; and the president of AARP, the formidable seniors lobby. They put aside their usual differences to deliver a clear, simple message to President Bush and congressional leaders of both parties:

We stand ready to give you the political cover you need for a centrist, bipartisan fix for a broken health-care system.

Or, if you refuse, we stand ready to embarrass you and run you out of office.

"Washington is behind where the rest of the country is," said Andy Stern, a labor leader. "Democratic leaders in Congress say this is not the time. The White House has said now is not the time. And we are saying, 'Now is the time.' "

Stern and his new friends are right about one thing: Something's going on.

A Republican governor of Massachusetts, working with Sen. Ted Kennedy and a Democratic legislature, hammered out a comprehensive reform plan last year. And last week, another Republican governor proposed a similarly bold plan for California.

Not coincidentally, both state plans conform roughly to a consensus that has been taking shape in Washington over the past two years, in behind-the-scenes negotiations among health insurers, hospitals, physicians, business and labor groups, drug companies and consumer groups such as Families USA. The first draft of their effort will be unveiled tomorrow. And while the "consensus" will fudge some of the most difficult issues in an effort to keep the coalition together, the outlines of a genuinely comprehensive reform plan are coming into focus.

What does that consensus look like?

It starts with universal coverage, accomplished either through a mandate on everyone to purchase basic health insurance or a mandate on all employers to offer it.

It includes subsidies for families with incomes up to 300 percent of the poverty level to help defray the cost of that insurance and the deductibles and co-payments that go with it.

It involves changes in tax law so that individuals who purchase health insurance enjoy the same tax benefits as those who get it as a fringe benefit at work.

It sets up a pooling arrangement in every state to allow individuals and small businesses to buy health insurance at the same price as large corporations.

Finally, it sets a deadline for physicians and hospitals to switch to computerized health records, along with a program to provide no-interest loans to buy the necessary hardware and software.

Of course, in health care, the details are always tricky. To get a plan that hangs together, all of the major interest groups would have to make important concessions.

Doctors would have to agree to have their compensation from insurers tied, in part, to how well they conform to treatment protocols established by the various medical specialties.

Hospitals and insurers would have to agree that 85 percent of their revenue would go to providing direct care, capping profit and administrative expenses at 15 percent.

Health insurers would have to accept the obligation to sell insurance to everyone, with only modest variation in rates for age and health status.

And to raise some money and hold down the growth in insurance premiums, union members and high-income workers would have to accept a cap on the amount of health benefits they receive tax-free.

To avoid government "negotiated" prices, drug companies would have to submit new drugs to a rigorous cost-benefit test by an independent agency, such as the Institute of Medicine, as a condition for being included on the Medicare and Medicaid formularies.

Conservatives and their small-business allies would have to swallow some form of "pay or play" -- either providing employer-paid health insurance or paying a tax to the state subsidy pool.

And liberals would have to accept a "basic" insurance package that provides full coverage for preventive care and catastrophic illness but requires patient cost-sharing for routine care.

These concessions won't come easy, which is why there has been no significant progress on health-care reform in the decade since the Clinton debacle. But the current system has become such a problem for so many providers and consumers that many are now willing to compromise on long-held positions.

Unfortunately, pulling it all together will require the active engagement of Congress and the White House, who, so far, have been missing in action.

It remains unclear whether Democrats would prefer to make progress now or have an issue to run on in the 2008 presidential election. If they're interested in a deal, the go-to guys will be Kennedy, who played a crucial role in negotiating the Massachusetts plan, and Rep. George Miller, a Californian and confidant of Speaker Nancy Pelosi who chairs the House Education and Labor Committee.

It is also unclear whether the Bush administration is prepared to move beyond its narrow ideological fixation on "consumer-driven health care" and become an honest broker. As head of Medicare and Medicaid, economist-physician Mark McClellan might have played that role, but he has resigned. And the obvious candidate to replace him -- Mike Leavitt, the secretary of Health and Human Services and former governor of Utah -- has yet to be given the same broad mandate and authority from the White House that Treasury Secretary Hank Paulson got to tackle budget balancing and entitlement reform.

All of which explains why the SEIU's Andy Stern, the Roundtable's John Castellani and AARP's Bill Novelli decided to put aside their differences and put it to the politicians. As Stern said yesterday, "The answer to the health-care problem is not one of policy but one of politics."

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