HEALTH REFORM: Obama's Vision

The White House has posted  President Obama's letter to Senators Ted Kennedy and Max Baucus on health care reform. He reiterated his vision (and ours) that reform is an economic as well as a moral imperative. And he added a few points (and $$$) we hadn't heard before:

In addition to the $635 billion reserve fund Obama outlined this Winter in his budget proposal, (some of which Congress balked at) he's calling for an additional $200 to $300 billion over 10 years in Medicare and Medicaid savings. This isn't from slashing the entitlement benefits but by taking steps to better manage chronic diseases, utilize health services more wisely, and reduce the revolving door of hospital readmissions. We waste a lot of money on care that doesn't make people any better.

Obama said he was "open" to the idea of giving more clout to the Medicare Payment Advisory Commission (MedPAC), which currently gives nonbinding but respected advice to Congress. In a post-reform world, MedPAC's recommendations on cost reductions would be adopted, unless opposed by a joint resolution of the Congress.T hat's modeled on military base closure system. (We published a paper on MedPAC a few months ago, and our colleague Tom Emswiler is working on a post about it that we hope to have for you soon).

During the campaign, Obama did not endorse the individual mandate (or "shared responsibility" as it's now known) but in this letter he was open to it, as long as health care costs are being brought down and there are "hardship exemptions" for certain individuals. Ditto for small businesses. Some should be exempt from any employer mandate. We didn't spot any explicit mention of the debate over whether to tax a portion of employer-sponsored health benefits, although news reports have said he may be able to accept the idea.

To summarize a few other elements of his vision of health reform:

• It's not just about coverage. "Indeed, without a serious, sustained effort to reduce the growth rate of health care costs, affordable health care coverage will remain out of reach," he wrote.
• Americans should have better choices for health insurance, building on the principle that if they like the coverage they have now, they can keep it, while seeing their costs lowered as reforms take hold.
• Creating a health insurance exchange— a market where Americans can one-stop shop for a health care plan, compare benefits and prices, and choose the plan that's best for them, in the same way that Members of Congress and their families can.
• No one should be denied coverage  because of their health history
• All plans should have an affordable basic benefit package that includes prevention, and protection against catastrophic costs.
• Americans should have the choice of a public health insurance option operating alongside private plans. This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest.

Obama concluded:

I know that you have reached out to Republican colleagues, as I have, and that you have worked hard to reach a bipartisan consensus about many of these issues. I remain hopeful that many Republicans will join us in enacting this historic legislation that will lower health care costs for families, businesses, and governments, and improve the lives of millions of Americans. So, I appreciate your efforts, and look forward to working with you so that the Congress can complete health care reform by October.