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Healthcare Reform Update: Inside Baseball Time

If you are a baseball fan, you’ll appreciate the correlation between a baseball game and the present course of healthcare reform.  A baseball game starts with anticipation and fanfare; speeches, the throwing out of the first pitch, the national anthem and the players taking the field.  The fans settle in and the game begins with cheers for the first hit, the first strikeout or the first double play.  As the game progresses, the typical fan loses a bit of interest and seemingly, little is happening across the middle innings.  People begin to mill around the stadium, seeking concessions or the restroom and the scoreboard becomes more of a video game/entertainment center, trying to keep fans engaged and entertained as the game appears to offer little excitement at the moment.  Nothing going on, right?

The course of healthcare reform has now entered the middle-innings.  The fanfare of the opening ceremonies and the introduction of various bills and propositions, the committee work and the initial passage of the “first-cut” of legislation has passed.  The news is now technical and policy oriented just like the stats laden reporting in the middle of the baseball game.  Polls show people have turned away; headed to the concession  stands or the restroom until the cheering erupts again.  Frankly, it is tough to watch as little substantive seems to be happening at the moment.  Who wants to hear about more stats and trivial poll data?  Does anyone really care about the current batter’s hitting streak over the past two weeks or the pitch count (or the fifth poll of the week comparing the last four polls of the weeks prior)?

So, if you like subtlety, drama, a bit of intrigue and the nuances of the game, you’ll appreciate this Inside Baseball view of healthcare reform.  Just like the middle innings of the baseball game, a lot is going on that will definitely shape the action in the latter innings; or, in this case, the actual votes on the respective floors.

  • This period of time is all about “vote counting” for the Democrats in the House and the Senate.  As of right now, there are not enough votes in favor of a bill containing a “public option” – at least not the fully loaded version.  Speaker Pelosi and Majority Leader Reid in the Senate will be posturing different options back and forth to gauge where the tolerance level is and in what form for any kind of a public option.  They also will be discussing a “trigger”; a clause in the legislation that will kick-in a public option in the event certain provisions are not met (such as number of insured, access to low-cost healthplans, etc.).
  • There is a budget buster monster that both the Senate and the House have to deal with and that concerns physician reimbursement under Medicare.  Right now, physician fee schedules are tied to GDP growth and the lack of GDP growth (actual shrinkage) in 2008-2009 would require a cut in physician fees under Medicare.  In order to provide for a modest increase in MD payments, Congress needs to infuse an additional $250 to $500 million into the fee schedule. This amount is in-addition to the cost associated with the various healthcare reform proposals.  The Senate version (the Baucus Bill) skirts the issue a bit by offering a one year fix with a higher level of taxation as an offset.  The House has tried to remove the issue and deal with it outside of the healthcare reform activity.  No matter how each side deals with the issue, the price tag is large and physicians are a powerful voice in the process.  Make the doctors unhappy and the prospects for major reform become dimmer by the day.
  • The financing of the legislation is still a major issue – in both the Senate and the House.  Two major components will bear the majority of the scrutiny; Medicare cuts and taxes.  Despite the rhetoric from the President regarding “savings” under Medicare, the reductions in Medicare spending in the healthcare reform bills are cuts in spending – not gains via reduced fraud or improvements in efficiency.  Medicare cuts and programmatic changes raise the ante for seniors and providers (including physicians).  Taxes, especially in the Senate version, are already being targeted by fiscal conservatives and anti-reform proponents as a breach of the President’s promise not “to raise taxes on the middle-class” and as a huge added cost to private insurance policies.
  • The issue of whether any final reform package can be truly deficit neutral will continue to be debated in the background and the foreground.  A great deal of pressure will be put on the CBO to use the most creative math possible in forecasting the costs associated with any final bill brought forward for a vote.  As of right now, neither major initiative as each stands is anywhere close to budget neutral – regardless of what is being said on the Hill.
  • Where does the President stand?  The President and the White House are oddly silent on their exact preferences and as a result, no one is quite sure when and if, Mr. Obama will attempt to push a particular package forward.  The reality is, the President is quietly maneuvering behind the scenes, watching and charting, hoping to make a move at the opportune moment.  To date, his moves including his speeches, have been less than effective in getting any piece of legislation closer to passage.
  • Polls, elections and timing are all being gauged carefully now.  Similar to vote counting, each legislator that faces an election battle in 2010 is carefully counting the days between a possible vote and the scheduled primary. Poll results that continue to show an anti-overhaul sentiment nationally or in a particular region will definitely influence a legislator as time ticks closer to election season.  In other words, the reform window will only be open so long for a number of legislators and therefore, forging a workable, viable plan is urgent business for the Senate and the House.
  • Finally, the economy is behaving like a two ton weight that each party is carrying at the moment – one uphill and the other down-hill.  The Democrats, as the party in power, must carry the weight uphill and cannot trip over healthcare reform as they go for fear that the overwhelming weight of both issues will send them crashing down, ultimately buried by the weight of both issues.  For Republicans, the weight is carried down-hill as they can use the deficit, the costs of healthcare reform, and other news of slow recovery to their political advantage.  The trick however in carrying a heavy weight down-hill is not to let gravity take over, pulling you down so fast that you lose control and tumble, risking the weight crashing down on you.

To close with some baseball lingo, don’t be surprised to see a squeeze play, a double-switch, a hit and run, and possibly even a steal or two go on over the next few weeks.  Remember, this is the middle of the game and a rhythm and tempo has been set.  Each party is charting the course of the game and has sufficient data now to begin to try to out-maneuver the other party.  Most of the moves will be subtle and may bear no relationship to what appears to be happening at the moment but rest assured, this is the time where the game is truly, most often, won or lost.

October 26, 2009 Posted by | Policy and Politics - Federal | , , , , , , | Leave a comment

Reform: The Senate Version

After weeks/months of meetings, Senator Baucus of Montana representing the “gang of six” (three Democrats and three Republicans) released the Senate Finance Committee version of “healthcare reform”.  What started as a bi-partisan sub-committee alternative to the House version (HR 3200) ended as essentially, a Baucus bill; legislation lacking any real support from Senate Democrats and no support from Senate Republicans.  In fact, the goals originally stated by Baucus and his committee concerning affordability (legislation paying for itself) and bi-partisan compromise are clearly unmet in the released version.

A quick comparison between the Baucus bill and the House bill shows the Baucus bill to be some $150 to $100 billion cheaper, devoid of a government specific health plan (although non-profit cooperatives established by the government with regulation and funding are present), including an excise tax on “rich” insurance plans via the companies providing the coverage, and a government requirement that every citizen somehow purchases insurance.  A preliminary estimate by the Congressional Budget Office indicates that the Baucus bill at least contains within, revenue sufficient to offset the new costs and perhaps, establish a small surplus over the ten year implementation horizon.  As the legislative details come forth, it is likely that the Baucus bill will be found to be at best, a break-even or modest deficit producing endeavor.

To be honest, I haven’t read the entirety of the bill as of yet; perhaps I’ll finish over the weekend.  My quick scan and a review of the bill’s “guts” tell me that it is essentially DOA.  Frankly, in many respects, the Baucus bill has less chance of success in the Senate than the House bill has chance of remaining alive in the House.  There are at least enough Pelosi loyal Democrats in the House to rally a charge behind HR 3200 and the Republican numbers literally insufficient to put up anything other than token opposition.  In the Senate, Republicans are still in the minority but not to an extent that their numbers are immaterial.  Additionally, conservative Democrats in the Senate are already in a number sufficient that any balk from their contingent will crater in totality, the Baucus effort.  Finally, the Kennedy Senate liberals have already raised rancor that the Baucus bill, absent the beloved public option, is unworthy of their vote.  Doing the math, the lack of support from Republicans, the wariness of conservative Democrats and the unsupportive Kennedy liberals equals crash and burn for the efforts of Senator Baucus.

With the healthcare reform cards now on the table, the next steps of this grand reform experiment should prove to be fascinating.  The President is in full campaign mode, appealing to any warm constituency to prop up his efforts to reform the system – though none of us are exactly sure what his efforts are although his pre-election rhetoric aligns him with the House bill.  Where high drama will play out is when the House and Senate are forced to congeal around a single piece of legislation in each chamber and then vote upon the same, either passing or rejecting the final bill prior to conference committee work.  As both the House and the Senate have more than one pending piece of reform legislation to consider, it is likely that the various internal factions (liberals, conservatives, Blue Dogs, moderates, etc.) will be horse-trading and brow-beating various party members to shore-up or derail, votes for amendments as well as passage.

Where the rubber (if you will) will meet the road is when five key points are either addressed or frankly, not addressed, adequately enough for House and Senate members who will face constituent pressure at re-election time (some way sooner than others).  The Public is already on-notice regarding healthcare reform and the polls continue to build more against the present Washington versions of reform and in support. 

  • The financing/payment methodology must be clear and understandable and frankly, far closer to budget neutral than where any proposal is to date.  To date, the savings mantra that keeps playing with pro-reform politicians is less than clear in terms of actualization.  There is a certain sweet logic to the notion that if the savings via reduced waste and inefficiency was in fact already identified, quantified and attainable, why hasn’t the Government sought to go after it irrespective of healthcare reform?  I doubt anyone ultimately will buy that the legislation efforts in the House and the Senate are directly tied to reducing waste and inefficiency in Medicare and Medicaid or more logically, buy the chicken and egg argument.  Beyond the savings argument still lies the bitter pill of higher taxes; a path that both the House and Senate has said each must follow to pay for reform.
  • Medicare and Medicaid funding cuts will be front and center for providers and extensively lobbied.  If the savings via waste and inefficiency reductions is nothing more than a veil used to cover signficant reimbursement reductions, the sales pitch for reform just got tougher.  Without question, provider groups banded together inclusive of physicians will lever significant weight and influence over individual legislators, perhaps enough to sway fragile votes come crunch time.
  • The issue of a public option and government-run healthcare has to be cleared up and re-packaged to become either totally transparent (call it what it is) or eliminated.  There appears to be waning support for a government option or government run single payer system but frankly, the variable rhetoric coming from Washington is too confusing and too malleable for anyone to decipher.  Left undisclosed or eliminated, it appears that the general public will not support much reform and in turn, will likely not support their current elected representatives – the kiss of death for a politician who is electorally exposed in 2010.
  • The number of uninsured and coverage for this group needs to be clarified both economically and mechanically.  Frankly, each week the number of uninsured that seems to be at the crux of the argument for reform goes up and down.  Who exactly is this group and what are the demographics?  Given the very real nature of adverse selection taking place, the argument that somehow insuring this group (however many it is) without pre-condition (no pre-existing condition limitation, no high deductibles, coverage for chronic illness, no waiting, no lifetime maximums, great coverage, etc.) is possible and actually lowers healthcare cost is inconceivable economically.  This issue needs to be defrocked from rhetoric and addressed plainly and simply because in its present form of argument, it is ultimately unsaleable.  Given that Washington never estimates the cost of anything correctly and certainly never higher than what really occurs, this issue alone could prove to be a huge hurdle for reform prospects.
  • Both the House and Senate versions are loaded with what I’ll call, “side issues”.  These side issues are the by-product of special interest groups and they need to be removed or placed in full view for all to see.  For example, government employees and unions are treated separately from everyone else in every reform proposal.  These groups are given special dispensation and protected status.  The question of “why” will be, and already is, unavoidable.  Congress also needs to address the issue of coverage for non-citizens, coverage for abortion (especially government funded or mandated), and the issue of care rationing for the elderly.  The President can “soft-shoe” around these issues all he wants and honestly, he is good at it but in the end, these issues uncovered or unaddressed unequivocally will present open-wounds that could and likely will, infect the reform legislation outcome.

September 17, 2009 Posted by | Policy and Politics - Federal | , , , , | Leave a comment

Will Reform Happen?

Recess – when I was a kid it was the best part of school.  Recess was a period of task abandonment; a temporary reprieve from the classroom engagement and the pedagogy.  Unfortunately for Congress, recess means a time to confront constituents and to engage on the home front.  For members of the House facing early primaries in states like Illinois, this recess may be one of the most contentious in some recent time – especially for Democrats.  Let’s face it, 2010 is right around the corner and for all but a few fully secure members, Congressional job security (the seat and/or the leadership or committee positions in the House which are equally as prized) is front and center. 

This Congressional summer holiday will also be a time where policy is tested and political capital is gained or lost.   Front and center is the President’s health plan (let’s call it what it is) and perhaps, the legacy of the Democratic controlled Congress, swept into power via the 2008 elections.  I frankly can’t remember a political time where health policy was so much in the national spotlight and certainly, no time in my memory was there ever a greater prospect for a wholesale revision of the U.S. health system.  Even the Clinton years and Hillary’s dabbles with health reform pale in comparison to present day.  To be certain, we are much closer to the brink of health care revolution than at any time since the evolution of Title 18 and Title 19.

I have taken the time to actually read HR 3200 otherwise known as “America’s Affordable Health Choices Act of 2009” and the Tri-Committee mark-ups and proposed amendments (many of which still require action post the Congressional holiday).  I have also taken the time to read the Senate’s companion version (though far less detailed) known as the “Affordable Health Choices Act”.  I’ve even watched the workings of the Senate Finance Committee, the locus of payment discussions  for the Senate’s version of health care reform legislation.  I’m actually somewhat proud of myself for getting through both pieces of legislation (and a host of accompanying analyses) given that most Congressman and Senators have admitted that they haven’t read the legislation.  To say that the legislation is heady stuff would be an understatement.  It is quite honestly, some of the most broad based and confusing, cross-wired and special interest driven, undefined and bureaucratically laden stuff I have ever read.  It makes reading a Russian novel such as Crime and Punishment seem simple.

I am of the belief that any time one tries to do great things, the underlying premise must be clear and simple and the methodology by which the undertaking will get started, thoughtful and straightforward.  I realize that the “devil is in the details” and trial and error will undoubtedly occur.  I also realize that something as immense as reforming the largest private economy in the U.S. (and one of the largest economies in the world for that matter) and the delivery system of health care for every American citizen is a daunting task and as a result, will lead to legislation with pages numbering in the thousands.  What I don’t understand after reading the legislation is how this “reform” step can be so far from true reform and thus, so unlikely to actually happen.

As I have written before, I am a pro-health care reform “guy”.  I know the system is irrevocably broken as presently constituted and economically unsustainable in its present, entitlement and bureaucratic form.  What I have read to date doesn’t make the system anywhere close to better or more affordable; it makes it worse by a significant magnitude.  It seeks to transfer a system that is already over-regulated and bureaucratically inefficient to a government payer and a government overseer – neither of which are anywhere close to capable to achieve the desired result of “improving the cost and quality of health care in the U.S.”  Frankly, it is no wonder that one by one, the politicians who were at one time, part of designing this “grand experiment” are presently looking for ways to distance themselves from that which is now front and center.  Timing in politics is everything, and as the ability to pass this legislation under the cover of darkness waned and now has gone, the legislation is illuminated for what it is and sadly, isn’t.

As the news coverage broadens about what is going on at the various town hall meetings held to garner constituent reaction to the health reform proposals, we begin to see the disconnect between Washington and the American people. Of course the media coverage is skewed and the pictures and stories designed to parlay a particular group of opinions.  Even though distorted, the news portrays an accurate center; Washington has missed the mark in this venture.

It is true that President Obama was elected with a wide enough margin to create tacit endorsement of his political agenda, health care reform a major piece thereto.  The missing link however was the specificity that legislation requires in order to become law and election platforms are anything but specific.  Where the disconnect occurred was during the step that the Democratic majority took to craft a clearly different approach than what most people assumed as “health care reform”.  Alas, the Democratic  majority and President Obama clearly forgot that elections are played out in broad, sweeping rhetorical and promissory themes and policy is made in real time and even in past-time; the time zone that exists where people gauge what they want by what is happening now and what they might lose.

So the logical question at the moment is, “will reform happen?”  My simple read is, not likely.  Once the President and the leading Democrat authors and initial champions were put in the position of having to defend the basic tenets and provisions that they so hastily crafted in HR 3200, the momentum was lost.  Worse, once the various interest groups and Republicans got sufficient traction in the form of plausible arguments against the current reform proposals and those talking points gained reception among average Americans,  politicians became wary of their future “employment” prospects.  Nothing stalls momentum like politicians on both sides of the aisle worried about their political future in a looming election year cycle.

As we sit today, we begin to see a picture of where health reform will go and why.  As dangerous as prognostications are concerning policy and Washington, I have no immediate “skin in the game” so I’ll make a few.  It won’t take long, likely by late-fall, early-winter to see how close I came with my “EWAGS” (educated, wild-ass guesses).

  • The polls show, nearly universally, the majority of Americans to be satisfied with their current health care status.  The trend within these polls continues to show a widening divide between those who believe the Washington approach will make them “worse off” in terms of their current coverage status and those who claim to be “pro reform”.  Unless this trend changes or reverses, the present reform plan is more or less D.O.A.
  • Wall Street and the financial markets continue to trend positively, almost foretelling a belief that reform is unlikely to occur and certainly, not at a level matching that in HR 3200.  Wall Street tends to like government that is in “stalemate” believing that such stalemate creates a period of inactivity in terms of new budgetary and business/regulatory initiatives.  As the health reform legislation is forcasted to be another level of unfunded government spending (a widening deficit), it appears that Wall Street is forcasting it to be a “no go”.  In summary, it is unlikely that a rising Dow will do anything to election wary politicians other than to put up additional “stop” signs.
  • The economy is likely near the bottom of the recession and beginning to trend slowly and modestly upward.  The President’s message and that of the Democratic congress has been that “reform and recovery go hand-in-hand”; no reform essentially and continued economic stagnation.  If in fact, such is not the case or at least not to the magnitude the President has sold, the economic wind has left the sails on the urgency of health care reform.
  • The legislation itself is hopelessly flawed, economically and structurally.  As continued information (and misinformation) pours forth on the contents of the bills, the hoped for “good intent” becomes mired in the details that are not as pleasing.  Frankly, the legislation cannot be viewed for anything other than what it is; a government run, single-payer plan.  Viewed in this light, along with the other provisions that call for significant spending reductions in Medicare and Medicaid, the legislation is truly politically and socially unsavory.

Knowing the above, my prediction is that HR 3200 and the companion Senate bill are all but dead.  What will happen is a furious post-recess attempt to save political face on behalf of the President and the Democrats; a backpedaling and recapitulation period where pieces of the existing legislation are furiously re-drafted in an attempt to produce even a watered down bill.  What will likely be sold is a “multi-year”, “multi-phased” plan that does little in the first or so year but creates enough of an illusion that reform will eventually happen, to use as positioning for a President and Congress that need to have a win on this issue.  The legislation will address simple and tiny pieces already encapsulated within the enormity of HR 3200 such as the “donut hole” in Medicare D, perhaps health insurance portability, fraud, abuse and waste provisions, targeted savings in Medicare and Medicaid (still some cuts) and perhaps, the creation of various commissions and groups that will be tasked with forming coalitions, buying groups, new quality initiatives, etc.  These special commissions will be “cloaked” in glorious Washington clothing, sold as having enormous responsibility and power, directly tasked by the President and Congress to push ahead with the bold reform agenda.  In reality, these groups will, as is always the case, do very little but provide political cover to wary and wounded politicians and the President.

So, the question answered, “will reform happen?” – not this year and likely, not any time soon.  Unfortunately, despite the fact that the system needs reform badly, Washington has once again misconstrued the core issues and politicized the process so wretchedly that the basics that could be accomplished and form the foundation for meaningful reform will remain unaddressed.

August 13, 2009 Posted by | Policy and Politics - Federal | , , , | Leave a comment