Conditions Seem Right for Some Type of Health Reform to Pass

Posted May 12, 2009 at 3:36pm

Back in March 1993, when we were just beginning the Clinton journey toward health care reform, I wrote an opinion piece in the Washington Post on the prospects for success. My central point was that there is a universal public definition of reform: I pay less.

[IMGCAP(1)]Thus, any plan built around insuring the 37 million Americans then without coverage would violate the basic principle. The message to 250 million insured Americans would be: Congratulations, you are going to pay more so that they can pay less. I also noted the difficulty of enacting major change at a time when nearly three-fourths of Americans were happy with their health care, meaning overcoming the principle above would be even more difficult.

There were many reasons health care reform subsequently flamed out in 1994, but that principle was near the top of the list. What is different now? The answer is a whole lot, as underscored by the remarkable meeting at the White House on Monday with President Barack Obama shoulder to shoulder with the leaders of the insurance community, the hospital community, the pharmaceutical industry, the medical device companies and the Service Employees International Union, pledging to work together to cut skyrocketing health costs by 1.5 percent a year over the next 10 years. That might not sound like much, but thanks to the miracle of compound interest, reducing the base that much means $2 trillion in savings.

It is true that the pledge by these disparate groups to join together to use health information technology, use the latest in comparative effectiveness techniques, and make a larger push in prevention and wellness, among other things, is only a promise. And it is a promise that many believe is a pre-emptive move made by providers to limit the damage that a government initiative might do to them. It is true that all of these interests are, well, interests — they are looking out for their own well-being. But I also believe that this is a genuine sign of a dramatically different climate than we had 16 years ago.

To begin with, the whole public dynamic is different. Of course, there are 7 million more uninsured Americans than in 1994; but additional multiples of that 44 million feel dislocated and disoriented by a health care system where they have little certainty, even if they are able to have and hold insurance, that there will be any continuity in their plans or limits to what they might have to pay, much less which drugs they can get and which doctors they can see.

Reform still is defined as “I pay less.— But that doesn’t just mean paying less in dollars; it also means more predictability and continuity, and a return to a sense that there is a genuine safety net if something happens, an even more important goal to voters in a bad economy.

There has also been a sea change in the attitude of the stakeholders. The famous “Harry and Louise— ads, run in 1994 by the flagship trade association of health insurers, tapped into the public fear that the Clinton plan would be anti-reform, but also reflected the prevailing attitude among all provider groups that any major plan emerging from Washington, D.C., would be to their detriment. They were convinced that they could manage change far better on their own.

Now it is different. Almost every stakeholder in the health system knows not only that change has to come, but that it can’t go on the same path that it has. At the same time, providers have come to realize that the 44 million uninsured are not just a crisis but an opportunity. Major insurers, battered by the vicissitudes of a careening economy, are losing subscribers all over the place. A system of universal coverage might in fact mean a safety net for providers even as they took hits elsewhere with a reform plan.

And just as important, the more farsighted among the provider community saw that the winds of change meant a much greater likelihood of a reform package passing, and that being on board the wagon helping to steer its path was better than waiting to see what politicians would do without them. They also knew that if a plan crashed and burned this time around, the populist backlash against the providers would be very harsh.

I have met and spoken regularly over a number of years to leaders of these industries, including especially the American Association of Health Plans. The three representatives from the insurance industry, George Halvorson of Kaiser Permanente, Jay Gellert of Health Net and Karen Ignagni, the tough-minded and farsighted long-time leader of AHIP, all have seen the change coming and all have been preparing to be leaders and participants, rather than trying to deep-six a reform plan or just sit back and wait for the wagon wreck to happen. They have been joined by other leaders from hospitals and big pharma, and by the major figures in the medical device community and a key labor entity, SEIU, to create this unlikely alliance.

Business and AARP will also be a part of the reform effort. This kind of broad-based buy-in and participation leaves Republicans without their usual allies to combat a Democratic president on health reform, and makes it more likely that the opposition will be divided.

Of course, this does not mean that reform is a sure thing. There are huge substantive problems and make-or-break issues for left and right that are not easily reconcilable. There are many Congressional figures, not all compatible with each other, trying to get their stirrers in the pot. And there is the huge issue of paying for any plan.

Here, the agreement this week may be a significant boost. If the Congressional Budget Office can score some of the savings these groups and the president announced, it will reduce the amount of taxpayer money needed to meet any pay-as-you-go targets. With all this, there is reason to believe that health policy reform has a real chance of success this year.

Norman Ornstein is a resident scholar at the American Enterprise Institute.