stanford medicine


McCain and Obama over a sick patient

Prognosis: Uncertain

A reality check on overhauling the health-care system

Health-care reform: It’s the issue that has vexed presidents and legislators since the Truman era. Now, as the United States heads toward the November general elections, the issue is reaching red-hot status once again, with the presidential hopefuls trumpeting their (fairly major) proposals and the media pundits buzzing about the prospects of either plan being enacted. Perhaps the time is right for something big to happen.

But hold on. As this magazine hits the mailbox, the nation’s most severe economic crisis since the Great Depression is barely in the rear-view mirror. Moreover, a U.S. government bailout program to buy distressed mortgage securities from financial institutions is in the offing. The program, projected to be the largest of its kind in U.S. history, will run up a tab of hundreds of billions of taxpayer dollars — and possibly more than a trillion. And if that’s not bleak enough, the new president will enter a political climate that makes major change difficult to achieve, even in the best of economic times.

So does either presidential candidate, Democrat Barack Obama or Republican John McCain, have a chance at pushing through health-care reform? It’s almost certain, experts say, that some efforts to fix the broken system will meet success. But major change? Despite the urgency — and all that campaign rhetoric — let’s just say that a revolution in health care is, well, probably a long shot.

Status: critical

It shouldn’t be a surprise that health care emerged as a critical issue on the presidential campaign trail. The country’s health-care problems are simply too big for someone seeking the post of the nation’s chief executive to ignore. Among the concerns: Forty-six million Americans are uninsured, health-care costs are soaring four times faster than wages and the rate of growth of health-care expenditures here is greater than in any other wealthy nation. Experts predict that more than one in four American workers will be uninsured within four years, and the country will spend more than $4 trillion per year on health care by 2016.

“They wave their hands and make noise about how they’re going to make health care more efficient and less costly but they have nothing specific or concrete to point to that will accomplish that.”

Health care — both its affordability and availability — is a major worry for Americans: Polls show it’s their third-biggest concern, behind the economy and the war in Iraq. And preliminary research from the Stanford Center on Longevity’s Health Security Project, which aims to provide thought leaders with detailed information on the public’s health-care views, finds that Democrats and Republicans agree reform should be a top priority for the next president.

As for the two men currently running for that position, neither Obama nor McCain has called for a complete overhaul of the system — something that would be challenging at best and the path to political suicide at worst. But both men have been advocating some fairly major changes to the status quo.

Their prescriptions

McCain proposes to eliminate the current tax-break benefit for individuals who receive insurance through their employer and to provide tax credits of $2,500 for individuals and $5,000 for families to buy their own private health plans. He would expand the use of health savings accounts, pools of money from which individuals can pay their medical bills and which shift financial responsibility for health care from the insurer to the individual, and he would allow low-cost plans from one state to be sold in another.

Obama, meanwhile, would build on the existing system of employer-based health insurance and public programs, and use tax dollars to ensure access to health care for all. Large companies would get a “pay or play” option of either covering their employees or paying a tax to support the government-administered program, and small businesses that offer quality health care to their employees would get a tax credit. And contrary to McCain’s false claim in his convention address that Obama would “force families into a government-run health-care system,” Obama’s plan would allow those with insurance to keep the coverage they have.

Neither plan, of course, has been universally embraced, and economists say they fail to address soaring health expenditures. Both candidates mention cost-controlling elements, such as expanding the use of technologies like electronic health records, but experts scoff at the notion that alone they’ll make a dent. “They wave their hands and make noise about how they’re going to make health care more efficient and less costly, but they have nothing specific or concrete to point to that will accomplish that,” Victor Fuchs, PhD, the well-known Stanford health economist, says of the candidates.

Other concerns swirl around the plans. Democrats, whose party platform calls for universal coverage, complain that McCain’s practically ignores the millions without insurance; Obama has said the plan only “takes care of the healthy and the wealthy.” Republicans claim Obama’s plan is a “big-government” proposal that ignores what McCain has called the “inefficiency, irrationality and uncontrolled costs” of the current system. And many people can’t help but raise an eyebrow at the price tags of both plans: The Urban Institute, a nonpartisan policy research center, recently estimated that McCain’s plan would cost $1.3 trillion over the next 10 years and Obama’s plan $1.6 trillion.

“When you run the numbers and estimate what universal coverage would cost, it’s going to be too hard to push through unless there are substantial offsetting savings,” says Stanford economist Alan Garber, MD, PhD, of Obama’s plan.

And Sen. Jay Rockefeller, D-W.Va., a member of the Senate Finance Committee, seems to concur. “We all know there is not enough money to do all this stuff,” he publicly announced last spring, adding that the candidates were just “laying out their ambitions.”

Bad precedent

History shows that a president’s efforts to push through his ambitions can be fraught with drama and difficulty. Fifteen years ago, after Americans expressed deep concerns about the country’s health-care system, Bill Clinton made reform a major part of his presidential campaign. Once in the Oval Office, he chose not to work with congressional leaders or cabinet officials to draft legislation, as is the policy-making norm; instead, he hand-delivered to Congress a plan that was developed in large part by his wife, Hillary Rodham Clinton.

“There was a feeling [in the Clinton administration] that since the public supported doing something about health care, you could slam-dunk the proposal,” says Leon Panetta, who headed the U.S. Office of Management and Budget during this time and later served as Bill Clinton’s chief-of-staff. “And that was a major mistake.”

To make a long, complicated story short: The plan, which would have revamped the system and provided health benefits to all Americans, flopped. Critics came out of the woodwork, claiming that the reform package was a big-government mess that would make the average American’s life worse, not better. Lawmakers from Clinton’s own party criticized it — with Senate giant Patrick Daniel Moynihan, D-N.Y., famously saying “anyone who thinks [the plan] can work in the real world as presently written isn’t living in it” — and introduced their own, alternative proposals. In the end, the massive proposal wasn’t even voted on by the full Congress and a compromise bill was declared dead in the summer of 1994.

“One of the things we learned from the Clinton efforts was that you cannot deliver a product of this magnitude to Congress and expect it to pass carte blanche — it’s too sweeping,” says Linda Tarplin, a Republican veteran health-care lobbyist in Washington. “You’ll likely see the next president dictate fewer specifics to Congress and work more collaboratively.”


Don’t be a dictator!

The new president would likely encounter major hurdles himself if he followed Clinton’s example and tried to push through his plan as written. (Even Hillary Clinton, now a U.S. senator, realized this during her own run at the 2008 Democratic presidential nomination, crafting a health-care reform plan that included input from a broader range of constituencies than the one she helped develop as first lady.) Because health-care reform is such a hot-button issue for so many constituencies — patients, physicians, insurance companies, drug companies, to name just a few — there would be plenty of people gunning for the president’s offerings.

“As soon as the president proposes his plan, he’ll face major opposition by anyone who will be impacted,” promises David Brady, PhD, a political scientist with the Hoover Institution. “They’ll make all these arguments about why it’s not a good policy and the president will have to counter them, which is hard to do.”

Indeed, a big reason for the Clinton health-care debacle was an aggressive campaign waged by the special interests that opposed his plan. These opponents portrayed the plan as a government takeover of the health-care system and convinced Americans through an effective television ad (featuring the fictional and now-famous couple Harry and Louise) that the plan restricted patient choice. In the end, polls showed that by a 2-to-1 margin people thought they would be worse off under the Clinton proposal.

Since that time, not much has changed on the lobbying front. Outside groups still like to throw around their money and power to thwart change and influence legislative action on health-care issues. According to the Center for Responsive Politics, a nonpartisan group that tracks money in U.S. politics, the health-care industry spent a whopping $445 million on lobbying Congress in 2007.

Aggressive outsiders wouldn’t be the president’s only problem. He would also have Congress to contend with. Capitol Hill leaders will revolt if cut out of the policymaking process as they were with the Clinton effort. “If you offend people, particularly those in powerful positions, they will do anything possible to block your efforts,” says Panetta.

And the U.S. political system positions jilted members of Congress to do just that. No bill will become law without the approval of the majority of members, and no bill will be voted on in the first place without the blessing of congressional committee chairs. Adding to the complexity is the fact that health-care bills fall under the jurisdiction of two or more committees each in the House of Representatives and the Senate. In the Senate, the filibuster rule allows just one angry senator to block a vote on a piece of legislation, and it takes a super-majority of 60 votes to resume action.

“With the way Congress is structured, and with the filibuster in Senate, it’s a major hurdle to get anything through — let alone a major health-care reform bill,” says Panetta.

Big divide

Even if the president shows leadership and tries to work collaboratively with Congress in developing a major reform bill, he faces challenges. A critical problem is what Drew Altman, PhD, president and chief executive officer of the Kaiser Family Foundation, calls the “huge ideological and policy divide” between the country’s two major political parties.

“The disagreement between the Republicans and Democrats on the role of government and the shaping of health care in America is huge. One of the reasons we’re at an impasse in this country is that they have such differences.”

Generally speaking, Democrats and Republicans have different views on the goal of health-care reform, the organization of the health-care system and the role that government should play — which would make a major compromise bill difficult to come by. If a proposed compromise failed to provide coverage to a majority of the uninsured, many Democrats would balk. If a plan did try to extend benefits to millions of the uninsured, many Republicans would complain that government spending is spinning out of control.

“The disagreement between the Republicans and Democrats on the role of government and the shaping of health care in American is huge,” explains Robert Blendon, ScD, a professor of health policy and political analysis at Harvard. “One of the reasons we’re at an impasse in this country is that they have such differences.”

But the challenges go beyond the party line, as legislators on both sides of the aisle must carefully consider the needs and wishes of their supporters. A southern Democrat might be in favor of universal coverage, for example, but would hesitate to support a costly plan if it would anger her fiscally conservative constituents. And any lawmaker might take pause when looking at national polls showing that the overwhelming majority of Americans (70 percent, according to data from the Stanford Center on Longevity’s Health

Security Project) say they’re actually satisfied with their own health care. Sure, they say they want reform, but when push comes to shove, reform at what price?

“With something like health care, which is so big, it’s going to be pretty tough to move legislators too far off their constituents’ preferences,” says Hoover fellow Daniel Kessler, PhD.

What this means: Reaching agreement on what major reform should look like, and mustering enough votes to enact that plan into law, is pretty unlikely.

Any hope for change?

Despite the various obstacles, political observers predict that something — just not something major — in health care will occur under the next administration’s watch. In fact, in a Health Security Project survey in Washington, 13 of 15 high-level health-care professionals said this was the best opportunity in 20 years for a president to implement some type of change.

Pundits also predict that the Democrats will expand their control of Congress, which bodes well for action in this area. Many Democrats have campaigned on the need for health-care reform; Blendon believes they would feel obligated to address the issue in at least a small way once in office.

“I don’t think we’re going to see revolution or transformation, but we can see an initiation of a process of change,” says Henry Aaron, PhD, a health-care expert at the Brookings Institution and a member of the Stanford Institute for Economic Policy’s advisory board.

Whether Obama or McCain takes office, the incoming president will likely shelve his campaign plan and instead focus on smaller pieces of the health-care puzzle. Panetta says he would advise the president to sit down with the chairs and ranking members of the congressional health-related and budget committees, reach a consensus on the issue, then craft legislation that reflects whatever can be agreed upon.

On health care, the president won’t be the only busy one: Members of Congress are likely to introduce their own plans, such as the bipartisan Healthy Americans Act. The brainchild of Sen. Ron Wyden, D-Ore., and Sen. Robert Bennett, R-Utah, the legislation would completely alter the country’s health-care system: It would phase out employer-based health insurance, offer tax credits and require all residents to obtain coverage through private insurance plans.

The legislation seems to strike middle ground between Democrats and Republicans, and Wyden has publicly said he’s hopeful the new president — no matter which party he’s in — will put his weight behind it. But given the enormity of the legislation, and the previously mentioned challenges to getting lawmakers to sign on to major reform, the bill will face an uphill battle.

Many experts predict that what the president and Congress will ultimately agree on is an expansion of the State Children’s Health Insurance Program, the federal program that provides insurance to children in families with incomes that are low but not low enough to qualify for Medicaid. After all, the program has strong bipartisan support, and was actually born from Clinton’s failed plan — when congressional leaders became insistent on enacting some sort of health-care legislation. Two recent efforts to expand the program were vetoed by President George W. Bush.

”It’s impossible to revamp the entire system....Anything you do to improve the health-care delivery system and people’s ability to get affordable, quality insurance is a plus, whether you think it’s major or incremental.”

Once SCHIP is worked out and trust develops between the president and congressional leaders, Panetta says the president might try to introduce other, smaller reform measures. Charles Jones, PhD, a presidential scholar with the Brookings Institution agrees, saying SCHIP could be considered just one small piece of a larger plan.

“It’s possible to be both piecemeal and comprehensive” when it comes to enacting health-care change, he says.

Anything short of a system overhaul would be unacceptable to certain patient advocacy groups, health-care coalitions and policy experts. But Jones and others have accepted the political reality of the little-bit-at-a-time approach.

“It’s impossible to revamp the entire system, so incremental health-care reform shouldn’t be [considered a] bad thing,” says lobbyist Tarplin. “Anything you do to improve the health-care delivery system and people’s ability to get affordable, quality insurance is a plus, whether you think it’s major or incremental.”

And it’s important to remember that the United States — with the government’s checks and balances and Congress’ procedural rules — doesn’t have a history of making major changes to major institutions in one swoop, anyway. “Our system wasn’t designed to easily fix systems. It was designed by people who were afraid of government authority,” says Blendon.

And so, perhaps Americans should consider it a victory when the next president finally uses his pen to enact a health-care initiative — even one that fails to overhaul the faulty system — into law. After all, with all the barriers facing lawmakers, incrementalism isn’t a strategy, it’s a reality.

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