White House Summit Falls Short on Ideas for Actual Reform

Published May 1, 2009

The White House Summit on Health Care Reform, held in early March, showed how much needs to be done to bring some reality to the health care reform debate.

Both President Barack Obama’s opening address and most of the comments in the breakout session showed there is abundant hope about solving the cost/quality/access problems and a general agreement that the realities that have intruded in the past to block major reform can be moved aside.

Congress Moving on Health Care

The president made a strategically important move in putting a $634 billion “down payment” on health reform in his 2010 budget, with only a broad outline of his goals … leaving it to Congress to fill in the details of the legislation.

Members are going to have to wrestle with the details, which they have been doing for months. The timetable is fluid, but they are certain the sooner they act, the more likely it is legislation can actually be passed. The general consensus is that they want a bill passed before the August recess, and it is almost guaranteed anything this Congress passes, Obama will sign.

But that means they will have to get into the details of a better way of paying for reform than raising taxes on charitable contributions and home mortgage interest deductions, eliminating private plan options in Medicare, and imposing higher taxes on pharmaceuticals in the name of “rebates.”

Going Wobbly on Mandates?

In addition, Congress will have to grapple with the thorny issue of mandates requiring individuals to have coverage and employers to pay for it. Most analysts believe you cannot get to universal coverage without a universal mandate, which Obama opposed during the presidential campaign.

The next steps are extremely difficult to navigate since the government must define acceptable coverage, making it much more likely that the mandate will be for an expensive, comprehensive plan. And enforcement provisions will have to be specified, most likely financial penalties constituting a new federal tax.

Crowding Out Workplace Coverage

Another contentious issue is whether there will be a new government health insurance plan for working Americans built on the Medicare model. If so, more than 100 million people could lose their job-based coverage as employers find the new public plan less expensive.

But with federal price controls and policing authority and all the resources of government to draw on, plus the ability to set the rules for all the players, a public plan is likely to drive private plans out of business, leaving people with only the government option. This is not what they were promised during the campaign.

All of the talk about these proposals already is starting to have an effect on the employment-based health insurance system.

A report by Hewitt Associates, an employee benefits consulting firm, found 4 percent of companies are already taking steps toward ending their health care benefits, while 19 percent more said they are moving away from directly providing health care benefits, up from 4 percent in 2008. According to the Hewitt report, “more employers are considering exit plans to pull out of the health care benefits arena.”

Government Complications

And does the government really ever make anything simpler? Certainly not with the new federal subsidies for COBRA coverage, which have been coupled with the requirement that employers provide it retroactively.

Bob Meyers, president and CEO of CobraGuard, a consulting firm specializing in COBRA administration and compliance, described regulations employers face as a result of the COBRA section of the stimulus bill as a “thicket.”

“For example,” Meyers said, “employers have a month to compile and submit lists of workers who were laid off between September 2008 and now, regardless of whether they were terminated voluntarily or involuntarily.”

Also, “the government will have to specify fines if people claim the credit and are not eligible. And the rules and [regulations] have to be issued to detail exactly how employers must comply.”

One of the things people kept insisting at the White House summit was that the health system will be so much simpler if government is in charge! Go figure.

Grace-Marie Turner ([email protected]) is president of the Galen Institute.

For more information …

“Challenges for Health Care in Uncertain Times,” Hewitt Associates: http://www.hewittassociates.com/Intl/NA/en-US/KnowledgeCenter/ArticlesReports/ArticleDetail.aspx?cid=6388&tid=45