View from Washington: The “Right” Debate

The return of health reform to the legislative agenda.

The Centers for Medicare and Medicaid Services (CMS) projects that healthcare spending will double within the next 10 years, representing 20 percent of the United States’ gross domestic product by 2016. In the words of one Washington health policymaker “healthcare is eating our economy.”

There have been some troubling signs recently in the data. The relationship between employers and employees regarding the provision of health insurance is shifting. In some sectors of the economy this shift is profound. Taken together, what appears to be happening is that some employers have come to the decision to treat their employees as “independent contractors.” They pay a salary and the worker is responsible for their health insurance as well as their pension/retirement requirements.

Other data tells the story from a different angle. According to a Kaiser Family Foundation survey of employers, 61 percent of U.S. companies offer health insurance as a benefit, down from 69 percent seven years ago. Additionally, 20 percent of employers indicated they were planning to shift more health insurance costs to their employees, according to the National Business Group on Health (NBGH). Given these realities, it is no surprise that close to 45 million people are living without health insurance, according to Census Bureau figures. Another frightening realization about the data is that policymakers simply do not know how many of the remaining population is “under-insured” for health care.

Frustrated with Washington’s seemingly lack of initiative, governors and state legislatures have been the true trailblazers in addressing this dilemma and implementing proposals for universal health care coverage. Close to twenty states have become architects of developing state-run plans with most being modeled after Massachusetts’ recently adopted program. Highlights of the Bay State plan includes: requiring state residents to obtain health insurance and imposing a fee on employers who do not provide insurance.

As predicted in the September/October 2006 JHC article “State’s Rights,” Federal lawmakers have taken notice of the data and the state initiatives. The 2008 presidential election may be helping the political viability for universal healthcare coverage as Americans are becoming more aware of the problem, and more supportive of such plans. Not since the beginning of the Clinton Administration have political types in Washington so seriously discussed providing a “right” to health care.

Candidates from both parties are pushing healthcare concerns to the front of their campaign agendas. Former North Carolina senator and 2004 vice presidential candidate John Edwards, Illinois Senator Barack Obama, and New York Senator Hillary Rodham Clinton are three significant Democratic contenders who have attached their voices to the call for universal healthcare.

But the Democrats are no longer the loudest voice for healthcare reforms. They must now share the issue with Republicans, who are calling for improvements to the healthcare system. Former Massachusetts Governor Mitt Romney, considered an architect of the Massachusetts’ plan, will likely get more credibility if his state program proves successful. Tommy Thompson, former head of the U.S. Department of Health and Human Services, will no doubt be calling on his experience in the field to persuade voters. The major philosophies on the topic range from expanding coverage, to moving the United States away from its employer-based system, to a greater focus on cost-shifting.

Washington politicians are not the only ones ready to get their oars in the water in the effort to improve health coverage. Employers are increasingly coming un-glued about the amount of healthcare spending, as these rising costs threaten their companies’ profitability. Reports released earlier this year showed that the employers involved in the NGBH study expected costs to increase by roughly 8 percent in the next two years. The U.S. Chamber of Commerce issued a study in February which indicated medical expenses accounted for most of the rising costs of employee benefits in 2005. Companies are forced to find ways to try and trim costs and save on their own healthcare spending. Many have set up on-site health clinics or nurse hotlines to assist in this effort. Unfortunately, even with those programs, companies are still expecting to increase their employees’ share of the cost of insurance.

In an historic joining of unlikely allies, Wal-Mart and the Service Employees International Union (SEIU) are partnering with a group of other organizations for a new project called “Better Health Care Together.” This new entity combines business, labor, and public policy organizations in an effort to bring new perspectives and collaborative energy to improve health care coverage. Even though these members represent markedly different views, they agree that changes need to be made to America’s employer-based system. There are plans for a summit to be held in the spring that will address developing alternatives to an employer-based system and improving the value of healthcare spending.

The Federation of American Hospitals (FAH) is another key industry organization which is stepping out front in an effort to bring some productive innovation to healthcare development. The FAH plan, called “Health Coverage Passport,” is a new effort that hopes to encourage the extension of coverage to 98 percent of all Americans.

Media coverage of the many proposals introduced has sparked Congressional action. A bipartisan group of Senators have outlined their goals to President Bush for modifications to private health insurance. In mid-March, the Senate Finance Committee held the first of a series of hearings on health reform with some witnesses calling on the Massachusetts law to serve as a model for a federally-funded program. Analysts are quick to point out that a $100 billion price tag accompanies such a proposal and even then, not all citizens would be covered.

Even if federally-operated universal healthcare coverage proposals are not implemented, the federal government will likely continue its growing role in furnishing some types of coverage. The establishment, and likely expansion, of covering children under Medicaid’s SCHIP program, rising Medicaid enrollment, and the expansion of Medicare to include prescription drugs have significantly affected the role the federal government plays in funding the nation’s healthcare system. According to a CMS study, by 2016 it is estimated that the government will be covering 48.7 percent of the nation’s healthcare bill; and some argue that the United States is inevitably progressing toward a single-payer system. Ripple effects of a universal healthcare debate may provide unexpected benefits. Some argue a universal health care system may help the U.S. economy overall, reversing a trend of companies shift manufacturing plants and call centers overseas or to Canada in large part to avoid employee healthcare costs.

Expect the states to barrel ahead with their efforts, and the presidential campaigns to accelerate the universal healthcare coverage debate. Both of these developments will occur simultaneously as employers push the issue of rising health costs to the top of our national domestic agenda. In an ever increasingly complicated patchwork system of coverage, also expect in the not-to-distant future for some politician to articulate the vision of a simplified system of universal health coverage funded by the combination of all the current revenue streams.

Robert Betz Ph.D. About Robert Betz Ph.D.

Robert Betz, Ph.D., is president of Robert Betz Associates, Inc. (RBA), a well-established federal health policy consulting firm located in the Washington, D.C. area. Additionally, Dr. Betz is an adjunct professor teaching at The George Washington University where he specializes in political science and health policy. For more information about RBA, visit www.robertbetz.com.

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