My Op-Ed on Health Reform and "Blue Dog" Democrat Congressman Altmire's political posturing in is today's Pittsburgh Post Gazette.

President Obama has sent a letter to Congressional Leadership identifying Republican proposals that he may include in a final reform package later this week, including increased funding pilot tort reform projects that may include health courts.  It's worth recalling that Obama (along with then Senator Clinton) sponsored a bill (MEDIC) in 2006 that sought funding for such programs.

This is nice example for negotiation 101--it never hurts to package something you are willing to do anyway as a "concession."

In truth, this seems all about PR, reiterating Republican obstinancy in opposing any meaningful reform, and attempting to provide some cover for supporters.  The Republican objective, as made clear in the health care summit, is to do nothing start over.  Adding "republican" ideas to the reform package doesn't really change anything. Although tort reform is necessary to eliminate waste, it is not (as posited by the Republican) a substitute for comprehensive reform.

The text of the President's letter follows:

March 2, 2010

Dear Speaker Pelosi, Senator Reid, Senator McConnell, and Representative Boehner:

Thank you again for the time, energy, and preparation you invested in last Thursday’s bipartisan meeting on health insurance reform. I have always believed that our legislative process works best when both sides can discuss our differences and common goals openly and honestly, and I’m very pleased that our meeting at Blair House offered the American people and their elected representatives a rare opportunity to explore different health reform proposals in extraordinary depth.

The meeting was a good opportunity to move past the usual rhetoric and sound-bites that have come to characterize this debate and identify areas on which we agree and disagree. And one point on which everyone expressed agreement was that the cost of health care is a large and growing problem that, left untended, threatens families, businesses and the solvency of our government itself.

I also left convinced that the Republican and Democratic approaches to health care have more in common than most people think.

For example, we agree on the need to reform our insurance markets. We agree on the idea of allowing small businesses and individuals who lack insurance to join together to increase their purchasing power so they can enjoy greater choices and lower prices. And we agree on the dire need to wring out waste, fraud and abuse and get control of skyrocketing health care costs.

But there were also important areas of disagreement. There was a fundamental disagreement about what role the oversight of the health insurance industry should play in reform.I believe we must insist on some common-sense rules of the road to hold insurance
companies accountable for the decisions they make to raise premiums and deny coverage. I don’t believe we can afford to leave life-and-death decisions about health care for America’s families to the discretion of insurance company executives alone.

No matter how we move forward, there are at least four policy priorities identified by Republican Members at the meeting that I am exploring. I said throughout this process that I’d continue to draw on the best ideas from both parties, and I’m open to these proposals in that spirit:

1. Although the proposal I released last week included a comprehensive set of initiatives to combat fraud, waste, and abuse, Senator Coburn had an interesting suggestion that we engage medical professionals to conduct random undercover investigations of health care providers that receive reimbursements from Medicare, Medicaid, and other Federal programs.
2. My proposal also included a provision from the Senate health reform bill that authorizes funding to states for demonstrations of alternatives to resolving medical malpractice disputes, including health courts. Last Thursday, we discussed the provision in the bills cosponsored by Senators Coburn and Burr and Representatives Ryan and Nunes (S. 1099) that provides a similar program of grants to states for demonstration projects. Senator Enzi offered a similar proposal in a health insurance reform bill he sponsored in the last Congress. As we discussed, my Administration is already moving forward in funding demonstration projects through the Department of Health and Human Services, and Secretary Sebelius will be awarding $23 million for these grants in the near future. However, in order to advance our shared interest in incentivizing states to explore what works in this arena, I am open to including an appropriation of $50 million in my proposal for additional grants. Currently there is only an authorization, which does not guarantee that the grants will be funded.
3. At the meeting, Senator Grassley raised a concern, shared by many Democrats, that Medicaid reimbursements to doctors are inadequate in many states, and that if Medicaid is expanded to cover more people, we should consider increasing doctor reimbursement. I’m open to exploring ways to address this issue in a fiscally responsible manner.
4. Senator Barrasso raised a suggestion that we expand Health Savings Accounts (HSAs). I know many Republicans believe that HSAs, when used in conjunction with high-deductible health plans, are a good vehicle to encourage more cost-consciousness in consumers’ use of health care services. I believe that high-deductible health plans could be offered in the exchange under my proposal, and I’m open to including language to ensure that is clear. This could help to encourage more people to take advantage of HSAs.

There are provisions that were added to the legislation that shouldn’t have been. That’s why my proposal does not include the Medicare Advantage provision, mentioned by Senator McCain at the meeting, which provided transitional extra benefits for Florida and other states. My proposal eliminates those payments, gradually reducing Medicare Advantage payments across the country relative to fee-for service Medicare in an equitable fashion (page 8).  My proposal rewards high-quality and high-performing plans.

In addition, my proposal eliminates the Nebraska FMAP provision, replacing it with additional federal financing to all states for the expansion of Medicaid.

Admittedly, there are areas on which Republicans and Democrats don’t agree. While we all believe that reform must be built around our existing private health insurance system, I believe that we must hold the insurance industry to clear rules, so they can’t arbitrarily raise rates or reduce or eliminate coverage. That must be a part of any serious reform to make it work for the many Americans who have insurance coverage today, as well as those who don’t.

I also believe that piecemeal reform is not the best way to effectively reduce premiums, end the exclusion of people with pre-existing conditions or offer Americans the security of knowing that they will never lose coverage, even if they lose or change jobs.

My ideas have been informed by discussions with Republicans and Democrats, doctors and nurses, health care experts, and everyday Americans – not just last Thursday, but over the course of a yearlong dialogue. Both parties agree that the health care status quo is unsustainable. And both should agree that it’s just not an option to walk away from the millions of American families and business owners counting on reform.

After decades of trying, we’re closer than we’ve ever been to making health insurance reform a reality. I look forward to working with you to complete what would be a truly historic achievement.
Sincerely,

I always find astonishing our ability to see only what we want to see.  In a 1954 study by Albert Hastorf & Hadley Cantril, students from Princeton and Dartmouth were asked to review a film of a football game between the two schools and to count the number of penalties by each side. The Princeton students found that the Dartmouth team committed twice as many flagrant penalties and three times as many mild penalties as the Princeton team. On the other hand, the Dartmouth students found that the two teams committed an approximately equal number of penalties. The study concluded that it was as though the two sets of students "saw a different game."

Commentary on yesterday's healthcare summit follows this predictable, but still remarkable pattern.  Take a look at any blog discussion of the summit, and you will see commentary that appears to review entirely different events.  Online comments on the WSJ's unsurprisingly negative op-ed is one example.   The LA Times comments start from the opposite side I don't doubt the sincerity with which democrats and republicans view their side as the "winner."

Regardless of positions on healthcare refore, I have to admit that I find it hard to see how President Obama's performance and command of the event could be considered anything other than extraordinary; he would certainly make an exceptional mediator.   In the face of aggressive and emotional criticism, he responds calmly and (for the most part) in a manner that invites deescalation.  He acknowledges the validity of diverse perspectives and doesn't reject the view of opponents simply because of their source.   (e.g., He left John McCain speechless when he agreed that the healthcare reform should not include special deals for different states).  He also recognizes that sometimes there is simply too wide a gap between the parties.

The Administration has posted President Obama's proposal, which is based on the Senate Bill but excludes a public option, here. More later...

In his NYT blog, economist Uwe Rheinhart expresses serious doubts as to the effectiveness of Republican costs control measures.  He writes:

,,, replace the term "cost control" ... with "constraining and possibly reducing the future incomes of doctors, hospitals, pharmaceutical companies, medical device companies and so on."

Given our system of governance, in which political favors can be purchased retail, the task of constraining or reducing the incomes of American health care providers will be a long and arduous battle with powerful, moneyed interest groups. American voters will have to become yet more desperate over the cost of health care before any politician will vigorously confront this powerful armada.

He further explains that tort reform, small business alliances, interstate insurance competition, and pricing transparency would have little effect on overall costs.

Medicare private insurance premiums are increasing from 14 to 31.2 percent.

In a February 10 Op Ed in the Wall Street Journal, Curt Levey  of the "Washington-based Committee for Justice" argued that healthcare reform should be opposed, because it will increase wasteful litigation.  This  argument is now spreading around the  blogosphere.

The problem with this theory is that it  is like saying that hospitals should be closed to save electricity. There is no doubt that litigation is far too wasteful and needs reform (in healthcare and all other fields). The notion, though, that a speculative risk of incremental lawsuits should forestall efforts to address exploding medical and insurance costs (98 percent of which have nothing to do with litigation) and provide coverage to at least some part of the now more than 50 million uninsured Americans is ridiculous.

For example, Mr. Levey expresses concern about the cost of "court battles [that] will focus on the constitutionality of requiring individuals to buy health insurance." In addition to the fact that such lawsuits would be utterly meritless--(have you ever heard of compulsory auto-insurance?)--the cost of such cases, however inflated, would not even rise to the level of insignificant in comparison to national healthcare costs.

Last week, we learned that healthcare now accounts for 17.3 percent of the GDP, and more than half of healthcare costs will soon be paid by government programs. Meanwhile, one of the nation's largest healthcare insurers is increasing some rates from 30 to 39 percent, which will doubtless force more of its subscribers to drop coverage (and lead to still higher rates for those that can afford to continue). At this rate, we will eventually end up with a near single-payor healthcare system--evenin the absence of reform--but one that is incapable of meeting increased demands of an ever-more impoverished public."

P.S.  Having never heard of the Committee for Justice, I checked out their website.  During the Bush years, the organization bemoaned procedural delays affecting republican judicial nominations.  Now, the group is applauding Republican filibusters.  Draw your own conclusions.

The president of AHIP (the American Health Insurance Plans) issued a statement today blaming everyone else for the high cost of health care and declaring the need for comprehensive health reform.  Among other things, the statement reiterates the premium death spiral (i.e., Health insurance premiums are increasing in the individual market because of soaring medical costs and because younger and healthier people are dropping their coverage due to the economy) and bemoans the health plans relatively small profit margins (relative to other segments of the market).

The first problem is that the profit margin numbers are pretty meaningless, because they are not adjusted for risk.  Given the ability to raise prices every year to cover actuarial changes, its far from clear that this margin is low.  Second, this is the group that brought us "Harry and Louise" who helped sink the Clinton reform efforts and doubtless prevented the Senate from adopting an entirely reasonable plan to drop the age for Medicare eligiblity to 55.

AHIP has a seat at the table simply because it can spend enormous sums on lobbying.  The notion that the Healthplans are somehow powerless victims is a bit hard to take.

The president of AHIP (the American Health Insurance) issued a statement today blaming everyone else for the high cost of health care and declaring the need for comprehensive health reform.  Among other things, the statement reiterates the premium death spiral (i.e., Health insurance premiums are increasing in the individual market because of soaring medical costs and because younger and healthier people are dropping their coverage due to the economy) and bemoans the health plans relatively small profit margins (relative to other segments of the market).

The first problem is that the profit margin numbers are pretty meaningless, because they are not adjusted for risk.  Given the ability to raise prices every year to cover actuarial changes, its far from clear that this margin is low.  Second, this is the group that brought us "Harry and Louise" who helped sink the Clinton reform efforts and doubtless prevented the Senate from adopting an entirely reasonable plan to drop the age for Medicare eligiblity to 55.

AHIP has a seat at the table simply because it can spend enormous sums on lobbying.  The notion that the Healthplans are somehow powerless victims is a bit hard to take.

Carl Mecurio, of Corporate Research Group, shows that Wellpoint is not alone in seeking substantial rate increases.  Eventually, the spiral of adverse selection (i.e., fewer healthy patients in the pool means higher costs for the remaining subscribers means fewer healthy patients and so on) may make private insurance a thing of the past.  (The demise of the Soviet Union as the result of internal, rather than external, forces may be a good analogy).