Health reform at crossroads

Sooner than anyone had anticipated, President Barack Obama’s drive for health reform has reached a crucial decision point – one that may well determine the fate of his biggest domestic initiative.

The White House plan had been to use the big Democratic majorities in Congress to get the necessary bills through the House and Senate before the scheduled Aug. 7 summer recess – knowing that the measures would have holes in them and would probably not resemble each other.

By Labor Day, congressional staff could fill in the gaps and – with guidance from Obama’s aides – assemble a hybrid measure that could win support on each side of the Capitol. That final version, officials at both ends of Pennsylvania Avenue said, would have to meet Obama’s criteria – expanding health insurance coverage to virtually all Americans but not adding to the budget deficit.

Because those two goals are hard to reconcile, Obama wanted to put off as long as possible the day of reckoning when the Congressional Budget Office, the official scorekeeper on all legislation, would assess how fiscally realistic the plan looked to be.

But on Thursday, just as three House committees that share jurisdiction on health matters were preparing to rush a bill to the floor, CBO Director Douglas Elmendorf told the Democrats that they were about to bust the budget. None of the bills he had seen contains “the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount.”

“And on the contrary, the legislation significantly expands the federal responsibility for health care costs,” he said.

Elmendorf is not alone in arguing that the legislators ought to go back to the drawing board. A day earlier, Mike Leavitt, the last secretary of health and human services in the George W. Bush administration, told me and other reporters that the House bill “does nothing to solve the problem of the escalating cost of health care.”

In a separate phone interview, Ken Thorpe, an academic expert who worked on the Clintons’ effort 16 years ago, said, “There is nothing in the current legislation that will reduce private insurance premiums” – and not nearly enough to contain the rising costs of Medicare.

Glenn Hackbarth, the head of a Medicare advisory commission chartered by Congress, testified last month that the kind of minor fee adjustments and pilot projects included in the House bill “will not fix the problems” of runaway costs.

All of them agree that the fee-for-service system that pays each hospital for each test given to each admitted patient and each doctor for each office visit and exam spurs a relentless drive for volume without making anyone accountable for preventing illness and maintaining good health. There is no reward for coordinated care.

Elmendorf cited the same defects in the pending bills’ gestures toward cost control and added a complaint that Congress has balked at challenging the wasteful policy of making even the most lavish employer-paid health insurance plans tax-free to both the company and the worker.

The Democrats drafting the House bill turned down any cap on the value of such plans and Senate Majority Leader Harry Reid is pressuring senators to do the same thing, even though their action feeds medical inflation and makes it far harder to finance expanded health coverage.

A survey released the same day Elmendorf dropped his bomb showed how Obama could still come out on top. The poll, conducted for America’s Agenda, a labor and business group backing health reform, by Democrat Celinda Lake and Republican Bill McInturff, found bipartisan voter support for an agenda emphasizing cost containment more than insuring the uninsured.

One of the key elements of that agenda is moving toward a time when everyone could be cared for by a team of health care professionals coordinated by a primary-care doctor – the opposite of today’s fee-for-service medicine.

All this left Obama facing a choice. He could encourage his congressional allies to push ahead quickly with plans that pretty clearly are badly flawed and overly expensive. Or he could ask them to reconsider and step up to the structural changes that could deliver the kind of reform voters want – and might actually be able to afford.

On Friday, Obama urged lawmakers not to slow down – even as doubts grow about the path they are on.