• How Blue Cross Became Part Of A Dysfunctional Health Care System
• The President's Health Plan Won’t Cut the Budget Deficit
• Popular But Ineffective: Repealing Insurers' Antitrust Exemption
• Post-Summit Health Reform: What A Mess
• Malpractice Reform: A Test Case for Bipartisanship At The Health Summit
• Why Are Fewer Patients Enrolling in Hospice?
• The Health Reform That Scares Both Parties
• Don't Stop Now
• Yes, Let's Talk About Those Republican Ideas
• The President’s Budget and Health Care Reform
• Obama’s Respite Care Plan: Part of the Problem, Not a Solution
• Lessons From Massachusetts: Campaigning Beats Governing Into Submission, Again
• The Bipartisan Trap - And How Democrats Fell Into It
• A Smaller, Bipartisan Health Care Bill: Where to Start
• Who Really Understands ObamaCare?
• Give Nurses A Bigger Role In Improving Health Care
• How Does U.S. Long-Term Care Stack Up Against the Rest of the World?
• Individual Mandate Would Impose High Implicit Taxes on Low-Wage Workers
• Transparency and Sausage Making
• An Entitlement Certain to Grow In Spite Of 'Firewalls'

This column is a collaboration between KHN and The New Republic .

When Alma Dickson slipped on an icy sidewalk in Dallas, Texas, she knew she was hurt. But she wasn’t sure that she could pay for the medical care she needed. The year was 1929 and Dickson, a schoolteacher, didn’t make enough money to pay for x-rays and treatment on her own. But Dickson had recently signed up for something new: A plan under which she paid a monthly premium in exchange for a promise of care at a local Dallas hospital. Dickson went, had her broken ankle set, and left without paying a penny.

The Dallas plan eventually evolved into a network of similar plans around the country, bringing affordable medical care to millions who, like Dickson, would not have had it otherwise. At one point, the director of the Minneapolis plan commissioned a series of advertising posters. The posters featured a nurse, whose image would quickly fade from memory. But they also featured a symbol that would become the most recognizable and, for a while, most trusted icon in American health care. That symbol was a blue cross.

Today, of course, the blue cross has come to symbolize something else: A deeply dysfunctional health care system. Last month, Anthem Blue Cross of California, a descendant of that original Dallas plan, announced that it was raising premiums for some of its customers by 39 percent. A report from the Center for American Progress, a liberal think-tank, showed that Blue Cross plans from other parts of the country had similar ideas in mind. The high prices mean that beneficiaries will struggle to pay premiums--and, in some cases, be forced to give up coverage altogether.

But even before these rate hikes made headlines, the evolution of Blue Cross was a case study in the need for health care reform. As Robert Cunningham and Robert Cunningham Jr. recount in their 1997 book, The Blues, those early Blue Cross plans had several defining characteristics. Among them were the twin principles of “guaranteed issue” and “community rating.” The plans would sell insurance to anybody who wanted to buy it. And they would charge the same premium to every person, regardless of the person’s medical condition. The plans did this because they were non-profits, designed not to earn money for shareholders but to insure a steady supply of paying patients for the hospitals. (It was the hospitals, who were struggling to pay their own bills during the Great Depression, that established the plans.)

What enabled the Blue Cross plans to succeed was their effective monopoly on the health insurance business. They had a huge, diverse base of customers--one based heavily on large groups of employees, like the Dallas schoolteachers--which meant they had sound finances. The majority of people were relatively healthy, with few medical bills. Their accumulated premiums were sufficient to cover the bills for that small group of people who, because of accident or disease, had much higher bills.

But as enrollment in the Blue Cross plans swelled, the commercial insurance industry took notice--and saw an opportunity. If Blue Cross was selling to everybody and charging everybody the same rate, that meant some people--healthy people--were effectively paying a bit extra in order to subsidize the sick. The commercial insurers figured that if they could target just the healthier customers, by charging higher premiums or refusing coverage to people with medical problems, they could offer lower premiums to these people and still make a profit.

They were correct. And the effect on Blue Cross was devastating. Over time, Blue Cross plans lost more and more healthy customers, leaving a pool of beneficiaries in relatively worse health. In order to finance their medical bills, Blue Cross had to raise everybody’s premiums. With each increase, more and more healthy people fled for cheaper plans, creating a vicious cycle. Eventually, the Blues faced a choice: Start acting like the commercial insurers, in order to compete, or go out of business. They chose the former. Soon Blue Cross plans were screening potential customers, charging them higher premiums or no coverage if they came with pre-existing conditions. Eventually, some of the plans converted outright to for-profit entities.

Anthem Blue Cross of California is the product of such a conversion. It is among the insurers that have drawn media scrutiny, and government investigations, for its practice of canceling the coverage of people who file large medical claims. Last year Anthem Blue Cross paid a $10 million fine to the state of California for this practice and agreed to restore more than 2,000 canceled policies, although it denied any wrongdoing. Meanwhile, its parent company, Wellpoint, posted profits of nearly $3 billion in 2009, despite the economic downturn.

Wellpoint executives have defended its approach to the insurance business, arguing--among other things--that it is necessary to compete in the marketplace. That is true. If some insurance companies are allowed to do whatever they can to maximize profits, whether it’s keeping out people with pre-existing conditions or charging higher premiums to people with high medical expenses, then companies who don’t keep up will not be able to survive, any more than the old Blue Cross plans could.

The only solution is to prohibit all insurers from discriminating against the sick and to make sure that everybody is part of large, financially sound insurance groups in which there are enough healthy people to subsidize the cost of the sick. This is precisely what the Democratic health care reform plans would do.

Executives at Wellpoint and its affiliates have frequently said they agree with the argument. Publicly, they have pledged their support for health care reform as long as it includes an individual mandate, requiring that everybody carry coverage. (Otherwise, they argue reasonably, people won’t take coverage until they get sick, which would cause the same kind of financial death spiral that the Blues experienced decades ago.) But they’ve carried a different message in private, lobbying against tight restrictions on pricing policies and other regulation on insurance company behavior.

It’s not surprising. The new Blue Cross plans have not only adapted to the realties of modern insurance marketplace. They've learned to thrive in it. If the Democrats get their way, the plans will have to change their business model again, so that they act a bit more like the Blue Cross plans of old--the ones that helped schoolteachers, not stockholders.

Jonathan Cohn is a senior editor at The New Republic

One of the central arguments President Barack Obama has made on behalf of the health care plan he wants Congress to approve in coming weeks is that it would begin to address the problem of rising costs and thus also begin to bring down future federal budget deficits.

But will it?

The president’s plan has not yet been assessed by the Congressional Budget Office. But CBO has provided a cost estimate for the Senate-passed bill, upon which the president’s proposal is built. That estimate shows the Senate bill would reduce the budget deficit by $132 billion through 2019. CBO also says that the Senate bill would likely reduce projected deficits even more during the second decade of implementation.

But, as Republican Rep. Paul Ryan of Wisconsin noted at last week’s Blair House meeting, there are a number of reasons to be skeptical about this claim.

For starters, the Senate bill omits the president’s proposal to permanently restore a 21 percent reduction in Medicare’s fees for physician services, now in effect as of March 1. The administration estimates that overriding this cut will cost $371 billion through 2020. Last summer, the House planned to include a permanent repeal of the cut in its health reform bill. But when the president imposed a 10-year budget of $900 billion on the reform legislation, Democratic leaders decided to pull the physician fee spending out of it and pass it separately.

The health bill includes scores of Medicare provisions, touching on just about every aspect of the program. The only major Medicare provision not in the bill is the costly “doc fix.” And the only reason for the omission is to make the total cost of the health reform bill appear lower. But passing the “doc fix” in a separate bill doesn’t make the cost go away. When the president’s entire health care agenda, including the “doc fix,” is tallied up, there is no deficit reduction over the next 10 years.

Ryan noted in his remarks at Blair House that the Senate bill would start up a new long-term care insurance program for the disabled. Participants would be required to pay in premiums for a number of years before becoming eligible for any benefits. Consequently, in the new program’s early years, there would a surplus, which CBO estimates at $73 billion over 10 years. The president’s claim of deficit reduction depends on double-counting these funds, first as an offset for the larger health care bill and then as a revenue source for long-term care insurance benefits beyond the 10-year window of the CBO estimate.

Over the long run, what matters in terms of the budget in the president’s health plan are the entitlement expansions, the effectiveness of “bending-the-cost-curve” measures, and the tax increases and spending cuts used to pay for broadened insurance coverage.

CBO expects the cost of the new entitlement spending aimed at coverage expansion in the Senate bill – the premium subsidies in the exchanges and the expansion of Medicaid -- to reach about $200 billion by 2019 and then grow at a rate of 8 percent every year thereafter. In other words, this new health entitlement spending is expected to escalate just as rapidly as Medicare and Medicaid have in the past. CBO does not expect the “delivery system reforms” in the Senate bill, which are mainly small initiatives and pilot programs, to amount to much of anything in terms of cost control.

So how would the president pay for another expensive and rapidly growing entitlement? First, he would try to slow the rate of growth in the Medicare program, but not with new measures to weed out wasteful spending. His claim of long-term deficit reduction comes mainly from across-the-board payment rate reductions for hospitals, nursing homes and other providers of Medicare services. They would get a lower inflation update every year, in perpetuity. But these kinds of cuts do nothing to improve the efficiency of patient care or reward quality.

The chief actuary of the Medicare program has said repeatedly that these cuts are unrealistic because they would continuously cut reimbursements without touching the actual costs of providing care. He expects many facilities would be driven into serious financial distress. And without these Medicare cuts, the Senate bill is almost certainly a long-term budget buster.

The Senate bill also includes the so-called “Cadillac tax,” a new fee imposed on insurers and employers offering high-cost plans. As passed, this provision would generate substantial revenue in the second decade of implementation because the threshold for what constitutes “high cost” would rise much more slowly than medical inflation. Eventually, virtually the entire country would be in plans deemed “high cost.”

The president is relying heavily on the large, second-decade revenue increase associated with this tax for his claim of long-term deficit reduction. But just last week, under heavy pressure from union leaders, the president proposed to delay the tax from 2014 to 2018, well past the point when he will have left office. It will now raise almost nothing over the next 10 years, but the administration still claims credit for the sizeable revenue that would come in a second decade. That revenue would materialize, however, only if future officeholders were more willing than their counterparts today to impose large new taxes on a broad cross-section of the American middle class.

The federal government is piling up new debt at rates not seen since World War II. As Warren Buffett said recently, what the country desperately needs is a serious plan to slow the pace of rising health care costs.

What the president’s plan would deliver, however, is dead-certain entitlement spending, financed with speculative revenue and spending cuts that almost certainly will not work as advertised. The president says Congress should pass his plan to improve the budget outlook. In fact, Congress should reject it to protect the budget from more unfunded entitlement obligations.

James C. Capretta is a Fellow at the Ethics and Public Policy Center. He served as an associate director at the White House Office of Management and Budget from 2001 to 2004.

It is well known that concentration in the health insurance industry is to blame for rapidly rising premiums. Well known, but wrong. Taking political advantage of this common misconception, last week the House passed a bill to repeal insurers’ antitrust exemption. But even if that bill becomes law it won’t do much good, and politicians’ distraction could actually harm consumers. It's far more likely that premium increases are largely due to other factors.

Those who claim that the antitrust exemption is the main reason a few insurers have substantial market power don’t understand the narrowness of that exemption’s scope. The law at issue, the McCarran-Ferguson Act, shields most aspects of “the business of insurance” from federal (but not state) antitrust oversight. This means that only those insurer activities dealing directly with providing insurance–think underwriting risk, setting rates, defining benefits, and the like–are not ordinarily subject to federal antitrust scrutiny.

There are exempt insurance practices that, at least in theory and under certain conditions, could help insurers defend and expand their market share against competitors. But the exemption simply does not shield the most straightforward kinds of conduct that make companies big.

Activities not connected with the basic risk-spreading function of insurance are deemed “the business of insurers” rather than “the business of insurance” under the law, and do not enjoy any federal antitrust exemption. Thus mergers and acquisitions among health insurers are as aggressively (or passively) scrutinized as those in any other industry by federal antitrust enforcers.

Health care reform advocates concerned about the high degree of concentration in today’s insurance market cite the more than 400 mergers among health plans allowed over the last 13 years. But repeal of the McCarran-Ferguson antitrust exemption would have literally no effect on this trend. Even if other forms of stepped-up antitrust enforcement or other means of encouraging competition were to have a material impact on insurer market power, there is little reason to believe it would produce tangible benefits for consumers absent parallel efforts targeting the provider side of the market.

While there is some evidence that insurers’ market concentration plays a role in premium increases, that role is small. For example, a National Bureau of Economic Research paper found that only 2.1 percent of employer-sponsored health insurance premium increases between 1998 and 2006 were due to insurer concentration.

It is far more plausible that a high proportion of premium increases are due to a combination of concentration in the provider market and adverse selection, especially in the nongroup market. After all, most premium dollars are not kept by insurers and go toward payment of health care services. Insurers take a little off the top, but not enough to be blamed for anything like the perennially large rate increases.

A recent Health Affairs paper describes the upward pressure on costs driven by provider organization and concentration. Based on hundreds of interviews with representatives of hospitals, physician organizations, health plans and other stakeholders in six California health care markets, the authors conclude that “[t]he shift in who holds the upper hand in negotiating payments—once held by health insurance plans but now resting with health care providers—has had a major impact on California premium trends.” And we all know what those trends have looked like lately.

Perhaps counter-intuitively, large insurers can be bulwarks against high costs driven by provider consolidation. Two papers by health economists in the International Journal of Health Care Finance and Economics indicate that the high degree of market power held by insurers acts as a counterweight to that held by hospitals. Therefore, diluting the insurance market may have small downward effects on insurer profit and administrative costs, but it could have large upward effects on prices of health care services. Those higher prices would be passed on to consumers.

That’s why those who understand our health care system know that costs will not be tamed by a focus on the insurance market alone. The Congressional Budget Office has scored the likely effect on premiums of health insurer antitrust repeal as insignificant. Therefore, concentration among providers, and in particular hospitals, must also be addressed.

Don’t get us wrong--we don’t think that the current antitrust exemption is good law or policy. But cracking down on insurer market power without doing the same against providers may well have the opposite of its intended effect. Taming health care costs will be hard. Attacking insurers is, by comparison, very easy, as well as popular. But in this case, what is popular will not be particularly effective.

Austin Frakt is a health economist and an Associate Professor at Boston University’s School of Public Health, Department of Health Policy and Management. Ian Crosby is a partner in the Seattle office of the law firm Susman Godfrey LLP and focuses on antitrust and patent matters. Both blog at The Incidental Economist.

Everyone agrees our health care system is unsustainable and too often unfair. At the White House health care summit, that was the only common ground between Democrats and Republicans.

Many Americans are either left-brain liberals or right-brain conservatives, with the remainder somewhere in the middle. These left- and right-brain types look at the same facts but come to different conclusions—no matter what.

This past election, something unique occurred. The independents were so frustrated with the Republicans about the Iraq war, the financial meltdown and the spendthrift ways of Congress that they swept liberals into power and apparently gave them a mandate to pass health care reform.

The liberals set about doing just that. No false advertising was involved—they crafted health care bills consistent with their campaign promises. But when conservatives erupted over the legislation last summer, they reminded many of those independent voters about their more-moderate political instincts.

It turns out that liberals needed the backing of a handful of moderate Republicans -- not because they needed their votes, but because they needed their endorsements.

By August, when the raucous town meetings occurred, it became clear that liberals had overplayed their hand on health care. After election defeats in Virginia, New Jersey and, most notably, Massachusetts, as well as months of months of sagging opinion polls, Democrats tried to adjust.

There was one problem: The more that the Democratic leadership pulled the health plan toward the center, the worse it looked to everyone—liberals, conservatives and independents.

That was the backdrop as Democrats and Republicans arrived at Blair House Thursday for the health care summit – a meeting that was not so much an attempt at bipartisanship as an effort to create political cover for wavering Democratic moderates in the House and Senate.

The thinking was that if the president and the Democratic leadership managed to show that their plan was better than the comparatively thin Republican approach – and as a result win points in the public opinion polls -- the moderates would perhaps feel free to vote for the big Democratic bill.

But the White House summit ended in a draw.

The Democrats talked about the substance of the bill, but the Republicans knew that the latest polls favored “starting over” and aggressively repeated that message all day. They played to the anxiety of swing voters about a huge entitlement expansion in the face of the Great Recession, as well as skepticism about the Democrats’ trillion-dollar numbers.

Now, with the session behind them, Democratic leaders and the president apparently believe they can't go backward and that tearing up their health care bill would be admitting they can't govern with huge majorities. Also off the table is support from moderate Republicans.

The Democrats have two options.

The first is to ignore the recent state elections and the polls and ram their bill through Congress using controversial reconciliation rules. The problem: There are as many as 90 House Democrats who are vulnerable in the November elections, and at least half are moderate Democrats who weren’t ever enamored with health care proposals written by their more liberal leadership.

The second is “Plan B,” a scaled-down bill costing about a third of the big bill and far more modest in giving the government authority over the health care system. It could likely attract some Republican votes and give Democrats, particularly moderates, a legitimate claim that they listened to voters and acted in a more measured way. It also would give the president and the Democratic congressional leadership something positive to show at election time.

The Democrats will use the coming weeks to see if they can talk members of their own party into taking the Great Health Care Leap of 2010.

My sense is that they better have a Plan B ready to go.

After watching this debate, as well as the Clinton health care battle 15 years ago, my conclusion is that arrogant partisanship on big, consequential policy issues is a prescription for failure.

What a mess.

This column is a collaboration between KHN and The New Republic .

Ever since President Barack Obama announced he'd be having a bipartisan meeting to talk about health care reform, Republicans have been denouncing it as a charade. He's not really interested in their ideas, they say. And he doesn't really want their support.

But is the problem that Obama won't listen to the Republicans--or that the Republicans won't listen to Obama? One way to answer that question is to watch what happens at Thursday's health 'summit' meeting if discussion turns to medical malpractice reform.

The issue is familiar to anybody who follows health care policy or, for that matter, anybody who has ever spoken to a doctor at length. Republicans have long said that frivolous malpractice lawsuits make medical care more expensive, by forcing doctors to spend money on lawyers, malpractice insurance and in some cases large jury awards. In addition, they say, physicians who fear malpractice end up practicing "defensive medicine," ordering up unnecessary tests and procedures that cost a lot of money. The solution, according to the Republicans, is to cap jury awards, as several states have already done. California, for example, limits pain and suffering awards in malpractice to just $250,000 per case.

More often than not, Democrats have opposed malpractice reform. They've pointed to studies questioning just how big of an impact malpractice litigation has on overall health costs. They have also cited evidence--fairly incontrovertible--that most victims of medical errors never get any compensation at all. As such, Democrats have argued, capping damages won't do a lot to reduce health care costs. What's worse, it might discourage people with legitimate claims of malpractice from bringing legal action.

The parties' allegiance to special interests has reinforced the political stalemate. Business groups, which traditionally support Republicans, have promoted malpractice reform because it's part of a broader campaign to rein in liability lawsuits. (Such lawsuits frequently target corporations and result in large jury awards.) Trial lawyers, who traditionally support Democrats, have fought malpractice reform for the same reason. (Trial lawyers are the ones arguing and making a living from such lawsuits.)

But there are ways to break the impasse. While malpractice may not be a major factor in rising health care costs, the system is clearly broken. It forces doctors to operate under a cloud of suspicion, without necessarily punishing those physicians who are truly negligent. It encourages the use of tests and treatments that are frivolous, if not downright harmful. And it leaves the vast majority of people who need compensation for medical errors with no easy way to get it.

The key is finding ways to fix the malpractice system so that it helps both physicians and the patients, rather than one at the expense of the other. And there are several promising possibilities for achieving that. One is to have doctors report medical errors to hospital administrators, who would then notify patients and begin negotiations. A version of this "sorry works" model is in place at the University of Michigan Health System, where it has reduced lawsuits, cut litigation costs and sped the resolution of cases.

Another idea is to create a no-fault system, similar to the way workers' compensation works, or to channel most malpractice cases through special "health courts" that would come before jury trials. (The Scandinavian countries and New Zealand have such systems in place.) One other proposal--perhaps the most intriguing--is to tie malpractice to quality incentives, by offering some sort of legal protection to physicians who demonstrate they have abided by accepted clinical guidelines. Not only might such a scheme cut down on frivolous lawsuits. It might also improve the quality of care--which would, in theory, reduce the incidence of actual malpractice.

The good news is that Obama doesn't need convincing on this front. Back in 2005, while he was still just a senator, he co-sponsored (with Hillary Clinton) a bill that would have implemented a "sorry works" model nationally. It didn't become law, but Obama kept talking up malpractice reform. Last year, he instructed the Department of Health and Human Services to sponsor a series of demonstration projects around the country.

Michelle Mello, a Harvard professor and leading expert in the field, says experimenting with the different models is precisely the right approach to take--because the data on the different reforms is still very sketchy. But, she adds, the experiments HHS has launched probably won't go far enough, because they are too limited. To really see which approach works, it's essential to get more data--and, whenever possible, to get data that covers an entire area (or areas) rather than one hospital or hospital network. Otherwise, it's difficult to tell whether a program has worked simply because of idiosyncratic factors like a particularly dedicated staff.

This is where the Republicans could push the discussion forward. Both the House and Senate health reform bills encourage more experimentation. But they don't set aside enough money. If Republicans wanted to do something to change malpractice, they could call for more funding of these programs--and, perhaps, more aggressive guidance about how to handle the results.

Of course, that would mean achieving malpractice reform, a cause they've long championed, in a different manner than the Republicans have traditionally embraced. But that's the definition of compromise: Finding common ground with an adversary in order to achieve a goal you both share. Obama has shown he's willing to do that. Will the Republicans do the same?

Jonathan Cohn is a Senior Editor at The New Republic

Suddenly, many hospices are admitting fewer patients. Others are increasingly caring for people for just days or hours before they die. The result: cash-strapped hospices are cutting back on nurses and aides, and patients are missing out on critical end-of-life care.

It is not clear why it’s happening, but some hospice officials blame both a bad economy and Medicare rules that unintentionally discourage doctors from referring all but those who are about to die.

Even though hospices have been operating in the U.S. for three decades, they remain widely misunderstood. Hospices provide medical care, pain management, spiritual and social care and volunteer support for those nearing the end of their lives. And their patients often live longer than if they were still receiving full-blown medical treatment.

Nearly all hospice care is paid by Medicare, but unlike most providers, hospices are paid a fixed daily rate (on average about $140-a-day for home care patients). If a hospice provides care for less, it keeps the difference. If a patient requires very costly care, the hospice can lose money. The number of patients served by hospices increased from about 1 million in 2004 to nearly 1.5 million in 2008, while the number of hospices grew from 3,600 to almost 5,000. Most of this explosive growth has been driven by for-profit companies.

But in recent months, hospice officials have seen a downturn. In some states, such as Oklahoma, heavy competition has forced consolidation, and at least 10 hospices have closed in the past year.

Elsewhere, hospice officials blame the bad economy. Patients who have lost jobs--and insurance—may be waiting longer to visit the doctor and consequently are diagnosed with terminal illnesses at a very late stage.

Some hospice executives say the poor economy may also be driving doctors to hold on to patients longer. Here’s why: Once a patient joins hospice, she’s likely to see her physician far less often. Her doctor can usually order tests and treatments only to keep her comfortable, and not to try to cure her terminal disease. And while it may still be appropriate for, say, cancer patients to receive costly drugs or even radiation therapy to relieve pain, hospices must pay for these treatments out of their daily Medicare rate. That inevitably can create tension between the hospice and the physician.

And it may add up to less money for doctors at a time when they are already feeling squeezed. One physician I spoke to strongly rejected this argument, insisting that declining compensation does not slow referrals. But another—an oncologist who frequently refers to hospice—acknowledged the problem. “There is a financial deterrent,” she says.

At the same time, new Medicare rules may be further discouraging physician referrals. Medicare has begun cracking down on a handful of hospices that are making big profits by taking on chronically ill, but not terminally ill, patients. While hospice patients are normally expected to have six months or less to live, some hospices have many on their rolls for a year or more. In one attempt to stop this practice, Medicare now requires doctors to write a brief narrative describing why a patient is appropriate for hospice. Trouble is, says one hospice official, “We’re getting a lot of pushback” from doctors.

In 2008, more than one-third of patients were enrolled in hospice for a week or less, and some organizations are seeing the number of short stays increase, perhaps because these requirements may be making already reluctant doctors even less willing to refer to hospice until their patients are actively dying.

Mark Murray, president of the Center for Hospice and Palliative Care in South Bend, Ind., says that in the past year, eight percent of his referrals died before they could even be admitted, and 20 percent died within 48 hours. Those last-minute decisions put enormous financial pressure on hospices and make it impossible for patients to get the full benefit of end-of-life care.

These disincentives come on top of a long-standing reluctance on the part of many doctors to even talk about hospice. In a 2009 study, more than half of patients with stage IV lung cancer said their physicians never even raised the option.

I am a huge fan of hospice: My wife is a hospice chaplain and both my father and father-in-law were hospice patients. These organizations are a model for coordinated care that other health care providers would do well to copy. But doctors need to be persuaded to use hospice. And that may mean changing a payment system that may be discouraging them from using this valuable service.

Howard Gleckman, a resident fellow at the Urban Institute, is author of "Caring For Our Parents" and a frequent writer and speaker on long-term care issues.

Twenty-seven years ago, President Ronald Reagan and a Congress split between Republican and Democratic control agreed to a radical new payment scheme for Medicare. The resulting legislation trimmed billions of dollars from the federal budget and caused medical inflation to plummet, yet still maintained quality of care.

Although this stunning achievement led to a permanent change in how both the public and private sector pay for health care, it has gone curiously unmentioned during more than a year of rancorous health reform debate. Nor is it likely to arise at the much-ballyhooed bipartisan summit. The topic simply raises too many squirm-inducing questions. In this instance, conservatives and liberals alike can agree that political discretion is the better part of valor.

For Democrats, the changes in Medicare hospital payments enshrined by the Social Security Amendments of 1983 constitute an unpleasant reminder that reforms targeting cost can be, and have been, successfully  decoupled from those aimed at improving access. Given the public enthusiasm for cost control over access expansion, acknowledging that reality might well deal a fatal blow to decades of liberal efforts to achieve the dream of universal coverage.

For Republicans, however, the reverberations of the Reagan-era Medicare revamp are even more unsettling. The most-revered figure in modern American conservatism agreed to an administered price system that the current guardians of conservative orthodoxy would undoubtedly denounce as socialist, Bolshevik or worse. Even more painfully, the scheme worked. Perhaps most painful of all, Reagan's reasoning showed a pragmatic view of government much closer to today's political center than it is to hard-right GOP ideologues.

The 1983 payment change was conceptually simple. Medicare pulled the plug on paying hospitals whatever they billed the government as their costs, plus an additional profit margin piled on. Instead, Medicare paid a fixed price linked to each patient's clinical condition, or diagnosis-related group (DRG). That price might vary somewhat due to adjustments such as regional wage levels, but it was essentially set in advance; hence the term "prospective payment system" (PPS) to describe the methodology.

As recounted by policy experts Rick Mayes and Robert A. Berenson in their book, Medicare Prospective Payment and the Shaping of U.S. Health Care, the effect of prospective payment was dramatic and immediate.  Growth in Medicare hospital payments plummeted from 16.2 percent a year from 1980 through 1983 to just 6.5 percent from 1987 through 1990. Hospitals, no longer paid to pad stays, hurriedly switched gears. Between 1982 and 1988, Medicare hospital days plunged 20 percent.

"Hospitals' financial health improved with increases in efficiency, and patient outcomes showed no discernible damage," noted a 2007 Health Affairs review of the Mayes and Berenson book, even as Congress discovered it could use changes in the annual update DRG factor to reduce the federal deficit.

Just as important were the far-reaching changes fomented elsewhere by the Medicare reforms. Reforms of Medicare hospital payment led inevitably to physician payment change. Even more heretically for free-marketeers, the government's actions spurred a lagging private sector. When hospitals tried to shift costs to private payers, insurers responded to customers' complaints by tightening oversight of medical utilization and changing  payment in the strategy. The result was that unregulated fee-for-service was replaced by what came to be called "managed care."

The Reagan administration understood that being for "small government" as a regulator did not mean abandoning efforts to make sure taxpayers got their money's worth from government-as-purchaser. Prospective payment was the strategy of a prudent purchaser committed to encouraging efficiency. Hospitals were put at financial risk: those who could efficiently deliver care for less than the average price made money;  inefficient hospitals lost money. Within that context, DRGs represented deregulation.

That confidence in appropriate use of government power helped the administration withstand a firestorm of criticism when DRGs actually went into effect. Although the term "death panels" was not used, the same idea quickly surfaced. The president of the American Medical Association, for example, declared that doctors were "not going to be allowed to practice medicine...based on their own judgment" and that "rationing of health care" had begun. Other critics spoke of patients discharged "quicker and sicker" to a "no-care zone."

The other factor that prevented the derailing of DRGs was the bleakness of the status quo. The much-overused word "crisis" genuinely applied. In 1967, Medicare served 19 million beneficiaries and paid $4.7 billion for their care. By 1985, Medicare expenditures had grown 30 times as fast as the population covered, reaching $72.3 billion for 31.1 million beneficiaries. The pain was real, persistent and getting worse.

At the same time, Social Security was literally on the verge of bankruptcy. Faced with that prospect, Congress  had to act. Prospective  payment, with little public notice, was snuck into "save Social Security" legislation, with the provider community threatened with far worse consequences if the deal for DRGs fell apart.

Today, policymakers seem less sensitive to the demands a crisis puts upon us as a nation and more attuned to the arguments advanced by special interests. Even in the extreme example of the 9/11 terrorist attacks,  Congress has been slow to take simple steps to adequately protect chemical plants because of concerns about government regulation. If the vivid memory of the crumpling World Trade Center towers is inadequate to override ideological concerns, why should more abstract issues, such as the growing numbers of the uninsured, fare any better?

Moreover, we are also quicker than ever to seize upon alarming anecdotes as if they were fact, and we are able to spread those anecdotes instantly via the Web. Even the rumor of short-term pain is unbearable; long-term gain is inconceivable if measured in months or even years.

Like DRGs, comparative effectiveness research is a way to use the power of government to promote private sector efficiency. It's the kind of idea that centrists from both parties could rally around at a bipartisan summit; after all, it was part of both the John McCain and Barack Obama presidential campaign platforms.

Unfortunately, in today's political environment the right wing of the GOP is very far from being Ronald Reagan Republicans.

Michael Millenson is a Highland Park, IL-based consultant, a visiting scholar at the Kellogg School of Management and the author of Demanding Medical Excellence: Doctors and Accountability in the Information Age .

This column is a collaboration between KHN and The New Republic.

The idea that Republicans haven’t had a chance to present their ideas on health care reform is a bit mind-boggling. Five separate congressional committees had hearings; each chamber had floor debates. That’s hundreds of hours the GOP had to talk about health care, all of it in public view and televised on C-SPAN. And that’s not even including all of the unofficial channels at the Republicans’ disposal. Generally speaking, the party of Rush Limbaugh and Fox Television doesn’t struggle to get across its message.

But if President Obama is determined to give Republicans one more public forum for presenting their health care agenda, as he will do when he meets with GOP leaders on Feb. 25, promised last week, maybe that is just as well. For most of last year, Republicans spent their time attacking Democratic plans for reform, rather than describing their own. But now they’ve put a plan on the table. Showcasing that plan--and comparing it to what the Democrats have proposed--might help clarify a few things.

The Republican health care plan is part of the "Roadmap for America's Future." Its chief architect is Paul Ryan, ranking Republican on the House Budget Committee and a rising star in the party. Republicans boast that the Roadmap is serious plan to get the federal budget under control, which turns out to be a fairly large exaggeration. As Howard Gleckman of the Tax Policy Center has observed, the Roadmap doesn't account for trillions of dollars in lost revenue from its tax cuts. Yes, that's trillions with a "t" at the front and "s" at the back.

The health care portions of the plan, though, really would reduce what the government spends on health care. And they would do so, primarily, by extracting money from Medicare. Instead of continuing to provide coverage directly, the government would issue vouchers that seniors could use to buy private insurance. The value of the vouchers would rise far more slowly than Medicare spending is expected to grow if nothing changes.

According to the Congressional Budget Office, Medicare will soak up more than 14 percent of gross domestic product by 2080. If the Roadmap were to be adopted, CBO says Medicare would take up less than 4 percent. As Ryan explained during an illuminating interview with the Washington Post’s Ezra Klein, the hope is that converting Medicare into a voucher scheme would prod seniors to shop around to find the best value--that is, the best insurance policies, the best hospitals, the best doctors--and, in so doing, get health care that is as good if not better than they would have otherwise.

That all sounds perfectly innocuous: Who wouldn’t want seniors taking the initiative and hunting around for the best bargains? But it’s not clear how many seniors really have the ability to navigate the world of health care with the sort of sophistication to really hunt down the most cost-effective care, even if, as Ryan promises, they’d have more information at their disposal. At the very least, you'd want to give seniors ironclad protections when it comes to the design of insurance products--making sure a wide array of services were covered and that out-of-pocket spending were limited.

The Roadmap includes only vague protections along those lines. Combine that with the magnitude of the spending reductions--those cuts are very big--and it's easy to envision a world where seniors simply couldn't afford their medical care. As a preliminary (and still unpublished) analysis of the Roadmap by the liberal Center on Budget and Policy Priorities concluded, “elderly and disabled people with significant medical conditions could encounter serous difficulty securing adequate coverage.”

But wait a minute--don’t the Democratic reform plans also take money out of Medicare? They sure do. But there are several key differences. For starters, the Democrats’ reductions don't appear to be as large as what’s envisioned in the Roadmap. Also, under the Democratic plan, most seniors would still be getting their coverage directly from the government, which has lower overhead than private sector insurers. So every dollar the Democrats spend on seniors would actually go a little further.

No less important, the Democratic plans wouldn't simply slash spending and let the market sort itself out. Instead, the Medicare cuts are part of a broader package of reforms designed to change the way Medicare pays for services. These reforms are designed to reward efficiency (by, for example, paying more to doctors that join integrated group practices) while penalizing inefficiency (by, for example, paying less to hospitals with high rates of infection or, eventually, paying less money for drugs that don’t work that well). They are also designed, quite frankly, to push down the prices that providers charge.

This is a critical difference. If you simply reduce the money flowing into Medicare, relying only on the wits of beneficiaries to figure out how best to spend what’s left, seniors are bound to end up with less care. That's the Republican method. But if you also introduce system-wide changes that reward more efficient care and force down provider prices, the dollars in the program really might go farther--so that spending less doesn't always mean getting less. That's the Democratic approach.

"The slowdown in the Reid [Senate] bill is predicated on specific policies which, according to MedPAC and others, shouldn't reduce beneficiaries' access to care," says Paul Van de Water, a senior fellow at the Center on Budget. "The Ryan bill just gives every beneficiary a voucher and makes them fend for themselves in a poorly regulated private market."

The irony is that, for much of the last year, Republicans have been scaring the bejeezus out of seniors by telling them that Democrats were out to destroy Medicare. But the Roadmap makes clear that it’s not Democrats who seek massive, disruptive changes to the program. It’s the Republicans. If the coming engagement between the Republicans and President Obama help the public to understand that reality, extending the debate might actually be worth it.

Jonathan Cohn is a Senior Editor of The New Republic .

President Barack Obama and Democratic leaders in Congress continue to insist that the push for health care reform is far from over. But the release of the president’s budget for fiscal year 2011 marks another turning point in the debate, one that means the climb toward passage of the bill — or any bill for that matter — has only gotten steeper.

The problem for those trying to pass a version of the current plans pending in Congress starts with the avalanche of debt the nation is staring at in coming years. From 1789 through 2008, the U.S. government borrowed a total of $5.8 trillion. In 2009, the federal budget deficit exceeded $1.4 trillion. The administration now expects the 2010 deficit to break that record, topping $1.6 trillion. And in 2011, it would only fall to about $1.3 trillion. Thus, in just three years, the debt will have jumped an astonishing $4.2 trillion.

And it will only get worse from there. In 2020, the administration expects total federal debt to reach $18.6 trillion — and that assumes all of the president’s budgetary policies are adopted in full, including a health care bill that the administration says will reduce the ten-year budget deficit by $150 billion. The average annual deficit in the president’s budget for the next decade is $853 billion, and it would be rising rapidly at the decade’s end as the full force of the baby boom retirement starts showing up in the numbers for Social Security, Medicare and Medicaid.

If the country has not gotten its fiscal house in order by then, it will be wrenching to do so at that time. Debt service payments alone will reach $912 billion in 2020, a full 20 percent of all federal revenue collections.

It is now readily apparent that piling up debt at the rates implied by the president’s budget would all but invite an economic crisis. At some point, the flood of Treasury debt instruments worldwide would lead lenders to demand higher rates of return for their loans, or perhaps to runaway inflation — or more probably both. The result could be quite devastating to private-sector business investment, productivity and job growth, making it all the more difficult to get out from under the debt spiral that would ensue.

The very real prospect of a looming calamity has gotten people’s attention. Economists from across the political spectrum are urging action to reduce the risks associated with out-of-control federal borrowing.

It’s not that the president and his advisors don’t recognize the problem. They speak frequently about the dangers of business as usual. The problem is that the president’s stated solution will never work.

What the administration would like to do is to have Congress pass the health care bill and then follow it up with a bipartisan deficit-cutting plan, put together by a special commission assigned with assembling a medium and long-term solution to the nation’s budgetary woes.

The first problem with this sequencing is its unrealistic political calculus. The president and Democratic majority in Congress are exhorting Republicans to cooperate in what will surely be a highly unpopular deficit-cutting exercise — after they have locked into place the most expensive new entitlement program in decades. There is virtually no chance this will work.

The other problem is the planned timing of the debt commission’s recommendations and congressional action. The president would like the commission to issue its plan after the November congressional elections, and have a lame-duck Congress vote on it between early November and the start of new Congress next January. So the most far-reaching tax hikes and spending cuts in a generation would be recommended by an unelected commission and passed by an exiting Congress, all in a matter of days and weeks, even as newly elected members are set to take their seats. To say the odds are long is quite an understatement.

Still, congressional Democrats press on and continue their search to put this plan into action. In the wake of Scott Brown’s election to the Senate, the latest tactical twist is to pass the health care plan in two bills, not one. The Senate has already passed a health care bill, which is now awaiting action in the House chamber. House leaders are suggesting that they might be able to pass the Senate bill and send it to the president for signature if Congress could simultaneously consider and pass a series of amendments to the Senate bill which would make it more palatable to House members. Moreover, these amendments would be taken up and passed in a reconciliation bill, which means they couldn’t be filibustered in the Senate.

It’s certainly a novel approach. The problem is that a Senate bill awaiting passage in the House is not a law. Reconciliation measures are supposed to address budgetary matters. How could amendments to something that is not yet in law change outlays or revenues in any rational way?

In normal years, the submission of the president’s budget kicks off a new legislative session. The Congressional Budget Office resets its baseline and looks one more year into the future. The congressional budget committees start with a clean slate and write a new budget resolution governing legislation over the coming year.

All that machinery will be cranking up in the days and weeks ahead, making it even more difficult to turn back and try to pass a bill based on last year’s assumptions.

The president and congressional majority should take the opportunity a new budget and legislative year brings to rethink how they are proceeding. The nation faces daunting challenges, economically and budgetarily.

There are opportunities for building bipartisan consensus on sensible solutions, including in health care, where both parties could come together to expand coverage and slow the pace of rising costs. But those opportunities will almost surely vanish if Democrats continue to insist on rewriting American health care their way -- which is to say in a way that much of the country plainly does not support.

James C. Capretta is a Fellow at the Ethics and Public Policy Center. He served as an associate director at the White House Office of Management and Budget from 2001 to 2004.

President Barack Obama wants to increase funding for a government program intended to make it easier for family caregivers to get respite care. These hard-pressed families desperately need the helping hand. But the White House initiative is a symptom of all that is wrong with long-term-care policy in the U.S.

Government assistance for those who suffer from chronic illness is both terribly underfunded and deeply disorganized. There are programs run by Medicaid and Medicare and the federal Administration on Aging. There are programs run by states and similar projects run out of Washington. This is a particular nightmare for those with disabilities who are struggling to stay at home. If you don’t believe me, try to find a local phone number for elder care assistance.

I live in Montgomery County, Md., and a quick look at my phone book shows 18 different numbers for various senior services. If I need help that is not provided though the county, I need to call the state, which requires yet another frustrating search. Over the years, offices on aging and disabilities have tried to create one-stop shopping to make it easier to find help. And Maryland has a pretty good Web site that tries to pull together all these resources in one place. But the various programs go on for screen after screen. Imagine trying to navigate this if you are 75 years old and caring for a spouse with dementia.

The respite care program Obama wants to expand is typical of the problem.  Respite care is temporary assistance for families who are helping the frail elderly or those with disabilities live at home. It may be a home health aide who visits for a few hours so a spouse can get a break. Or it may be an adult day program or transportation aimed at helping the person receiving care get out of the house. 

The Lifespan Respite Care Act was passed by Congress in 2006. And its laudable goal was to encourage states to coordinate services aimed at giving family members a temporary break from their often stressful responsibilities. For instance, states could use the funds to make more information available to caregivers about respite services or to train care workers.  

But the new law ran into two problems: Individual state agencies trying to protect their turf—and no money. For instance, the original law allowed up to $71 million for the program this year. But in its most recent budget, Congress agreed to make only $2.5 million available to states. The president now says he wants to increase this to about $50 million next year. At a time when the $1.4 trillion federal deficit is putting enormous pressure on spending programs like this, I’m willing to bet he’ll never get it all. And even if he does, he’d still only be spending a bit more than half of the $91 million the original law allowed.

For some sense of how little this is, think about it this way: By the administration’s own count, there are 38 million caregivers in the U.S. (others estimate there are many more). Even if Congress gave Obama the full $50 million, that works out to $1.31 per family. Of course, that's a lot better than the six cents being spent today.

Worse, cash-strapped states are slashing their subsidies for the very adult day programs Lifespan is trying to promote. In a states such as California, for example, a federal program to promote these services won’t help much if the programs themselves are shuttered—an idea now being debated in Sacramento. And no small federal grant program will save them. 

In today’s awful budget environment, financial pressure on government services for the elderly and others with disabilities will only get worse. The president has already proposed freezing overall spending for social programs exactly like Lifespan for the next three years. If more is spent on Lifespan, don’t be surprised to see funds cut for other badly needed assistance aimed at exactly the frail elderly and younger adults with disabilities.

At the same time, Medicaid—the primary long-term care support program for the sickest and poorest among us—faces its own budget crisis, both in Washington and in the states that pay about half its costs.

The best solution is to free families from the whims of politicians and the inevitable battles over government dollars. National long-term care insurance, such as the proposed CLASS Act, would help in two ways. First, it would give people cash benefits they could use however they want. They would not need to rely on underfunded and possibly inaccessible government programs. If a wife wanted to enroll her husband in an adult day program, she could just do it. Second, because millions of consumers would, for the first time, have the financial resources to pay for these services on their own, new private services would spring up that might do a better job than today’s diffuse and underfunded government programs. It is at least worth a try.

Howard Gleckman, a resident fellow at the Urban Institute, is author of "Caring For Our Parents" and a frequent writer and speaker on long-term care issues.

Critics of health care reform have been hammering away at its substance for months. But, since last week's election in Massachusetts, they’ve been focusing their attacks more on the way reform has come together in Congress. As the argument goes, Democrats wrote the bill on their own and in secret, producing proposals full of shady back-room deals that aren’t in the public interest. The symbol of reform’s hidden corruption is the so-called Cornhusker swindle: A promise, extracted by Nebraska Sen. Ben Nelson, that the federal government would pay the entire cost of expanding Medicaid in his state.

You can’t really defend the deal on the merits. No other state got the special treatment that Nebraska did. But if you stop and think about why Democratic leaders cut that deal, you’ll realize just how wrong-headed the broader critique of the process is. If Democrats hadn’t been so determined to reach out to Republicans--and worked so hard for an agreement that didn’t seem overly partisan--they wouldn’t have made the Nebraska bargain, or many others, in the first place.

Remember how we got to this point--and how far President Barack Obama and the Democrats have gone to accommodate Republicans and the conservatives they represent. The plan Obama outlined on the campaign trail, the one Democratic congressional leaders endorsed, called for making sure nearly every American had insurance. But accomplishing that would have cost well over $1 trillion over 10 years and, by some estimates, closer to $2 trillion. That was more than conservatives could stomach. To get the price tag down below $1 trillion, they settled on a plan that covered far fewer people.

The original Obama and congressional plans all called for creating a public insurance option, into which people could enroll voluntarily. But that proposal, too, ran afoul of more conservative sensibilities--and was summarily dropped. (The House ended up including a public plan as part of its bill, but House leaders signaled long ago their readiness to drop it in order to reach a compromise with the Senate.)

These moves didn’t make health care reform more popular. If anything, they had the opposite effect. A plan that spent more money would have required finding more offsetting revenue or savings. But it also would have provided clearer, quicker benefits for middle-class people--many of whom now fear the bill does too little to improve their lives. As for the public plan, poll after poll has shown that it is popular. And the really crazy thing is that the Democrats might have been able to keep both features--with, at most, minimal compromises--if only they’d been willing to go it alone, the way the critics insist they did.

Under Senate procedures, the Democrats had the option of passing health care reform, or at least many of its elements, through what’s called the reconciliation process. In reconciliation, a simple majority of senators can pass a bill, without the threat of a filibuster. Rules limit what can and can’t be considered during the process, so it has definite drawbacks. But if Democratic congressional leaders were determined to pass something on their own--the way, say, Republican congressional leaders were frequently during the Bush years--they could have gotten much and maybe most of what they wanted.

But they didn’t--in no small part because they didn’t want to act in such a blatantly partisan way. Whether that was a matter of principle (i.e, they really believed bipartisanship is important) or a matter of perception (i.e., they thought voters would get mad), it ended up constraining them all year long. Instead of wrapping up negotiations and passing bills before the summer was over, the process dragged into the fall and winter. Over and over again, Democratic leaders (particularly Senate Finance Chairman Max Baucus) reached out to Republicans, only to be rebuffed. When that didn’t work, they were left trying to deal with the most conservative members of their own caucus--culminating in the negotiations with Nelson and the promise to cover his state’s Medicaid expansion. If Senate Democrats hadn’t needed Nelson’s vote to break the expected Republican filibuster--if they could have passed health reform with a “mere” 59-vote majority--they could have told Nelson to take a proverbial hike.

The same, by the way, goes for all of the other back-room deals made to pass this bill. If Obama and his supporters had a greater margin for error--if they could have passed health care reform with a simple majority of votes, instead of the 60-vote supermajority forced by the threat of Republican filibusters--they wouldn’t have had to make so many concessions to special interests that wield influence over the Congress.

But every special interest knew that the Democrats had a razor-thin margin for success--and that gave them maximum leverage. They understood early on that, by trying in good faith to reach deals with Republicans and conservatives, Democrats were falling into a trap--the one that’s ensnaring them now.

Jonathan Cohn is a Senior Editor of The New Republic.

I've heard many people say it won't be possible to pass a bipartisan health care bill in today's poisoned environment.

But we will ultimately have real health care reform in this country for a very simple reason: We have no choice and both Democrats and Republicans understand that. More importantly, the American people know it.

If there is one common lesson in the collapse of the Democratic health care efforts in 1994 and 2010, it's that something as big, complex and controversial as reform has to be done in a bipartisan way.

Was the recent debate hyperpartisan? Were the Democrats arrogant in thinking they could ram through their liberal health care agenda? Did lots of Republicans demagogue the Democratic efforts as soon as the debate clearly turned partisan? Isn't it true the Republicans haven't had a serious health plan of their own?

Yes to all of the above.

But if the Democrats and Republicans are serious about being bipartisan, there are opportunities. There are at least 10 Republican senators who have a track record of good faith on health care issues. They include the Senate Finance Committee Republicans who worked hard to get a deal last summer; Orrin Hatch, who co-wrote the children's health plan; John McCain, who co-sponsored the patients' bill of rights with Ted Kennedy, and the Republicans who support the Wyden-Bennett bill.

Can we achieve something bipartisan and modest in this election year? It isn't likely but it is not impossible. True, the Republican base isn't going to support any efforts to reach out to Democrats who are dangling on a political meat hook.

And liberals are going to have to swallow a lot of the hubris that is at the root of Democrats' current political fix.

Republicans also need to understand that voter anger at the Democrats is not the same as support for Republicans. In 1994, Gingrich and his team had new and fresh ideas. In 2010, these Republicans are the guys we threw out in 2006 and 2008 -- and they certainly haven't offered any new and intriguing ideas lately to fix the health care system.

Both sides could benefit from behaving themselves and actually accomplishing something tangible. A few modest first steps could do a lot to begin to build some bipartisan trust -- and actually help some Americans who need it.

Calls to deal with insurance reform -- eliminating pre-existing conditions and medical underwriting limits -- would not likely be part of these first steps. To make those changes, we would have to get both the sick and the healthy into the health insurance risk pool. And that means mandates and hundreds of billions of dollars in subsidies; those provisions aren't possible without reconstructing the same big bills now on the table.

In fact, President Barack Obama and Congress have already taken some important steps on health care. They have, for example, expanded and extended the Children's Health Insurance Program, and promoted  health information technology and comparative effectiveness as part of the stimulus bill.

Now they should take some other good bipartisan steps:

Approve lesser health insurance reforms that are in the Democratic bills. Bar policy rescissions for immaterial and inadvertent consumer mistakes and provide federal funding for state-based high-risk pools serving the uninsured.

Create subsidies for small businesses to buy health insurance. The number of small businesses that provide coverage is melting in the face of the high cost of insurance. The small group market would be a good place to begin to spend subsidy dollars; it already has less- restrictive underwriting rules because it is generally a guaranteed- issue market. Most of the working uninsured don't have coverage because their small employers can't offer it. This would be a very efficient way of making progress toward covering people.

Expand Medicaid in a modest way. The House bill would expand Medicaid coverage to people with incomes up to 150 percent of the federal poverty level; the Senate bill, 133 percent. What can we afford now? From the existing state average of 65 percent of the poverty level, there might be enough money available to fully fund an expansion of Medicaid to 80 percent or 90 percent.

A huge bipartisan step would be to grant the Republicans some commonsense tort reform.

Would enacting this list constitute health care reform?

No.

But it could be the beginning of a process to rebuild bipartisan effectiveness, trust between the parties, voter confidence and actually help millions of people.

From the very moment public opinion started going south on the president’s health plan, the White House and Democrat leaders in Congress began sounding a familiar refrain: The public does not understand the bill; they’ve been lied to, deceived and misled by the opponents; and once they learn how it really works, familiarity will breed...well, something other than contempt.

I have four problems with this point of view:

1. If it is sincere, you would think the Obama Administration would have made a major effort to educate the public about how the bill really works; in fact, they have made no effort whatsoever.

2. Since ObamaCare is modeled after the Massachusetts health plan, voters in that state should be better informed than even Obama himself about how it “really works”; yet Massachusetts voters resoundingly rejected the president’s plan in Tuesday’s U.S. Senate election.

3. There was a lot of misleading information flying in all directions at last summer’s town hall meetings; but on balance, the average protestor appeared to be better informed than the average member of Congress.

4. Among the chattering class — who are paid to express informed opinion — the proponents of ObamaCare are far less knowledgeable than the opponents.

Cognoscenti are in the Dark. Let’s take the last point first. How many editorials have you seen where the writer rattles off a laundry list of health care problems and then concludes with “that’s why we need health reform”? Each of these editorials makes the same two mistakes: (1) They assume that ObamaCare will solve the problems they are writing about and (2) they assume it’s either ObamaCare or nothing. This second mistake is called the fallacy of the excluded middle.

As we have pointed out many times, ObamaCare is not going to solve our most serious problems. It will make costs higher, not lower. It will lower, rather than raise, the quality of care. It will “solve” the problems of pre-existing conditions by substituting problems that are even worse. And it may not even increase access to care.

Then there are the writers who bypass the details altogether and jump straight to wild claims. Here are two:

["ObamaCare] will give Americans what citizens in every other advanced nation already have — guaranteed access to essential care. " (Paul Krugman in The New York Times)

For the first time, we will enshrine the principle that all Americans deserve access to medical care, regardless of their ability to pay." (Eugene Robinson in The Washington Post)

Now you would think that anyone who hasn’t been living in a cave in some remote spot would know that access to the care they need is exactly what many Canadians and Britains do not have. And if they do not have the money to buy that care in the private sector or in another country, they are forced to go without because of lack of “ability to pay.”

Bay State Folks Know What’s Happening in Their State. We don’t have to go all the way to Britain or Canada to see where Krugman, Robinson and others have missed the boat, however. Massachusetts will do just fine. Bay Staters are not clamoring to repeal what they have. But they are acutely aware of the problems that haven’t been solved. And one of them is lack of access to care for people who lack the ability to pay market prices. As previously noted, the wait to see a new doctor in Boston is more than twice as long as in any other U.S. city. Further, the number of people going to emergency rooms for nonemergency care in Massachusetts is as great today as it was before health reform was enacted.

The White House is Doing Nothing to Educate the Public. It’s not just the general public that is being kept in the dark. Obama is the same way with his base. Since June, the president has been sending a weekly e-mail to an estimated 19 million faithful about health care. Strangely, these letters are never truly educational. Instead they are cheerleading messages — the sort of thing you would expect at a pep rally. (By contrast, the NCPA’s weekly messages to 1.3 million petition signers tend to be very informative.)

Voters on the Whole are Very Informed. There has probably never been a major piece of legislation before Congress about which voters were better informed. I continue to believe that the average “activist” who opposes the bill knows more about it than his/her congressional representative. Rasmussen found that after an initial poll question, people were just as negative — if not more so — when pollsters described ObamaCare in some detail.

As Lanny Davis said the other day, “It’s the substance, stupid.”

The Washington Post recently ran a column arguing that the U.S. model for caring for the frail elderly and younger people with disabilities falls far short of the long-term care systems in France and the United Kingdom. There is no doubt the U.S. scheme is deeply flawed. But even as Congress struggles to reform long-term services and supports here, France is wrestling with its own system. And in Britain, long-term care is rapidly becoming a major political embarrassment for Labor Prime Minister Gordon Brown.

A bit of history: Two decades ago, most of the developed world relied on the same sort of welfare-based, Medicaid-type system that the U.S. still uses. That is, if you were poor enough and sick enough, the state would provide some modest personal assistance. If you were middle class, you were on your own—that is, until you spent so much on care that you became poor enough to qualify for government aid.

Most developed countries recognized this system was both needlessly cruel and fiscally unsustainable. The U.S. tried to keep people off Medicaid by encouraging them to buy private long-term care insurance. It tried tax subsidies, a government marketing campaign, and an effort to better coordinate private insurance with public benefits. For the most part, it failed, and today, only about seven million Americans own private insurance.

At the same time, most of Europe and Japan went a different route. Building on their national health systems, they turned long-term care from welfare to social insurance. Germany, for example, adopted a universal, national long-term care insurance system that aims to pay about half the cost of long-term care.

Japan took a similar, but slightly different, tack. In the face of massive pressure from women who were trying to hold down jobs while caring for their mothers and mothers-in-law, Japan also created a national long-term care insurance program. Funded by both taxes and income-based premiums, Japanese insurance covers about 90 percent of the cost of care, though principally for those 65 and older.

France put its own spin on the social insurance model. It also provides universal tax-funded long-term care insurance, but benefits are closely tied to income. As a result, a very poor person might get the equivalent of $1,400-a-month for home care, while someone earning about $50,000-a-year might receive only a few hundred dollars. As a result, in France, one-quarter of those 65 and older have purchased private long-term care insurance to supplement their government benefit.

While these changes are a big improvement over past practices, they have created their own problems. For instance, France and Japan, along with countries such as The Netherlands, have struggled with rapidly increasing costs and have had to reduce benefits. Germany has addressed its cost problem by raising the payroll tax that funds its insurance program.

Oddly, England, which The Post held out as a model of long-term care, may face the biggest mess of all. Unlike the rest of Europe, it has failed to reform its financing system in any significant way, and remains stuck in its failing welfare model. While the elderly (and everyone else) get universal medical care through its National Health System, only the poor get government long-term care benefits. And, because this assistance varies dramatically from one local jurisdiction to another, the system is widely disparaged as the “postcode lottery.”

The U.K. has struggled to fix this system for well over a decade. High-powered commissions have recommended major reforms, but little has been done. One scathing 2006 report by the Joseph Rowntree Foundation concluded "the public finds the present system incomprehensible and considers its outcomes unjust." Not exactly a ringing endorsement.

Yet, reform efforts have gone nowhere. In July, Prime Minister Brown proposed a fundamental shift to an insurance-type model. But in November, he appeared to switch gears and call for expanding free care, but only for the most needy. For his troubles, Brown, who faces reelection this spring, is being roundly criticized by both conservatives and members of his own Labor Party.

There are two important lessons from the European experience. First, while an insurance-based system is vastly better than one that requires people to impoverish themselves before they can get help, it is not easy to implement. Second, the U.K is no model for reform.

Howard Gleckman, a resident fellow at the Urban Institute, is author of "Caring For Our Parents" and a frequent writer and speaker on long-term care issues.

In their attempt to expand health insurance coverage, House and Senate Democrats are poised to make the American dream less accessible to low-income Americans by hitting them with higher implicit tax rates than even multi-millionaires face.

In a new study, I found those implicit marginal tax rates would hover near 70-80 percent over broad ranges of income. In many cases, they would exceed 100 percent, financially penalizing those who try to climb the economic ladder.

The legislation would cause taxes and health insurance premiums to climb higher still, by creating huge financial incentives for healthy people to drop out of the market.

Two features of each bill would combine to impose punitive implicit tax rates on low-income Americans.

The first is an “individual mandate,” which would force Americans to purchase health insurance whether they want it or not, under penalty of fines and/or imprisonment. President Obama’s economic advisors and other Democratic economists acknowledge that the individual mandate is essentially a tax.

Each bill would require low- and middle-income Americans to pay an increasing percentage of their income toward health insurance. In so doing, the bills dispense with the heretofore universally accepted principle that marginal tax rates should only apply to income at the margin. As a result, the “mandate tax” creates marginal rates as high as 53 percent – and that’s for people making just $15,000 per year.

The second feature is the health insurance subsidies tied to the individual mandate. Those subsidies would disappear as income rises. Under the House bill, families of four with an annual income around $43,000 can lose a $1,000 subsidy just by earning $1 over the eligibility cutoff.

The non-partisan Congressional Budget Office writes, “That effect, known as an ‘implicit tax,’ can lead people to work fewer hours than they otherwise would, in the same way that income and payroll tax rates do.” It may also discourage them from “working harder in the hope of winning raises; accepting new positions or responsibilities with higher compensation; or investing in their future earning capacity through education, training, or other means.”

The disincentives to climb the economic ladder would be severe:

• Under the Senate bill, a single adult who scrapes her way from $12,000 to $17,000 in annual earnings would only get to keep one out of every three of those additional $5,000 dollars – an implicit tax rate of 66 percent.

• Under the House bill, a family of four that struggles to climb from $30,000 to $45,000 would only get to keep $3,000 of that additional $15,000 – an implicit tax rate of more than 80 percent.

In many cases, implicit marginal tax rates would exceed 100 percent:

• Under the Senate bill, adults with annual earnings of $14,560 who earn an additional $560 would see their total income fall by $200, due to higher taxes and reduced subsidies.

• Under the House bill, a family of four starting at $43,670 that earns an additional $1,100 would see its total income fall by $870.

Multi-millionaires would face tax rates no higher than 47.9 percent under these bills. In contrast, the Senate bill would create at least three “cliffs” where families of four would face implicit marginal tax rates greater than 100 percent. The House bill would create at least four.

Many low- and middle-income families will decide the American dream is no longer worth it. If work no longer pays, who could blame them?

These high implicit tax rates are not a minor problem that can be fixed with a quick amendment. They are an inherent part of the Democrats’ strategy of expanding coverage by shifting costs, rather than reducing costs.

The perverse incentives don’t stop there.

Americans would have to pay a penalty if they lack insurance, but the penalties are so small that healthy individuals could save as much as $3,000 per year by going uninsured, while families of four could save $8,000. Those savings would grow over time. Each bill would effectively eliminate any penalty for “going bare” by forcing insurers to sell to the uninsured at standard premiums whenever they fall ill.

When healthy people respond to those incentives by abandoning insurance pools, premiums will rise for those who remain. That will create pressure for even more government spending and higher taxes.

Congress should apply the brakes to this locomotive. Americans deserve time to figure out what’s going on inside these 2,000-page bills.

Michael F. Cannon ( @mfcannon ) is director of health policy studies at the Cato Institute and author of ObamaCare’s Prescription for Low-Wage Workers: High Implicit Taxes, Higher Premiums , released today by the Cato Institute.

This column is a collaboration between KHN and The New Republic .

When the Democrats announced that they would be forgoing conference committee proceedings and negotiating a final health care reform bill informally, critics pounced on President Barack Obama for violating his promise of greater transparency in government. And I, for one, had no great urge to defend him.

As a presidential candidate, Obama had not merely promised to introduce more transparency to government. He had very specifically, and very repeatedly, promised to conduct deliberations over health care “in front of the cameras on C-SPAN.” Although I never took the pledge literally--clearly, you can’t negotiate an entire bill in public view--plenty of voters did. Now Obama was paying a political price for the boast. I figured it was punishment for rhetorical hubris.

But then, on Wednesday, a press release from the Republican National Committee came across my desk. It contained a statement by Rep. Tom Price, Ga., chairman of the Republican Study Committee. “If the Democrats aren’t engaging in more nefarious backroom deal-making, why do they refuse to pull back the curtains and let the public see what’s going on?” Price said. “What are they doing that they don’t want us to see?”

To call that statement priceless is not just a bad pun. It’s a gross understatement. As you may recall, the previous administration--that is, the very Republican George W. Bush administration--had its own problems with transparency. Perhaps most famously, Vice President Richard Cheney convened a task force to help the administration design energy policy. People were naturally curious about what this task force was doing, particularly given the administration’s close ties to the petroleum industry, but Cheney wouldn’t even reveal who was on the task force, let alone open its proceedings to the public.

If Republican leadership was in high dudgeon then, I must have missed it.

The energy task force episode was emblematic of the Bush administration’s approach to transparency. And that approach has changed pretty radically in the last year. According to Ellen Miller, president of the Sunlight Foundation, the Obama administration has made “enormous strides” towards open government. The record is “not perfect,” she says, but “no White House has been more open.”

One sign of this progress is the decision to make public the names of all visitors to the White House. Want to know how frequently Billy Tauzin, the former congressman who now lobbies for the drug industry, visited 1600 Pennsylvania Avenue? You can look it up at www.whitehouse.gov. There’s even a handy search tool.

Of course, if you do that search, you’ll see that Tauzin visited the White House 11 times last year--which is not unrelated to the fact that his organization, the Pharmaceutical Research and Manufacturers of America, struck a deal with the administration over health care reform. In a nutshell, PhRMA agreed not to fight reform and the administration, with Senate Finance Chairman Max Baucus, D-Mont., as a partner, agreed it wouldn’t seek changes that reduced drug industry revenues by more than $80 billion. While the existence of a deal was no secret--the administration itself announced it, as a sign of legislative progress--the details only came to light later on, in reports that appeared in the New York Times and Huffington Post. Those details suggest the industry will make out rather well.

Still, everything is relative. The health care industry seemed to have even more influence in 2003, when the Bush administration worked with the Republican congress to create a drug benefit for Medicare. The role of lobbyists in that episode was so obvious and the resulting giveaways to industry so egregious that it disgusted even some Republicans--like Rep. Walter Jones, R-N.C., who told “60 Minutes” that “the pharmaceutical lobbyists wrote this bill.”

Nor did the Bush administration and its allies seem particularly concerned with transparency during that fight. On the contrary, when the chief actuary for Medicare concluded that the drug plan would cost more than its proponents were predicting, an administration official ordered the actuary to say nothing--to the point where the actuary believed his job was in jeopardy. That same actuary, Richard Foster, has spent much of the last year issuing (somewhat) critical projections about Obama’s reforms. But neither the president nor his allies have tried to squelch Foster. Instead, they’ve been content to argue their case, in public, on the merits.

One more fact to consider is that Obama and his supporters are pushing reforms that will, on their own, advance the cause of transparency--not transparency in government, mind you, but transparency in health care. When insurance carriers make decisions about what services or treatments to cover, they often do so in secret--and leave beneficiaries no legal recourse for challenging those decisions. Reform would create a standard set of benefits, to be determined by democratically accountable officials, that all insurers must cover. It would also create binding legal processes, through which patients could challenge decisions they thought were unfair.

Could Obama be doing more to bring health care--and its policy work--out into the open? Without a question. But he could also be doing a lot less. That's worth something.