Doctoring Health Care, I

For all the hype over the Democrats retaking Congress, you'd think the reemergence of that body's liberal lions would, in short order, bring about universal health care and a host of other panaceas. Winning universal health care, alas, remains unlikely, at least in the near term. Instead, repairing the cracked foundations of Medicare and Medicaid will dominate the health agenda, and if the Democrats have any energy left, they may try to stabilize the employer-based health system, too. But if the Democrats are smart, they'll go one step further, using their control of committees and their ability to set the agenda to lay the groundwork for a major universal health-care push in 2008 -- one that may boast a surprising array of new allies.

It's true that for the next two years the Democrats will be hamstrung in their legislative efforts by the threat of a presidential veto. So their first order of business will be a series of investigations and hearings showcasing how Republicans have undermined the stability of Medicare, rammed through a capricious and inadequate drug benefit, ignored soaring insurance costs and the number of uninsured, and further damaged the already precarious employer-based insurance system. But attaining significant improvements in these areas will take a wider Democratic majority in the Senate as well as a change in occupancy at 1600 Pennsylvania Avenue. California Democrat Pete Stark, who returns as chairman of the important House Ways and Means health panel, says “We're going to have to do this slowly and we're going to have to reach out to build a bi-partisan coalition. … I don't want to spoil our chances for making bigger strides in 2008, when arguably we have a good chance to win the White House.”

Even the much-touted promise, from incoming House Speaker Nancy Pelosi of California and Senate Majority Leader Harry Reid of Nevada to pass a measure in the first 100 legislative hours that would allow the government to negotiate drug prices with manufacturers will be largely symbolic, given Health and Human Services Secretary Michael Leavitt's emphatic statement that he doesn't want such authority. More useful would be a measure that more than 130 House Democrats, including Pelosi, co-sponsored last Congress offering seniors the option of enrolling in a government-run drug plan that would compete with private plans. Unleashing Medicare's cost and administrative efficiencies on prescription-drug purchasing would be good for seniors and for advocates of a strong Medicare program.

Meanwhile, even if such health-care legislation stalls, simply debating it would jump-start discussion over the future of Medicare, both as a government entitlement for seniors and as a program for covering the nearly 47 million people without health insurance. Debate on the uninsured will also be sparked by hearings on the State Children's Health Insurance Program, which covers about 8.5 million children and must be renewed this year. Many Democrats want to expand this program to more children as well as their families.

At the same time, five congressional committees are required by law to hold hearings in 2007 on options for insuring all Americans that were recently released by a nonpartisan panel that Congress created three years ago. The panel concluded that most Americans want a national, universal coverage system. And a surprising array of business leaders, labor union officials, consumer activists and health-care industry executives may agree. “It is one of those times, it is like 1992 again,” says Robert Galvin, who oversees the $3 billion General Electric spends on health care annually. Galvin is referring to the health-care crisis of the early 1990s, which led President Clinton to take a serious crack at comprehensive reform. “It is like it was 15 years ago, in terms of business interest in getting into the dialogue.”

“Conditions are there to drive health care to the top of the agenda,” John Rother, policy director for AARP, told a recent forum. Public surveys show that paying for health care is the public's top concern; people worry about it more than they do rent or terrorism. And these worries will intensify. Surveys of insurers indicate premiums will jump another 10 percent to 13 percent next year. “A majority of Americans do have health coverage and it's the issue that premiums, co-pays, and deductibles are going through the roof,” says Alan Reuther, the legislative director of the United Auto Workers (UAW), whose members have been reeling from increased health-care costs the auto industry is shifting to them.

For the past six years, as costs soared and the numbers of uninsured grew, the Bush administration and Congress offered platitudes and tax-free health savings accounts (HSAs) as a solution. But employers have been reluctant to offer these accounts and employees have been even less eager to sign up. A recent Kaiser Family Foundation survey of more than 3,000 firms found only 7 percent offered those accounts, and only 4 percent of employees participated. “No benefits manager worth their salt in any large employer will tell their boss that HSAs will take care of their problems,” says Chris Jennings, who was President Clinton's top health-care adviser and now advises corporations, consumer groups, local governments, and unions.

Employers are between a rock and a hard place, warns GE's Galvin. They need to provide health insurance in order to attract workers, but they have been unable to control their health-care costs. “I think large employers … are looking for new ideas and a creative exit strategy,” says Galvin, a leader in several organizations formed by the largest U.S. companies to propose solutions to the health-care cost crisis. “We're never going to get out of it entirely. Even in countries that don't do it our way, employers are paying, just through taxes. I think we're very willing and eager to get into a discussion about some kind of solution to the health-care problems.”

Exactly how serious the issue is for employers was underscored by the fact that just days after the election, the heads of the three top U.S. automakers came to Washington, D.C., begging for help from Bush and Congress on their catastrophic health costs. The auto industry hopes to find a more receptive ear in Congress now that Democratic legislators from key auto states like Ohio and Michigan are sitting on, or chairing, key committees. “Obviously having Mr. [John] Dingell [of Michigan] back as chairman [of the House Energy and Commerce Committee] helps a lot,” the UAW's Reuther says. Dingell's new committee chief of staff will be Dennis Fitzgibbons, who left the panel six years ago to work for an automaker, DaimlerChrysler.

Even as business gears up to shape the health-care debate, labor, consumer groups like AARP, and even health insurers, are mobilizing as well. Immediately after the election, America's Health Insurance Plans (AHIP), representing nearly 1,300 insurers, proposed a plan to insure everyone by helping them buy insurance with tax breaks and federal grants, and expanding government programs for the poor. Clearly, such a plan would benefit AHIP's members, and the organization said it will spend “significant resources” to buy advertising and have community events to discuss these proposals. AARP plans to keep up debate about health-care policies through forums, advertising, and community events, especially in states with early presidential primaries, says Rother. And organized labor shows no willingness to rest in its agitation for a national system. Says JoAnn Volk, a legislative representative for the AFL-CIO, “We're trying to be realistic about what can be accomplished in the next two years,” but the federation is hopeful it can “lay the groundwork for the debates that will come with the presidential election.”

As that debate evolves, there seems to be broad agreement on the need for universal insurance coverage. But there will be two main questions: How to get to universal coverage, and whether it will be provided through an efficient, less costly federal insurance plan or through a more costly multitude of private insurers who will demand huge profits. Senator Ted Kennedy of Massachusetts promises that access to affordable care will be a top issue for his Health, Education, Labor, and Pensions Committee. “The most straightforward way to see that every American has affordable, quality health care is to extend Medicare to all citizens,” he said.

Rather than vigorously leading the effort toward this Medicare-type insurance system, however, labor leaders seem to be shying away from insisting on it. “I think it's safe to say we have a policy in support of single payer,” says Volk, “but it is more important to us that we get to universal health care. We want to have a debate about the need for universal health care and will worry about how to do it at a later point.” Andrew Stern, president of the Service Employees International Union and the key force behind the Change to Win Federation formed by seven unions, sent a letter in July to CEOs of the Fortune 500 companies, asking them to join with labor to craft a replacement for employer-based health care, and noting that the federal employees health system, which offers an array of private insurance plans, was worth looking at.

The business community, however, seems to be showing new interest in government involvement with health insurance. A recent survey of 3,000 employers by the Commonwealth Fund and Center for Studying Health System Change found 51 percent interested or somewhat interested in allowing employees to participate in a public insurance program or the federally run private insurance program offered to Congress. Sixty-three percent thought it was important for the government to protect employers from catastrophic health costs.

Those numbers will only increase as the employer-based insurance system continues to crumble. In early 2006, Glen Barton, the retired CEO of Caterpillar and former head of the Business Roundtable's health-care task force, said the solution to the health-care crisis is a single-payer system, citing Medicare as a model. Giving testimony to a task force set up by the Illinois legislature and governor to develop a universal health-care plan for the state, Barton said that Medicare “works amazingly well in my opinion.” He proposed that employers and employees pay premiums directly to Medicare, “getting companies out of the health-care business.” He explained that the “only reason most companies are in this today is because they believe they can control health-care costs better than the insurers. With a single payer system, this should not be an issue.”

Barton's testimony is the first explicit call for a single-payer health-care system by a major American business leader. GE's Galvin does not reject it out of hand. “Where I step away from the Medicare-for-all is that today's Medicare is not something that makes sense to extend to everybody,” he says. But “a tomorrow's Medicare, where you could drive the values of information and incentives, and competition around quality and much more engagement by employees, having more price sensitivity, is one way to get there.”
It is too soon to say whether any presidential candidate will be bold enough to press a Medicare-for-all proposal. But Democrats will be using their new leverage to press on health care, and at least two Republican presidential hopefuls -- former Massachusetts Governor Mitt Romney and Tommy Thompson, George W. Bush's former Health and Human Services secretary -- are best known for health-care initiatives. By 2008, with the employer-based insurance system continuing to crumble, an alliance of business and labor just might be strong enough to get things moving.

Barbara T. Dreyfuss is a senior correspondent for The American Prospect.