Healthcare Reform Proposals Taking Shape

The last time we had a major health reform proposal was the Clinton administration, and it didnât go well. Ezra Klein explains the reasons: Instead of bringing members of Congress and stakeholders into the process early, the administration drafted a detailed proposal and then presented it to Congress. Those in favor of reform failed to mount a coordinated campaign for it, while the Republicans, guided by a memo from William Kristol, united in opposition against it and ruled out compromise. And even before the administration presented its plan, the health-insurance industry was spreading fear to the public with the notorious âHarry and Louiseâ ad.

Things are different this time around. Public support for some kind of healthcare fix is strong, as the recession leaves even more people struggling to afford the healthcare they need. And, explains CQ Politicsâ Rebecca Adams, the insurance industry knows itâs not in a good position for bargaining:

After a decade in which the image of managed-care companies has been marred by stories about denied coverage and hassles for patients, health insurers have a 40 percent favorability rating with the public, according to a 2008 USA Today/Kaiser Family Foundation/Harvard School of Public Health poll. That number was lower than the ratings for banks, airlines and drug companies, and about half the approval rating of doctors.

Insurance companies and other segments of the healthcare industry (doctors, hospitals, pharmaceutical companies, etc) have evidently realized that spiraling healthcare costs and growing rates of uninsurance and underinsurance have predisposed both the public and politicians to favor a fix, so they might as well try to make the legislation as favorable to their industries as they can. The insurance industry in particular has made some impressive announcements â but itâs still not clear whether itâs possible to arrive at a compromise thatâs acceptable to them and to reformers.

The insurance industry has promised to stop charging higher premiums to people with histories of health problems if thereâs an individual mandate â that is, if everyone is required to have health insurance. Theyâre still opposed to having a public plan as one insurance option, though. (More on these issues here.)

According to Ezra Klein (whoâs now a Washington Post blogger and gets given internal Senate committee memos), the two Senate committees involved in healthcare reform legislation â the Finance Committee and the Health, Education, Labor and Pensions Committee â is to have legislation on the floor of the Senate by the last two weeks of July. The overall goal is to have legislation on President Obamaâs desk by October 1st. This timetable means that we should be seeing specific proposals very soon â and weâre already starting to hear specifics from Senators and the President:

• The bill from the HELP Committee, chaired by Senator Edward Kennedy, will reportedly include a public plan, and the government will subsidize premiums for people with incomes of up to 500% of the poverty level. The plan would pay doctors and hospitals set fees, equal to 110% of what Medicare pays. There will be an individual mandate, with exemptions for those who canât obtain affordable coverage.
• Senator Max Baucus, chair of the Finance Committee, is now saying that he expects the Senateâs proposal to include a public plan. (Baucus works closely with Ranking Member Charles Grassley and had long stated his preference for a bipartisan bill, so his support for a public plan was never a foregone conclusion.) Modern Healthcare reports that Baucus expects this plan to âlook and feel more like a private plan, adhering to open-market principles and âwhere the governmentâs thumb is very, very light.ââ
• In a letter to Senators Kennedy and Baucus, President Obama stated his support for a public plan and indicated that he would be open to an individual mandate, provided that those who couldnât afford coverage would be exempted. Obama had remained quiet on the details of healthcare until now, evidently preferring to let Congress create a plan for which they could muster enough votes. As a candidate, Obama criticized Hillary Clintonâs proposed mandate.
• Blue Dog Democrats, a coalition of fiscally conservative House Democrats, will only back a public plan if itâs restricted to operating as public insurance does, and Senate Republicans generally oppose it.

A public plan is starting to look like a real possibility. How will the insurance industry respond? Will they accept a public plan if itâs required to operate like a private plan (not setting provider rates the way Medicare does)? Weâre sure to hear more from them over the next few weeks.