Editore"s Note
Tilting at Windmills

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May 11, 2009

HEALTH CARE REFORM TAKES AN ENCOURAGING TURN.... When Senate leaders cleared the way for health care reform to pass through the reconciliation process, it made the prospects for passage a whole lot better. In about an hour, representatives of hospitals, doctors, insurance companies, and the pharmaceutical industry will present a proposal to the White House that makes passage even more likely.

Volunteering to "do our part" to tackle runaway health costs, leading groups in the health-care industry have offered to squeeze $2 trillion in savings from projected increases over the next decade, White House officials said yesterday. [...]

The groups aim to achieve the proposed savings by using new efficiencies to trim the rise in health-care costs by 1.5 percent a year, the officials said. That would carry huge implications for the national economy and the federal budget, both of which are significantly affected by health-care expenses. [...]

"I don't think there can be a more significant step to help struggling families and the federal budget," a senior administration official said in a conference call with reporters.

These are, of course, some of the very same health industry trade groups that worked to kill health care reform in 1993. We're dealing with a very different landscape now.

Marc Ambinder said, "What's the bottom line political significance of all of this: it means that the White House is gonna get health care reform, this year." Jon Cohn added, "[M]ake no mistake: This is a big deal.... [T]he industry groups aren't promising to control costs as an alternative to reform. They're promising to control costs as part of reform." Paul Krugman, while noting the reasons for skepticism, described today's announcement as "tremendously good news" and "some of the best policy news I've heard in a long time."

Krugman added, "The fact that the medical-industrial complex is trying to shape health care reform rather than block it is a tremendously good omen. It looks as if America may finally get what every other advanced country already has: a system that guarantees essential health care to all its citizens. And serious cost control would change everything, not just for health care, but for America's fiscal future."

Ezra Klein takes a more skeptical approach, highlighting the groups' fierce ongoing opposition to comparative effectiveness review and the public plan, and questioning what the industry trade groups are going to do, exactly, once they have a seat at the proverbial table.

All of those concerns have a lot of merit. That said, I'm encouraged anyway, in part because it suggests the right's opposition is completely falling apart, as the reform push picks up needed momentum, and in part because it brings these heavy-hitters into the tent, where they're far less likely to start launching vicious attacks.

The writing is on the wall, and to mix crude LBJ metaphors, the White House sees the value in having these industries inside the tent pissing out, as compared to the alternative.

Steve Benen 11:15 AM Permalink | Trackbacks | Comments (22)

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It is also a matter of being wary of Big Healthcare Lobbyists bearing gifts.

Posted by: Former Dan on May 11, 2009 at 11:21 AM | PERMALINK

I know a great big bunch of people for whom a "1.5% reduction" won't do a dimn-damned thing. Besides---does this "1.5% reduction" mean that prices are going down 1.5% from last years prices, or will it just be a 1.5% decrease in the projected annual increases?

Posted by: S. Waybright on May 11, 2009 at 11:22 AM | PERMALINK

My guess is industry will implement measures and metrics, but ultimately and utterly fail to meet their performance goals... They will buy time and hope for a better political climate.

Posted by: inkadu on May 11, 2009 at 11:22 AM | PERMALINK

I'm a very small employer and our premiums went up over 20% this year. Every year, we pay more for less coverage.
I don't see how cutting 1.5% each year in the cost of healthcare is going to do anything substantive. So I remain in the camp of those who are skeptical that anything of substance will be done about the issue, especially from a plan that is concocted of compromise from all the players.
The fact is, many countries with national health plans have shown the way as to what needs to be done. You don't need a committee to figure it out. I fear there never will be an adequate change in our system but the politicians will congratulate themselves when they come up with a "solution" that provides portability for the employed and some expansion of Medicaid or Cobra that insures the unemployed. Big deal.

Posted by: Frak on May 11, 2009 at 11:22 AM | PERMALINK

Also, I would like someone to point out to me when in the history of the world has a corporation voluntarily ceded it's ability to make enormous profits.

Name me one.

Posted by: inkadu on May 11, 2009 at 11:24 AM | PERMALINK

Evidently the Medical-Industrial Complex has decided that long term survival depends on their embracing and shaping change. That means they have decided that change is going to happen. That is the good news.

The bad news is that they have tons of money to spend on Congress insuring that the change we will get is "change" that will allow them to thrive.

My guess is that this proposal is little more than policy judo. They are giving way to change the course of and ultimately defeat reform.

Posted by: Ron Byers on May 11, 2009 at 11:38 AM | PERMALINK

I guarantee these people (the insurance companies and pharmaceutical companies) should not be trusted. They will "cut costs" by denying benefits to subscribers for which their policies clearly are supposed to cover. There are only three ways to cut costs. First, force all of these groups to become non-profit. Secondly, as long as Medicare Part D exists, force Pharma companies to negotiate drug prices, just as they have to with the Vets Admin. and DOD. Thirdly, offer a completely public plan to the American people.

Posted by: winddancer on May 11, 2009 at 11:39 AM | PERMALINK

Those who drop in to complain there aren't enough posts on Single-Payer health care v. 'fixing up' the current system, is this post good enough to hold it for awhile?

Posted by: Neil B ♥ on May 11, 2009 at 11:40 AM | PERMALINK

I'm skeptical that negotiations between insiders will produce anything good.

It seems to me that the President or his surrogates should be rallying the people to descend on Washington and demand real change. I've seen little of that so far.

Posted by: PeakVT on May 11, 2009 at 11:43 AM | PERMALINK

Even more reason to make certain that a "public plan alternative" is in place, something that works like the VA works here in Los Angeles. The industry is right that eventually the public plan would kill private insurance. Every time I get one of those nice "invitations" from a health insurance plan to let them work with me as I turn 65, I send it back with a big note scribbled on it as to what they can do with it. No way I am ever going back into the private system.

Posted by: TCinLA on May 11, 2009 at 11:53 AM | PERMALINK

Obama needs to stand firm on the public option. What the industry is proposing is simply a "voluntary" effort. That is simply insufficient. Yes, I am all for moving the debate in the right direction, but it needs to go a lot further than this for the resulting reform to end up being anything close to what we need. The truth is also that these so-called interest group "stakeholders" are often at cross purposes and are likely to go right back to their "default" positions as soon as it becomes clear they have sufficiently bought themselves enough breathing room -- health plans would love to get more efficacy studies, for instance, but hate the public option, and so on.

Posted by: Barbara on May 11, 2009 at 11:55 AM | PERMALINK

Ah, the money flows into Helena, MT

Max Baucus was the token Democrat who was allowed to sit in on Medicare Reform when Big Pharma blocked the VA type of drug negotiation for Medicare. He, also, has refused to allow Single Pay to sit at the table in the first meetings in his Finance Committee. That money is not pouring into Montana to clean up the polluted Blackfoot River. The book "A River Runs Through It" is being changed to "A River of Money Runs Through Max's Bank Account".

Posted by: berttheclock on May 11, 2009 at 12:15 PM | PERMALINK

Everyone is skeptical, and for good reason. Why should anyone trust the health insurance and pharmaceutical industry to do the right thing on their own and without any sort of enforcement?
Someone else made a good point--if a public option is so awful(certainly not as good as single payer), why would the insurance companies oppose it? You'd think that with competition between a public plan and the vastly superior private plans, it would be no contest and would prove once and for all that government insurance doesn't work. But of course they know it would work and that they would lose the competition.
The only thing I trust is a reform bill with a public option, at least, and strong regulation of the private insurers to enforce compliance with their promises. Otherwise it's all pointless.

Posted by: Allan Snyder on May 11, 2009 at 12:18 PM | PERMALINK

Any "solution" that doesn't provide a viable public insurance alternative will not solve anything.

Posted by: qwerty on May 11, 2009 at 12:19 PM | PERMALINK

As long as there are health insurance companies, there will be an inefficiency (unnecessary cost component) related to their need to make a profit and issue dividends to their shareholders.

Any "reform" in which they partipate will funnel all the high-risk/cost candidates to the goverment program, while retaining the healthier, lower-risk people at the same or higher premiums.

There's no way they will sacrifice anything as long as they are allowed to control the healthcare system in this country.

Everyone will end up paying more through funding a much more expensive government program. Let's have everyone take a good chunk of what we pay as premiums and fund our own insurance!

Posted by: bdop4 on May 11, 2009 at 12:31 PM | PERMALINK

I'm afraid I do not share Mr Krugman's optimism with regard to these policy proposals. I'm quite sure the medical insurance and pharmacology giants will game this the way Enron played California. Then they'll blame all malfunctions on "socialized medicine".

Posted by: Peter G on May 11, 2009 at 12:32 PM | PERMALINK

Moreover, single-payer healthcare advocates are carefully being excluded from the discussion.

If you don't believe the fix is in, you're not paying attention!

Posted by: MichMan on May 11, 2009 at 1:00 PM | PERMALINK

p.s. let's be clear what these vultures are offering--

leading groups in the health-care industry have offered to squeeze $2 trillion in savings from projected increases over the next decade,

--IOW, they're not cutting squat, costs will still go up, just not as much as their projected increases. These people are not to be trusted at all, and yes, someone should monitor every cent that's going to Max Baucus' campaign account.

Posted by: Allan Snyder on May 11, 2009 at 1:05 PM | PERMALINK

You keep talking about health care reform. That is not even on the table. Not one candidate in the election talked about reforming health care, and Obama has not talked about health care reform one single time since he was elected.

He has talked at length about extending halth insurance to people who do not have it, and there is some talk of minor tinkering with the way it is administered. Those changes to not constitute reform, and changes to health insurance are not a reformation of health care.

Most of the bankruptcies filed due to medical costs are filed by people who had health insurance. Extending insurance to people who do not have it is not going to change the fact that people will lose their homes and their life savings due to medical catastrophe. That should not happen in civilized societies, and nothing that is on the table will change it.

Health care reform? Not even close.

Posted by: Bill H on May 11, 2009 at 1:06 PM | PERMALINK
"If you don't believe the fix is in, you're not paying attention!"

Great link, MichMan,Thanks.

And here's another one.

We're screwed. Again!

Posted by: elouise on May 11, 2009 at 1:28 PM | PERMALINK

From Drum:

UPDATE: Matt Yglesias offers a comment:


"Whatever kind of backstabbing these industry groups may or may not do in the future, they won’t be able to take back the fact that once upon a time they stood beside the White House in agreeing that it’s possible to achieve massive cost-savings without compromising patient care. That argument may well prove hugely important, politically, to getting a package through congress."

Copy and paste that folks and use it in the months to come.

Posted by: markg8 on May 11, 2009 at 2:18 PM | PERMALINK

That said, I'm encouraged anyway, in part because it suggests the right's opposition is completely falling apart, as the reform push picks up needed momentum, and in part because it brings these heavy-hitters into the tent, where they're far less likely to start launching vicious attacks.

Yes, and as we all know, deals with the devil never turn out badly....

Steve, this is an example of how your obsession with what the wingnuts are doing is blinding you to reality. In the Health Care Battle, the wingnuts are just pawns being played by the real enemies of reform -- the Health Care Industry. That the Health Care Industry has decided that people on the left are now more useful pawns is *not* an encouraging sign -- it is an *ominous* sign.

You shallow progressives are really beginning to piss me off; you were useful during the GWB admin, but more and more your middle-of-the-roadism, naivete, and timidity are now just getting in the way of real reform.

Posted by: Disputo on May 11, 2009 at 2:52 PM | PERMALINK



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