Two security guards in dark suits towered over Mary Carol Jennings, a spiky-haired medical student wearing a white doctor’s coat, as she and some fifty others tried to enter DC’s Ritz-Carlton Hotel one morning in early March. The contingent included representatives of the AFL-CIO, MoveOn and the Campaign for America’s Future. Jennings was flanked by two members of the National Nurses Organizing Committee who held a giant certificate for the head of America’s Health Insurance Plans, the trade group meeting inside the hotel.
“We hereby present Karen Ignagni, CEO [of] AHIP, with this award for Best Protector of Health Insurance Industry Profits at the Expense of Our Health,” read the mock certificate, which they decided to leave on her car after being denied entrance to the Ritz. “We are confident that Karen Ignagni will continue to protect profits while paying lip service to ‘health care reform.'”
This showdown was organized by a nine-month-old coalition known as Health Care for America Now, which claims more than 850 affiliate organizations. Having learned from the mistakes made by reformers in 1993 and ’94, HCAN is launching an early assault on the organization that led the crusade against President Clinton’s proposal. According to HCAN spokeswoman Jacki Schechner, “There was no organization on the left” during the Clinton fight, a time when insurers “talked nice about reform until it got down to the nitty-gritty” details of the plan.
“What we expect [from AHIP] is that there’s going to be a lot of yes up front and a lot of no behind the scenes,” she says. “We know [what] we’re seeing this time around is a coordinated effort to say we’re not going to buy it–this is not to be left in the hands of DC lobbyists and special interests anymore.”
Though AHIP is publicly espousing cooperation–Ignagni told President Obama at a March 5 healthcare summit that “You have our commitment to play, to contribute and to help pass healthcare reform this year”–the group has already staked out its opposition to one of the planks of the president’s proposal that progressives regard as most essential: giving the American people the choice of a public insurance plan alongside a range of private ones. Iowa Senator Chuck Grassley, the ranking Republican member of the Finance Committee, who also claims to be seeking a bipartisan compromise, has joined AHIP in drawing this line in the sand. HCAN has responded to Grassley’s statements by broadcasting television ads in his state featuring a Des Moines nurse endorsing the choice of a public plan.
The public plan is important to many on the left as a fallback from the single-payer system many would prefer. But in practical terms, the public plan may be a crucial cost-containment measure–if it can run more efficiently than private plans, it can force costs down across the system through competition. So the debate over this provision is part of a much more fundamental question: can Washington summon the will to squeeze savings from insurers and providers and raise the revenues needed to cover the uninsured?
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A showdown over the public plan looms when Congressional committees begin writing healthcare reform legislation this summer, but the funding fight that may determine the outcome of the reform effort began in March when Congress started working on the budget. HCAN and some other reform advocates say they are “comfortable” with the healthcare provisions in the budget resolutions just passed by the House and Senate, but these are not as favorable to healthcare reform as they might have hoped. Both chambers rejected President Obama’s plan to set aside $634 billion as a “down payment” on his healthcare reform proposal–an amount that would have covered only about half the plan’s expected cost–refusing to commit any dollar amount to healthcare reform. When Congress takes up reform legislation, advocates will not only be fighting to pass a bill that restructures the healthcare industry; they will also have to persuade legislators to raise more than $1 trillion with a single vote.
If Congress cannot come up with the money, it is clear who will pay for the shortfall: the people who must give up care because they cannot afford it. As HCAN director Richard Kirsch told me last month, to get truly universal coverage, “we’ve got to be sure there’s enough money.”
HCAN organized a “grassroots army” to greet members of Congress who returned home for the April recess, planning ninety-six events in forty-four states, which organizers expected to turn out 15,000 to 20,000 people nationwide. Residents of Pennsylvania and New Jersey are showing their unity by rallying on a bridge that connects their states; in Colorado something called a “move-a-thon” is scheduled; and more than a dozen town-hall meetings are planned in rural states like Arkansas and Montana. The organizers’ top priority is to ensure that a final budget, which Congress will vote on after the recess, retains a provision of the House version that would prevent healthcare reform legislation from being blocked by a Senate filibuster. This would not only protect it from Republican opposition but also from fiscally conservative Democrats who might balk at its large price tag.
“It’s fair to say that our entire effort is informed by what went wrong last time” a president tried health reform, says Kirsch. One lesson HCAN learned was not to advance a particular plan–many groups in the ’90s broke with President Clinton to promote a single-payer proposal–but instead to drive a debate around the principles of choice, affordability and universality, that can shape legislation as it moves forward. HCAN has the advantage of being far better financed than the activists going up against health-industry lobbyists during the Clinton effort, with perhaps ten times the operating budget of the labor-backed coalition of the ’90s. It has been building an activist network and hiring organizers for more than a year.
Obama has studied the failures of the Clinton effort, which downplayed the need for additional funding, and is tackling the money problem upfront. James Mongan, a former Senate Finance Committee staffer and Carter administration official who now heads a Boston hospital network, thinks this is a wise idea. “I think Obama’s done exactly the right thing by showing he’s willing to put money on the table,” he explains. “In my own experience in about forty years of working on this…the sticking point has always been the financing.”
Strictly speaking, the question is not whether we can afford to cover all Americans, even with a darkening economic forecast. We already spend far more per person on healthcare than comparable countries, which cover more people and get better results than we do. But one payer’s savings are another provider’s profits, and one patient’s subsidies are another person’s taxes. So Representative Pete Stark of California, the Democrat who chairs the House Ways and Means subcommittee on health, says, “how we structure [financing] is mostly a political question–not an economic one.”
Health industry interests, employers and taxpayers are all going to have to make painful concessions to raise the needed $1 trillion. When holding hearings on healthcare reform, Stark says, “If anybody in the room is smiling, you keep going. And when everybody’s frowning, that’s when you drop the gavel because you know you have the right mix” of concessions.
Insurers have AHIP to represent their interests; drug companies have the Pharmaceutical Research and Manufacturers of America (PhRMA). Doctors have the American Medical Association; hospitals have the American Hospital Association. Big businesses have the Chamber of Commerce; small businesses have the National Federation of Independent Businesses (NFIB). Unions speak for the workers most likely to have insurance. Blue Dog Democrats will yap for those who dislike federal spending, and the Republican Caucus will growl at tax increases. But there has been no organized, well-financed lobbying apparatus for the almost 50 million uninsured and the millions more who may unexpectedly discover they have no coverage when they need it.
That, says Gerald Shea of the AFL-CIO, is why HCAN is so important. Most of the organized interests are professing a desire for reform. Shea takes them at their word, because even the healthcare industry is feeling the strain of a collapsing system. (Ironically, Shea took a job at the AFL-CIO held by Karen Ignagni before she joined the insurers in 1993, and he says, “I think Karen genuinely supports reform out of personal conviction and out of institutional reasons.”) But the cost of change is so big that he doubts these groups can stomach what’s required.
“My biggest fear is that people won’t be able to make the amount of change we need to really make a difference,” says Shea. “The question is not whether they want change, because I think they genuinely do. The question is whether they’ve got the spine to provide leadership for big change. Because unless we have big change, we’ll wind up with something, but we’ll continue to be eaten alive by the costs and we’ll continue to see coverage just go down the chute.”
How big is the change Shea’s talking about? So big that it is impossible to describe with a word of only three letters. That’s a shame, because the numbers involved here have so many zeros that they’re next to impossible for regular people to understand. But the only way to understand the politics of healthcare is to follow the money, so bear with me.
The scale of the healthcare industry is so vast that it makes the $1 trillion or more in additional spending likely required by the president’s proposal over the next ten years seem small. If trends continue, total healthcare spending in that window could equal thirty-seven times that amount. Healthcare spending already accounts for more than 15 percent of GDP, and cost growth has priced almost 50 million Americans out of insurance and is forcing businesses to drop coverage at alarming rates. If nothing is done, economists predict, our healthcare bills will double again by 2020 and we’ll have more than 60 million uninsured.
Because we only think about insurers when they’re raising our premiums or denying benefits, it’s tempting to believe we could fix this problem simply by seizing unnecessary profits from greedy companies. Insurance companies may be greedy, and the tenfold rise in their profits over the past five years may be obscene when millions of Americans have lost their insurance. But the profits of the top seven for-profit insurance companies are equal to less than 1 percent of annual healthcare spending. Even if we eliminated insurance companies altogether and recouped some of the administrative costs, which can consume as much as 30 percent of some policies, we still would need additional money to fix our problems.
The biggest savings–an estimated $700 billion a year, or one in every three healthcare dollars–can be captured only by revolutionizing the way medicine is practiced. This money is going to treatments that have not been shown to make patients better and in some cases make them worse. One study of seniors in the Medicare program suggests that patients receive appropriate care only about half the time. A study by the RAND Corporation found that doctors perform surgeries in which the risks outweigh the benefits to their patients, as often as one-third of the time in the case of a particular heart procedure.
Even if everyone can agree that we should pay for care that actually works, changing the way medicine is practiced is no easy matter. This can partly be achieved by investing in health information technology and research into what treatments work best, so that doctors have the tools to make better decisions. (The stimulus package provided additional funding to move in this direction.) Drug and medical device manufacturers won’t like this, because it means they will have to demonstrate that newer, more expensive products outperform older, cheaper ones. Since doctors and hospitals consume more than 50 percent of healthcare dollars, we are going to have to make difficult changes to the way they are paid if we really want to make better use of our health spending. Today providers are reimbursed by the volume of services they give to patients, not whether their treatments are making their patients better. They are not going to be happy if they think changing this will cut their paychecks, and they can rally support from patients by scaring them with threats of “government rationing.”
This is one area in which the public plan is most helpful. A government-run health insurance plan will have the ability to aggressively restructure how providers are paid. If it operates more efficiently, private insurers will be forced to trim costs in order to compete. In the absence of a public plan, however, a more complicated alternative might be to drive a change in reimbursements through the largest existing federal program, Medicare, while using regulation to guarantee coverage to hard-to-insure patients in private plans.
Though it is theoretically possible to expand coverage just by reallocating existing healthcare dollars, engineering such a reallocation would be so disruptive that many believe it is politically impossible. (This is largely what the Clinton plan tried to do, and we know how that went.) Instead, a plan like the one outlined by the Obama administration combines some cost-saving measures with a call to raise additional revenue. This new spending would cover the upfront costs of making the system more efficient and subsidize coverage for the uninsured and those whose coverage does not fully meet their needs.
Raising revenue is always a major challenge, as the president was reminded when even some Democratic Congressional committee chairs balked at his budget proposal to raise money by capping the tax deductions of the wealthiest Americans. Some, like Senate Finance Committee chair Max Baucus, would prefer to impose a tax on the healthcare benefits employers now give employees tax-free. But large businesses, which offer insurance at a far higher rate than small ones, hate this idea, and unions also oppose it, because they regard these benefits as hard-won wages. Unions like the idea of paying for health insurance by mandating that businesses offer benefits or contribute to a government fund to help employees buy insurance on their own. But Dan Danner, president of the NFIB, the small-business group, calls an employer mandate a “lightning rod” that would trigger his group’s opposition. AHIP, which has been working closely with NFIB, is officially agnostic on an employer mandate but heavily favors requiring everyone to have coverage (as Massachusetts has done), a proposition that works only if premiums are adequately subsidized to make coverage truly affordable.
HCAN has no easy task in cutting through this thicket of interests, Representative Stark warns: “There are a lot of guerrillas in that jungle.”
Surveying a meeting of these guerrillas–I mean, stakeholders–at the White House healthcare reform summit, Senator Ted Kennedy expressed hope that a new spirit of cooperation will make possible the reforms that have eluded him for forty years. Pledges of cooperation were made that day not only by AHIP but also PhRMA, the NFIB and the Chamber of Commerce. “It’d be hard to think of those interests being together and…demonstrating the kind of commitment as we have today,” Kennedy told the gathering. “This time we will not fail.”
Kennedy’s office has been arranging confidential meetings of these groups for months to try to reach a compromise package. But the AFL-CIO’s Shea, who attended the White House summit and whose organization is participating in the Kennedy discussion group, thinks such an approach will lead to the death of healthcare reform by a thousand cuts: “Having gone through a number of these processes fifteen years ago, we think this is bullshit. There is no way to get agreement that way.”
That is why HCAN was rallying in front of AHIP’s Ritz-Carlton policy forum just a few days later. The path to reform, Shea says, is not bipartisan compromise but the same one that led to Medicare and the Civil Rights Act: for the president to use his electoral mandate to press for the big change that’s needed, and for a better-organized, better-funded progressive coalition to help force Congress to pay for it.
