Health care proposals divide Democrats in Congress

WASHINGTON, D.C. — The Democrats may control Congress and the White House, but when it comes to health care reform —arguably the most important legislation that the U.S. government will tackle this year — the well-positioned political party could turn out to be its own worst enemy.

Although this round of health care debates has only just begun, cracks have already started to form between liberal Democrats in the House, who have rallied for a robust government-run health insurance option, and moderates in the Senate, who have said that such a plan might not be politically feasible and have pushed instead for a more incremental approach.

“At this point, the prospect of failure is very strong,” said Larry Jacobs, a political science professor at the University of Minnesota who specializes in health care policy.

On one side of the Capitol, liberal House Democrats, who largely prefer a single-payer system, have lobbied for a strong public plan option, which would be able to aggressively compete with private insurers.

Rep. Keith Ellison, who is a member of the House Progressive Caucus, has already expressed frustration with the Senate’s attempts to diminish the public plan. In a recent interview with MinnPost, the Democrat from Minneapolis said that he was “very worried” that the Senate would ultimately water down any public plan to the point of non-existence or ineffectiveness.

Rep. Keith Ellison
REUTERS/Eric Miller
Rep. Keith Ellison

“I will not tolerate it,” Ellison said. “I’m just going to be a ‘no’ vote and I’m going to be recruiting people to be ‘nos’ if we don’t have a robust public plan.”

Rep. Jim Oberstar, D-Minn., who has supported a single-payer system in the past, is also an adamant proponent of a public option.

Although Oberstar did not go as far as Ellison, he did say that the Obama administration’s recent equivocations on the matter concerned him.

“I think they are a little muddy over at the administration because they got so much push back [from the Senate and interest groups] and now they are trying to soft-pedal the idea of a public option,” Oberstar said.

Losing the left wing of the Democratic Party in the House would likely be disastrous for the legislation, which is expected to draw few Republican votes. And Rep. Lynn Woolsey, D-Calif., who chairs the 80-member House Progressive Caucus, has said that a majority of the caucus would not vote for a health care reform bill that does not include a solid public plan.

All or nothing
Meanwhile, economist and New York Times columnist Paul Krugman has also been adding to the public plan push, as have liberal groups like MoveOn.org, which recently launched ads attacking Democrats who have voiced objections to a government-sponsored option.

In two columns last week, Krugman derided “balking Democrats” for undermining health care reform, and “Barack the Post-Partisan” for not pushing hard enough for a large public option, which Krugman argued might allow health care reform to go the way of the stimulus — big, but not big enough — in his opinion.

“So Mr. Obama and Democrats in Congress have to hang tough — no more gratuitous giveaways in the attempt to sound reasonable. And reform advocates have to keep up the pressure to stay on track,” wrote Krugman. “Yes, the perfect is the enemy of the good; but so is the not-good-enough-to-work. Health reform has to be done right.”

According to Rep. Betty McCollum, D-Minn., doing it right would include a public plan much like MinnesotaCare.

Rep. Betty McCollum
Rep. Betty McCollum

“I would like to see a Minnesota MinnCare not-for-profit model moving forward,” McCollum said. “And, I’m going to keep working toward that goal and trying to incentivize my colleagues to get with me.”

But on the other side of the Capitol where Democrats are one vote shy of a filibuster-proof majority, the public plan has largely floundered.

Sen. Ben Nelson, D-Neb., initially went as far as saying that the public option would be a “deal breaker.” Although Nelson later backed away from his comment, Sen. Kent Conrad, D-N.D., has said that he still doesn’t think there is enough support to pass a public plan in the Senate. Instead, Conrad has advocated for a national network of member-run cooperatives, which, he said, would increase bargaining power with less government involvement.

Some health care policy experts, however, fear that these cooperatives would not be enough to improve the current system.

“Nonprofit health-care cooperatives won’t have any real bargaining leverage to get lower prices because they’ll be too small and too numerous,” Robert Reich, a former Secretary of Labor under President Bill Clinton, recently wrote on The American Prospect website. “Pharma and Insurance know they can roll them. That’s why the Conrad compromise is getting a good reception from across the aisle, just as [Republican Maine Senator] Olympia Snowe’s ‘trigger’ (which means no public option until some time down the pike, and only if Pharma and Insurance don’t bring down and extend coverage a tad) is also gaining traction.”

Health care exchanges
For the time being, Sen. Amy Klobuchar, D-Minn., appears to be undecided on some of the key particulars of health care reform. When asked specifically about the public plans, a single-payer system and financing options, Klobuchar’s spokesman said that the senator was not available for comment.

“She is considering health reform options that include Health Benefit Gateways or Health Exchanges, but wants to analyze how the plans in their entirety will impact our state before signing on to a specific proposal,” said Klobuchar spokesman Linden Zakula.

Health care exchanges could operate on the state or national level and would essentially pool together providers and offer a variety of coverage options with certain set rules, such as no discrimination for pre-existing conditions and a minimum level of comprehensiveness.

Although the health care exchanges would likely begin in limited versions, Jacobs said that the exchanges, combined with incremental reforms to Medicare and Medicaid, could still be extremely useful and, ultimately, more politically feasible than a large public plan.

Larry Jacobs
hhh.umn.edu
Larry Jacobs

“The Krugman position that half measures are defeatist and counterproductive is radically ignorant,” Jacobs told MinnPost on Monday. “In a way, Krugman is the best ally of the enemies of reform because he is pushing reformers into a false choice between systematic reform and no reform.

“What is missing among liberals,” Jacobs added, “is that they see this as a do-or-die, one gulp reform and it is kind of stunning.”

Jacobs argued that the choice Krugman and other liberals were posing was a false one. “We can do incremental reform that is good and leads to enormous progress,” Jacobs said.

Henry Aaron, a Senior Fellow in Economic Studies at the left-leaning Brookings Institution, agreed.

“I think the key is to dislodge the immobility of the current finance arrangement,” Aaron said. “Whatever we do, we are not going to get it right the first time and corrective action will need to be taken… We are starting the process of health care reform and that is going to take a generation to complete.”

How to pay?
How to pay for the reform and reorganize funding of the current system is perhaps an even thornier issue than coverage expansion methods.

The Obama administration has refused to rule out the possibility of a tax hike on health insurance plans. That option, however, is extremely unpopular among many members of Congress and Minnesota’s delegation, though many analysts, and even some lawmakers, see it as a reasonable way of funding the massive reform.

“I have great reservations on this,” said Rep. Tim Walz, D-Minn., who is a former public school teacher. “I know that the tax is hugely unpopular among the unions.”

Walz and Ellison have introduced legislation in the House that aims to create savings through Medicare funding formula restructuring. Klobuchar has introduced similar legislation in the Senate.

The bills would essentially change Medicare’s funding model so that it awards outcomes over numbers of tests. Although the idea seems logical enough, Jacobs said there would likely be regional disputes over the matter. The current system, for instance, favors states that spend more on health care, such as California or New York. Meanwhile, states with relatively low health care costs like Minnesota are at a disadvantage.

To pay for the reform, Obama has also said that he would support a cap on deductions that people making over $250,000 can take on their taxes.

But Aaron said that he preferred a value-added tax, which would provide a much wider tax base and could be included at each stage of production for all goods expect those given exemptions.

“Nobody is talking about it, but this is a favorite of analysts,” said Aaron. “Of course, they don’t have any votes.”

Republicans, who are working on an alternative bill (PDF) in the House, have yet to come up with many workable financing suggestions either.

“The costs haven’t been identified in terms of paying for [the Republican health care plan] yet,” said Rep. Erik Paulsen, R-Minn.

Rep. Erik Paulsen
Rep. Erik Paulsen

Among other things, the Republican plan would provide tax deductions for people who purchase health insurance on their own, allow small businesses to band together to offer health insurance at lower costs and ensure that pre-existing conditions do not affect access to coverage.

The main difference, of course, is that the GOP plan does not include a government-run insurance option that would compete with private insurers.

“The Democrat’s plan is it increases the role of the federal government through a new government-run plan and an expansion of Medicaid,” said Rep. John Kline, R-Minn., at a hearing last week on the House health care plan. “With government spending on health care already exploding and the federal Medicare and Medicaid programs already on the road to insolvency, I can’t imagine the reasoning behind intensifying the stress placed on these programs.”

Public support
In this respect, all three of Minnesota’s Republican lawmakers, along with most of their GOP colleagues, seem to be in agreement, making Democratic solidarity all the more crucial.

In certain ways, however, these disputes in Congress and among analysts and policy experts seem somewhat divorced from popular public opinion.

A recent New York Times-CBS News poll showed that 72 percent of respondents said that they would support a government-run program like Medicare, while 57 percent said they would be willing to pay higher taxes for health insurance.

The poll also showed that support for a competing government plan crossed party lines with 87 percent of Democrats, 50 percent of Republicans and 73 percent of independents in favor of the plan.

“You can’t avoid politics in health care… [But] there is a unique window of opportunity right now,” said Lynn Blewett, director of the State Health Access Data Assistance Center at the University of Minnesota.

But will Congress seize it?

Cynthia Dizikes covers Minnesota’s congressional delegation and reports on issues and developments in Washington, D.C. She can be reached at cdizikes[at]minnpost[dot]com.

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Comments (7)

  1. Submitted by Paul Udstrand on 06/30/2009 - 10:10 am.

    The Democrats are once again talking themselves out of doing anything. The time for increments has long since passed. That’s been the plan for decades and all it’s lead to is a worsening system. Failure to create a robust public option now will just push this crises out for another 8 years at least because unlike Republicans, Democrats just walk away once something is done or undone. Republicans keep coming back year after year, it’s irritating but you have give them credit.

    All this talk about what is and is not politically feasible just betrays a lack of courage and vision. All they have to do is vote for it. If Obama can’t point to a clear and serious improvement in health care in this country, and the Republicans manage to come up with a decent candidate, he can very possibly lose the election.

  2. Submitted by Gregory Stricherz on 06/30/2009 - 12:37 pm.

    It’s interesting to hear all the media blather about a “Public Health Care Option” that some want thrown in the mix of options. And supported by the supposed “liberals” like Keith Ellison, Paul Krugman and MoveOn. This still leaves the insurance companies in control of our health care.

    What the American people REALLY want is what is contained in Representative John Conyers bill, H.R. 676, “The United States National Health Care Act.” As Dennis Kucinich says, this would give us a “a universal single-payer, not-for-profit health care system.” Medicare for all. It would do away with the obscene profits and wasteful overhead of the insurance industry. And result in much lower health care expenses for all of us. Over half of US physicians (64 percent in Minnesota) support such a system.

    Yet when Congress held their “hearings” on revising health care in the US, they observed Obama’s dictum that “single-payer is off the table.” In the beginning they refused to allow any attendance by an advocate of a plan like John Conyers. After vocal public criticism John Conyers was allowed to testify. But even then protesters for single-payer were dragged from the hearing room and arrested.

    So enough with the media telling us what the liberal Democrats want. For the 2010 election cycle, Democrats lead Republicans in money collected from the Insurance industry. And that is what THEY really want.

  3. Submitted by Glenn Mesaros on 06/30/2009 - 01:57 pm.

    The City of London’s Economist magazine devotes its June 27-July 3 issue to ordering President Barack Obama to make sure that murderous healthcare cuts, and denial of “expensive care” to millions, is rammed through in the United States—including, explicitly, the replication in America of the British NICE, the hated national healthcare board which rations treatments and drugs and denies them if they are “not cost effective.”

    The Economist pictures on its cover a grinning President Obama, dressed as a surgeon. He holds a menacing syringe with a four-inch needle, under the headline, “Reforming Health care: THIS IS GOING TO HURT.”

    Inside are three articles giving the U.S. President his marching orders to get tough with Congress and the people to slash health care—and another entire section on aging, attacking the present system of pension benefits for elderly Americans, and demanding an end to the concept of retirement.

    On the principle of the healthcare reform, the Economist’s instruction is:

    “Forcing people into ‘managed’ health schemes, where SOME SPECIES OF BUREAUCRAT DECIDES WHICH TREATMENTS ARE COST-EFFECTIVE, IS POLITICALLY TOXIC… BUT TO SOME EXTENT IT WILL HAVE TO BE DONE.” [emphasis added -ed]

  4. Submitted by Bernice Vetsch on 06/30/2009 - 04:13 pm.

    The administration will rejoice when its bill passes, even though it does leave the for-profit insurance industry in charge of our health care and the public option will no doubt have been so weakened as to be negligible. Sixteen mega-health care, insurance, and drug companies spent $41,480,000 in lobbying during the first three months of 2009, much of it in opposition to the public option. They are bound to have an influence and what becomes of it.

    I’m thinking the 80 members of the Progressive Caucus in the House should join the Blue Dog Dems who will vote against the proposed bill because it costs too much (which it does) and the Republicans (because we will be On the Road to Socialism).

    Then, after next year’s elections, it may be possible to get HR-676 to the floor and do the right thing by uniting all Dems and at least some moderate Republicans to vote for the plan that leaves no one without care while saving us $400 billion per year.

  5. Submitted by Richard Schulze on 06/30/2009 - 10:11 pm.

    The fact that many people are without insurance, the fact insurance is not portable. Those problems all stem from a single cause. Which is that we rely on private insurers to provide health insurance. That’s a failed business model effectively for this enterprise.

    The private insurance companies imperative is to not sign up as clients, people who need medical care. They want to find healthy people or people who won’t need medical care.

    Much of their budget is devoted to identifying who is going to need care and then taking steps to exclude those people from their policy rolls.

    Another major part of their budget is based on aggressive efforts to deny reimbursement claims, so if you do have a policy and you do get a procedure and then you seek reimbursement for it. They have experts who get extra salary if they deny a higher proportion of claims.

    That is a failed business model for providing health care. That is called the adverse selection problem.

    That is why no other major economy provides health care along the lines of that model. Every other country has a universal access system that is roughly speaking a single payer system.

    I think the Obama administration will include a vigorous public plan. There will be a lot of uproar I’m sure if a bill comes out without one. Then there will be a chance for the public to choose.

    It will be a public plan that will take all comers, a public plan that you can carry with you where ever you go, a public plan that will not charge you a heavy premium if you have previous conditions. If people have access to that plan and for reasons of their own choose not to buy it, well and good.

    As long as that is part of the mix, I can think that the health care reform effort can be said to have done its job.

    We provide health care in the least efficient way of any modern industrial country. On average most countries spend half as much per capita as we do.

    People complain there are waiting lines in those countries and that’s true, in some there are. Then we could spend three quarters as much if we did it more efficiently and have no waiting lines.

    It’s up to us on how we want to spend the money. With a more elaborate plan with shorter waiting lines, or a cheaper plan with longer waiting lines.

    We have waiting lines now in effect. There are a lot of people who are denied care forever and that’s a waiting line.

  6. Submitted by Rebecca Hoover on 07/01/2009 - 01:03 am.

    It is interesting that Amy Klobuchar has busied herself with this little issue and that little issue and ignores the health care issue that is one of the two most important issues for most Americans. Amy Klobuchar does not seem to be able to address the other important issue either: the economy.

    While Amy may be able to smile and fake lively concern over average families, her dithering is not deceptive. Amy is set to become the senator who did everything but–a master of trivia–a ditherer of no consequence. Thank heavens Ellison and Oberstar are made of more substance.

  7. Submitted by Colin Lee on 07/01/2009 - 03:27 pm.

    Any bill that fails to deal with the over 2500% growth in the number of health care administrators since 1970, a figure compiled by the Bureau of Labor Statistics, is a wasted effort at reform.

    Any such bill that continues to leave the HMOs in charge of profiting from massive administrative waste will fail at cost reduction. Minnesota’s health costs are projected to increase by more than the size of the entire state budget in seven years. This is a crisis, not an opportunity to grease the palms of private, for-profit insurance companies with favorable mandates.

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