Industry sources have told the Washington Post that 3 influential hospital associations have agreed to contribute $155 billion over the next decade toward paying for the costs of insuring the 47 million Americans that don’t currently have coverage.

The deal reached between the American Hospital Association, the Federation of American Hospitals and the Catholic Health Association and both White House officials and Senate Finance Committee leaders follows a similar deal in which Big Pharma coughed up  $80 billion toward the same end.

“Getting health-care reform is absolutely critical,” said a hospital association negotiator. “This is our attempt to act in good faith.”

About 60% of the savings would result from cuts to previously expected Medicare and Medicaid payments. Most of the rest would be achieved by reducing hospital payments earmarked for care of the uninsured.

The reductions would kick-in after most uninsured folks acquire coverage, a significant risk-mitigator for hospitals.

A source privy to the negotiations indicated the parties reached a deal after government officials pitched “shared responsibility” and assured providers that that all parts of the system would be asked to sacrifice.

In achieving the final figure, the Big O played hardball, just as he did with Big Pharma 2 weeks earlier. In that case, Obama floated a request that drug makers fork over $100 billion towards the greater good. After losing its lunch, Big Pharma countered with $80 billion and the deal was done.

In this case, the Coronated One announced in his weekly radio/Internet chat that his team had found ways to save $200 billion in hospital costs over a 10 year period.

“There was no way we could tolerate $200 billion,” an industry executive told the Post.

Since forever, the Big O has argued that comprehensive health reform was a prerequisite to revivifying the nation’s flagging economy.

Last week, his argument got support from a report by the Council of Economic Advisors, which claimed that cutting annual growth in health-care spending from 6% to 4.5% could create 500,000 jobs per year and increase annual family income by $2,600 over the next decade.

Alas, the report lacked details regarding how such goals would be met, and failed to mention the extra dollar or two in government spending that would be needed to jump-start the process.

The report also acknowledged that the 25% reduction in the rate of growth in spending was “near the upper bound of what is feasible.”

Republicans and independent analysts were deeply critical of the report, decrying in particular the assumption that a broad expansion of health insurance could translate into long-term savings for the government and the economy as a whole.

“This report is nothing more than smoke and mirrors,” seethed House Minority Leader John Boehner to the Washington Post. “The administration hasn’t offered a credible plan to (cut costs) without raising taxes or rationing care.”

Nevertheless, the Unflappable One pushed onward, releasing the contents of a letter from a consortium of industry stakeholders that promised to help save money over the next decade. 

In it, American Hospital Association pledged to fight nosocomial infections and readmissions. The AMA said it would coax physicians to follow evidence-based guidelines for back pain, heart disease and prenatal care. Big Pharma said that starting drugs earlier in the course of certain illnesses could reduce the need for more costly interventions later on.

One can only wonder why these obviously good ideas weren’t implemented long ago.

This post first appeared on the Practice Fusion Blog.

During Tuesday’s press frolic, the Big O put some mustard on his pitch for a public option, dismissing as “not logical” suggestions that a government plan would sink Big Insurance faster than the Titanic.

He followed quickly with a favorite refrain, which is that good, old-fashioned competition from a public plan would be an “important tool to discipline insurance companies.”

Then, in a denouement worthy of at least runner up at a Harvard Law Debate Club, he triple-dog-dared anyone to come up with a better plan that met his 2 etched-in-stone requirements. “Reform has to control costs and it has to provide relief to people who don’t have health insurance or are underinsured,” he said.

Big Insurance, destined in this match to play Smokin’ Joe to the Big O’s Ali, released a wild haymaker of its own 2 hours before the Big O even showed up.

“We do not believe it is possible to create a government plan that could operate on a level playing field,” quoth Karen Ignagni, president of America’s Health Insurance Plans, and Scott Serota, president of the Blue Cross and Blue Shield Association in an open letter to the Senate.

“Regardless of how it is initially structured, a government plan would use its built-in advantages to take over the health insurance market,” the letter continued.

No doubt the Big O smirked when he read that.

Meanwhile, Kent Conrad, the intrepid Senator from North Dakota has created a stir with his suggestion that nonprofit consumer-owned cooperatives could be an alternative to the government plan.

He foresees the Feds forking over $3-4 billion to jumpstart the co-ops, after which time they would sink or swim on premiums and investment income, just like Big Insurance.

The Big O knows he can live with this or any approach that covers most everybody without breaking the bank, but on this day he was playing offense.

“If private insurers say that the marketplace provides the best quality health care, if they tell us that they’re offering a good deal, then why is it that the government — which they say can’t run anything — suddenly is going to drive them out of business?” Obama asked.

Mr. Spock himself couldn’t have asked a more logical question.

The Senate Finance Committee has circulated a draft health reform proposal that features an individual mandate, authorizes an expansion of Medicaid, and–hold the presses!–dumps the Big O’s pet project, a government-sponsored plan that would compete with Big Insurance.

The draft also includes scaled-back coverage provisions that limit costs associated with the overhaul.

One such provision cuts the number of middle-class folks that would qualify for tax credits designed to render insurance more affordable.

The Big O, HHS Secretary Kathleen Sebelius, and many House Democrats including Nancy Pelosi favor a public option to keep Big Insurance honest. Senate Democrats have been divided on the issue since Day 1.

In lieu of a public option, the draft proposes consumer-owned cooperatives similar in design to rural telecom and electricity providers. They would be “subject to government oversight and funded with federal seed money,” according to the Washington Post.

Meanwhile, House Democrats are divining ways to pay for the overhaul. They’re considering a Robin Hood tax on the rich, increased payroll taxes on employees, sin taxes on sugary drinks and alcohol, and a new value-added tax.

The House is also considering the Senate’s preferred approach to paying for reform, which is to tax health benefits received by Americans through their employers, as well as the Big O’s idea to limit itemized deductions for the rich.

A particularly controversial issue, according to the Post, is the extent to which employers must subsidize public coverage for employees if they don’t offer coverage to employees themselves.

People worry that if lawmakers don’t get this right, employees will flee to federal plans and send government costs through the roof.

The draft includes preliminary proposals for handling this nightmare.

As chairman of the Senate Finance Committee, Montana Senator Max Baucus is right in the eye of Hurricane Health Reform.

A Democrat that hasn’t lost an election since 1972 in a state that has voted for the Republican presidential candidate every time but once over that period, Baucus sometimes infuriates party partisans.

Take the time for example, when he lambasted HillaryCare’s proposals for employer mandates and regional insurance cooperatives. They “smack of excess government and the smell of socialism,” he said back then.

So far though, the Big O couldn’t be happier with the support he’s received from Baucus on this health reform go-round.

In describing the current challenge, the Montana Democrat told the Washington Post “we’re doing something. It’s holistic, it’s our health-care apparatus. We don’t even have a system in America, really. (People) know the train is leaving the station. There’s a sense of inevitability here.”

His Finance Committee is trying to draft deficit-neutral legislation that expands coverage and cuts costs. He is said to favor an individual mandate, in which people are required to purchase health insurance, and a tax on employer-provided health benefits, issues known to rankle Republicans.

At the same time, Baucus’ track record shows he has upheld the Finance Committee’s bipartisan traditions. In the 8 years he and Republican Charles Grassley have run Finance, just 4 bills have passed on straight party-line votes.

“That’s a pretty good record of bipartisanship,” Grassley told the Post.

But then he turned ominous. ”(Baucus has) a large share of his caucus who thinks government can run health care better than the private sector, and they want that intervention,” Grassley said. 

The Montanan responded like a Blue-stater. “They may get to the point where they’re not there,” he said of Republicans. “The president (and) I want a bipartisan bill. I hope that happens. But I don’t know. Crunch time is coming up pretty soon.”

As part of their effort to redesign America’s health care system, 2 key members of Congress have proposed awarding tax credits to employers that offer wellness programs or otherwise promote healthy behavior among workers.

Democratic senators Max Baucus of Montana, who chairs the Finance Committee, and Tom Harkin of Iowa, are behind the scheme.

“Prevention and wellness should be a centerpiece of health care reform,” Harkin told the New York Times while taking the stairs to reach his seventh-floor office.

The Big O agrees. In fact one of his eight principles for health reform is that it should “invest in prevention and wellness.”

Harkin suggests that employers ought to receive tax credits for programs focused on tobacco use, physical fitness, obesity and diabetes, blood pressure control, nutrition and depression.

Many employers already offer such wellness programs. Some say they lower health costs and increase productivity. But currently, they must navigate complex labor, tax and insurance laws in order to offer them.

For example, if an employer pays for an employee’s gym membership, the payment is usually dunned as taxable income.

Employers also risk running afoul of a law designed to prevent insurers from discriminating against people because of a pre-existing condition.

Meanwhile, critics like Lewis Maltby, president of the National Workrights Institute, argue that financial incentives amount to lifestyle discrimination.

“You are supposed to be paid on the basis of how you do your job, not how often you go to the gym or how many cheeseburgers you eat,” he scoffed to the Times.

Among the bevy of options to fund health system reform, a tax on employer-sponsored health insurance now appears to be gaining momentum faster than Oprah Winfrey on a Luge track.

The idea apparently won general acceptance during last week’s Senate Finance Committee meeting, and House Democratic opposition has begun to melt as well.

The Big O has a political problem with the tax, since he pasted Top Gun during the presidential campaign for making the very same idea central to his health proposals.

And Republicans will surely remind people that 2 years ago, a Democratically-controlled Congress zapped the idea after George W. Bush put it in his budget request.

Nevertheless, the Big O has signaled he’s happy to absorb the hit if it’s for the greater good.

US Census data show that in 2007, 177 million Americans received health benefits from their employers. Currently the benefits are not taxed as income. Congressional tax analysts estimate that closing the yawning loophole would have generated $133 billion last year.

Senate Finance Committee Chairman Max Baucus would prefer not to close the loophole altogether. He’s suggested two alternatives—limiting the tax to high-income earners, or taxing the benefits after they exceed a pre-set limit.

The former option may not raise enough cash, and if that income limit is dropped too far, “you’re impacting workers and threatening the employer-based system,” Senator John Kerry told the Washington Post.

Yet capping employer-provided health benefits, somehow, some way could generate upwards of $500 billion over the next decade. No one’s come up with another politically viable method that could raise anywhere near that kind of dough.

Two Democratic senators in the eye of Hurricane Health Reform are butting heads over the most explosive political issue in the process—whether or not to establish a public health insurance plan.

Massachusetts’ Edward Kennedy favors a Medicare-like government-sponsored plan that would compete with Big Insurance.

Montana’s Max Baucus, who has been holding hands with Republican Senator Charles Grassley for months in an attempt to craft legislation that is at least vaguely bipartisan, prefers to bag the public plan or at least play it down initially.

For his part, Grassley, who seems to have forgotten how to count to 60, told the New York Times, “we cannot afford the public health plan we have already,” a slap at Medicare.

The Big O believes a public plan would “keep the private sector honest,” but says he can live without it.

Most House Democrats, including the 3 committee chairmen who are drafting the House bill, are in Kennedy’s camp.

In the Baucus compromise, a public plan would be formed only if Big Insurance fails to provide affordable coverage to all Americans by some deadline, presumably during the lifetimes of our great-grandchildren.

Meanwhile, New York Senator Charles Schumer has floated yet another proposal, in which the public plan would have to comply with the same rules and standards that apply to Big Insurance, including a requirement that it sustain itself with premiums rather than a money-tree over at Treasury.

Opinion polls show that health consumers would like a public plan, but Big Insurers worry it would drive them out of business and lead to a government-run, single-payer system.

No one knows how the dispute will be settled, but the Big O has offered to host a winner-take-all game of H-O-R-S-E during halftime of an NBA Finals game.

That didn’t take long.

Just 3 days after the Big O appeared to make serious hay out of last Monday’s announcement that key health care stakeholders were steppin’ up to save 2 trillion or so in future health care costs, reps from providers and insurers threw a bushel of thumb tacks on the road.

The Coronated One had hailed their cost-cutting promise as historic.

“These groups are voluntarily coming together to make an unprecedented commitment,” Obama told the New York Times. “Over the next 10 years, they are pledging to cut the rate of growth of national health care spending by 1.5% each year, an amount that’s equal to over $2 trillion.”

Not so, say the reps, who clearly caught an earful from their constituencies after the photo op. They claim to have agreed to cool off spending more gradually and never did they sign up for specific year-by-year cuts.

“There’s been a lot of misunderstanding that has caused a lot of consternation among our members,” Richard Umbdenstock told the Times. And the president of the American Hospital Association added that he’s “spent the better part of three days trying to deal with it.”

To make matters worse, Nancy-Ann DeParle, the director of the White House Office of Health Reform, then pulled a John Kerry by saying “the president misspoke,” and then saying “I don’t think the president misspoke. His remarks correctly and accurately described the industry’s commitment.”

Karen Ignagni, president of America’s Health Insurance Plans remembers reaching consensus around the concept that savings would “ramp up” more gradually than what Obama had said.

And for his part, David Nexon, an EVP of the Advanced Medical Technology Association recalled that “there was no specific understanding” of the pace with which savings would be achieved.

Everyone in policyville slept well last night on news that key stakeholders agreed in principal to help the Big O tackle health care cost escalation.

Today it’s back to a thicket of problems that lie between us and reformland.

One particularly thorny issue is that government-sponsored health plan Obama had proposed during the campaign, the one supposedly designed for Americans who had problems acquiring private coverage.

The plan has been supported by House Speaker Nancy Pelosi, HHS Secretary Kathleen Sebelius and a cavalcade of devotees on the left.

In the afterglow of yesterday’s announcement, the pessimistic few remind us that just last week, every one of those devotees gasped collectively when administration officials implied The Man was open to compromise on the idea.

Was Obama going to cave before serious negotiations got underway? 

No, Obama spokesperson Linda Douglass insisted. The Big O simply stated a willingness to consider any proposal that meets his broad goals. “The administration is open to all ideas for achieving those goals,” she reiterated to the Washington Post.

That did little to placate more than 70 House Democrats who told party leaders they’d reject any bill that failed to include a government-sponsored policy, not to mention 2 unions, which abruptly withdrew from a prominent health reform coalition after it said it would not endorse a public plan.

“It’s way too early” to punt on what the SEIU believes should be a central component of reform, a disappointed Andy Stern told the Post. The union’s president pulled his support from Health Reform Dialogue while taking a swipe at the Big O.

“You don’t make compromises with your allies,” he said. The SEIU by the way, is one of the groups that signed yesterday’s letter to the Big O.

“I took that as a signal to Senator Grassley” a Republican who has vehemently opposed the idea, seethed Len Nichols, director of health policy at the New America Foundation.

(more…)