Mandate

The White House has posted  President Obama's letter to Senators Ted Kennedy and Max Baucus on health care reform. He reiterated his vision (and ours) that reform is an economic as well as a moral imperative. And he added a few points (and $$$) we hadn't heard before:

In addition to the $635 billion reserve fund Obama outlined this Winter in his budget proposal, (some of which Congress balked at) he's calling for an additional $200 to $300 billion over 10 years in Medicare and Medicaid savings. This isn't from slashing the entitlement benefits but by taking steps to better manage chronic diseases, utilize health services more wisely, and reduce the revolving door of hospital readmissions. We waste a lot of money on care that doesn't make people any better.

The health insurance industry, in what was widely seen as a step toward consensus on health reform, has said it would stop charging sick people higher rates as part of a comprehensive health reform plan that required everyone to have insurance.

The New York Times said the concessions on pricing in the individual market and acceptance of more regulation  "came as a surprise to lawmakers" and could "make it easier for Congress to reach a consensus." The Times and others also pointed out, however, that the offer from America's Health Insurance Plans and Blue Cross Blue Shield Association were made in part to counter proposals that private insurers would have to compete against a new public insurance plan. (We're going to post separately about that shortly).

"Creating a new government-run plan would thwart the ability of the healthcare sector to implement meaningful delivery system reforms, exacerbate the cost shifting from public programs to consumers in the private market, and destabilize the employer-based system,"  AHIP CEO Karen Ignagni and BCBSA CEO Scott Serota wrote in a letter to the chairmen and ranking Republicans of the Senate HELP and Finance Committees.

This post also appears on the National Journal's Health Care Experts Blog. where you can also see what other health policy analysts have to say about insurance market reform.

The point of insurance market reform worthy of the name is twofold: to make markets more efficient and more fair for all, not just for some, and to transition the business model of insurers away from risk selection and toward care coordination and high value care. In order to maximize value per premium dollar, we need to align incentives among insurers, consumers, and health providers.

This post also appears on the National Journal's Health Care Experts Blog. where you can also see what other health policy analysts have to say.

On Wednesday, Senate Finance Chairman Max Baucus (D-MT) made clear that reforming our health care system is an economic imperative and that comprehensive health care reform should be a priority for Congress. I applaud his leadership, vision, and willingness to work with colleagues, stakeholders and the public to "get it done" in this Congress. He has laid down a key cornerstone in our pathway to a high quality health care system that works well for all Americans.

Senator Baucus emphasized two important messages on Wednesday: 1) The cost of "inaction is much more expensive" than reform, 2) We should approach health reform with a bipartisan attitude and endeavor to persuade "80 Senators" to support the final legislation. I believe the health care reform conversation would be well-served to continue to remember and echo these two points.

As for policy, the Baucus policy plan is extensive, so today I will simply highlight what I view as the most original contributions.

That strange bedfellow Divided We Fail coalition you've heard us talk about before about is putting its money where its mouth is in the name of health reform. The Business Roundtable, the National Federation of Independent Businesses, the AARP and the SEIU have sent President-elect Barack Obama an open letter urging him to enact comprehensive health reform. And they are backing it up with a nearly $1 million TV and newspaper ad campaign.

"What we are doing is reminding not just the president but the Congress as well that . . . this remains one of the most important issues facing the country," Business Roundtable President John Castellani was quoted as saying in the Los Angeles Times. The coalition sees health reform as an essential aspect of economic recovery and job creation.

"Addressing skyrocketing healthcare costs is a critical component of stabilizing household, national and global economies," the letter from the business-labor-senior citizen group said. "Inaction undermines the economic security of our families; limits the productivity of our workforce; stagnates job creation and wage growth; and threatens to crowd out investments in energy, education and infrastructure."

Forget about the Nationals' new stadium (you already had?), the hardest seat to get in town this summer has been at the Senate Finance hearings on health reform. We arrived 20 minutes early yesterday to find the halls of the Senate's Dirksen building packed. And for good reason, as the day's testimony on 47 Million & Counting: Why the Health Care Marketplace is Broken was as refreshing as the room's AC (68.2 degrees!)

The hearing opened with video testimony from Lisa Kelly, of Lake Jackson, Texas. Kelly is one of the 25 million underinsured Americans we wrote about yesterday. Kelly purchased a limited benefit plan with a $189 monthly premium that provided fine coverage for her allergy pills but was woefully inadequate when she was diagnosed with leukemia in 2006. Kelly's trials were the subject of a recent piece in the Wall Street Journal. Forced to dip into her savings and currently saddled with nearly $137,000 in medical debt, Kelly, was asked what she thought Congress should do. Her answer was particularly moving:

Myth: An individual mandate will stifle market competition.

Fact: An individual mandate, coupled with insurance market reforms and subsidies, would make markets work more effectively and efficiently. By reducing the risk of adverse selection, an individual mandate would force insurers to compete based on price and quality, not underwriting and marketing.

Myth: An individual mandate is not necessary to ensure that all Americans have health insurance coverage.

Fact: Many Americans who are eligible for public insurance at little to no cost do not enroll, while others who could afford private health insurance choose not to buy. This suggests a mandate is necessary to approach 100 percent enrollment.

• Three highly respected health economists concluded that an "individual requirement to buy or acquire health insurance is a necessary element of any proposal that aims to cover all Americans."
• According to research by the Urban Institute, more than 15.5 million people would still be uninsured under a system with generous benefits, subsidies, and sufficient administrative simplification—but no mandate
• Researchers have found that when insurance is affordable, compliance is easy, and enforcement is done right, mandates are likely to succeed.

Check back tomorrow when we'll examine common myths about mandates and stifling competition. For more in depth discussion, read New America's recent issue brief.

Myth: An individual mandate is not enforceable.

Fact: Switzerland and the Netherlands have successfully enforced an individual mandate to purchase health insurance. Similarly, some American states have achieved close to 100 percent compliance with a mandate to purchase car insurance.

Enforcing a requirement to purchase health insurance will likely a take series of integrated approaches. Some possible models include:

Can New Jersey afford health reform? Can New Jersey afford to do without health reform? We traveled north to the Garden State today as our very own Len Nichols, (see Len's presentation here) the AARP, the Rutgers Center for State Health Policy, Governor Jon Corzine, Representative Frank Pallone, and a host of state lawmakers addressed those two key questions.

Most of the buzz surrounded New Jersey State Senator Joseph Vitale, chairman of the health committee, who has introduced legislation that would seek to cover all New Jerseyans in two phases during a three-year-period: