Obama calls for reform talks with Republicans

The President called today for talks between himself, Republicans and Congressional Democrats seeking to develop a reform bill that wouldn't be filibustered in the Senate and presumably might actually get some Republican votes. He seems to suggest unifying the House and Senate bills and saying here is where the Dems are, what do you guys think? to the Republicans.

In many ways the Republicans have no incentivizes to vote for anything. However, it will be hard for Republicans to not neogtiate at some level, and a give and take could result. If the talks are 'public' which is what everyone has been calling for, the President will likely do well. And if nothing passes then, the voters will have to decide what happens.

For all the terse rhetoric used to describe the Democratic bills, they essentially parody the Republican alternative to the Clinton Plan in 1994 and the framework of a deal is fairly obvious.

Might I suggest the following road map for discussion.

1. Med mal. The President should simply propose the AMAs wildest dream. The cost savings are widely over-estimated, but this is a key step both politically, and to have a hope to transition to a more patient-saftey focused system. Here is what I wrote about malpractice and reform in August. Here is what the CBO says is will be saved by a national imposition of a basic slate of medmal reforms ($54 Billion over 10 years; this is on a base of $33.3 Trillion, keep in mind). I think med mal reform is a good policy if used to also focus on patient safety. But, let me make a straight political argument to my liberal/progressive friends.

Even if you think doctors are money grubers, and you think they overstate the case for how much savings will come from malpractice reform, you should be for this in order to call their bluff. We often hear in response to any reform discussion that the real way to slow costs is to get rid of junk lawsuits. If you play this card, you end that argument. This is both good policy (I think) and good politics in terms of getting a bill passed.

2. Dump the tax on high cost health insurance and instead cap the tax exclusion at the mean (about $13,500 for family policies; about $5,000 for individual). Among health policy types, this is about the most bipartisan policy that exists--most think this is necessary to help get control of cost inflation. There are some Democratic politicians for this (for example the Wyden-Bennett bill), and all the Republicans who are for this need to put up or shut up. Adding this financing to the mix would be a big change, that will bring much more cost inflation reducing pressure into the system. I have written alot about this over the last 6 months. One aspect of this change that is key I think, is reorienting the discussion of health care cost inflation to include the role of individual consumers--you and I--our use of care ultimately drives increases in health care costs.

3. Add a lower cost catastrophic insurance option for persons under age 30. One of the biggest concerns about the Democratic bills are related to affordability of insurance given that an individual mandate has been enforced. While I agree that you need clearly defined and regulated benefit packages to enable consumers to shop for care, allow an option for a much more catastrophic level of coverage (maybe $10,000 individual; $15,000 family) for persons under age 30. Even better, create an auto-enroll catastrophic policy for persons under 30.

Update: an older post showing proportion of persons with $10,000+ in medical expenditures in a year...18-39 is 6.2% of persons.

4. Do two things related to Medicare. First, increase the eligibility age to equalize it with the planned increases in Social Security age, increasing it by two months per year starting in 2014 until it is 67 in 2025. Second, keep an Independent Medicare Advisory Commission that has an ability to look closely at what Medicare pays for, how and when. And have and engage in an open discussion about rationing of care. Not rationing is everyone getting anything they want. We don't have that now. We need to begin asking the question are the benefits greater than the costs and develop practical ways to frame, address, answer and act upon these questions.

During this discussion, everyone needs to take a close look at Rep. Ryan's proposal for vouchering Medicare. We can reduce the cost of Medicare by fixing the federal government's cost, and assuming the rest works out as Rep. Ryan notes. Or we can begin to muddle through developing ways to reconsider what, when and how we pay for care. Or it could be a mixture of the two. But, it has got to be something.

5. Adopt the so-called Wyden Amendment, which would open up the exchanges to more persons. As written, the Senate bill only allows around 1 in 10 Americans to buy insurance via the exchanges (only the uninsured, those working or small employers, or those with offers of employer based cover that is above the affordability standard). The big idea behind the Senate idea, and the Patients' Choice Act (Republican Alernative) is to help individuals shop for their own health insurance. If we are going to try it, lets try it.

These are just some thoughts on a way forward.