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Political Balance Is Shifting Against Health Care Reform — Unless Business Weighs In

The past two weeks have produced continual bad news for advocates of national health insurance.

[IMGCAP(1)]The Congressional Budget Office issued preliminary formal scoring of the draft first title of a Senate Health, Education, Labor and Pensions Committee bill and provided informal estimates of a Senate Finance Committee approach. Each report suggested budgetary costs would be higher and coverage extension more limited than may be politically plausible. Senate Finance Chairman Max Baucus (D-Mont.) responded by saying there would be no bill markup until sometime in July, as he and his colleagues searched for savings or better financing.

Opposition to any meaningful version of President Barack Obama’s idea of a voluntary, publicly sponsored insurance plan to compete with private insurers seemed only to strengthen. It was condemned by the American Medical Association and by House Blue Dog Democrats.

In the Senate, Budget Chairman Kent Conrad (D-N.D.) proposed to substitute some form of “cooperatives— for the public plan, saying he saw little prospect that the idea as originally proposed could pass in his chamber. But the cooperative approach was widely panned by health policy analysts who pointed out that it did not seem all that different, at best, from the Blue Cross/Blue Shield systems that neither control costs nor limit perverse insurer competition now. At worst, the cooperatives would have difficulty forming at all.

These developments suggest something that should have been obvious all along: the legislative equation for comprehensive health care reform may not have a solution. The math requires some combination of support for revenues to cover new coverage, for cost control to limit the revenues needed for new coverage while also protecting those who currently receive and pay for decent insurance, and accepting any remaining increase in deficits. The obstacles are straightforward:

• Hardly any Republicans and few Blue Dog Democrats seem willing to contemplate larger deficits.

• Virtually all Republicans oppose the vast majority of revenue options, and more centrist Senate Democrats have already opposed some of the revenues that Obama proposed in his budget.

• The major revenue source that some conservatives and moderates like, capping the value of tax preferences for health insurance, is a direct attack on both labor and many employers. It can only raise substantial funds by redefining the standard of good insurance downward, which will contradict many voters’ definition of secure coverage.

• And there is no sign of swing legislators supporting cost controls. There is a lot of talk about variations, redesigning delivery, prevention and many other ideas beloved in the health policy community. But as CBO has reported, there is little prospect of any of these ideas being implemented within a time frame that would allow CBO to “score— them as providing helpful amounts of savings.

There is no sign of bipartisan agreement on revenues and cost controls in either the House or Senate. House Democrats are 13 votes short of a majority without some Blue Dog support. Senate Democrats clearly include enough relative conservatives that they will struggle to find 51 votes, and have little prospect of 60. They could try to pass a bill through reconciliation after Oct. 15 but, as Sen. Conrad has pointed out, the Byrd rule is likely to eliminate much of the provisions that would be necessary to make such a bill work.

In this context, the “public plan— debate is fundamental because it involves the only plausible short-term source of cost control. If it were linked to Medicare, the public plan could have the market power necessary to counter the price-gouging that has become common in the many markets with dominant hospital systems and single-specialty physician practices.

While private insurers protest that the public plan would drive them out of business precisely because it would do better at controlling costs, some of the advocates for a public plan have suggested that private insurers should be allowed to pay the same prices. Cost control measures shared among all payers would eliminate any legitimate concerns about cost-shifting or unfairness to private insurers.

It is easy to see why insurers, hospitals, physicians and drug companies with dominant market power object to countervailing power on behalf of consumers and patients. It is harder to see how the policy equation could be solved without the cost control it offers. Public opinion seems to favor the idea of a voluntary public plan, in principle. Yet between interest group opposition and their own ideological doubts, it appears that the swing votes in Congress, as represented by both the Senators whom Senator Conrad seeks to represent and the House Blue Dogs, neither support the public plan nor have a cost control alternative.

But something’s missing in the equation I’ve described: the interest groups that are supposed to be for cost control. Where are the payers? Where are the business interests?

Those that do not cover their employees may oppose reform anyway — but even the owners and managers of those plans are worried about affording their personal coverage. Employers that do offer coverage to their employees desperately need to control costs. Yet the copious reporting from Washington, D.C., these days makes little reference to organized business lobbying for cost control — except the insurers and drug companies that make vague promises in an effort to prevent legislation.

Business-related organizations are certainly participating in discussions around Washington. Some, like the National Coalition on Health Care, have issued statements calling for more direct cost control. Yet any pressure for cost control that they are bringing to bear is not being reflected either in mass media coverage of the debate or the stands being taken, so far, in Congress.

Effective pressure for cost control that would help businesses in the next few years would also help the federal budget. Not only would this reduce the need for revenues and any deficits, meeting the concerns of more conservative Democrats, but that wing of the party tends to be more attentive to business concerns already. Only business, or large segments of business, could provide the political counterweight to the attacks of insurance, hospital, drug company and some physician interests against any effort to counter the spiraling costs that threaten the federal budget, corporations and individual Americans.

But business and its stake in cost control so far seem to be a surprisingly small factor in the health care politics equation. If that doesn’t change, health care reform is dead.

Joseph White is Luxenberg Family professor of public policy at Case Western Reserve University.

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