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Whither healthcare reform? Policy experts at Berkeley offer insights and predictions on the debate

By Public Affairs | 21 September 2009

BERKELEY — National healthcare reform continues to dominate the headlines, with Congress laboring over various proposals and President Obama making his case for reform to the public. To help shed light on where the debate stands today, and where it may be headed, the NewsCenter queried heathcare-policy experts at Berkeley for their insights — asking what they would like to see in a comprehensive healthcare plan, what compromises they expect from Congress, and what they predict will finally emerge.

Stephen Shortell, dean of the School of Public Health and professor of health policy and management

Any comprehensive healthcare plan that is meaningful must be affordable, accessible, and sustainable. I think that by the end of the year the President and Congress will be able to claim victory on something that they can label "healthcare reform." But it will probably be far short of what is needed.

I certainly expect that there will be expanded coverage, that insurance claims will no longer be rejected because of pre-existing conditions, that insurance coverage will be mandated for all, and that insurance exchanges will be established at state and regional levels. There is actually considerable agreement on both sides of the aisle on those things. The survival of the public-plan option is much less certain.

Not having some form of competition to private insurers will be disappointing. It would also be disappointing if we fail to enact significant reforms to the payment system, to restructure the way healthcare is delivered by hospitals, clinicians, and other providers. Health professionals should be given incentives and rewards based on quality and outcomes of care, not on the quantity of care delivered. The focus should be on rewarding cost-effective care and on investing in nutrition, physical activity, and tobacco-cessation programs.

Melissa Rodgers, associate director, Berkeley Center on Health, Economic & Family Security

My greatest hope is that Congressional Democrats will take the long view, seizing their historic opportunity to pave the way for a society in which no one lacks access to necessary healthcare. To this end, I hope Congress will pass a bill that includes a strong public plan: a health-insurance program that, like Medicare, is provided by the government.

I would be greatly disappointed by a compromise that fails to include a public option. Private insurance companies have demonstrated their commitment to their bottom line over the needs of the public; and they have also failed to rein in costs. I am concerned that Democrats will abandon the public plan. I also worry that employer contribution requirements will be watered down to a fee that does not create a real incentive for employers to cover their workers. Other probable compromises that concern me are cuts (in order to limit the bill's price tag) to subsidies for working families and the near-elderly, such that meaningful coverage will remain unaffordable to many. Finally, I'm disappointed, but not surprised, that the proposals exclude undocumented immigrants.

I predict that Congress will pass, and President Obama will sign, a comprehensive overhaul of the healthcare system, featuring a mandate that all individuals have health insurance; an "exchange" through which individuals and small businesses will be able to purchase insurance coverage; subsidies to make that coverage more affordable; private-insurance market reforms; and Medicaid expansions.

Ken Jacobs, labor-policy specialist, Institute for Research on Labor and Employment

We have the greatest opportunity for meaningful health reform since the passage of Medicare. The proposals in Congress are based on shared risk and shared responsibility. Both of those elements must be maintained in the final bill. Shared risk means creating a common risk pool for small businesses and individuals who do not have coverage on the job. Insurers would have to compete on price and quality, not cherry pick the healthy and drop those who are not. A robust public option, as one of the choices in the exchange, is vital to help keep costs down and increase competition.

Shared risk will not work without shared responsibility. In the House and Senate Health, Education, Labor, and Pensions (HELP) proposals, individuals are required to purchase, and employers to provide, coverage that meets a certain minimum standard, or to pay into the exchange. If the employer requirement is removed, the cost of reform to the federal government will increase considerably. One area that has not received the attention it deserves is affordability for consumers. We cannot require people to purchase coverage they cannot afford. The House and Senate HELP bills would provide subsidies for low- and middle-income families if the cost of coverage exceeds a certain percent of their income. The Senate Finance Committee is proposing to reduce the subsidies to bring costs down. That would be a major mistake; it risks generating backlash in the middle class against reform. I predict Congress will get it done. The cost of inaction is too great.

William H. Dow, Henry J. Kaiser Associate Professor of Health Economics

A truly bipartisan healthcare bill now looks quite unlikely, so the challenge at this point is for the Democrats to converge on a bill they can all compromise on, while bringing along at least one Republican vote in the Senate to avoid filibuster.

Forging a compromise will be no small feat, as Democrats are still quite divided on important issues such as the extent of subsidies for low-income individuals, and hence the overall cost of the bill, as well as the extent to which those costs are to be paid for through Medicare cuts and different types of new taxes. This is in addition to such contentious issues as the "public option." Many of these disagreements are based on disputes for which we have very imperfect analysis to guide us, given the difficulty of projecting the effects of different reform elements.

The real horse trading will likely not happen until late-night sessions sometime in November, as Congress works to adjourn. But there are already some signs of flexibility emerging, in part led by President Obama's concessions during his speech to Congress. The President has signaled significant new flexibility on issues such as the public option, taxation of high-value health benefits, and malpractice reform. It will take an all-out effort by the White House, though, to convince and coerce Congress to pass a compromise bill.

The exact nature of the eventual compromise is hard to predict, but the general outlines have become much clearer. Democrats appear largely agreed that reform should focus foremost on reducing the number of uninsured. The most likely compromise bill would include an expansion of Medicaid to perhaps 133 percent of the poverty line; insurance-premium subsidies for other low-middle-income persons; a mandate that all individuals buy health insurance; and some provisions incentivizing employers to offer insurance.

The trick will be to find a middle ground whereby subsidies are large enough that lower-income individuals could afford to purchase insurance (hence making the individual mandate credible), but not so large that more fiscally conservative Democrats would oppose the bill as too expensive. The current Congressional proposals offer somewhat different combinations of subsidies and costs, but any of these would likely reduce the number of uninsured Americans by tens of millions.

The complementary aim of slowing the growth of healthcare costs, however, appears unlikely to be tackled this year. Although this is a primary goal of Republicans, and an important secondary goal for Democrats, there are not many effective tools available for achieving it. The current Congressional bills include numerous provisions designed to reduce cost growth — many of which may be useful for making the healthcare system somewhat more efficient. As a whole, though, they are unlikely to bend the cost curve of projected future spending significantly.

In studying those healthcare systems that have more successfully slowed cost growth in recent decades, the key tools appear to be cost controls imposed by governments. While there are some examples of cost controls being used in the U.S. — for example by the Veteran's Administration system and by Maryland's limitations on healthcare-provider reimbursement rates — fears of government ineptitude mean that that such approaches are not currently politically feasible as part of broader health reform.