44 The Obama Presidency
Live Blogging Obama's Health Care Address
"I don't believe malpractice reform is a silver bullet, but I have talked to enough doctors to know that defensive medicine may be contributing to unnecessary costs. ... I know that the Bush Administration considered authorizing demonstration projects in individual states to test these issues. I think it's a good idea, and I am directing my Secretary of Health and Human Services to move forward on this initiative today."
This is primarily a sop to Republicans, who have been calling on Obama for weeks to include malpractice reform in his health plan. Numerous independent analyses have shown that malpractice lawsuits contribute a tiny fraction to the cost of health care.
At the same time, a number of hospitals report success with a program called "Sorry Works" that calls on them to admit their mistakes and negotiate with victims to determine just compensation before lawsuits are filed. In 2005, Obama and then Sen. Hillary Rodham Clinton (D-N.Y.) authored a proposal to offer federal funding to hospitals that adopt the Sorry Works model. By encouraging such experiments, Obama could attract Republican votes while improving the way the system functions -- without annoying the trial lawyers, who are among the most important contributors to Democratic campaigns.
"There are also those who claim that our reform effort will insure illegal immigrants. This, too, is false - the reforms I'm proposing would not apply to those who are here illegally."
Despite many claims to the contrary by opponents of the universal health care proposals, fact-checkers have repeatedly established that the bills' universal coverage provisions would not extend to illegal immigrants. In Section 246 on page 143, the House's bill states that "undocumented aliens" will not be eligible for credits to help them buy health insurance -- and these credits are the provision that lies at the heart of expanding coverage to the uninsured. And Medicaid already is limited to those who can prove legal residency. For that matter, even the universal health care program in Massachusetts -- one of the most liberal states in the country -- does not cover illegal immigrants.
The correctness of Obama's assertion did not keep one member of the House from shouting that it was a "lie." The Washington Post's Shailagh Murray and Chris Cillizza have reported that the shout came from Rep. Joe Wilson, a South Carolina Republican.
"This reform will charge insurance companies a fee for their most expensive policies, which will encourage them to provide greater value for the money -- an idea which has the support of Democratic and Republican experts. And according to these same experts, this modest change could help hold down the cost of health care for all of us in the long-run."
Obama is embracing one of the primary sources of funding the Senate Finance Committee has proposed for its bipartisan bill. This is significant because Obama has in the past refused to support the idea because he campaigned vigorously against a variant of it during the 2008 presidential election.
In essence, the proposal to fine insurance companies for selling high-cost insurance plans amounts to a tax on the most generous employer-provided policies in America. Many of those policies are held by union workers, who helped Obama win the election last year. But many are held by workers with the highest incomes, and the benefit is currently tax free.
Taxing all employer-provided insurance benefits would generate huge sums of cash for the federal government. The tax-free treatment of employer benefits is the single biggest loophole in the federal tax code. But lawmakers and Obama are not willing to go that far. Instead, they have settled on a plan to fine insurance companies for selling policies that cost more than $8,000 for individuals and $21,000 for families -- a move that virtually ensures such policies will disappear.
So, in the end, workers would pay for this change -- at least at first. But many economists hope that the funds employers no longer spend on gold-plated health plans would be shifted out of the bloated health care system and into workers' wages -- a move that would improve the nation's economic stability in the long run.
Some Republican members in the House chamber could be seen holding up pieces of paper, a highly unusual demonstration during a presidential address. At least one lawmaker -- Rep. John Shimkus (R-Ill.) -- could be seen holding up a copy of H.R. 1086, a Republican health-care reform proposal offered by Rep. Phil Gingrey (R-Ga.). The measure currently has 51 cosponsors, and Republicans clearly want to combat the charge made by many Democrats that they have opposed Obama's plan without offering one of their own.
-- Ben Pershing
"There are now more than thirty million American citizens who cannot get coverage."
This is a shift in the terms Obama uses to address the problem of the uninsured. He and other reform proponents have in the past talked about the 46 million or so uninsured, a Census-based number that many reform opponents have called overstated. Among other things, opponents have argued that a large chunk of the uninsured are illegal immigrants, who, as Obama emphasized again tonight, would not be covered under universal health care.
But in a seeming concession to the rhetoric around illegal immigrants, Obama tonight narrowed the uninsured who would be helped by the insurance to 30 million citizens. That is roughly in line with expert estimates of the number of citizens without insurance; experts estimate that there are about 9.7 million non-citizen uninsured, including about six million illegal immigrants.
Obama's "citizen" framing does raise the question of whether he intends his plan to cover legal immigrants who are not citizens. Until this point, he and congressional leaders had given no indication that their plans would not cover legal immigrants. But in Massachusetts, budget troubles have forced lawmakers to trim back the benefits offered to legal immigrants under the state's universal health care program.
"The only thing this plan would eliminate is the hundreds of billions of dollars in waste and fraud, as well as unwarranted subsidies in Medicare that go to insurance companies - subsidies that do everything to pad their profits and nothing to improve your care. And we will also create an independent commission of doctors and medical experts charged with identifying more waste in the years ahead. "
This is, at best, wishful thinking. Many of the proposed reductions in future Medicare spending would require hospitals and other providers to come up with ways to cover the savings. In theory, this could be accomplished by eliminating the vast quantities of waste and abuse that permeate the health care system. But some analysts fear that it could affect the quality of care. No one really knows how the cuts would affect the system.
Meanwhile, lawmakers are proposing a number of very specific reforms to improve the quality of care while reducing the number of procedures performed. The president's independent commission proposes to expand those reforms where they work and end them when they don't. Many health care experts view this as a promising route to cut costs without harming care to the millions of senior citizens who rely on Medicare.
In any case, the reductions proposed hardly constitute a slashing of Medicare spending, as some Republicans have charged. The nation already spends more than $400 billion a year on Medicare, and that figure is growing rapidly. Lawmakers are considering cuts that would reduce spending by $400 billion to $500 billion over the next 10 years.
-- Lori Montgomery
"First, I will not sign a plan that adds one dime to our deficits - either now or in the future. Period."
While Republicans quickly attacked this statement, many lawmakers in both parties have hope that the Senate Finance Committee will produce a plan that does indeed save the government money now and in the long run.
The House has proposed a plan that would increase the deficit by $240 billion over the next decade. The Senate health committee has a plan that would increase the deficit by $600 billion over the next decade. But Senate Finance has vowed that its plan will be paid for, and lawmakers say they have received a seal of approval from the Congressional Budget Office.
The CBO has yet to release a public estimate of the Baucus plan, however, and until that estimate is public Republicans are correct in asserting that none of the Democratic proposals would lower the deficit over the next decade or over the long term.
-- Lori Montgomery
"It's worth noting that a strong majority of Americans still favor a public insurance option of the sort I've proposed tonight. But its impact shouldn't be exaggerated - by the left, the right, or the media. It is only one part of my plan, and should not be used as a handy excuse for the usual Washington ideological battles. ... The public option is only a means to that end - and we should remain open to other ideas that accomplish our ultimate goal."
Obama's rhetoric on the public-insurance option -- that he favors it and wants it, but won't demand it, "and we should remain open to other ideas that accomplish our ultimate goal" -- sounds remarkably similar to that used Tuesday by House Majority Leader Steny Hoyer (D-Md.), whose comments on the subject caused some consternation among House liberals.
Hoyer's basic point, which he had made before, was that he supported the public option but it was not indispensable. The White House has long signaled that Obama feels the same way, and he reiterated that tonight. Speaker Nancy Pelosi (D-Calif.), meanwhile, has been more vocal in her support for the public option. But while she has said the House's initial health-care bill must have a strong public option, she's never quite vowed the same about a conference report. If push comes to shove, the House Democratic leadership will ultimately back a final bill without a public option. But what about the rest of the caucus?
- Ben Pershing
"One more misunderstanding I want to clear up - under our plan, no federal dollars will be used to fund abortions, and federal conscience laws will remain in place. "
Reform opponents have talked a lot about how universal coverage will result in taxpayer dollars going to pay for abortions. This is not supposed to be allowed under the so-called Hyde amendment, which bans Medicaid from covering abortions except in the case of rape or incest. The reform proposals initially skirted the question of abortion coverage; in response to opponents' attacks, Rep. Lois Capps (D-Calif.) proposed an amendment that would require that at least one plan on the new "exchange" would not include abortion coverage, and that another one would include it, to give people choices.
But this leaves the thorny question of what to do in the case of people buying insurance with the help of federal subsidies - if those plans cover abortions (as many plans to) aren't the federal subsidies for those plans indirectly going to pay for abortions? Capps' amendment proposes that insurers offering abortion coverage -- including the a government-run plan, if such a thing is offered on the exchange -- pay for abortions with funds that are separate from the federal subsidies. But abortion rights opponents argue that this is little more than a shell game.
"In the meantime, for those Americans who can't get insurance today because they have pre-existing medical conditions, we will immediately offer low-cost coverage that will protect you against financial ruin if you become seriously ill. This was a good idea when Senator John McCain proposed it in the campaign, it's a good idea now, and we should embrace it. "
By embracing high-risk pools as a temporary solution to the problem of hard-to-insure people, Obama made an implicit nod to his general election opponent, McCain, who made such pools a central part of his health reform plan. McCain's idea was to greatly expand the high-risk pools that are now used in 34 states to insure some of the people who are unable to buy coverage on the open market because of their pre-existing conditions. This was part of his overall plan to move away from employer-based insurance to a system where everyone buys their own coverage on the open market.
But an in-depth article by the Washington Post's Amy Goldstein last year found that these high-risk pools have mixed results. They have proved so expensive to maintain that they hold only about 200,000 people, combined. The Maryland Health Insurance Plan, for instance has "been growing so fast that it needed to raise the fees on hospitals that help pay for the program and require new members to wait longer for coverage of existing illnesses -- or pay extra for it." Even the director of the Minnesota pool, widely regarded as the most successful in the country, told Goldstein that the pools are a stop-gap at best. "It is not a panacea. . . . We need to be moving in the direction of universal coverage," he said, "No one should be rejected because of their health conditions. Our federal government has failed us . . . if we are still here in five or 10 years."
Of course, what Obama is proposing here is that the pools would serve as nothing more than a stopgap, until the 2013 debut of the new "exchange" where uninsured people would be able to buy coverage from insurers who would not be allowed to deny coverage for preexisting conditions.
"Likewise, businesses will be required to either offer their workers health care, or chip in to help cover the cost of their workers."
This statement sidesteps a brewing battle over the role of employers. In the House, lawmakers would require firms to offer their workers health care or pay a penalty of as much as 8 percent of their total payroll. In the Senate, where Democrats are trying attract Republican support, the Finance Committee has proposed a "free-rider" provision that would not force firms to offer health coverage at all.
Instead, under the Senate Finance plan, larger firms with more than 50 full-time employees would only have to pay if they hire people who are eligible for government subsidies. In the case of the Senate Finance Committee, that includes people who earn between 133 percent of the federal poverty level and 400 percent of the poverty level, or about $88,000 a year for a family of four. Liberal analysts fear that idea would give many firms a huge incentive to refuse to hire lower-income workers or to bypass people who do not have coverage through their spouses or other means.
Obama's remarks leave the door open to either option - and leaves Congress to haggle over a hugely contentious issue.
-- Lori Montgomery
"This reform will charge insurance companies a fee for their most expensive policies, which will encourage them to provide greater value for the money."
The tax the president endorsed on insurers that issue Cadillac policies has built-in complications. It would encourage insurers to sell -- and employers to offer -- less Cadillac coverage.
To the extent that it reduces Cadillac coverage, as supporters intend, the revenue from the tax could diminish.
In theory, employers could compensate for the reduction in health benefits by paying employees higher wages and salaries. That could boost income tax receipts, because unlike health benefits, cash pay is taxed by the federal government.
However, whether employers will raise salaries to offset reductions in health benefits is a matter of debate - especially at a time when high unemployment has left workers in a weak bargaining position.
Economist Allen Sinai of Decision Economics called the tax "misplaced, misguided economic policy," saying that employers would capture the savings and would not make workers whole.
"They won't pay out the savings to employees in the form of higher wages," Sinai said. "They will take them in profit and the shareholder will benefit through higher stock prices."
If the skeptics are right, employees who now have the richest benefits could end up as net losers under the tax, and revenues from the tax could suffer.
--David S. Hilzenrath
"First, if you are among the hundreds of millions of Americans who already have health insurance through your job, Medicare, Medicaid, or the VA, nothing in this plan will require you or your employer to change the coverage or the doctor you have. Let me repeat this: nothing in our plan requires you to change what you have. "
The Washington Post's David Hilzenrath and many others have in recent months questioned Obama's oft-stated claim that if people like their insurance, they won't have to change it after reform. "If you like your health care plan, you'll be able to keep your health care plan, period," he liked to say. Obama has retained that basic notion, but possibly in response to those criticisms, he has slightly tweaked his claim here tonight to say that reform will not "require" people or companies to change their plans. This is a subtle but crucial shift that puts the president on slightly firmer ground, though its broader implication is still a bit misleading.
The fact is, there are several likely scenarios under which some people who are now insured will find themselves with different coverage - possibly better coverage, but still, different coverage. For one thing, small businesses who now pay exorbitantly for coverage will be able to buy coverage for their employees on a new "exchange" that will be available only to small businesses and individuals without employer insurance. The plans on the exchange will be more strongly-regulated and and may be of a higher quality than what employers can afford now, but they will be different plans.
In addition, Obama is signaling that he would endorse the proposal by Senate Finance Chairman Max Baucus to impose an excise tax on the most expensive health insurance plans. This will likely lead many insurers and employers to stop offering such plans, leading employees to get less costly plans instead. Still other employers might feel better about doing away with health coverage after reform is passed if they know that their employees can get good coverage on the new exchange -- even if the employer has to pay a fine as a result. The CEO of Whole Foods has threatened to do just that.
But in all three cases - small businesses switching insurers, companies choosing to stop offering gold-plated plans, employers deciding to drop coverage - the reforms will not be "requiring" the switch; it will be in employers' interest to do so. Thus Obama's rhetorical sleight of hand - his promise is slightly less definitive, and slightly more accurate.
• Post Fact Check: President's Coverage Promise Is No Keeper, The Washington Post, 8/16/09
"The plan I'm announcing tonight would meet three basic goals: It will provide more security and stability to those who have health insurance. It will provide insurance to those who don't. And it will slow the growth of health care costs for our families, our businesses, and our government."
This framing is a clear departure from the way Obama laid out his reform vision months ago. All along, he talked about health care in a two-pronged way - it would expand coverage to the uninsured and slow the growth of overall health care costs in the long term. To broaden support for reform, the White House has more recently been emphasizing the benefits that will accrue to people who already have coverage. Still, reform proponents on the outside thought that case was not being made strongly enough, and urged Obama to emphasize the "security" of having insurance available even if one loses one's job - an effective argument to make in a time of very high unemployment. Finally, in his Labor Day speech in Cincinnati on Monday, Obama debuted the "security and stability" framing. And here it is again tonight.
"Our overall efforts have been supported by an unprecedented coalition of doctors and nurses; hospitals, seniors' groups and even drug companies - many of whom opposed reform in the past. "
Note who's absent from this list of cooperative industry players: the insurance companies. As the whole health reform push started earlier this year, the White House and congressional leaders touted the fact that they were getting buy-in from big insurance companies, who were showing signs of being willing to accept new regulations in exchange for having millions of new customers to insure. But in August, as the reform push started to bog down, Obama and congressional leaders - most vocally, House Speaker Nancy Pelosi - started trying to reinvigorate reform by framing it as an effort to rein in unpopular insurance company practices. This hasn't been enough to push the industry into full-fledged opposition - yet. But it's got the insurers off of the cooperative list.
What's also notable is that Obama put special emphasis on support from drug companies. This support has come at a cost - the White House has hinted to drug companies that they will be asked to contribute no more than $80 billion over 10 years in concessions, and that it will not push for reforms that the industry strongly opposes, such as allowing Medicare to negotiate for lower prices. Liberals such as House committee chairman Henry Waxman have criticized this deal, yet here's Obama, putting special weight on the drug company support.
In noting that many presidents before him have tried unsuccessfully to reform health care, Obama not only underscores the importance of the issue; he also insulates himself from some of the criticism should his own effort fail.
In addition, he undercuts arguments that he and Congress are moving too swiftly.
"I am not the first President to take up this cause, but I am determined to be the last," Obama said. "It has now been nearly a century since Theodore Roosevelt first called for health care reform. And ever since, nearly every President and Congress, whether Democrat or Republican, has attempted to meet this challenge in some way. A bill for comprehensive health reform was first introduced by John Dingell Sr. in 1943. Sixty-five years later, his son continues to introduce that same bill at the beginning of each session.
"Our collective failure to meet this challenge - year after year, decade after decade - has led us to a breaking point," Obama said.
--David S. Hilzenrath
"Thanks to the bold and decisive action we have taken since January, I can stand here with confidence and say that we have pulled this economy back from the brink."
Many economists would largely agree with this statement. Both through Treasury Secretary Timothy Geithner's management of the $700 billion financial system bailout (which was passed during the Bush administration) and Obama's successful push for a massive $787 billion economic stimulus package, the administration contributed significantly to what is believed to be a slowly dawning economic recovery. In its recent economic outlook, the nonpartisan Congressional Budget Office credited the stimulus package with returning the economy to positive growth by the end of the year.
The unexpected severity of the recession has taken its toll, however, and the stimulus package is expected to cost significantly more than $787 billion when all is said and done. Republicans predict the package of tax breaks and government spending will top out at $900 billion. White House budget director Peter Orszag has said the administration's current predictions are that the cost will be slightly below that.
-- Lori Montgomery
President Obama takes the podium on Capitol Hill tonight for his much-anticipated address on health care reform to a joint session of Congress. Washington Post reporters who have been covering the debate will be your guides to the action, offering live analysis and fact-checking starting at 8 p.m.
Posted at 8:15 PM ET on Sep 9, 2009
44 The Obama Presidency
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