Article reprinted from "The RPM Report" December 23, 2008
Find out why Health care reform advocates think the stars are aligned for a major push toward universal coverage under President-elect Barack Obama. They aren’t about to let the free-falling economy get in the way.
Article reprinted from "The RPM Report" December 23, 2008
By Ramsey Baghdadi
Health care reform advocates think the stars are aligned for a major push toward universal coverage under President-elect Barack Obama. They aren’t about to let the free-falling economy get in the way.
The presidential campaign ended November 4, but the victory of Barack Obama ushered in a new challenge: a campaign to ensure that health care reform is at the top of the agenda for the new Administration.
In Washington, DC, health care stakeholders across all segments of industry, politics and activism have been gearing up for a major push towards universal coverage for nearly a year. And they want to see health care stay on top of the political agenda in 2009, despite the economic turmoil roiling global markets.
There are six key events since Election Day that will impact the coming health care reform debate:
(1) Obama’s pick of former Senate Majority Leader Tom Daschle as HHS Secretary with a portfolio of responsibilities that reaches beyond the department—a break with tradition.
(2) The decision to move economist Peter Orszag from the Congressional Budget Office to director of the Office of Management & Budget.
(3) The ascension of California Democrat Henry Waxman to chairman of the powerful Energy & Commerce Committee.
(4) The unveiling of Senate Finance Committee Chairman Max Baucus’ health care reform proposal in the form of a “white paper.”
(5) Senator Hillary Clinton’s decision to accept Obama’s offer to serve as Secretary of State.
(6) A quiet, behind-the-scenes effort by CBO to release a series of health care “options” papers.
Each development in and of itself shapes the pending battle over where the US health care system is headed. Taken together, they represent a serious shift in the position of reform to the forefront of the domestic policy agenda .
Nothing changes a game like a new set of players and another deck of cards. In 2009, Democrats will have both.
Is It The Economy, Stupid?
At a November 17 health care briefing, two highly respected political pollsters, a Democrat and a Republican, were asked for predictions on where reform would stand on the political list of priorities during an event sponsored by the Engelberg Center for Health Care Reform.
“Very high,” said Democratic pollster Stan Greenberg of Greenberg Quinlan Rosner. “But with legislation moving into the next year.”
“It will still be number three. Economy. Iraq. Health care,” said Republican pollster Neil Newhouse of Public Opinion Strategies.
Following those comments, Consumers Union CEO Jim Guest offered: “I certainly think in the first few years I would see health reform enacted and it can’t be too far into the second year.”
Those remarks pretty much capture the opinions voiced around Washington in the weeks following Election Day. Two key observations surface repeatedly: pieces of the health reform puzzle will pass through legislation early in the first Obama term, while more sweeping reforms—such as universal health care—will likely have to wait until a second theoretical term.
“I’m not sure we can digest much more than the economic crisis that we’re in,” Senator Richard Burr (R-NC) remarked at the Engelberg meeting. “At some point, you have to look at the funding mechanisms: it’s a change in tax law, it’s an injection of federal funds, or it’s a mandate on companies.”
While Burr and others feel the economy will cast a long shadow on health care reform efforts, a number of lawmakers and policy experts—and the president-elect himself—say the two are inexorably linked, and therefore, moving forward quickly is possible.
Senate Finance Committee Chairman Max Baucus, for example, has repeatedly tied health care and the economy together in public appearances. “There is no way to solve America’s economic troubles without fixing the health care system as well,” Baucus said in a keynote address at the Engelberg event. “It’s my top priority for the year,” he said, referring to 2009.
“I’m actually quite excited about the prospects,” Chris Jennings, a top health adviser to Senator Hillary Clinton and former adviser to President Bill Clinton, said at the Engelberg forum. “Let there be no doubt we are in an absolute economic crisis and with crisis comes opportunity. In this country, rarely do we do anything outside of a crisis of any substantial proportions. I think in this context there is an openness of to greater change.”
So, which is it? Is the economy a help or a hindrance? Probably a little bit of both.
“The economists who are advising the President see this link,” Jennings maintained.
Federal Reserve Chairman Ben Bernanke; former Government Accountability Office head David Walker; soon-to-be director of the Office of Management & Budget Peter Orszag; and director of the National Economic Council Larry Summers are “all talking about the integration of the health care debate within the discussion of strengthening our economy.”
Freshman Senator Sheldon Whitehouse (D-RI) says the economic situation coupled with skyrocketing health costs and the growing number of Americans who will be out of a job make addressing health reform an immediate top priority.
“Harry and Louise—it’s over,” Whitehouse said, referring to the famous ads that helped derail the Clinton plan in 1993. “This is Thelma & Louise, and we’re in the convertible and we’re headed over the cliff.”
The Clinton Team Returns—Without Clinton
Whitehouse’s reference to the 1993 health care reform debate reflects a recurring theme—or maybe a recurring nightmare—for reform advocates. The health policy establishment is wary of revisiting what is generally viewed as a great missed opportunity to expand health coverage in the US.
When Obama chose the theme of “change” as his campaign slogan, many assumed he would bring a new crop of policy experts and advisers to Washington, eschewing the strategy of building a new administration from the building blocks of an old one. In other words, many expected a group of relative outsiders to fill senior roles in the coming administration. That hasn’t been the case at all.
Instead, Obama has hit the ground running with Washington veterans—many of whom were part of the last major health care reform debate. “Understand where the vision for change comes from, first and foremost: it comes from me,” Obama said at a November 26 press briefing. “That’s my job, to provide a vision in terms of where we are going.”
On health care, that vision became much clearer with the announcement that Senator Clinton will be nominated as Secretary of State in the new Administration.
As First Lady, Clinton led the failed effort to overhaul the health care system in 1993 and she made universal health care the cornerstone of her domestic agenda during her bid for the White House.
During his speech on the final night of the Democratic primaries in June, Obama singled out Clinton as a key figure in the fight for universal coverage. “You can rest assured that when we finally win the battle for universal health care in this country, she will be central to that victory.”
However, Obama’s choice of Clinton as Secretary of State removes a polarizing figure from upcoming health care reform battles. Moreover, it takes Clinton out of domestic policy issues altogether.
But it doesn’t mean the Clinton legacy will be out of the health care reform team altogether. In fact, most of the key health policy positions are likely to go to veterans of the Clinton Administration.
To some, that is another good sign for reform prospects. “I’m given greater confidence by the fact that the Obama Administration looks like it is going to have many veterans of the fight in the 1990s,” says Merck & Co. Inc. VP-global health policy Ian Spatz. “I think that is good. There were a lot of lessons that were learned there, and then things that will be done differently this time around.”
Merck has staked out a position in favor of universal coverage in the US, posting health care reform principles online.
Daschle: Legislative General
Clinton’s move into international affairs also clarifies the central role that will be played in the upcoming reform debate by HHS Secretary-designate Daschle. Obama made a splash by selecting the former Senate Majority Leader early in the transition process—even before the selection of an economic or national security team.
Still, Obama’s choice of Daschle may not have been as bold as some would have thought. But it illustrates his realistic view of how best to reform the health care system by bringing Congress in step with White House plans.
Daschle will serve as a legislative general within the cabinet with three key roles: overseeing planning and strategy within the administration, working closely with the House and Senate on viable legislation, and acting as a high-profile public champion for the cause of universal coverage.
Daschle, who was in the Senate between 1987 through 2005, gives Obama a former legislator who knows how to pull the Congressional levers of power and carries a strong bipartisan reputation for reaching across the aisle to negotiate with opposition leaders.
“Appointing Tom Daschle to lead the effort on health care speaks volumes about the importance the Obama Administration places on working with Congress to enact comprehensive health reform, and on managing our current health programs,” House Ways & Means Health Subcommittee Chairman Pete Stark (D-Calif.) said in a November 19 statement. “Daschle’s experience on health care and his intimate knowledge of both the legislative process and players bodes well for all.”
Outgoing Rep. Tom Allen (D-Maine) echoed those comments in an interview, saying that Daschle’s appointment sends a strong signal that health care is a high priority for the Obama Administration. As HHS secretary under Obama, Daschle will essentially have two roles: the traditional role as administrator for the department and—in a departure from previous administrations—the point person for health reform.
That will result in a “heavy load” for the former senator, but will be necessary to enact change, Rep. Allen said. While he predicts Daschle will eventually create a special body to focus on health reform, Daschle will need the “clout of HHS”—rather than a position as “health czar”—to get anything through the next Congressional session.
The selection of Daschle makes it more than likely that Jeanne Lambrew, a professor at University of Texas’ LBJ School of Public Affairs and a senior fellow at the Center for American Progress (founder and former Clinton Administration official John Podesta is leading the Obama transition team), will have a senior role on Obama’s health team. She is currently on Daschle’s health policy transition team.
Lambrew co-wrote Daschle’s book on reforming health care called “Critical.” She also has experience in government, serving as the program associate director for health at OMB and as the senior health analyst at the National Economic Council between 1997-2001.
Attorney Mark Childress, a partner at the law firm Foley Hoag, will also likely have Daschle’s ear, whether it be in a formal or informal role. Childress, who is also on the health policy transition team, served as chief counsel and chief policy director to Daschle from 2000-2005 when Daschle was in the Senate. Childress also served as general counsel to the Senate HELP Committee under then- and current Chairman Ted Kennedy (D-Mass.).
A Preview of HHS Secretary Daschle
So what will HHS look like under Secretary Daschle? During a talk at the Stanford Washington Symposium on November 6, Daschle gave a preview of his vision for the job, focusing his remarks on reforming the health care system.
Two key pieces of Daschle’s remarks stood out from the rest: the creation of a health oversight agency and the need to show that any reforms will lead to reduce costs.
Daschle has advocated for a Federal Health Board modeled after the Federal Reserve as a way to manage the health care system and help achieve adoption of comparative effectiveness research, health information technology and increased across-the-board transparency.
The Federal Reserve is a public agency with involved private entities. Oversight of the Fed is spearheaded by a board of governors appointed by the President and the system includes a mix of regional public banks with private bank members across the country.
The former South Dakota Senator demonstrated his knowledge of Washington and what moves legislation by keying in on the need to procure significant scoreable savings in order to achieve major reforms. Congressional pay-as-you-go budget rules, known as “pay-go”, require that any increased spending on entitlement programs be paid for by budget savings or revenue in the form of taxes.
Key Players in the Senate
Clinton’s decision to accept the position as Secretary of State also clarifies the key policy leaders in the Senate. Clinton reportedly had been seeking a chairmanship of a newly created Subcommittee for Health under the Senate Health, Education, Labor & Pensions Committee but was denied by HELP Chairman Ted Kennedy (D-Mass.).
Instead, Kennedy put her in charge of a task force to expand insurance coverage for uninsured Americans along with two other senators: Senator Tom Harkin (D-Iowa) was tapped by Kennedy to lead the HELP committee’s efforts on prevention and public health, while Senator Barbara Mikulski (D-Md.) will lead a health care quality initiative.
Kennedy was unwilling to cede health care jurisdiction to Clinton despite her historic bid for the presidency and expertise and experience on the issue. He has been leading the fight for universal health coverage for decades and has made it his central cause for the 112th Congress.
“This is the cause of my life: new hope that we will break the old gridlock and guarantee that every American...will have decent, quality health care as a fundamental right and not a privilege,” Kennedy said at the Democratic National Convention in Denver. His speech marked a rare public appearance since he underwent surgery for brain cancer earlier in the year.
Baucus Takes Pole Position in Upcoming Health Reform Debate
Kennedy has been working behind the scenes for months with physician organizations, patient groups, and insurers to craft universal health care legislation ready for introduction at the beginning of the next session.
But he hasn’t been alone.
Senate Finance Committee Chairman Max Baucus is ensuring himself a prominent and visible seat at the health reform table with a “white paper” outlining his legislative proposal.
The paper, “Call to Action: Health Reform 2009,” was unveiled on November 12 and represents a culmination of discussions both in Congressional hearing rooms (10 hearings including one scheduled for November 19) and behind closed doors with key stakeholders.
“The need is so great, we have to act now. There is no choice,” Baucus said during a same-day press briefing on why the economic situation should not delay acting on broad—and expensive—health reforms. “If we wait, the costs will grow.”
Baucus said the next administration and Congress will not repeat two mistakes made by the Clinton Administration: waiting too long and conducting the process from the top down. Congress will want to show that it will act quickly after the January 20 inauguration and key lawmakers and committees will be heavily involved in the legislative process from the very beginning.
The Baucus plan is a clear play to get out in front of the health care debate ahead of a number of Democratic heavyweights looking to make health care their signature issue. The Finance Committee has jurisdiction over Medicare, Medicaid, the State Children’s Health Insurance Program (SCHIP), and all tax policy changes including those affecting health care.
The Baucus proposal, though, essentially cuts off the Kennedy legislation and steals some of the Massachusetts Democrat’s thunder. Still, Baucus says he plans on working with Kennedy and other leaders, naming Republicans Chuck Grassley (Iowa) and Michael Enzi (Wyoming). “I received a call this morning from Sen. Kennedy. It was a very complimentary call…I was truly touched,” Baucus said. (Enzi, the ranking minority member on the HELP committee, is seeking a seat on the Finance Committee.)
Baucus appeared together with Kennedy and Grassley at a press conference as a show of unity. Those feelings may not last, however, as discussions heat up over what a reform bill will include and whether there will be two Senate bills or one. “I’m less concerned with that. I’m more concerned about getting the job done,” Baucus said.
Baucus used the press briefing to demonstrate his intent to take the lead on the issue: there was a packed room of media, including representatives from every major national newspaper. The white paper was also previewed to the national press the day before in order for stories to show up in headlines on the front pages of mainstream newspapers.
The formal media conference was followed by a backgrounder session for the press with a half dozen top Baucus health staffers. Immediately after the backgrounder, Baucus’ policy team was slated to meet with staff from other Congressional members to brief them on the plan and provide specifics on some of the more technical aspects of the white paper.
Orszag Move Kills Two Birds With One Stone
In the House, the biggest change in the legislative line-up came when Henry Waxman successfully challenged John Dingell for the chairmanship of the House Energy & Commerce Committee. That change, in fact, may be the biggest political development for the biopharma industry heading into 2009.
Another important change affecting the legislative pathway comes with the selection of Congressional Budget Office Director Peter Orszag to head the White House Office of Management & Budget.
The choice of Orszag as head of OMB simultaneously rewards and reins in one of the party’s most outspoken thinkers on health care. Moving Orszag from CBO to OMB is a shrewd move by the Obama transition team and accomplishes two things.
First, it rewards Orszag, considered a rising star in the Democratic Party, with a key cabinet-level position. Second, it moves the free-thinking and outspoken economist from a critical legislative scoring role to one where he must act as the ultimate team player in supporting the President’s domestic agenda as budget director.
Legislative scoring is critical to the prospects of any health reforms, since the projected price tag to the Treasury is a primary obstacle to universal coverage.
During a November 12 press briefing to unveil the white paper on health care reform, Baucus underscored the importance of having CBO on board as a willing partner.
“Mr. Orszag and I will be having a conversation,” Baucus said. “There are investments here and they do lead to savings.” He made it a point to highlight there were private groups who score upfront investments as savings. “Upfront investment is necessary to achieve these results. This will cost money over the first five years.”
The Engelberg event showcased some friction with Orszag as well. “We’ve got to find a way to manage the CBO process,” Senator Whitehouse said. “There’s a huge institutional bias that has nothing to do with health care that casts a dark shadow on a lot of ideas and a bright light on others, and that is whether CBO decides if they can score them.”
He added: “Peter Orszag is a wonderful guy, but he should not be our health care emperor. We have to figure out a way to work the policy scoring so it makes policy sense. To some of us who are deficit hawks, it’s going to mean taking a leap of faith that we will get payback without waiting for CBO to make the move.”
Senator Burr expressed an equal amount of annoyance with the CBO process. “We brought CBO in very early on in our discussions and Sheldon and I only had one question of CBO: How do we do this in a way that you will score a cost savings? We’re still waiting for the answer.”
As head of OMB, Orszag will be charged with monitoring how well federal programs stick to Presidential policies and initiatives. The OMB director also provides guidance to the White House on a wide range of legislative, budgetary and management issues.
In that role, Orszag will be limited in his ability to stray from the President’s message and agenda, and stay relatively confined. That has not been the case at CBO, where he made numerous public appearances as part of a speaking tour of sorts—especially on the issue of comparative effectiveness.
CBO “Option” Papers
Despite some public aggravation with the way CBO does business when it comes to scoring legislation, the agency has been working diligently behind the scenes under Orszag’s watch to develop a collection of “option” papers to help frame the coming debate.
At a December 2007 meeting sponsored by the American Enterprise Institute, Orszag discussed the CBO’s efforts to confront health care costs. With a staff of roughly three dozen analysts, he said, CBO was preparing a set of white papers on various health care reform options, detailing how much each option was likely to cost the federal government.
The idea is to create a collection of stand-alone papers that would pre-score a number of potential legislative reforms to accelerate the process without taking it over.
The papers, scheduled for release in mid-December, would help jumpstart the debate for the next administration and yet remain malleable to Congress’ wishes as the debate takes shape over the first months of an Obama White House.
Obama Still Holds the Keys
Despite the building momentum for reform and the rhetoric of bipartisanship, everything will have to break just right for expansive reforms to take place.
There are already signs of stakeholders trying to block of potential avenues for change. For example, the Pharmaceutical Research & Manufacturers of America is planning a multi-million dollar public relations campaign to tout free-market health care.
The American Medical Association had issued a health care reform proposal; however, it mirrored in many ways the plan proposed by Republican nominee John McCain to scrap the employer-sponsored health system—something that certainly won’t happen under the current political conditions.
“What alarms me right now is the AMA is not out there with a position,” Burr said. “Physicians aren’t out there asking for something; pharmaceutical companies basically said, ‘here we are, go ahead and do what you’re going to do.’ My fear is that the people who have the most at stake have disengaged from the process.” He added: “Last time, [health reform] didn’t go over too well because it became purely politics.”
There certainly is a long history of failed attempts. The Baucus white paper cites an attempt by the Progressive Party in the 1900s to pass national health reform, as well as unsuccessful efforts by President Harry Truman in the 1940s, the Wagner-Murray-Dingell bill, and a try by President Richard Nixon in the 1970s.
Still, former White House advisor Chris Jennings is more optimistic. “The business communities—large, small, manufacturing, retail—are all very much invested in, and support a long-overdue and substantial debate over health care,” he said. “Their big focus has been: ‘We spend a lot of money in this thing, but we’re just not getting the value that we think we should.’”
Looking at covering uninsured Americans as a cost-shift issue rather than a moral problem has helped advance calls for universal coverage, Jennings maintained.
“Insurers [are invested] because they don’t want to be scapegoated but they also see that if they all want to play a fair game under insurance reform…then they fundamentally need have to have everyone covered,” Jennings explained. “The pharmaceutical industry doesn’t want to have scapegoating debates about direct negotiation, re-importation or a whole host of other things. There is value to reform if it will also incorporate broader coverage enhancements.”
When all is said and done, it will be up to Obama: how much political capital is he willing to spend—and how early—in order to reform the system?
“I was going to Montana, and my plane landed,” Baucus recounted at the Engelberg meeting. “My cell phone rang, it said ‘private number’ so I pushed it. I said, ‘Hello.’ The person on the other end said, ‘Max, this is Barack.’ And so we talked about health care reform and what we needed to do to get it passed.”
The first six months of the next administration will tell just how serious that conversation was.
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