This article first appeared in the St. Louis Beacon, Oct. 16, 2009 - For all the sound and fury about President Barack Obama's plan to overhaul health care, one curious fact stands out:
Obama has no plan of his own. The White House was wary of repeating the blunder of President Bill Clinton. In 1993, Clinton dumped a detailed health-care bill onto Congress -- and watched in dismay as his 1,342-page plan sank of its own weight.
Obama chose to toss the ball to Congress. In his speech to Congress last month, Obama laid out his goals:
- Giving stability and security to Americans who have insurance.
- Insuring Americans who lack insurance.
- Slowing the relentlessly rising costs of health care.
Obama listed some broad outlines. But he left to Congress the chore of writing the bill itself, with all of its touchy details.
Three committees in the House and two in the Senate have come up with health-care plans. But most of the attention has gone to the bill in the Senate Finance Committee, headed by Democrat Max Baucus of Montana.
Why so much attention to the Senate Finance Committee? First, that bill pays for itself, with a bit left over. Second, Democrats hold a big edge in the House. But in the Senate, they have just barely enough seats to foil a filibuster. So the Senate Finance Committee's bill probably bumps up against the limit of what's politically possible.
At any rate, much wheeling and dealing remains to be wheeled and dealt. The two Senate bills must be wrestled into a single bill. So must the three House bills. And then, the final Senate bill will have to be meshed with whatever the House produces as its final bill.
But for now, the spotlight is on the Senate Finance Committee's bill. Here's a rundown on what's in that bill.
The missing links
Just as important as what's in the Senate Finance Committee's bill are two items that are not in it -- a public option and an employer mandate. (Still, both are in the other Senate bill, passed by the Senate Health committee.)
A public option is simply a health insurance plan run by the federal government, competing against the private, for-profit insurers who now rule the market. Americans who are priced out of the insurance market could get public-option insurance more cheaply. After all, unlike the private insurers, the government could drop profit from the price of its premiums.
Conservative Republicans see a public-option plan as the first step toward a government takeover of health care -- as the nose in the tent for "socialized medicine." In the Senate, the conservatives have allies among Democratic centrists wary of a public option.
Although the politically savvy Obama calls a public option a plus, he has now stopped short of calling it vital. The plan that came out of Baucus' committee lacks a public option, much to the distress of liberal Democrats.
Neither does the Finance bill have an employer mandate -- an order that all businesses offer health insurance to their workers. The other Senate bill calls for companies with at least 25 workers to pay a minimum of 60 percent of the cost of insurance plans or pay $750 penalty for each full-time worker.
Many big businesses bristle at the price tag for health insurance. As politician-physician Howard Dean notes, General Motors spends more per car for health insurance than it does for steel, while Starbucks pays more for health insurance than it does for coffee beans. A growing number of small businesses have simply dropped health insurance altogether.
Instead of an employer mandate, the Senate bill imposes an individual mandate -- a requirement that everybody (or almost everybody) buy insurance. Those who balk would pay a penalty.
Comparison-shopping
To help individuals sort through the confusing mass of insurance plans, the Senate Finance bill sets up state-by-state "exchanges." In effect, these marketplaces would let people comparison-shop, balancing what competing plans offer against what they cost.
The government would set the rules on what benefits all plans for sale on the exchanges must offer -- for example, preventive and primary care, emergency service, hospital stays, prescription drugs and so on.
In a big change from the way things work now, insurers would have to offer their plans to people who are already sick -- who have what the trade calls "pre-existing conditions." Nor could the insurers drop policyholders who get sick. And the private insurers would be barred from putting yearly or lifetime limits on just how much health care they'll pay for.
To dampen the demand by liberals for a public option, the bill would boost the income cap for getting into Medicaid, the health program for the poorest of Americans. And the bill would allow "co-ops" of health insurance buyers. In theory, anyway, by banding together in cooperatives, individuals and small businesses would gain the clout they need to drive better bargains with insurers.
To help low- and middle-income people shopping in the exchanges, the government would offer tax credits on a sliding scale. They'd apply to families earning up to $88,000 a year.
Similarly, the Senate Finance bill offers a range of tax credits to small businesses that shop for insurance at the exchanges. For some, the credit could eventually total half of the total they spend.
On the down side, the bill slaps a tax on so-called "Cadillac policies" -- gold-plated insurance with a steep yearly premium.
In theory, the insurers would pay the tax. In practice, they'll tack it on to the cost of the premium. Some labor unions have contracts calling for Cadillac policies, in part the result of trading wage increases for health benefits. They're upset, and then some, at the prospect of seeing a worker's share of his premium taxed.
On the other hand, big businesses that refuse to offer health insurance to their workers would have to kick in to the government up to $400 a year for each worker who got a federal subsidy to buy his or her own coverage.
Harry and Louise: The Encore
When Obama stood before Congress, he insisted that he'd stand in the way of any health-care plan "that adds one dime to the deficit."
On paper, anyway, the Senate Finance bill might knock $81 billion off the deficit over the coming decade.
The Congressional Budget Office puts the price at $829 billion over 10 years. The major sources of all that money are the health-care industry and the Medicare program.
When politicians talk about touching Medicare, they run the risk of sending streams of elderly Americans flooding to vote against them on election day. Because the Senate bill mentions Medicare, it has made many old folks jumpy.
The bill's backers insist that basic Medicare will stay just as it is. The changes will hit hospitals, skilled nursing facilities and the like by cutting what Medicare pays. (In return, those places will see their paying-customer pool shoot up by 29 million Americans when almost all of us are insured.)
Until recent days, anyway, the industry figured it was a fair trade. But now, the insurance industry charges that the Finance Committee has weakened and delayed the penalties for those who refuse to buy insurance. The industry says that as a result, fewer young and healthy Americans will buy insurance -- and without them in the pool, older and sicker Americans will drain the system.
The industry wants the bill to guarantee that 97 percent of Americans have insurance, up from 83 percent today. The Congressional Budget Office says that under the Senate Finance bill, the percentage would peak out at 94.
The other Medicare money source is Medicare Advantage. The government set up Medicare Advantage to compete with the nuts-and-bolts basic program. Under Medicare Advantage, the government pays private insurers to cover anybody on Medicare who chooses that option. Nearly one in four of the 45 million Americans on Medicare has chosen Medicare Advantage.
But Medicare Advantage has run up bigger per-patient bills than nuts-and-bolts Medicare. The Senate bill would start cutting back on payments to the private insurers. In turn, the insurers would probably cut such goodies as dental coverage and gym memberships.
The health-care industry will pick up a big share of the Senate bill's cost. Under the Senate bill, insurance companies would pay a yearly fee of $6 billion. Drug companies would pay $4 billion. Companies that make medical devices would pay $4 billion. Clinical labs would pay $770 million. And drug companies have already agreed to big price cuts for Medicare patients stuck in a coverage gap known as "the doughnut hole."
Despite the big fees, most parts of the industry have been willing to go along - at least until recent days.
Back in 1994, when Clinton was pushing his plan, a clever TV commercial showed a couple named Harry and Louise fretting that Clinton's plan would put federal bureaucrats between them and their doctor. But now, Harry and Louise are back, supporting an overhaul of health care.
Again, it's that big pool of potential paying customers. If the Senate Finance bill means 29 million more Americans with health insurance, they'll be paying their premiums, buying drugs and medical equipment, paying for lab tests and so on. The industry figures that whatever it hands to the government in fees, it'll get back even more from its new paying customers.
Or at least that was the industry's stand when the young and healthy were in the pool. Now, the industry is grousing, saying that the Senate bill would push premiums up even faster.
But the industry's about-face has heartened members of Congress who want a public option. Now that the insurance industry has pulled its support of the bill, the public-option people feel free to paint Harry and Louise as villains.
Now, there's more talk of a "trigger" -- a provision that if the bill as written fails to rein in costs five years down the road, a public option will kick in. And there's talk of state-level public-option plans, or of a federal public option that states can opt out of.
In other words, the death watch for the public option has ended.
The Outlook
Most Americans agree that the nation's pricey health-care system needs an overhaul. But when the talk turns specific, many Americans get edgy, for a bunch of reasons.
First, health care is enormously complicated. The industry speaks in a jargon that glazes most eyes: "diagnosis-related group," "point-of-service plan," "tertiary care," "capitation" and the like.
People outside the industry have a hard time following the overhaul debate. And when issues seem messy, the status quo gets a boost.
Second, the economic meltdown has re-stoked resentment toward big government. The government bailed out the banks and bought up much of the auto industry. That left a sizable number of Americans grumbling that letting government into health care would merely make this monster even bigger.
Third, most Americans already have health insurance -- 164 million through their jobs, 81 million through Medicare, Medicaid or Veterans Affairs and the like, and 14 million on their own. That's almost 260 million people, as opposed to the 49 million who lack insurance. As a result, health-care reform seems to be a minority cause.
What's more, most of those who have insurance say they're happy with their health care just the way it is. When a majority is content with the status quo, reform has real problems.
On the other side stand those who charge that the Senate Finance bill stops short of real reform. They note that it lacks a public option -- and that it offers only the mildest of incentives for eliminating the needless and wasteful care that makes the American system the world's priciest.
Without changes to cut needless and wasteful care, they say, health-care costs will keep going up. To cover those cost increases, insurance premiums will go up. That means many employers will dump more of the price load onto workers -- more co-pays, higher premiums, bigger deductibles and so forth.
So even if a version of the Senate Finance bill makes it to Obama's desk, it may merely kick the health-care can farther down the road. In a recent blog, Princeton economist Uwe W. Reinhardt put it this way:
"So imagine, if you will, solid-middle-class Harry and Louise, sitting in their kitchen and beholding the latest premium notice from their friendly private health insurer.
"The private health insurance industry may yet find itself to be the proverbial flak catcher in the years ahead, and the public clamor for a public health plan may come back."
Harry Levins is a freelance writer in St. Louis.