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Under the Dome by Joel Wood 80-20 Rule

Interest group differences stalled healthcare reform for years, but Obama may now have the political muscle to make single payer a reality.

By  Joel Wood

After the collapse of the Clinton health overhaul of 1994, health economist Grace-Marie Turnercame up withthe “80-20 rule” to characterize the positions of public and healthcare interest groups.The idea is that most of the groups are willing to go along with 80% of the agenda, but they simply can’t live with 20%.“And the problem they’ve got is everyone’s got a different 20%,” she told National Public Radio in April.

Indeed, every constituency group—such as health insurers, brokers, hospitals, specialists, primary care docs, employers large and small—has a different 20% beef.Some employers might be perfectly happy with a plan that includes a government-run option, but they won’t stand for a requirement that all employers offer their workers coverage.And providers might be fine with a mandate, but would vehemently oppose the public option.

The other premise of the 80-20 rule is that everybody’s default position is the status quo.Everyone’s first priority is big reform (in the eyeof the beholder), but their second choice, in reality, is nothing.Which helps explain why health reform has had no significant federal traction for 15 years.

Turner is hoping 2009 will be the year her rule is repealed.Certainly the stars have aligned for Pres. Obama to break much of the political impasse. The president has enormous political capital.He’s got a solid liberal majority in the House of Representatives.Democrats are knocking at the door of 60 votes in the Senate, which means they may be able to do pretty much anything they want to.Years of double-digit health insurance inflation have divided the weary business community. Consumer disdain for health plans may be higher than ever.Elections have consequences, and Obama can credibly claim a public mandate to fundamentally change the way we dispense and fund healthcare.

The Council of Employee Benefits Executives, in years of thoughtful deliberation, has identified multiple big-picture health reforms to support, includinghealth IT, preventive care, pay-for-performance standards, group insurance market reforms and medical malpractice overhaul. Trickier issues like guaranteed issue, corporate and individual mandates, realignment of community rating laws to eliminate cherry-picking—brokers can live with a lot of that, too.

In short, on about 80% of the Obama/Congressional health reform agenda, Council member firms can not only support legislation, but embrace it.But that 20%—the creation of a public plan option to compete with private health plans—is deadly.We are fiercely opposed to a public plan option.

As the political divide deepens, White House and Congressional leaders have tried to cool the tempers.Nancy-Ann DeParle, the White House health reform czar, has said there are many ways to construct a public plan option that wouldn’t have inherent cost-shifting advantages.Leaders have talked about a variety of public options ranging from the relatively simple, like increasing eligibility standards for Medicaid, to the enormously complex, like a complete federal program available to all modeled after Medicare—with lots of gradations in between.

We’re not buying it.As Sen. Judd Gregg, R-N.H., said in an April Wall Street Journal editorial, the administration’s goal is crystal-clear: “This is a single-payer government…[The administration]doesn’t want to say that publicly, and it rejects it publicly.But the goal is to push it substantively.Because that’s what they believe.”In other words, what Obama bills as a public “option” would soon become the only option for those who need health insurance but can’t get it through their employer or in the private market.

Throughout the debate to date, brokers have seemed reluctant to defend the services they provide to millions of consumers via the employer-based health system. Meanwhile, policymakers (in pursuit of the low-hanging fruit of cutting unnecessary administrative costs) really don’t appreciate the value brokers add to the insurance process.Let’s face it, when DeParle talked in April about a public plan addressing the evil of “brokers out there selling,” the rationale is little different than the one Hillary Clinton expressed to a health insurance broker in 1994:“You seem to be a very bright person, I’m sure you’ll find something else to do.”A lot of policymakers simply think that brokers are part of a wasted marketing expense.

Virtually everyone agrees that the Democratic majorities in Congress notwithstanding, a do-or-die battle over a public plan could doom healthcare reform.So advocates of the public plan are putting lots of lipstick on the pig.

At this writing, one of The Council’s officers stuck an op-ed piece from another healthcare academic under my nose.“A differently designed, publicly chartered plan can complement both private insurers and Medicare,” wrote Professor Harold Luft of the University of California, San Francisco.“It would build on the strengths and avoid the weaknesses of each.The new public plan would cover just hospitalization and chronic illnesses… By combining a mandate that everyone have this basic coverage with income-based subsidies for affordability, we could rapidly reach universal coverage.”

Yep, and if you believe that, I’ve got some nice subprime mortgage-backed securities to sell you, too.

Wood is The Council’s senior vp of Government Affairs.

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