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Health Care Reform Memo: February 26, 2010 - Special Edition

Deloitte Center for Health Solutions publication

The health care reform memos are issued on a weekly basis, highlighting news from the previous week's activities in the new administration and implications for the C-suite and various stakeholder groups.

The White House Summit on Health Reform

Yesterday, the televised seven-hour White House Summit on Health Reform produced few surprises but clarified for viewers the seemingly entrenched positions the parties will carry into the debate going forward and into the fall campaign.

Logistics: The room setup was basic: no podiums, name cards for all, and seating assigned with Republican representations on one side and Democrats on the other.

Decorum: The President served as moderator alternating between designated Republican and Democrat speakers, often commenting after each to clarify or challenge data or suggest areas of agreement. According to unofficial timekeeper Mitch McConnell, Senate Minority Leader, the President spoke 119 minutes, Democrats 114 minutes and Republicans 110 minutes. The tone throughout the day was civil, sometimes testy and respectful.

Positioning of party viewpoints: The messaging of the two parties was evident in opening remarks by Senator Lamar Alexander (R-TN) and House Speaker Pelosi (D-CA):

The Republican view:

“The 2,700 page bill is too big, too expensive and too important to be done now. A fresh start is needed to address the cost issues and insurance market reforms that would reduce indebtedness and lend to economic stability. The GOP has ideas that to date have not been considered.”

The Democratic view: 

“Health reform is needed that helps the uninsured get access to affordable coverage and correct the health insurance industry’s unfair business practices. The bill per the CBO will reduce the deficit long term while providing coverage to 30,000,000. It incorporates many ideas of the GOP and the public wants reform.”

Areas of agreement: General agreement was underscored in the following areas:

  1. Insurance industry business practices that deny coverage, drive premium costs up unfairly, and limit competition need review and change. The President, Republicans and Democrats agreed that state oversight is useful: the White House indicated that exchanges are necessary to standardize “essential benefits” and maintain risk pool continuity and the GOP stated that allowing consumers to purchase across state lines important to keeping rates low and competition strong.
  2. Small business and individuals need help in maintaining affordable insurance coverage. The general consensus was that tax credits to small businesses and individuals were directionally sound, though GOP preferred association insurance plans to the Democrats approach of employer mandates with subsidies to small businesses.
  3. Taking substantial costs out of the current system is possible. Both contended it is wasteful as a result of defensive medicine, widespread fraud, complex paperwork and regulatory compliance. Both conceded the incentives rewarding volume instead of outcomes and performance perpetuate high costs and in some cases poor quality. The opportunity to expand federal and state efforts in these areas is important to economic recovery and the White House indicated that it is receptive to ideas.
  4. Preventive health is important and must be a priority to reform. The parties agree more money and programmatic emphasis should be placed on preventive health and primary care to improve population-based health status, reduce progression of chronic illness, and bend the cost curve long term. Democrats stated it is necessary to strengthen the safety net-community health centers—for the uninsured as a key element; Republicans were inclined toward personal accountability using changes in the insurance market to force individuals to live healthier lives.
  5. Special concessions to states and interest groups need to be stripped from reform legislation to create a fair bill for all. The Republicans contended and the White House agreed that concessions made to unions (e.g. the “Cadillac tax”), and states (e.g. Medicaid relief for Nebraska, Louisiana; Florida for Medicare Part C premiums) should be removed from the bill.

Areas of contention: Predictably, the summit appeared to produced no resolution to key differences in the views of the groups:

  1. Access to insurance for the uninsured and underinsured: Democrats placed a high priority on access, stating the Senate bill affords coverage for up to 31 million through Medicaid expansion, subsidies and tax credits. The GOP countered that the market will work to solve the uninsured by allowing insurance companies to compete across state lines and thereafter by giving individuals tax credits to purchase insurance.
  2. The public option: Some Democrats viewed it as an essential ingredient in reform for those unable to purchase insurance and likened it to Social Security and Medicare. Republicans viewed it as an entitlement too costly and an overreach by the federal government.
  3. Costs of reform: The Democrats argued that systemic reforms in the insurance and delivery system accompanied by increased coverage for up to 30 million at a cost of $950 billion is justified since it lends to economic recovery and according to the CBO is deficit neutral. Republicans stated that the price is too high while the nation recovers from the recession.
  4. Abortion coverage: Though explicitly underscored that federal funding for abortions is not allowed in Democratic legislation proposed, Republicans remained skeptical.
  5. Federal role: A prominent theme is the federal role in health reform—designation of essential benefits for coverage, oversight of health insurance regulation, comparative clinical effectiveness efforts, Medicare funding, etc. Republicans argued states and individuals should be the focus and the federal role less; Democrats countered that a federal role is necessary to consumer protections and improved access.
  6. Legislative process: Republicans wanted to start health reform using an incremental approach. Democrats indicated that a comprehensive approach necessary to systemic reforms that address cost, access and quality.

What’s next?

The President challenged the Republican delegation to bring ideas to the table in the next 4-6 weeks even as Democrats (Sen. Harkin, D-IA, and others) suggested a bill signing before Easter was the goal. The President intimated his momentum toward a comprehensive health reform bill would not diminish. In direct response to a question posed by Sen. McCain (R-AZ) about the prospects for a reconciliation vote on reform requiring only a simple majority, the President did not take the option off the table saying the “American people understand a majority…and this is not about baby steps”. So the official process will continue while both sides revisit current bills and modify positions toward areas of agreement.

My take

The discourse was civil, clear and instructive. The complexity of the issues and contrasting positions of the two parties on full display for all to see.

Was the discussion thorough? No. Little attention was given to the obvious need for delivery system reforms that require integration and collaboration. Marginal reference was made to the health industry workforce and the need for training toward a new paradigm. And there was scant notice to the ubiquitous need to align payments with incentives to practice per the evidence.

Will the Summit be a pivot to a new bill? Not likely. But it will certainly provide a mechanism for changes to current bills, and in all likelihood result in a series of bills forthcoming (a la Wednesday’s House vote to remove the antitrust exemption from the health insurance industry).

Health reform circa 2010 is underway. The process of reforming the health system is the winner.

More to come.

Paul Keckley
Executive Director,
Deloitte Center for Health Solutions

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