The Politics and Prospects of Health Care Reform

1. The Politics and Prospects of Health Care Reform Public Sector Health Care Roundtable November 30, 2005

2. Focus of the Washington “Elite”… • Jack Murtha daring to question Iraq strategy • Who told: Scooter, Woodward, Karl, Dick? Ask Patrick… • Delay, Ney, Abramoff, and associates • “Scalito” Supreme Court nomination • Republican “schism”: Ideologues vs. Budget Hawks • Budget Priorities: Spending/Tax cuts/Deficit reduction/Katrina?

3. What the Media/Public is PayingAttention to: • Angelina, Brad, and Jennifer – 24/7 • Oprah and Dave finally get together • Jessica Simpson officially splits with Nick • $ X Box and holiday shopping • Any local sports story • Iraq, Iraq, Iraq – 24/7

4. Governing Party’s Priority List • Ensuring ‘06 elections don’t weaken majority control • Distracting attention from indictments, investigations and Iraq • Avoiding failed implementation of Medicare Rx benefit • Securing Samuel Alito’s Supreme Court confirmation • Immigration Reform • Achieving budget cuts (e.g. Medicaid, food stamps) to placate conservative base and help pay for tax cuts • IN SHORT: MODEST HEALTH COST/COVERAGE AGENDA

5. Barriers to Major Progress Are Endemic • Redistricting for “safe seats” • Parties moved to extreme and center is collapsing • 80’s and early 90’s very different from today in terms of comity and bipartisanship • No party has substantial majority • 24-hour news cycle, cable TV, enomous talk radio

6. GOP Has Moved from Constraining Dem Vision to New “Neo Con” Ideology • In 1980’s and 1990’s, Republicans sought to limit investment, expansions, and regulation • Opposed the Health Security Act but supported building on public programs, group coverage, and direct (though limited) subsidies • But Republicans have shifted to an “ownership-privatization” ideology that effectively shifts cost and risk to consumers

7. Policy Divisions Becoming More Difficult to Bridge Republican Vision • “Ownership Society”/Privatization • Capped federal and employer contributions • Individual accounts • “Skin in the game” • More plan-benefit “choices”/Less regulation Democratic Vision • Shared responsibility-”We are in this together” • Everyone pays/everyone benefits • Pooled group coverage • Leveraging group purchasing power • “Choice” of MDs, benefit floors, consumer protections

8. Governing Party’s Privatization Vision Translated Into Policies… • Social Security: Private accounts • Medicare: Incentives for Managed Care and Prohibition Against Direct Drug Negotiations • Medicaid: Ultimately Capping Federal Commitment through Block Grant/Health Savings Accounts (HSAs) • Private coverage: HSAs and Association Health Plans (AHPs)

9. …That Does Little to Address the True Challenge: Health Costs Realistically addressing purchaser costs requires: • Constraining prices and/or utilization; • Promoting system-wide efficiency and accountability; or • Increasing federal financial support Only the MMA uses some – but not all – of these levers

10. In Contrast, the Rest of Health Vision Simply Shifts Costs/Risks • HSAs: Segments, risk selects, shifts costs, and forgets the 80/20 rule of health costs by failing to focus on: • Chronic care management • Prescription drug costs (JAMA: Rx drug copay increase = ER/hospital costs) • Preventative care (KFF: 70% have no preventative coverage) • Block grants: Shifts cost to states and public purchasers • AHPs: Cherry picks the young/healthy out of broader pools leading to higher cost/less access for those that remain behind

11. Bipartisan Market-Oriented, Accountability Policies Worth Promoting • Health Information Technology/e-prescribing • Comparative effectiveness research • Pay-for-performance • Work-based wellness promotion • Focus on high cost populations

12. Aging Workforce: Challenges and Opportunities • MMA partially responded through new drug benefit and subsidy for post-Medicare retiree health population • 55 to 65 year old retirees are attractive population to target • General Motors and CalPERS spend nearly three times as much per beneficiary on this group as all others combined • Policy options targeted to high-cost populations and linked to chronic care management: • Reinsurance for catastrophic costs • Direct support for retiree health plans • Specific groups of retirees, including those with high physical stress in the workplace (e.g. public safety officers; HR 2177) • Policies that create incentives for workers to continue careers without burdening employer health costs • Medicare as primary payer for 65+ population

13. Possible Public Sector Roundtable Positioning Strategy • Strategy should be multi-faceted and strategic: • Oppose or modify the negative (e.g. BioShield II, AHPs, HSAs) • Embrace the positive (e.g. IT, P4P) • Advocate for intermediate reforms, like retiree health • Lay the foundation for longer-term reforms • Strategic coalition building with other purchasers to implement strategy • Strategic messaging and policy development/support