Health-Care Reform Needs Holistic Approach

By Steven Pearlstein
Wednesday, June 6, 2007

It is February 1993, just weeks after the Clinton inauguration. First lady Hillary Clinton, appointed by her husband to spearhead reform of the U.S. health-care system, speaks for the first time about the issue at a forum in Harrisburg, Pa.

"There are people and interests who do not want change," she warns the crowd at Pennsylvania State University. "It's not in their interest for this system to change." It was clear from her remarks that first among those who opposed change were the drug companies and health insurers.

Fourteen years later, Sen. Hillary Clinton went again before an academic audience, at a presidential debate at St. Anselm College in Manchester, N.H. Only this time, she wanted to make clear that she had learned important lessons from the humiliating defeat of her first health-care reform effort.

"You've got to have the political will -- a broad coalition of business and labor, doctors, nurses, hospitals -- everybody standing firm when the inevitable attacks come from the insurance companies and pharmaceutical companies that don't want to change the system because they make so much money out of it."

Excuse me, but wouldn't you have thought that one of the important lessons from the 1993 debacle is that you don't launch an effort to reform the health-care system by demonizing the drug companies and health insurers, and turning them into opponents?

Don't get me wrong: In their drive to sustain and enhance their profits, health insurers and drug companies use any number of business practices that unnecessarily drive up the cost of health care.

But at the same time, you have to have a pretty finely calibrated moral yardstick to see how drug companies and insurers are any worse than hospitals and doctors, who profit just as handsomely from the current system and have been just as dogged in opposing reasonable reform. And you could add to that list the medical-equipment makers, laboratories and nursing-home operators.

They are all part of the problem, and they all need to be part of the solution. The trick is to get them to the table, convince them that the current system can't continue and offer them a set of trade-offs that, in the end, they can't refuse.

Of course, you can't do that until you get elected. And I'm sure their campaign consultants have all told the Democratic candidates that trashing the drug companies and the health insurers does well in the polls -- much better than, say, pointing out that good old Doc Welby orders up too many tests and surgical procedures, or that Baptist Memorial Hospital has administrative costs that would make Aetna look lean and mean.

But where is the candidate or campaign consultant clever enough to see through the two-dimensional polls to the three-dimensional truth -- that voters would flock to the candidate who doesn't pander to them but tells it to them straight, who can see past the campaign to the more difficult job of governing, who understands what real leadership is all about?

Barack Obama set out to be that candidate, and in many respects he has succeeded. The political press grumbles about the smooth edges of his campaign rhetoric and misperceives his call for a new political culture and vocabulary as a nicely packaged political dodge. No matter. The public and the smart political money are taken with Obama's determination not to play the same old games and are smitten with his ability to weave hard and soft, left and center, into a different political cloth.

As he often does, Obama had it just right when, in announcing his own health program, he declared: "It's time to let the drug and insurance industries know that while they'll get a seat at the table, they don't get to buy every chair" -- a line he repeated in Monday night's debate.

But even Obama could not resist the temptation to demonize those he says he wants to invite to the table, referring to "profiteering" by the drug and insurance companies and the "stranglehold" they have over the marketplace.

This kind of overheated rhetoric is not only unfair and unproductive but also out of date. It ignores the reality on health reform -- that just about every important interest group acknowledges that today's health-care model is politically and financially unsustainable, that universal coverage is inevitable, and that everyone is going to have to accept major changes in how they do business and how things are priced and paid for.

Doctors and hospitals know that, in the future, they will be have to give up some of their autonomy and treat their patients according to proven best practices ("evidence-based medicine" and "disease management"), with their compensation based on how well they adhere to these protocols ("pay for performance").

Insurers realize that their profits will depend on how successful they are in managing care rather than how clever they are in cherry-picking the healthiest customers.

Drug companies realize that they will have to accept some limits on their marketing and will no longer be able to overcharge Americans while undercharging consumers in industrial and middle-income countries.

Politicians understand that tax money will be needed to subsidize premiums for the poor and near poor.

Unions understand that the days of first dollar coverage are gone and higher deductibles and co-payments will be required for all but preventive care.

The small-business lobby understands that universal coverage is coming and that its members will be required to help finance and administer it.

And everyone accepts that they will have to invest in new information technology to reduce administrative costs and medical errors and make it possible to evaluate the performance of individual doctors and hospitals.

Obviously there are lots of highly contentious details to ironed out. But that process will be made even more difficult if the politicians who ought to be encouraging it are scoring political points by setting up a phony battle between white hats and black hats.

We are all implicated in the failures of the current system -- consumers and providers alike. And what everyone should have learned from the last time is that nothing can happen unless the major interests are convinced they will be better off with reform than without it.