Political and Cultural Impediments to Health Care Reform

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Political and Cultural Impediments to Health Care
Reform

• Successful Health Care Reform has a Very High
  Degree of Difficulty

Daniel B. Perrin President, HSA Coalition,
Washington, D.C.
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Conventional Wisdom on Health Care Reform in 2009

• A victory by Senator Obama will result in
  Democratic Party control of the White House and
  Congress and Health Care Reform will happen.
  Every Democratic Presidential candidate made
  health care reform their number one priority.

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The Conventional Wisdom is Hopelessly Naïve

• There are eight structural impediments to health
  care reform. Each represents a substantial
  hurtle for reform.
• Taken in total, these eight impediments conspire
  to make health care reform the most difficult
  type of reform to enact.

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Senator Obama wins

• The Democratic Party will control the White House
  and Congress, the same advantage President
  Clinton had for Hillary Clintons health reform
  plan.
• The Clinton plan did not get a single vote on the
  floor of the U.S. House.
• Its failure, in part, cost the Democratic Party
  control of the U.S. House and 54 House seats.

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Brief History of Health Care Reform

• Two successes HIPAA and the Medicare
  Prescription Drug Benefit
• Two failures the Clinton Health Plan, the
  Patient Bill of Rights
• State success Massachusetts plan
• State failure California Health Care Reform
• Private sector reform failure HMOs

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1. The Control Issue

• HMOs, and their philosophy of managing the
  patient with drug and treatment formularies was
  defeated in detail by the average American
• The Clinton plan suffered from the real or
  perceived lack of control of your own health care
  problem
• Both failed.

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2. Americans Dislike taking Health Care Risks

• When there is confusion about any new health care
  idea or reform, in the mind of the public, it
  grows into resistance.
• The default position to confusion is to do
  nothing. Alternatively, the public will revert
  to dominate cultural views, like having control
  of my own health care.
• Sowing doubt or fear about private sector or
  government bureaucrats on health care is deadly
  to health care reform.

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3. Both Rs and Ds have been Burned by Health Care
Reform

• The Democratic Party lost control of the U.S.
  House of Representatives in the aftermath of the
  failure of the Clinton plan.
• The Republicans, after passing the Medicare
  Prescription Drug Benefit received earache from
  their base about voting for a new entitlement
  program, and received no big surge of support
  from seniors. Nada.
• Shouldnt we all just join hands and jump off the
  cliff together?

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4. Cash

• In less than nine years, 11 million Seniors will
  join the rolls of Medicare, from 44 million now
  to 55 million in 2017. This is not the main cost
  driver for Medicare according to the
  Congressional Budget Office.
• It is the growth in the per senior cost in
  Medicare.

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4. Cash

• In 2008 640 Billion for Medicare and Medicaid,
  260 Billion for the employer provided tax
  deduction.
• The U.S. Government spends 1 Trillion a year now
  on health care sans reform.
• Californias plan was killed by the price tag.
  Not a single bill left a single committee,
  despite a left-right coalition for reform.

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5. 1 Trillion in Special Interests

• If you are going to restructure funding now being
  spent, you will have to face those now on the
  receiving end of the cash.
• For example, the 260 billion in cash for the
  employer health insurance tax break is a nice
  place to find the cash. It will be 300 billion
  next year. But some will fight you.

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6. Intra-Party Political Tensions

• Ninety plus members of the U.S. House have
  cosponsored Medicare for All.
• If these members dig in their heels to get what
  they want, reform may fail.
• It will be a fight, inside the Democratic Party.

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6. Intra-Party Political Tensions

• Whatever reform is proposed, short of Medicare
  for All, will have to have the support of these
  Representatives.
• Will it be acceptable to the rest of America,
  whatever they support?
• What do the other 170 House Dems want, do they
  know, is there a consensus?

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7. Massive Growth in Health Care Spending

• Spending on Medicare and Medicaid will double in
  10 years.
• Delays in reform will simply expose the larger
  and larger share of federal dollars going to
  health care.
• It will conspire to make new spending on new
  health care programs very tough indeed.

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8. Changing the Tax Code is Hard

• Any comprehensive health care reform will have to
  amend the tax code.
• It is very difficult to amend the Federal Tax
  Code, it is one of the most difficult legislative
  feats.
• Average change to the tax code takes 14 years.

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Success Stories

• HIPAA passed in the aftermath of the failure of
  the Clinton health plan to prevent the sick from
  being fired, and to allow benefits to continue if
  they were fired.
• Bi-partisan support Democratic White House,
  Republican Senate, Republican House
• Medicare Rx Republican WH and Congress

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Reform Can Happen, if

• It is bi-partisan
• Government helps, does not control
• It is incremental
• It is funded (will be tougher each out year, as
  the boomers hit the Medicare system)
• Average American has choice and control

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New Reform Example

• Indiana created a program for the uninsured
  Medicaid population
• 1,100 deductible insurance, with free
  preventative care
• 1,100 debit card for the beneficiary to spend on
  health care (like food stamps)
• Expenditures over 1,100 and insurance kicks in

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New Reform Example

• Money left in account rolls over onto debit card
  if beneficiary meets preventative care
  requirements for their sex, health status and age
• If not state gets money
• 70,000 applications in seven months, had to stop
  advertising for plan, triple enrollment staff

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Many Smart People Have Failed at Health Care
Reform

• Failure has real political costs to those who
  fail. Even success has political costs, as the
  Rs found out.
• Health care reform has a very high political risk
  profile, to very little political reward. It is
  a risk-reward equation elected members weigh.
• QUESTIONS?