Is Meaningful Health Care (Or Any Other Kind Of) Reform Possible?

Posted on | July 18, 2008 | Comments Off on Is Meaningful Health Care (Or Any Other Kind Of) Reform Possible?

Congress’ money-for-policy system will prevent health care reform

Those who wait, ever hopefully, for real health reform might want to take a deep breath and take stock of a few realities.

First, think about the fact that when the Democrats retook Congress, they tweaked but did not fundamentally change the lobbying rules that trade money for influence over policy. In fact, most contributors have now adjusted their contributions to favor the current, rather than the past, majority party. As it turns out, Democrats, like Republicans, are only too eager to allow special interests to trump the common interest, so long as the transactions fetch a good price.

Take a long hard look at the chart below, taken from an April 15th report published by OpenSecrets, which tracks the impacts money has on politics and policy, put together by the Center for Responsive Politics. In 2007, the health care industry spent $445 million lobbying Congress, providing 16 percent of the total $2.8 billion spent to sway Congressional actions, more than any other economic sector for two years running.

$227 million, or 51% of that $445 million, came from the drug, device and medical products sector. General Electric alone spent almost $24 million courting our Senators and Representatives. PhRMA, the drug industry association, contributed another $22.1 million. The AMA also spent $22.1 million.

These dollars are spent to obtain specific results. David Beier, Amgen’s head lobbyist and, formerly, Vice President Al Gore’s chief domestic policy advisor, explained his company’s 2007 $16.3 million lobbying expense very nicely in a Washington Post article last April. “We face a lot of legislative and regulatory issues. We resourced our advocacy to match our challenges.”

Anyone watching the lobbying frenzy leading up to last week’s vote, the President’s veto, and Congress’ rejection of that veto, pitting funding for Medicare Advantage plans against funding for physician reimbursement – the blow-by-blow was eloquently described by Bob Laszewski – could only marvel at the resources that can be brought to bear when money or other perceived interests are on the line.

Of course, there’s nothing new here. For decades, the health care industry has leveraged its money and influence, shaping policy to its own ends. Last December I recounted that, upon hearing that the US Department of Health and Human Services had appealed a court ruling calling for CMS to release Medicare physician data, American Medical News quoted the AMA’s Board Chair Ed Langston MD, “The Association is pleased that HHS is taking its advice.” (This quote has since been expunged from the online version of the article.)

Or remember when the Employers’ Coalition on Medicare, a powerful business interest group, teamed with PhRMA and the Republican Congress to pass Medicare D? The resulting legislation provided for a significant portion of the largess to be allocated to large firms (in the form of retiree prescription subsidies) in exchange for their support for the program. Retirees and taxpayers, of course, didn’t fare as well in the deal.

Then there is the longstanding sole-advisor relationship between CMS and the AMA on the issue of physician reimbursement, in which the specialist-heavy society has continually called for, and CMS has continually delivered, increased reimbursements to specialists at the expense of America’s primary care physicians, who are now in deep crisis as a result.

There are endless examples, all of which beg a couple important questions. Let’s take the health care question first:

In a policy-making environment that is so clearly and openly influenced by money, how likely is it that Congress will pass be able to achieve health care reforms that are in the public interest?

There is broad expert consensus that one-third to one-half of all health care expenditure is waste. Talk privately with most health care professionals – physicians, hospital execs, health plan administrators, benefits managers, supply chain execs – and there is reasonable agreement on critical principles that are necessary to re-establish the system’s stability and sustainability: some form of universal coverage for at least basic health services; a comprehensive and compatible IT infrastructure; a transition from fee-for-service to some form of performance-based reimbursement; pricing and performance transparency; and much more.

Such changes could drive tremendous savings for individual, corporate and governmental purchasers, but at significant cost to health care firms and professionals. Revenues and profitability would plummet. As the struggles over health care resources intensify, the efforts to protect and enhance each interest’s position through policy will intensify as well.

It isn’t as as though there aren’t credible and influential people sounding the alarm. Take this comment from Peter Orszag, Director of the Congressional Budget Office, while testifying to the US Senate Finance Committee in June 2007.

“If [Medicare and Medicaid’s] costs continue growing at the same rate over the next four decades [as they have over the last four decades, at 2.5%/year higher than per capita GDP], federal spending on those two programs alone would rise from 4.5% of GDP today to about 20% by 2050. That amount would represent roughly the same share of the economy as the entire federal budget does today.”

Alarming? Sure. But that kind of “let’s not burn the house down” warning tends to get lost against arguments for more dollars, backed by the nearly half-billion dollars the industry spent last year – an average of about $832,000 for each Senator and Representative!

Pass real reforms? I’d be surprised. Delighted! But surprised.

But that brings us to the biggest question.

America has a slew of important problems that cry out to be addressed: the obesity epidemic, energy, education, the environment, poverty, infrastructure replacement. What will it take for Congress to mount serious, public interest efforts that focus on these issues?

To a one, these problems are structurally identical to those we face in health care. Congress’ current lobbying system means that money-for-influence relationships with lawmakers continually spin policy to favor special interests rather than the common interest.

Take the obesity epidemic. Here’s a wonderful graphic I show in all my presentations. It shows that 31% of adult Americans are obese, with a body mass index of greater than 30. We’re the leaders among developing countries on this problem. Mexico and England are a distant 2nd and 3rd, at 24% and 23%. The ridiculously industrious Japanese and Koreans are at 3%. I have two arguments here.

First, we have the worst obesity of any country because agribusiness and the fast, prepared and junk food industries have convinced Congress to provide concessions, ranging from corn subsidies to open-field running with advertising techniques that seduce our children. Sure, individual choices by parents factor into this, but whatever your philosophical position on that point, it is important to acknowledge that the current approach isn’t working and we’re losing the battle. And nationally, we HAVEN’T drawn a line in the sand as, for example, the Japanese recently did in deciding to mount an effort that measures waistlines. From their perspective, that effort is undoubtedly an investment in their national future.

Second, since weight is important to fitness, fitness is important to overall health, health is an important component of productivity, and productivity drives competitiveness, the US’ future prospects are already lousy and headed south. In terms of our health AND our competitiveness, we’re committing slow suicide.

And we can’t seem to mount approaches like the Japanese seemingly did so easily. We’re stymied due to policies that thwart the common interest in favor of the special interest. We wouldn’t want to reduce choice for our consumers or our vendors, or be forced to reinvest in exercise programming, or compromise the profitability of agribusiness or the prepared food sectors.

And so we are paralyzed in our ability to problem-solve in virtually every area of societal endeavor.

As far as I can tell, there are two – and only two – solutions here. Both are highly improbable.

One is for America’s largest corporations, the organizations that drive national policy through lobbying now, to galvanize to preserve the common interest. This is tough. Currently, most organizations focus their lobbying within their own core competency areas. Microsoft lobbies on IT, but not health. Marriott lobbies on hospitality policy, but not education.

What’s needed is a national business coalition that collaboratively focuses on what’s good public policy for the country – what’s in our common short- and long-term interest. It could both support democratic institutions and, equally important, place sanctions on rogue organizations, like Enron, that would hurt the system through excesses or very poor performance at public expense. (By the way, I’m not advocating for government run by corporations – the formal definition of fascism. I’m simply explaining how things appear to already work, and how they might be redirected.)

They might do this because they realize that, if the components of the fabric that has made America strong – a focus on education and an informed populace, fairness and social justice, creativity, financial independence, productivity – are lost, then it will be more and more difficult to successfully pursue the special interest, at least from here.

The other solution would require a new Congress, under new leadership, to resolve to rid itself of its lobbying cancer, and to do so in a way that is highly visible and publicized. There would be ferocious opposition from industry. Hence the need for visible, articulate leadership from key political and business leaders.

Like I said, both are improbable. But they’re also key our ability to turn the nation around.

In the meantime, we’re all health care people. Go to the New York Times Health Page, and you’ll see five sub-sections. The center one is “Money and Policy.” Think that’s clever, or simply precise?

Brian Klepper ([email protected]) is an analyst and commentator based in sweltering, muggy Atlantic Beach, FL.