Health Care Showdown

President Obama said he is not yet ready to draw any lines in the sand in the developing showdown over his health care reform initiative. Unfortunately for this consummate, consensus seeking politician, the lines in the sand have already been drawn for him by the resident health care beach bullies.

The major insurance industry associations already have kicked sand all over Obama’s plan to offer a public option to individuals and small businesses to compete with the private, for profit health plans. They have vowed to go down swinging in an effort to stop the public option from seeing the light of day.

Obama cannot hide from this fight. The public option is the only remotely substantive provision left since single payer has been axed from consideration. Leave out the public option and everyone on the beach will know Obama turned tail and slinked away from the bullies. It looks like it’s going to fall to Obama because although the House is preparing to pass a bill with the public option included, the key Senate Finance Committee is promising to pass a bi-partisan bill, which means no public option, since Republicans have vowed they will not support it.

Both Obama and the Congress have already ruled out the single payer option (Medicare for everyone), which is the only option which would comprehensively and effectively address the inefficiencies and fundamental flaws of the existing system, which costs us roughly twice as much as other comparable national health systems (France, Germany, Canada) yet produces significantly worse health outcomes.

A reform plan with single payer as its basis is the only alternative that would make it possible to cover all Americans with equal or better benefits at less overall cost than what we pay today for a system that leaves 50 million Americans without coverage and the rest of us wondering whether the coverage we have will actually pay our claims. (For an excellent summary of the cost/savings profile of single payer see the David Lindorff article in Counterpunch June 24 edition.)

By ruling out single payer, Congress and Obama have committed themselves to the false proposition that Americans are so enamored of their existing insurance plans that they are not prepared to give them up. This idea is at the core of the relentless propaganda employed by the insurance/medical/pharmaceutical industry complex in their attempt to maintain their stranglehold on a system designed to deliver profits before actual care.

All of the options still on the table are based on maintaining the existing for-profit system as the basis for coverage for most Americans. Since this system is fundamentally flawed and spectacularly inefficient at providing care at a reasonable cost, all of the options still under consideration will cost more than what we pay now, unless benefits are reduced or taxes increased. So we are treated to endless congressional hand-wringing over how we cannot afford to pay for extending benefits to all Americans. while the key Senate Finance Committee twists itself into a pretzel trying to find a revenue neutral plan, and not a word is spoken about the real solution to the cost problem, single payer.

To pay for its plan, the Senate Finance Committee reportedly is considering taxing employees for some portion of the employer provided health benefits they now receive tax free. There also has been talk of reducing the benefits offered by employers, and imposing other kinds of taxes as well.

The story line is that these new sources of revenue are needed to pay for coverage for those who do not have it now. What should be said is that a substantial share of the new the revenue will be needed to maintain the profits and overhead of the insurance companies. That overhead amounts to up to 30 percent of the cost of the existing private system of insurance. These revenues will go to continuing to pay claims analysts to find ways to deny claims and rescind coverage after claims have been filed. They will pay for layers of marketing to preserve the illusion that there is some kind of real competition in the market. Does anyone outside Congress or the insurance industry think that consumers are offered real and appealing choices? Yet more of the new revenue will pay for the additional staff in doctors’ offices needed to figure out which plans cover what for whom and under what circumstances.

So it’s likely that you will be paying more for the same not necessarily reliable insurance you have now (with perhaps less benefits), so that some but probably not all of the uninsured can have the same uncertain insurance, so that insurance companies can continue to collect profits from the scheme. And it should be noted that the insurance companies receive these profits while adding absolutely no value to the product delivered, actual health care. And this will occur while the only option guaranteed to cover all of us for less is not even discussed in Congress.

Within the remaining options, the only provision with any substance at all is the public option, which would allow individuals and small companies to buy into a Medicare-like program. The plan offered will still offer free choice of doctors but will certainly be less expensive as it will not be burdened with the need for profit and will require less marketing and other overhead costs. Of course, if single payer were adopted, no marketing would be required at all and far less overhead. The public option will not move us in the direction of reform as quickly as we need to move, but given the remaining options, it is the only plan that even points in the right direction. Without a public option, any of the plans now on the table would represent a serious step backward as they would be likely to delay any substantive improvement for however many years it would take Congress to revisit the issue. The promise of the public option is that it may finally make it obvious to all the doubters that a better system than the private one we have now is easily within reach.

The insurance industry claims the public option will drive them out of business because so many people will join it, while simultaneously claiming that people want to retain the private sector plans they have now. Obama has chided the industry for complaining that they can’t compete with a plan run by a government that can’t do anything right.

This is where the line in the sand is now drawn. The Senate Finance Committee is talking of replacing the public option with regional purchasing co-ops, which will be small enough so that they have no real bargaining power – and thus no threat to the insurance industry.

Recent polls show that 72 percent of the American public support the idea of a public option. Rarely has the conflict between the general public interest and special interests been so clearly defined and so highly visible. This is a fight where everyone on the beach seems to be paying attention.

It’s not clear that Senate Finance Committee Chairman Max Baucus, D-Montana, fully comprehends the public mood surrounding this legislation. Seventy-two percent support for a public option health plan can be interpreted to mean that nearly three quarters of the population of the U.S. is sick (often literally) and tired of being under the thumb of the insurance companies.

Yet Baucus is bragging about cutting a deal with the pharmaceutical industry, and he’s trying to cut deals with the hospital industry and others, under which industry will give back part of its profits to pay for the cost of a reform bill. The pharmaceutical industry deal proposes that the industry will spend $80 billion over 10 years to pay half the cost of brand name drugs for Medicare recipients in the donut hole gap in Medicare prescription drug coverage. What they will receive in return has not been publicized, but one can only imagine that their payoff is that the bill will not include provisions that would lower the cost of drugs even further. The payoff could be either a bill with no public option, or a watered down public option that does not give the government the power to negotiate directly with drug companies for lower prices.

What is remarkable and disgusting is that a powerful committee chairman is bringing to light the backroom deal making with special interest lobbyists and thinking it will be perceived as a positive accomplishment. The whole sorry spectacle raises the question of why the Senate is negotiating with the very interests it is trying to reform. It’s an uncommonly frank admission of where the true power lies in Washington these days, and it’s clearly not with the desires or needs of the people. What’s most depressing about it is the lack of shame or awareness that what appears to be transpiring is a powerful committee chairman going hat in hand to powerful interests and begging for the return of some of the loot that was handed over in earlier legislation that favored them. This is what now passes for the legislative process, and Baucus’s fawning servitude is praised as great skill for a seasoned legislator.

The bill that extended the prescription drug benefit to Medicare beneficiaries was an outright bonanza for drug companies, in that it gave them a massive infusion of new customers while guaranteeing them excessive profits, because it prevented the government from negotiating directly with the drug companies for lower prices. The donut hole in the drug benefit would never have existed in the first place if the drug companies had not been guaranteed their desired profit margins. And now Baucus returns to big pharma and asks them to cough up some of their ill gotten gains to help head off real reform once again. After all, you have to spend money to make money, especially in Congress.

The administration has praised the big pharma deal, and while Obama continues to voice his support for the public option, he has yet to state that any bill that comes to his desk must include a public option to earn his signature. He continues to play the conciliator, willing to listen to all proposals.

The Obama administration is very keen on trying to wring savings out of the health care system with technical improvements such as electronic records and comparative effectiveness research. He correctly perceives that there is great savings to be had by reducing the estimated 30 percent, or $700 billion worth per year, of medical procedures that may be provided unnecessarily. Obama so far has not been so keen to go after the huge savings that can be realized by reforming the financial and administrative structure of the industry.

While both avenues must be pursued to truly reform the system, it’s always tempting for a policy wonk like Obama to pursue a technical fix that has the perceived advantage of being supported by data. It requires more courage to pursue the political solution required to change the structural problems of finance and administration – even though all the data overwhelmingly supports taking a firm stand in opposition to the insurance industry. Furthermore, the savings to be realized from the proposed technical changes will take longer to realize while the data is developed through research, while the structural changes can be adopted and produce savings more quickly. The polls say the public wants results as quickly as possible.

There’s nowhere to hide for Obama now. He’s either going to deliver on his campaign promises to change the course of the nation towards a brighter future not dominated by special interests, or he’s going to sustain the corrupt, inefficient, predatory and outdated systems that have brought this nation to its knees. This decision will be one of the defining moments of his presidency.

The patient is begging for a cure. The overwhelming majority of Americans expect him to accept the patient and prescribe the appropriate treatment. If he denies treatment, it can only be because of a pre-existing condition not previously disclosed.

JEFF SHER lives in the Bay Area. He can be reached at:

Jeff Sher is a journalist specializing in the health care industry. He lives in San Francisco.