Time's Karen Tumulty: Obama Gives Congress Some Health Care Marching Orders

Obama Gives Congress Some Health Care Marching Orders

Wednesday, June 3, 2009

Until now, Barack Obama's strategy on health care has been a conscious effort to avoid the mistakes of Bill and Hillary Clinton, who delivered a 1,000-plus page bill to Congress and then watched it get dismantled. Though Obama produced a health care plan during his presidential campaign, he has signaled since his inauguration that he is pretty flexible on its details.

Not so much any more. Today, the White House released a letter from the President to Senate Finance Committee Chairman Max Baucus and Senate Health, Education, Labor and Pensions Committee Chairman Ted Kennedy. It gives us a somewhat better idea of what Obama would like to see in the legislation that those two committees will begin drafting later this month. Among its points:

• Cost control appears to be Obama's top priority, even over expanding coverage. I want to stress that reform cannot mean focusing on expanded coverage alone. Indeed, without a serious, sustained effort to reduce the growth rate of health care costs, affordable health care coverage will remain out of reach.

• He wants a "a public health insurance option operating alongside private plans. This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest." So he wants a government-financed plan to be part of the mix, and not just as a fallback if private insurance doesn't do the job of providing affordable and accessible coverage. But what does that mean, exactly? Will it work like Medicare, or more like a private insurance company, having to finance its operations on what it collects in premiums? The former is what liberals say they want to see; the latter, the most the insurance industry says it will accept.

• He is now willing to consider a requirement that individuals have to buy insurance. This is a change from his campaign proposal, which had no such "individual mandate." But there are exceptions, both to the individual mandate and to the requirement that employers provide insurance: If we do end up with a system where people are responsible for their own insurance, we need to provide a hardship waiver to exempt Americans who cannot afford it. In addition, while I believe that employers have a responsibility to support health insurance for their employees, small businesses face a number of special challenges in affording health benefits and should be exempted.

That could leave a lot of people without insurance.

Finally, there is one big question the letter doesn't address: whether employer-provided health benefits should be taxed. Obama opposed that idea when John McCain put it forward, labor hates it, but lawmakers--including Baucus--now say it could be the only way they can find the money to pay for health care reform within 11 years, as required under the budget rules. Watch that one closely. Moving forward, it could prove to be an even bigger sticking point than the public plan.

http://swampland.blogs.time.com/2009/06/03/obama-gives-congress-some-health-care-marching-orders/

Link to president's letter: http://thepage.time.com/obama-letter-to-kennedy-baucus/

Obama Letter to Kennedy, Baucus on Health Care

THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release June 3, 2009

TEXT OF A LETTER FROM THE PRESIDENT TO
SENATOR EDWARD M. KENNEDY AND SENATOR MAX BAUCUS

June 2, 2009

The Honorable Edward M. Kennedy
The Honorable Max Baucus
United States Senate
Washington, D.C. 20510

Dear Senator Kennedy and Senator Baucus:

The meeting that we held today was very productive and I want to commend you for
your leadership -- and the hard work your Committees are doing on health care reform, one
of the most urgent and important challenges confronting us as a Nation.

In 2009, health care reform is not a luxury. It's a necessity we cannot defer. Soaring
health care costs make our current course unsustainable. It is unsustainable for our families,
whose spiraling premiums and out-of-pocket expenses are pushing them into bankruptcy and
forcing them to go without the checkups and prescriptions they need. It is unsustainable for
businesses, forcing more and more of them to choose between keeping their doors open or
covering their workers. And the ever-increasing cost of Medicare and Medicaid are among
the main drivers of enormous budget deficits that are threatening our economic future.

In short, the status quo is broken, and pouring money into a broken system only
perpetuates its inefficiencies. Doing nothing would only put our entire health care system at
risk. Without meaningful reform, one fifth of our economy is projected to be tied up in our
health care system in 10 years; millions more Americans are expected to go without insurance;
and outside of what they are receiving for health care, workers are projected to see their
take-home pay actually fall over time.

We simply cannot afford to postpone health care reform any longer. This recognition has
led an unprecedented coalition to emerge on behalf of reform -- hospitals, physicians, and health
insurers, labor and business, Democrats and Republicans. These groups, adversaries in past
efforts, are now standing as partners on the same side of this debate.

At this historic juncture, we share the goal of quality, affordable health care for all
Americans. But I want to stress that reform cannot mean focusing on expanded coverage
alone. Indeed, without a serious, sustained effort to reduce the growth rate of health care costs,
affordable health care coverage will remain out of reach. So we must attack the root causes
of the inflation in health care. That means promoting the best practices, not simply the most
expensive. We should ask why places like the Mayo Clinic in Minnesota, the Cleveland Clinic
in Ohio, and other institutions can offer the highest quality care at costs well below the national
norm. We need to learn from their successes and replicate those best practices across our
country. That's how we can achieve reform that preserves and strengthens what's best about
our health care system, while fixing what is broken.

The plans you are discussing embody my core belief that Americans should have better
choices for health insurance, building on the principle that if they like the coverage they have
now, they can keep it, while seeing their costs lowered as our reforms take hold. But for those
who don't have such options, I agree that we should create a health insurance exchange -- a
market where Americans can one-stop shop for a health care plan, compare benefits and prices,
and choose the plan that's best for them, in the same way that Members of Congress and their
families can. None of these plans should deny coverage on the basis of a preexisting condition,
and all of these plans should include an affordable basic benefit package that includes
prevention, and protection against catastrophic costs. I strongly believe that Americans should
have the choice of a public health insurance option operating alongside private plans. This will
give them a better range of choices, make the health care market more competitive, and keep
insurance companies honest.

I understand the Committees are moving towards a principle of shared responsibility --
making every American responsible for having health insurance coverage, and asking that
employers share in the cost. I share the goal of ending lapses and gaps in coverage that make us
less healthy and drive up everyone's costs, and I am open to your ideas on shared responsibility.
But I believe if we are going to make people responsible for owning health insurance, we must
make health care affordable. If we do end up with a system where people are responsible for
their own insurance, we need to provide a hardship waiver to exempt Americans who cannot
afford it. In addition, while I believe that employers have a responsibility to support health
insurance for their employees, small businesses face a number of special challenges in affording
health benefits and should be exempted.

Health care reform must not add to our deficits over the next 10 years -- it must be at
least deficit neutral and put America on a path to reducing its deficit over time. To fulfill this
promise, I have set aside $635 billion in a health reserve fund as a down payment on reform.
This reserve fund includes a number of proposals to cut spending by $309 billion over
10 years --reducing overpayments to Medicare Advantage private insurers; strengthening
Medicare and Medicaid payment accuracy by cutting waste, fraud and abuse; improving care
for Medicare patients after hospitalizations; and encouraging physicians to form "accountable
care organizations" to improve the quality of care for Medicare patients. The reserve fund also
includes a proposal to limit the tax rate at which high-income taxpayers can take itemized
deductions to 28 percent, which, together with other steps to close loopholes, would raise
$326 billion over 10 years.

I am committed to working with the Congress to fully offset the cost of health care
reform by reducing Medicare and Medicaid spending by another $200 to $300 billion over the
next 10 years, and by enacting appropriate proposals to generate additional revenues. These
savings will come not only by adopting new technologies and addressing the vastly different
costs of care, but from going after the key drivers of skyrocketing health care costs, including
unmanaged chronic diseases, duplicated tests, and unnecessary hospital readmissions.
To identify and achieve additional savings, I am also open to your ideas about giving
special consideration to the recommendations of the Medicare Payment Advisory Commission
(MedPAC), a commission created by a Republican Congress. Under this approach, MedPAC's
recommendations on cost reductions would be adopted unless opposed by a joint resolution
of the Congress. This is similar to a process that has been used effectively by a commission
charged with closing military bases, and could be a valuable tool to help achieve health care
reform in a fiscally responsible way.

These are some of the issues I look forward to discussing with you in greater detail in
the weeks and months ahead. But this year, we must do more than discuss. We must act. The
American people and America's future demand it.

I know that you have reached out to Republican colleagues, as I have, and that you have
worked hard to reach a bipartisan consensus about many of these issues. I remain hopeful that
many Republicans will join us in enacting this historic legislation that will lower health care
costs for families, businesses, and governments, and improve the lives of millions of Americans.

So, I appreciate your efforts, and look forward to working with you so that the Congress can
complete health care reform by October.

Sincerely,
BARACK OBAMA