An Election, a Budget, and Two Summits = A Bold Obama Strategy for Health Care Change.

Like most participants in President Obama's Health Care Summit last Thursday, I was thrilled to be invited to the White House for the big public meeting on health care. At the Summit, the President did what the leaders and activists of the 800 organizations in our Health Care for America Now coalition have been urging:
he announced his determination to reform the country's health care system -- to cover everyone and to control health costs -- in this first year of his presidency.

I brought CDs with 300,000 signatures and emails collected by MoveOn, HCAN and my organization. The message to Congress: "Don't let conservatives and special interests block health care for all." By challenging all participants to control health costs as well as coverage, Obama is setting up the coming debate to demonstrate that the conservatives and special interests are bankrupt when it comes to real health reform - because they and the interests they represent are part of the problem, not part of the solution.

Obama signaled he was serious about health care with his first budget documents, released before his February 24 speech to Congress, containing a $640 billion "down-payment" on the cost of health reform in the next 10 years. And he set up the rationale for the urgency of going ahead with health care at the February 23 Fiscal Responsibility Summit, where Obama and his OMB director Peter Orszag argued that the only serious way to "bend the budget toward balance" is reorganize the health care system to control costs in this sector of the private economy that is also responsible for runaway growth in the Federal budget.

At a time when he has gotten the Congress to spend hundreds of billions to revive the economy and unfreeze the banking system, the President took on the concerns of conservatives and Blue Dog Democrats about growing deficits to set up the following equation: "When the economy recovers, the number one factor pushing up deficits will be Medicare and Medicaid spending. But these Federal programs is driven by rising costs in the entire health care system. So it is imperative that we reform the whole health care system to reduce inflation that is driving growth in Medicare and Medicaid spending."

But the important point that I want to emphasize today is that on Medicare and Medicaid, in particular -- which everybody here understands is the 800-pound gorilla -- I don't see us being able to get an effective reform package around those entitlements without fixing the underlying problem of health care inflation. If we've got 6, 7, 8 percent health care inflation we could fix Medicare and Medicaid temporarily for a couple of years, but we would be back in the same fix 10 years from now. And so our most urgent task is to drive down costs both on the private side and on the public side, because Medicare and Medicaid costs have actually gone up fairly comparably to what's been happening in the private sector what businesses and families and others have been doing. That's why I think it's so important for us to focus on costs as part of this overall reform package. [Link]

What is truly impressive is President Obama's ability to reach out to deficit hawks who disagree with him fundamentally on the budget - or insurance company executives who have a very different approach to health care -- and make them (and the media) feel as though they have been consulted, heard, and at least partially agreed with. Sooner or later, many of these forces will break with Obama, and he will have to assemble a majority in the Congress who support his approach -- and he will need the power of a powerful progressive movement to help him win. But for now this public openness works.

The new team has gotten this domestic policy summit thing down: Fill the East Room with a couple hundred Congresspeople and Senators and policy and organizational leaders from across the political spectrum. Give the President the microphone and let him impress us with his mastery of the issues -- and then send us off for two hours of wonky "break out sessions" where Congressional leaders dominate but others also get to weigh in. Finally, bring us all together to hear the President summarize the discussions (from reports from his staff) and declare his intentions -- to bend the arc of the budget toward balance (in the case of the Fiscal Summit) and (at the Health Summit) to reorganize the health care sector to cover everyone in a way that controls the main cause of long term budget imbalance, the spiraling costs of health care.

These gatherings are designed to do a number of things at once: to dominate the hourly cable and talk-radio programs and the daily and weekly news; to make a large number of elected officials and citizen leaders feel they have had an opportunity to advise the White House and posture in public, and to convey to the voters who elected him that he has a plan to achieve what he said he would do if he got to the White House. And on each occasion the President sent off the participants with the admonition to work together for progress -- and the implication failure to work together is a betrayal of the common good.

The good news is that many of the participants now feel pressure not to oppose the President directly. On health care, for example, the groups that wielded the knife that killed the Clinton health plan, the health insurance lobby and some groups claiming to represent small and big business, attended the Health Summit and pledged to help this time. Karen Ignani, who runs the insurance company association, now called America's Health Insurance Plans, declared to the President. "We hear the American people about what's not working. You have our commitment to play, to contribute, and to help pass health care reform this year." Dan Danner, representing the National Federation of Independent Businesses, the group that produced the Harry and Louise ads against Hillary Clinton's health reform, replied to Obama, "I'm honored to be here representing small business . . . and for them, cost is still the top issue. And we very much look forward to finding a solution together that works for America's job creators."

But how does the insurance industry meet President Obama's challenge to control health insurance costs, now bankrupting companies and experienced by you and me in rising premiums, growing out-of-pocket costs, and just plain inability to afford decent coverage? Here's Karen Ignani's answer, conveyed in the breakout session I was assigned to: She suggested that every player in the health system -- insurance companies, doctors, hospitals and other providers -- all get together and promise to voluntarily reduce their costs in the coming year by at least 1 percent. That's it. That's the best this representative of America's Health Insurance Plans could come up with! Voluntary price restraint! Bernie Madoff should try making this promise of volunteerism when he finally goes to trail. ("Members of the jury, if you don't send me to jail, I will voluntarily give back the money and do real investments, not ponzi schemes for the rest of my life.") When American health consumers, like the Madoff jury, hear this offer, they are likely to look for another solution.

In his concluding remarks at the Health Summit, in what may have been a feint to confuse everyone, President Obama declared "I'm talking to you liberal bleeding hearts out there. (Laughter.) Don't think that we can solve this problem without tackling costs." Well, it turns out that it is the liberals who have been promoting the most effective strategy for tackling costs that has so far been proposed: giving everyone the option of enrolling in a public health insurance plan, like Medicare for the non-elderly. The Lewin group estimates that something like half the population would enroll in such a plan, creating a very important benchmark and competitor for the private insurance industry. The Commonwealth Fund Commission found that a public health insurance plan will have premiums averaging 20% less than private insurance. And recent polling by Celinda Lake has found that 73% of Americans favor a choice of private or public health insurance over having just one or the other.

The public insurance option is controversial among some of the same people who, like Ronald Reagan in the 1950s, called the prospect of Medicare for seniors "socialistic." But the real impact of a public insurance plan would be to bring to bear some good old-fashioned competition in the health insurance market, which is dominated by a few firms in most states. According to a study in Health Affairs, in 40 states the top three carriers account for between 60 and 100 percent of the market. By now, everyone should know that Medicare is more efficient than private insurance, with fewer overhead costs like advertising - and much simplified billing and other procedures than private companies. And it is just this kind of simplified nation-wide administrative structure that would allow a public insurance plan for the rest of us to institute cost-saving and quality-improving reforms.

Everyone talks about the virtues of Health Information Technology in controlling costs. A unified system (like a Medicare for the rest of us) would be able to deploy IT system-wide more easily that a whole lot of private firms, each with their own administrative, billing and reporting systems. And the real cost saving potential for health IT comes when linked with a new system of "comparative effectiveness research," so that over time, the health system builds up a huge database of what works and what doesn't work in health treatments. Senate Finance Committee Chairman, Max Baucus, in his highly-regarded White Paper called Call to Action: Health Reform 2009, which proposes creation of a public insurance plan similar to Obama's, argues that the public plan, by virtue of its size and non-profit national charter, would be able to reorient America's health care delivery system toward services and activities that improve patient care and "bend the curve" of growth in national health care spending.

Study after study has endorsed the importance of a public insurance plan as a very effective mechanism for controlling system-wide costs, spurring competition and innovation in the private sector, and improving the quality of health care.

And yet, the conservative ideology dominates one part of the political spectrum. At the White House Health Summit, after he called on Senator Baucus, President Obama graciously gave the microphone to Baucus's minority party ranking member in the committee, Sen. Grassley, who thanked the President and then laid down the gauntlet on the public insurance option: "So the only thing that I would throw out for your consideration -- and please don't respond to this now, because I'm asking you just to think about it -- there's a lot of us that feel that the public option that the government is an unfair competitor and that we're going to get an awful lot of crowd out."

So the only time the public insurance option was seriously discussed with the President in the room, it was for the highest ranking leader of the Republicans at the Summit to try to rule it off the table, because - it would represent unfair competition with the private insurance companies.

President Obama didn't respond conclusively, but he correctly summarized the case for the public insurance option: "The thinking on the public option has been that it gives consumers more choices, and it helps give -- keep the private sector honest, because there's some competition out there."

So the debate has finally been joined. The President is in favor of competition and choice to bring down costs. And the Republicans, echoing the insurance industry, are afraid of competition and have no other real answers to the problem of rising health care costs. Sound like a good fight to me.


I also attended the February 23 White House Fiscal Responsibility Summit and I was brought face-to-face with the reality that Republicans and some Democrats do have a proposal for dealing with Medicare and Social Security costs. They want an independent Commission on Entitlements that would propose caps on overall entitlement spending and automatic cuts to those programs when spending exceeded the caps. The Commission would devise the specifics and then present them to the Congress for an up or down vote - dispensing with the democratic niceties of debate or amendments.

Prior to this first summit I had worked with allies to urge the White House NOT to have Peter G. Peterson, the notorious budget hawk and advocate of such a commission, speak at the Summit - and to urge them not to announce a White House task force on Social Security. Perhaps to punish me for this successful pre-Summit agitation - or perhaps to let me see what they were up against, the White House assigned me to the Budget Process break out session that was dominated by Senators and Congresspeople -- like Judd Gregg and Evan Bayh and Kent Conrad - who made an entitlements commission the subject of the session. Their focus was on capping and automatically cutting Social Security and Medicare -- the very opposite of health care reform that takes on the drivers of health care inflation, the insurance companies.

I got only one opportunity to speak in a session dominated by Senators and Congresspeople, but I am especially proud of the small section (page 44) devoted in the official report to the dissenters:

Still others - for example, Representative Obey, Representative Van Hollen, and Roger Hickey - stated express opposition to a commission.

• Representative Obey stated that he believed a commission would thrill the policy wonks but nobody else, and that in the end nothing would be accomplished. "Cound me among the strong skeptics," he said.

• Representative Van Hollen's central concern with a commission process was his belief that Congress should not outsource the key fiscal policy decisions on health care, taxes, and Social Security to someone else. In his words: "Huge policy issues cannot be subcontracted." He feared that a commission would be viewed as undemocratic and and abrogation of congressional responsibility.

• Roger Hickey believed that "an extraordinary procedure" has already been employed in the past year, to great effect - namely, the presidential election. He argued that the American people had spoken in favor of expanded health care and a fairer tax distribution, and also for greater honesty and transparency from their government - not in favor of handing over decisions on fundamental issues such as taxes, health, and retirement to a closed group of insiders.

My moment of glory at the Fiscal Responsibility Summit.