Corporate Research Group’s Weblog

I won’t say that Republicans despise President Obama as much as they despised President Clinton (man, did they despise President Clinton), but last night’s State of the Union address received a cold reception from conservative lawmakers.  The whole evening, in fact, seemed subdued to me — long stretches during the speech when you could hear a pin drop.  In fairness, that’s probably because everyone actually wanted to hear what the President had to say.  Given the Democrats’ Senate loss in Massachusetts and with the Obama agenda hanging in the balance, last night’s speech was one of those “Whatcha gonna do?” moments. 

Obama did well.  I thought it was a powerful — and at times moving — speech.  But it was clear he distanced himself from healthcare reform; instead the emphasis was on jobs and middle class economic security.  He didn’t talk about healthcare reform until halfway through his hour-long speech — and then for only five minutes.  What exactly did he say about healthcare? 

After nearly a century of trying — Democratic administrations, Republican administrations — we are closer than ever to bringing more security to the lives of so many Americans….Still, this is a complex issue. And the longer it was debated, the more skeptical people became….But I also know this problem is not going away. By the time I’m finished speaking tonight, more Americans will have lost their health insurance. Millions will lose it this year. Our deficit will grow. Premiums will go up. Patients will be denied the care they need. Small-business owners will continue to drop coverage altogether.  I will not walk away from these Americans, and neither should the people in this chamber….

Here’s what I ask Congress, though: Don’t walk away from reform, not now, not when we are so close. Let us find a way to come together and finish the job for the American people. Let’s get it done.

It’s not as strong a statement as reformers would have liked.  For example, he’s still talking about coming together and putting aside differences when it’s clear that approach won’t work with Republicans.  The only way reform will get done is if the House passes the Senate bill — and that’s going to take some arm-twisting by the Obama Administration.

There are differing views on why Obama appears to have de-emphasized healthcare reform.  Here are two.  1. Reform is dead, and he’s turning tail and running.  2. Getting reform out of the spotlight might be what’s needed for the final push toward getting it done.  I’m already on the record that in the end, House Democrats will come together and pass the Senate bill.  Nobody I know agrees with me.  But that’s all right.  What really matters is whether Obama has the will to push reluctant members of his own party — which I might remind you is in the majority — to get it done.

Remember all those nice charts the Congressional Budget Office published showing how healthcare reform would reduce the ranks of the uninsured?  CBO also included a chart showing what would happen without reform.  To wit: the number of uninsured would rise to 54 million by 2019.  That would be an increase of 46% since the demise of Hillarycare.  Read it and weep.

David Einhorn, famous short-seller and head of Greenlight Capital, in a speech last year on investing:

Americans understand that the Washington-Wall Street relationship has rewarded the least deserving people and institutions at the expense of the prudent. They don’t know the particulars or how to argue against the “without banks, we have no economy” demagogues. So, they fight healthcare reform, where they have enough personal experience to equip them to argue with Congressmen at town hall meetings. As I see it, the revolt over healthcare isn’t really about healthcare, but represents a broader upset at Washington. The lack of trust over the inability to deal seriously with the party goers feeds the lack of trust over healthcare.

President Obama spoke last night about the future of healthcare reform in the wake of Republican Scott Brown’s U.S. Senate victory in Massachusetts.

I would advise that we try to move quickly to coalesce around those elements of the package that people agree on. We know that we need insurance reform, that the health insurance companies are taking advantage of people. We know that we have to have some form of cost containment because if we don’t, then our budgets are going to blow up and we know that small businesses are going to need help so that they can provide health insurance to their families. Those are the core, some of the core elements of, to this bill. Now I think there’s some things in there that people don’t like and legitimately don’t like. If they think for example that there’s a carve out for just one or two particular groups or interests, I think some of that, clearing out some of that under brush, moving rapidly.

As Paul Krugman notes, not exactly fighting words.

From the acceptance speech of Scott Brown, U.S. Senator-elect from Massachusetts:

One thing is clear, voters do not want the trillion-dollar health care bill that is being forced on the American people.  This bill is not being debated openly and fairly. It will raise taxes, hurt Medicare, destroy jobs, and run our nation deeper into debt….I will work in the Senate with Democrats and Republicans to reform health care in an open and honest way. No more closed-door meetings or back room deals by an out of touch party leadership. No more hiding costs, concealing taxes, collaborating with special interests, and leaving more trillions in debt for our children to pay.

Here’s some early reaction from healthcare industry observers on Masachusetts’ stunning special election of Republican Scott Brown to the U.S. Senate.  

We’ve spent so much time discussing the life of healthcare reform, it seems only fitting to talk about its death. The resounding election of Republican Scott Brown as the next Massachusetts Senator leaves the Democrats with no good alternatives. The only hope is that the House accepts the Senate version of the health care legislation, but this isn’t going to happen….It’s hard to see how any potentially vulnerable Democratic member of Congress with a desire to win another term will want anything more to do with this health care reform bill. And since Brown was virtually unknown (even in Massachusetts) just over two weeks ago, the list of vulnerable seats is now a lot longer.  — Carl McDonald, Oppenheimer 

His upset win reflects voters’ suspicion of Big Government solutions and their frustration with either party when it is in power.  What it does not do, sadly, is suggest a new answer to the country’s medical mess.  In a bit of an oddity, voters in the one state that already has near-universal healthcare stymied the Democrats’ plan to give it to everyone else.  USA Today

Scott Brown was not elected primarily because he said: I will be the 41st vote to stop healthcare, but this statement will be the one weighing on the 52 House Blue Dog Democrats and many House liberals who are stopping dead in their tracks…Brown won because this is an anti-incumbent, anti-Washington big spending, anti-Washington closed-door, anti-bloom off the rose/Obama electorate.  — Steven Valiquette, UBS

Healthcare reform isn’t dead, despite last night’s stunning special election of Republican Scott Brown as the junior U.S. Senator from Massachusetts to fill the late Ted Kennedy’s seat.

Maybe it’s wishful thinking (or the liberal in me), but you have to remember what happened after the health insurance industry — with the help of Harry and Louise — killed Hillarycare 15 years ago.  The ranks of the uninsured rose steadily from about 37 million then to 50 million now. 

We still face an eroding employer-sponsored insurance market, a broken individual insurance market, inadequate Medicaid eligibility levels, and rising insecurity, vulnerability and out-of-pocket expenses for the lucky ones among us who have healthcare coverage.

Obstruction won’t alter these trends — and in fairness that’s all Brown’s victory offers.  As USA Today notes, what the victory “does not do, sadly, is suggest a new answer to the country’s medical mess.”

At what point does healthcare insecurity touch so many of us something has to be done: 75 million uninsured?  100 million?  Do we have to wait until 75% of personal bankruptcies are from healthcare bills versus 50% today. 

These aren’t rhetorical questions.  The reason reform came so far this time around was that the numbers were getting too big for people to find comfort in platitudes like “it won’t happen to me.”  “It” being sickness and financial ruin.

Remember, the only reason Republicans can block reform is filibuster power, not an actual majority.  And that’s why I think the House will ultimately pass the Senate bill — with all its flaws — and get reform done.  We’re too far along — and too many people would benefit — not to make reform happen.

I’m up in the Boston area today watching with great interest the coverage of the special election to fill the late Ted Kennedy’s U.S. Senate seat — the outcome of which holds important implications for healthcare reform.  But whatever the result, Massachusetts already offers lots of lessons about healthcare reform.  Notes Credit Suisse:

Up to this point Massachusetts healthcare reforms have focused entirely on expansion and not on costs, leading to a growing source of budgetary pressure for the state….According to the state, the monthly premiums for both the lowest and highest cost Commonwealth Choice Bronze plan have increased by 15% during 2009. Greater than expected enrollment in the subsidized Commonwealth Care program was the primary reason the state’s healthcare expenses exceeded budget by 20% in 2008….

In response, the state is undertaking numerous reviews and studies in order to develop cost containment strategies….The two basic approaches to reduce health care spending are (1) lowering unit costs through regulation of prices paid (rate setting, bundling payments) and/or substituting to less expensive services (limited service clinics, increase use of nurse practitioners), and (2) lowering utilization or volumes by providing incentives for more efficient care (pay for performance, increased adoption of health IT) and/or using regulatory mechanisms to reduce volume (decrease end-of-life care service intensity). 

Tough choices.  Now shift to national reform.  The emphasis is also on expanding coverage, rather than controlling costs.  So I wouldn’t be surprised to see the nation struggle with similar tough choices down the road. 

The only thing worse would be no reform, which could conceivably happen if  Republican Scott Brown wins the tight Massachusetts race over Democrat Martha Coakley.  Hard to imagine all this was for nothing.

Here’s a satirical video from Keep America Now, written by the husband-and-wife team of Rob Kutner (The Daily Show, The Tonight Show) and Sheryl Zohn (Penn & Teller: B.S.!). 

I suppose that the October release of a flawed and biased study suggesting that healthcare reform would cause insurance premiums to soar (see prior post) was proof enough that America’s Health Insurance Plans had shifted gears and was now actively trying to kill reform.  I, however, clung to the belief that the association — long recognizing the writing on the wall — was still in favor of “reform” but was seeking concessions:

Why kill something that gives you most of what you want, i.e., no public option and no serious consideration of single-payer healthcare.  I do think the industry is still lobbying for a stronger insurance coverage mandate to address the likelihood that the young and healthy will simply pay a small fine rather than buy health insurance. 

After all, AHIP still supported guaranteed issue and some form of community rating….Right?

Then there was the report of an industry rift — with Blue Cross Blue Shield plans stepping up the anti-reform rhetoric, according to The Wall Street Journal, even as other big players like Aetna were seeking to mend fences after the October fallout.  O.K., but this could still be just another example of fighting for “the right kind of reform.”  After all, didn’t Blue Cross Blue Shield of North Carolina end up killing those planned Harry & Louise-esque commercials it had on the drawing board (see prior post)….Right?

Comes now a report that since September AHIP has been quietly soliciting funds from its members — some $10 million to $20 million from six major health plans — and funneling the money to the U.S. Chamber of Commerce to help subsidize “third-party television ads aimed at killing or significantly modifying the major health reform bills moving through Congress.”  The six plans named in the article are Aetna, Cigna, Humana, Kaiser, UnitedHealth Group and WellPoint.

Below are two examples of the types of commercials the Chamber has run through the Campaign for Responsible Health Reform and Employers for a Healthy Economy.  Let’s see, how can this be spun by someone like me who actually believed AHIP had seen the light — well to some extent at least?  I’ve got it!  As Matthew Holt noted in The Health Care Blog, insurers are the “poor suckers” in reform because the industry signed on for guaranteed issue and community rating but didn’t get a strong mandate to avoid adverse selection — a valid point.  So I guess you could argue that all AHIP is doing is fighting for justice…Right?….All of a sudden I’m not feeling so well.

The National Assn. of Insurance Commissioners issued a letter last week to House Speaker Pelosi and Senate Majority Leader Reid expressing certain concerns about healthcare reform.  Here’s what NAIC had to say about provisions that would give federal regulators authority over health plan premiums:

Granting a federal regulator the authority to approve or deny premiums, or exclude plans from the Exchange if it disapproves of a premium increase, interferes with states’ financial oversight of insurers and could expose a plan to insolvency, straining state guarantee funds and creating anxiety among healthcare consumers. A better way to ensure appropriate regulatory oversight over rates is to build that oversight into the federal minimum standards that states must meet so that financial regulation and rate regulation operate together. 

Which brings us to today’s poll question:

I had the opportunity to talk to Karen Davis, president of The Commonwealth Fund, about the likely impact of healthcare reform on the average American.  Her take is generally a positive one.  Here’s the video from the Nasdaq Market Site, Jan. 6, 2010.