Behind the Healthcare Debate

A panel of experts, from Harvard and elsewhere, attempts to cut through the confusion about the healthcare reform bills in Congress.

The healthcare reform proposals under consideration in Congress this year “are not pretty,” Yale political-science professor Jacob S. Hacker ’94 told an audience at the Harvard School of Public Health (HSPH) on September 25. “They are meant to pass.”

The bills that are being taken seriously are not manifestos from a single party, he said; they were written strategically, to skirt objections from both sides and hew the narrow path to passage.

The proposals were drafted not in sweeping, idealistic prose but with attention to bureaucratic detail, and this focus on the trees in lieu of the forest has meant that the discussions largely “lack the underlying vision” that could override people’s fears and get more members of the public on board, said Hacker, who is the author of The Great Risk Shift: The New Economic Insecurity and the Decline of the American Dream.

In a panel discussion sponsored by the New England Journal of Medicine, Hacker and other health-policy experts came together to shed some light on the proposals at hand—what they contain, what they don’t, the differences among them, and what’s left unaddressed.

Defining Questions

The so-called “public option” has gotten a disproportionate amount of attention in the public debate, said Henry J. Aaron, Ph.D. ’63, a senior fellow at the Brookings Institution and a member of the panel of economic advisers to the Congressional Budget Office. Given the size of the health-insurance industry and its influence in Congress, he said, there is little chance that a public option would be allowed to poach large numbers of subscribers from private insurers.

What hasn’t gotten enough attention is payment reform, said Katherine Baicker, a professor of health economics at HSPH who served on the President’s Council of Economic Advisers from 2005 to 2007. If the long-term goal is decreasing costs while bolstering Americans’ health, she said, policymakers must ponder how to rearrange the system to give incentives for quality care, rather than paying per-procedure regardless of quality, but also to encourage prevention rather than paying for expensive treatments once someone is ill.

Although the reform rests its hopes of passage on the notion that people have a right to affordable healthcare, neither term in the phrase “affordable healthcare” has been well defined, panelists said.

“We talk about…healthcare…as if it’s a monolithic thing—you either have healthcare…or you don’t,” said Baicker. “But of course, there’s a continuum of things available through medical technology, the same way there’s a continuum of housing available, or food. We say people have a right to food, but…we don’t require everyone to have access to the most food that you could imagine.…What do we mean when we say we want everyone to have access to at least a minimum bundle of care?”

Similarly, an individual mandate (a requirement that everyone have insurance) is palatable only if the government provides subsidies sufficient to make insurance affordable for all. But “I don’t know what affordable means, and I can absolutely guarantee no one else does either,” said Mark Pauly, a professor of healthcare management, of business and public policy, and of insurance and risk management at the Wharton School and professor of economics at the University of Pennsylvania. “It’s a social value judgment.”

Some of the discussion’s lighter moments came from Hacker. In outlining the healthcare debate’s political landscape, he described Senators Max Baucus (a Montana Democrat who heads the Senate Finance Committee and sponsored one of the leading reform proposals) and Charles Grassley (an Iowa Republican and the ranking minority member of the Finance Committee) as being engaged in “a strange and unrequited love story that has consisted of Baucus constantly professing his belief that at any moment, Grassley will turn and start running toward him through the field with arms outstretched, and Grassley continuing to run as far right as possible.” Hacker continued, “I keep wanting to say, ‘Max—he’s really not that into you.’”

Cost Concerns

For all their attention to detail, the reform’s supporters have soft-pedaled its long-term costs, Aaron said.

All the bills, he said, have cost projections looking forward 10 years, complying with the rules of Congressional procedure, and all of them cost more at the end of the 10-year period than they do starting out—and that final-year cost will become the continuing annualized cost, so judging by the first-year cost can be misleading. He outlined some differences among the funding structures in the various bills being considered. But in sum, he said, “You can’t really trust the numbers that you hear thrown around” because so much is still uncertain.

Bringing healthcare costs down won’t be easy, said Baicker. Although there is waste and room for improvement within the system, she said, “I think that we’ve deluded ourselves a little bit by thinking that we can get healthcare services under control strictly by limiting services that are of zero value to people.…That’s not enough….The tough part of the debate, that I don’t think we’ve grappled with,” she said, is “that we can’t afford, as a society, to spend on every item of healthcare that might have positive benefit, because that would be more than 100 percent of GDP.”

Discussions of how to cover the cost—whatever it is—are sometimes grounded in mistaken assumptions, the panelists said.

A shift toward preventive care shouldn’t be sold on economic grounds, Aaron said: “On balance, it isn’t, in the long haul, going to reduce cost,” he said. “It will improve the health of the American public.”

Baicker warned against the seductive appeal of an employer mandate (a requirement that employers of a certain size provide health insurance for their employees). “There is no secret pool of profits that we would be drawing from,” she said. “It has labor-market consequences that aren’t going to bode well for a lot of workers.”

Pauly took aim at the suggestion of taking money from Medicare funds for subsidies to cover the poor uninsured. Noting that Medicare had become a subject of more interest to him in recent years—he completed his undergraduate degree in 1963—he said, “We need that.” Spending down Medicare now will require a future tax increase to cover that program’s costs, he said. “We can’t be spending that money twice.”

And he warned of the potential for “slips between cup and lip.” Several states have passed universal-coverage bills that nevertheless have not been fully implemented; the work does not end with the passage of legislation, he said.

The Road Ahead

If the bills being considered already represent difficult compromises, panelists said, passing them will require even more.

The reform’s proponents are operating with four goals in mind, Pauly said: “to cover the uninsured, lower cost growth, improve quality, and only tax rich people.” To achieve all of those is “impossible,” in his estimation: “You cannot do all four things. Something’s got to go.”

Describing the challenge of crafting a bill that both goes far enough in terms of relieving the burden of health expenses on the poor, and doesn’t cost too much, Aaron turned to an aphorism from the venerable Groucho Marx, who joked that he didn’t want to belong to any club that would accept him as a member. “In this case,” Aaron said, “there is a genuine question as to whether members of Congress are willing to pay for any bill that they are willing to sign.”

Aaron said compromise is a more likely route to passage than so-called reconciliation—a procedure (meant for use with budgetary measures) that requires just 50 supporters, rather than 60, to pass in the Senate because it is not subject to filibuster—because of the political implications. Passing such an important reform through reconciliation, he said, would make repeal likely if the power balance in Congress shifts, he said.

And he said President Obama was wrong to say that, although he was “not the first president” to take up the cause of healthcare reform, he is “determined to be the last.” He said this rhetorical flourish might make things seem simpler than they are, leading to outsized expectations from the public—and criticism when future administrations have to revisit whatever reform is enacted now. When it comes to tackling such “huge” issues, Aaron said, “If we got it right the first time, that would be nothing short of miraculous.”

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