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The Prospects for Health Reform in 2009

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On November 4, U.S. voters chose a president who made health care reform a central part of his campaign. But at this moment the issue of most concern to Americans is the economic crisis. As the new administration prepares to take office later this month, it is not yet clear whether the economy will push health reform and other priorities off the table, or whether the economy and the health care system will be viewed as intertwined elements that should be addressed together.

This issue of States in Action considers the prospects for a health care overhaul based on voters' opinions, President-elect Barack Obama's choices for a health care reform team, signals from incoming Congressional leadership, and the specter of an ever-worsening economy.

Voters Want Change…But Not Necessarily for Themselves

Since 1988, health care has been one of the six most important issues to voters in each presidential election. In 1992, health care ranked among voters' top two priorities during an election that preceded the national debate over—and ultimate rejection of—the Clinton Administration's plan for health system reform.

In 2008, registered voters ranked health care third as a stand-alone election issue, behind the economy/jobs and energy/gas prices. [1] However, most Americans see health care and the economy as related, and 62 percent believe it is more important than ever to take on health care reform (Table 1).

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In a recent poll, the majority (77%) of respondents said that the new president should make major changes in the health care system (20% say he should not), and about half of respondents believe Obama should seek the changes immediately after he takes office. [2] Nearly three-fourths of respondents said that the new president should increase federal funds for health insurance for children.

These responses mirror the results of surveys conducted earlier this year that indicated the vast majority of Americans believe the health care system needs fundamental changes or complete rebuilding (Table 2). About one of three Americans reported their family has had problems paying medical bills in the past year, up from about a quarter saying the same two years ago, and one of five report household problems with medical bills amounting to more than $1,000 in the past year (Table 3). Yet, polls also indicate that the public fears major change from the status quo, particularly if it affects them and their families. [3]

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When asked about specific health care reform priorities, voters in 2008 ranked affordability as their top priority and expanding health insurance coverage second. [4] In exit polls, 65 percent of voters were somewhat or very worried about being able to afford the health care services they need (Table 4). Yet, only one proposal was viewed "very favorably" by a majority of registered voters—requiring health insurance companies to cover anyone who applies, even if they have a previous illness.

The challenge for health reformers will be to respond to Americans' urgent call for significant reform in a way that places affordability front and center, does not significantly change coverage for people satisfied with what they have, and negotiates the devilish details without unleashing, as in the past, a firestorm of opposition.

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Obama Health Care Team to Hit the Ground Running

On December 19, President-elect Barack Obama nominated former Senate Majority Leader Tom Daschle to lead the Department of Health and Human Services (HHS) and named him the Director of a new White House Office of Health Reform. The Daschle nomination is being taken as a sign that the administration plans to begin work on a health care overhaul early in 2009. In his recent book, Critical: What We Can Do About the Health Care Crisis, Daschle argues that the 1993 health care reform effort failed primarily because President Clinton waited too long to get started.

The Clinton reform plan met its end in Congress amid criticism that the administration had been naïve in believing it could simply hand off a full-blown proposal to Congress for enactment. Daschle's former colleagues on both sides of the aisle say he is a smart choice to avoid the mistakes of the past and work with Congress to craft and pass a health care plan. Daschle served three terms as a senator from South Dakota and led Senate Democrats from 1995 until he lost his reelection in 2004. [5] Daschle is by all measures well-respected by the political leaders who hold the positions that will determine the outcome of any overhaul attempt in 2009.

In addition to reaching out to his friends in Congress, Daschle is also hoping to encourage a grassroots campaign for health care reform. Taking a page from the Obama campaign playbook and sending the message that the new administration will be listening to citizens' voices, Daschle invited Americans to sign up to lead a Health Care Community Discussion in their home or community over the holidays.

President-elect Obama's transition team has also created a Health Care Policy Working Group to help prepare the incoming administration to address "the urgent and long-run challenges in the health system." Working group members—whose resumes generally showcase experience on Capitol Hill and in the Clinton-era HHS—include Lauren Aronson of Rep. Rahm Emanuel's congressional office; Dora Hughes, M.D., who worked in Obama's U.S. Senate Office and at The Commonwealth Fund; and David Cutler, a Harvard economist and part-time Obama campaign advisor. Jeanne Lambrew, Ph.D., an associate professor of public affairs at the University of Texas and co-author of Daschle's book, will serve as Deputy Director of the White House Office of Health Reform.

Congressional Leadership Shows Interest

Most of the congressional leaders who are in a position to support or resist health care reform have signaled their eagerness to pursue health system change. House Speaker Nancy Pelosi (D–Calif.)—along with fellow influential California Democrats Rep. George Miller, chairman of the Education and Labor Committee, Rep. Pete Stark, chairman of the Ways and Means Health Subcommittee, and Rep. Henry Waxman, chairman of the Energy and Commerce Committee—is poised to follow the lead of the new administration.

The Senate is being watched carefully by proponents of a health system overhaul because the Democrat majority will likely need Republicans, as well as conservative Democrats, to achieve the 60 votes required to pass most legislation. Sen. Max Baucus (D–Mont.), chairman of the Senate Finance Committee, says that an overhaul aimed at providing insurance coverage to all or most Americans—and reducing the costs of health care—will be his committee's top priority in 2009. It is also the top priority of Sen. Edward Kennedy (D–Mass.), chairman of the Senate Health, Education, Labor and Pensions Committee. The two panels will share jurisdiction over any legislation that touches both private and public insurance programs. So far, Baucus and Kennedy are expressing support for each others' plans and say that they intend to unify the Senate around one proposal.

Weighing the Proposals

During the campaign, President-elect Obama outlined a plan for universal coverage that would build on the current system of mixed private and public group insurance. Some of its features are similar to the universal coverage law now being implemented in Massachusetts. All employers, other than small businesses, would be required to offer health insurance to their employees or contribute to the cost of coverage. Eligibility for Medicaid and the State Children's Health Insurance Program (SCHIP) would be expanded. Small businesses, self-employed individuals, and people who do not have coverage through their employers, Medicaid, or SCHIP would be able to purchase a plan through a new insurance market called the National Health Insurance Exchange. Through this exchange, people could choose a private plan or a new public plan. All insurance carriers would be required to offer plans to all applicants and could not charge premiums based on health status. Small businesses would be eligible for tax credits to offset their premium costs and individuals would be eligible for income-based premium subsidies, though the size of eligible small businesses was never defined.

The Tax Policy Center has projected that, in 2018, the Obama plan would reduce the number of uninsured by 33.9 million at a cost of $237 billion and, over a 10-year period, the total federal cost could reach $1.6 trillion. [6]

The health reform plan Daschle outlines in his book mostly reinforces the Obama approach, with some interesting exceptions. For example, Daschle proposes creating an independent "federal health board" to conduct research to determine which health procedures and treatments are most effective and to make recommendations about which ones should be covered under public and private insurance plans. He also endorses requiring all Americans to purchase health insurance, a measure that President-elect Obama has said isn't necessary to overhaul of the system.

Daschle's approach to health system reform is similar to a proposal recently unveiled by Senate Finance Committee Chairman Baucus. The chairman's Call to Action: Health Reform 2009 expresses the same basic principles for reform outlined by Daschle—expanding health coverage and cutting costs by requiring all but the smallest companies to provide health insurance for their employees, providing tax breaks for people who cannot afford to buy coverage, and setting up a federally backed insurance system open to anyone. Obama, Daschle, and Baucus are all clear that they want people who are happy with their employer-provided insurance to be able to keep it.

All of these health care reform proposals envision a larger role for Medicaid and therefore states, which administer and partially fund the program. The proposals also address the need to get better value out of every health care dollar spent. States, which are constitutionally required to balance budgets, have been innovators in doing more with less and, in some cases, have been able to achieve gains in health outcomes without higher public program costs. Examples of promising state innovations that could become the basis for national health care reform include initiatives to improve prevention and primary care; paying for provider performance and not paying for mistakes; insisting on price and quality transparency from providers; improving care management for acute and long-term care; and establishing statewide purchasing pools or "connectors," combined with public subsidies and requirements, to extend coverage.

It's the Economy, Again

While some health care analysts have expressed concern that the nation's economic problems will hurt next year's chances for passage of major health care legislation, Baucus says a major overhaul of the nation's health care system is "central to restoring America's economy." And by appointing Tom Daschle to the health job, the President-elect seems to be defying the view that the state of the economy rules out such an expensive initiative. After all, the deepening recession is likely to have a devastating impact on coverage as companies lay off employees or scale back or abandon the insurance packages they offer to their workers. (Jonathan Gruber, Ph.D., a professor of economics at the Massachusetts Institute of Technology, makes this case in a December 4 New York Times Op-Ed summarized in the box below.) Also, on the heels of unprecedented financial bailouts for American businesses and talk of additional stimulus spending, it might become politically easier to make the case that health care benefits for ordinary people are just as important as the welfare of corporations.

Leading up to the 1992 presidential election and the 1993 health reform debate, James Carville constantly reminded the Clinton campaign, "it's the economy, stupid." In 2008, the economy is again playing a central role in determining the future course of health reform. Will the incoming administration focus first on restoring the failing economy to the exclusion of other priorities? Or will a health system overhaul be seen as essential for economic recovery? The answer will likely emerge early in 2009 and set the course for reform. The new administration and Congress will do well to reflect on lessons learned from the failures of 1993, but also to think back further to 1965 when quick action and political tenacity delivered reforms that today provide health coverage through Medicare and Medicaid to one of three Americans.

Jonathan Gruber on Why Health Reform Is Good Medicine for the Job Market

  • One of the most effective ways to stimulate the economy would be to give states federal money to enroll more people in Medicaid and the State Children's Health Insurance Plan. This would free up state money for rebuilding roads and bridges and other public works projects.
  • Investing in computerized recordkeeping, and the improved sharing of information among doctors that it would enable, would improve the quality of patient care, perhaps also lower medical costs and, more immediately, create jobs in the technology sector.
  • Expanded insurance coverage would drive demand for high-paying, rewarding jobs in health services. Most reform proposals emphasize primary care, much of which can be provided by nurse practitioners, registered nurses, and physician's assistants. These jobs could provide a landing spot for workers who have lost jobs in other sectors of the economy.
  • Health care reform would also stimulate consumer spending, as previously uninsured families would no longer need to save every extra penny to cover a medical emergency. When the federal government expanded Medicaid in the 1990s, the newly insured significantly increased their spending on consumer goods.
  • Experts have yet to figure out how to restrain cost increases without sacrificing the quality of care that Americans demand, but cost control would be easier in an environment of universal coverage.

SOURCE: J. Gruber, "Medicine for the Job Market," The New York Times, December 4, 2008.
For More Information
See: S. R. Collins, J. L. Nicholson, S. D. Rustgi, and K. Davis, The 2008 Presidential Candidates' Health Reform Proposals: Choices for America, The Commonwealth Fund, October 2008.

R. J. Blendon, D. E. Altman, J. M. Benson et al., Voters and Health Reform in the 2008 Presidential Election, The New England Journal of Medicine, Nov. 6, 2008 359(19):2050-2061.

C. Schoen, S. K. H. How, I. Weinbaum, J. E. Craig, Jr., and K. Davis, Public Views on Shaping the Future of the U.S. Health Care System, The Commonwealth Fund, August 2008.

[1] R.J. Blendon, D. E. Altman, J. M. Benson et al., Voters and Health Reform in the 2008 Presidential Election, The New England Journal of Medicine, Nov. 6, 2008, 359(19):2050-2061.
[2] Washington Post–ABC News Poll, conducted by telephone between Dec. 11 and Dec. 14, 2008; responses from a random sample of 1,003 adults, with a margin of error of plus or minus three percentage points (Cohen/Agiesta, Washington Post, 12/21).
[3] M. Brodie, Public Opinion, Election 2008 and Health Care Policy,Presentation, December 9, 2008.
[4] Blendon et al., 2008.
[5] After leaving Congress, Daschle has worked as an advisor for the lobbying firm Alston & Bird and has served as a senior fellow at the Center for American Progress, a Democratic think tank.
[6] L. Burman, S. Khitatrakun, G. Leiserson et al., An Updated Analysis of the 2008 Presidential Candidates' Tax Plans, Urban Institute–Brookings Institution Tax Policy Center, September 12, 2008.

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