An August Recess Health Care Reform Primer

Social Security is no longer the third rail of American politics. That title seems to have been taken by health care. President Obama has invested enormous political capital, time, and effort into getting a health care reform bill passed in Congress. He wanted an early August vote, but after weeks of balkanization over the matter, congressional leaders have announced that Thanksgiving will be the more likely time frame for passage of a bill. Interestingly, Republicans have largely been sitting on the sidelines and watching as the conservative "Blue Dogs" and liberal Democrats rip each other to pieces over the costs and mandates of the bill.

Now lawmakers will attempt to sell the Democrats' health care reform plan during the August recess, meeting with skeptical and confused constituents in their home districts. So what exactly is the status of reform going into the recess?

It's important to note that, right now, there is no uniform Democratic health care plan. Five bills, all from different committees, are currently floating around. In the House, the bill with the most clout is from the House Energy and Commerce Committee, known as H.R. 3200 or "America's Affordable Health Choices Act of 2009." House Energy finally voted on the bill and moved it out of committee (by a thin 31-28 vote), but not before a series of battles and compromises between more liberal Democrats and more conservative "Blue Dog" Democrats. In order to get the bill out of committee, Chairman Rep. Henry Waxman (D-Calif.) had to make some concessions to the Blue Dogs, particularly on scaled-back costs and a public option. We'll see if those changes stay or are undone next month. The Web site for the committee has several interesting documents about the bill, including all of the proposed amendments, and an analysis of the bill's district-by-district impact.

Meanwhile, the Senate Finance Commitee has been working on its own version of a health care bill. Senators Max Baucus (D-Mont.) and Chuck Grassley (R-Iowa) have been crafting a bipartisan and centrist health care reform plan, the details of which are still being worked out. As of now, it seems that the Senate Finance Committee plan will not include a government-run public option. Instead, it may create a system of privately owned insurance co-ops that work to keep premiums low. Liberal Democrats dislike this idea, but Sen. Kent Conrad (D-N.D.) insists that not including the public option will be the only way to guarantee at least 60 votes and a bipartisan bill.

We'll have to wait until September, when Congress reconvenes, to see what bill could ultimately be sent to Obama's desk to sign. The House will have to reconcile all of its bills into one uniform House bill, and the Senate will have to reconcile the two Senate bills into one Senate bill. Then, Congress will have to combine the House and Senate bills into one bill in conference, then send them back to the House and Senate to vote on them again before the bill can be sent to the White House.

In the interim, however, there are plenty of competing elements of health care reform to debate and examine in the context of the proposals that have been presented in Congress.

There are two big goals in health care reform. One is universal coverage (expanding insurance to those who do not have it or cannot afford it). The other is lowering health care costs (by lowering the prices of insurance for everyone). These two linked goals pose a complex dilemma: many people don't have health insurance because it is expensive, and it is expensive because many people don't have health insurance. For example, emergency rooms are required to treat injured patients regardless of their ability to pay -- but if they can't pay, hospitals stuck with the bill compensate by charging slightly higher rates to those who can. There's no such thing as free surgery, and the growing number of uninsured is partly causing the increase in insurance prices.

President Obama and Democratic reformers in Congress have rallied around the need for universal coverage, but recent Rasmussen polling data reported that "Voters see cost, not universal coverage, as the biggest health care concern." Gov. Tim Pawlenty (R-Minn.) phrased it this way in a recent op-ed: "In typical fashion, the self-proclaimed experts piecing together this Democratic health-care legislation are focusing on only one leg -- access -- of a three-legged stool that also includes cost and quality. Expanding access to health care is a worthwhile goal. But equal or greater focus should be placed on containing costs for the vast majority of Americans who already have insurance. Those costs will not be contained by a massive expansion of federal programs."

H.R. 3200 from the House Energy and Commerce Committee is the bill receiving the most attention, and there is significant evidence that the bill in its current form places too much emphasis on universal coverage and not enough emphasis on lowering costs via other alternatives. The proposed increase in government control of the health care industry could hurt our access to vital health care necessities.

H.R. 3200 would create a health insurance exchange, which "works with state insurance departments to set and enforce insurance reforms and consumer protections (and) facilitates enrollment," according to the summary provided by the House Web site. The point of an exchange is to spur competition among insurance companies to lower prices, creating a mall where consumers can peruse all the available insurance plans and pick the plan of their choosing (check out Massachusetts' "Connector" health insurance exchange here.)

However, H.R. 3200 also creates essential benefits which will mandate a set of insurance benefits (i.e. dental, vision) that plans must offer. The text of the bill, which can be found here at Open Congress, discusses these essential benefits in Subtitle C. It states that at a minimum, health plans must cover such services as "hospitalization"and "physician services" as well as "rehabilitative services" and "substance use disorder services." If you are not planning on using substance abuse services any time soon, this proposal could make you insure against it anyway.

A new council by the government can recommend other benefits be added to this mandatory minimum whenever it see sfit. States that have experimented with defining essential benefits have seen rushes of lobbyists who want to get their client's practice deemed "essential." As Ann Coulter wrote in a recent column, "politicians are more interested in pleasing lobbyists for acupuncturists, midwives and marriage counselors than they are in pleasing recent college graduates who only want to insure against the possibility that they'll be hit by a truck."

Shawn Tully from Fortune 500 has identified these provisions as the cause of one of the five lost freedoms under H.R. 3200 -- the freedom to choose what is in our own health insurance plan.

The proposed bill would ban insurance companies from the practice of experience rating, or charging different prices to different people based on how likely they are to need health care. Instead, insurance companies will have to use community rating, establishing nearly the same prices for everyone. President Obama has been arguing as a part of his "fairness" argument for health care reform that you will not be unfairly denied health care coverage because of pre-existing conditions. Under the current bill, a healthy 25-year-old would effectively subsidize the health insurance of a 70-year-old heart attack survivor because the two would pay similar, community-rated amounts for coverage. While community rating may increase access to coverage, it would do so at the expense of the young and healthy.

Another portion of the bill would create a sliding affordability scale providing health care credits to families below 400 percent of the poverty line. This would give coverage to poorer Americans who cannot afford it, and it is intended to help lower costs by eliminating the burden of the uninsured on the insured. However, it is also a big driver of the trillion-dollar price tag on H.R. 3200. If health care costs do not start to go down (which many policy experts are saying won't happen, including the prestigious Mayo Clinic often cited in Obama's health care arguments), the government will keep paying higher and higher credits. In order for H.R. 3200 to get out of House Energy, Waxman agreed to a compromise offer by the Blue Dogs that would slightly lower the level of subsidies given to the poor in order to limit costs to about $60 billion over 10 years.

The bill would also expand Medicaid coverage, a prospect that states are less than enthusiastic about. Medicaid dollars are the biggest eater of state budgets, and Medicaid is the No 1 issue concerning state governors. Gov. Rick Perry of Texas has already announced he will fight the expansion of health care requirements as an unconstitutional burden on his state.

The bill creates a concept called shared responsibility, requiring that all individuals purchase health insurance and all employers offer it (exempting tiny businesses). This is the same plan used in Massachusetts's 2006 health care reform. Some 60 percent of Americans already receive health care from their employer, so this practice is a logical one to expand if we are going to insure everybody. Such universal coverage would help in lowering health care costs, as mentioned earlier, but shared responsibility could be futile if we cannot guarantee that rising costs will not drive individuals into debt or force businesses to cut employees and lower wages to pay for coverage.

The most controversial and expensive portion of H.R. 3200 is the public option. Under the bill, the government would set up its own insurance program run by the Department of Health and Human Services. The theory is that a public option competing with private insurance companies will help drive down prices. In practice, however, it could be very difficult for private insurance companies to compete with the government. The Heritage Foundation recently released stunning new research that suggests that as many as half of Americans with private health coverage could lose that coverage as a result of the competing public option in the next several years, driving 80 percent of the country to the public option. Such an outcome would look a lot like the single-payer system Democrats insist they have abandoned, with a health care system controlled largely by the government and financed with higher taxes.

Another compromise reached in the Energy and Commerce Committee would make the public plan negotiate prices on its own rather than relying on Medicare rates. This would limit the plan's power in the market and keep insurance companies more competitive, but it would also raise the cost of providing a public option and could offset the savings from the lower subsidies also agreed on by House Energy.

The present H.R. 3200 bill, the "America's Affordable Health Choices Act," could force many to make difficult health care choices, and it is hardly affordable. So what's the solution?

If we are serious about lowering health care costs, we need to look at the root of the problem. In America, we don't utilize primary care enough. What would be a minor issue turns into a major surgery, and sometimes we receive surgeries that are unnecessary. This is over-consumption of health care. As the NY Daily News described it, "coverage should be structured so patients have an incentive to spend wisely, rather than to take every treatment thrown at them by docs running up insurance claims . . . At the same time, the federal government must stop exempting gold-plated health insurance from taxes. Until the tax-free treatment of those benefits is ended, the sky's the limit for uncontrolled spending." We utilize health care like it's as plentiful as grains of sand on a beach (in some ways, the money to pay for it is). One option would be to start taxing health care benefits to limit their usage, which Sen. John McCain (R-Ariz.) proposed during the election cycle.

Some countries require a visit to a primary care doctor before seeing a specialist, a technique which works in lowering prices and demand but often fails in delivering fast and necessary health care. Shona Holmes, a Canadian who fled to the U.S. for health care, testified recently to Congress about the dangers of "rationed care:"

"The Canadian government, which runs a dangerous monopoly of the health care system in our country, ultimately offered me the only option of a four-month wait time to see a neurologist and a six-month wait time to see an endocrinologist. As my health worsened, I knew there was no possible way I could wait that long . . .What started many years ago as a seemingly compassionate move in government to treat all equally and fairly by providing the same medical coverage for everyone has in fact turned into a nightmare of everyone suffering equally . . . If I had relied on my own government-run health care system in Canada, I would not be sitting here before you today. At the very best, I would be blind and the very worst I would be dead."

Another option that has gained attention in the Senate is the idea of creating health insurance cooperatives -- one for each state and/or region. Small (and large) business owners would band together in a private co-op and collectively purchase health insurance, driving up their bargaining power while simultaneously lowering their risk as the size of the pool increases.

There are many problems with the American health care system and many different policy prescriptions, yet H.R. 3200 and other bills like it do not offer a complete solution. The proposed level of government control over our health care decisions is unprecedented and troublesome, for everyone from young people who don't want to be forced to pay too much to elderly people who want to be guaranteed necessary treatments will be there.

The summary of H.R. 3200 can is revealed in one lonely sentence: "The government is responsible for ensuring that every American can afford quality health insurance." Is that a job we want our government to have? Is it a cost we want to bear? Having read how all of the above can affect health decisions, is it a risk we want to take?