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HEALTH REFORM: Back to the Basics -- Money, Money, Money, Money

What a relief. An intelligent essay about health reform that isn't about the public plan, illegal aliens, abortion, Granny plug-pullers or Santa Claus. (OK, we made up the part about Santa.)

In fact, it's an intelligent essay about how all the yelling about the public plan, illegal aliens, Granny killers and abortion is distracting us from what health reform is really about -- cost and coverage.

Kaiser Family Foundation President and CEO Drew Altman reminds us that the "core concern" of the American people is cost. And that's how this debate over health reform began in the first place. Cost to individuals and families. Cost to businesses. Costs to our country.

Once the summer of town meeting discontent winds down, lawmakers return to Washington and, we hope, get back to the business of fixing health care. And the hardest part Drew maintains, is still money. (See a Kaiser issue brief on financing here, or an Urban Institute/RWJF paper on financing options here.) Lots of money is at stake, and anything involving taxes or changing Medicare (because it's hard to explain "delivery system reform" and "realigning incentives" in a sound bite to Granny, particularly when she's scared out of her wits because she thinks the death panel is on her trail) was bound to be controversial.

Financing, in fact, dominated the Washington debate for months, although it was overshadowed by hot button emotional issues this summer. Drew raises pertinent questions about the remaining barriers to devising a workable financing system, particularly regarding the level of subsidies and out-of-pocket costs (will it really be affordable and for whom?) and about the nature of the coverage (how good will it be? how much benefit bang for the buck?). Skimpier subsidies brings down the sticker price on the surface, making it sound more palatable to budget worriers. But what do those subsidies buy? If the system doesn't produce tangible and affordable benefits, Altman writes, it's still going to be in trouble:

If reform legislation advances in Congress, the media and the American people will start to look beyond the cost and financing issues and focus on the coverage and subsidies in the proposals. Will they be viewed as a good deal for the roughly $1 trillion spent over the next 10 years and as a fair deal by people who will now be required to have health insurance coverage?  This could be the next big issue in the reform debate, if and when a final bill emerges, and much will depend on whether the American people feel it delivers a reasonable level of relief for the expenditures required.

He outlines five things to watch out for:

  1. How high up the income scale will subsidies go?
  2. Is there an individual requirement to obtain coverage and how severe are the penalties for not complying?
  3. What coverage will people get?
  4. How much will insurers be allowed to vary premiums by age?
  5. What will be available for the lowest income Americans?

If you read his full essay, you'll see numerous examples of why, as he put it, it's a "tough balancing act" particularly because health reform has so many interconnected parts. Trade offs have consequences. Here's one example he gives:

If there's an individual mandate, a requirement that we all have insurance, a minimum level of insurance will have to be defined. In other words, we'll need to be clear about what constitutes fulfillment of that mandate. But there will be pressure to keep the basic level low enough so that premiums are affordable, and that people who are insured today don't have to shell out a lot more money. (Remember, reform is supposed to bend the national cost curve, and save families money over the long haul). But if a basic plan is too parsimonious, it won't do much for the 25 million who are underinsured today. That may "cause people to look at it and decide reform isn't worth it," Drew writes.  And premiums are only part of the story. Will deductibles and copays be affordable? Will insurance policies in the post-reform world have an out-of-pocket maximum, protecting American families from piling up severe debt even with insurance. And if so, what will that cost?

The complexity that he explores illustrates the conundrum that has been haunting some of those seeking a path to a "compromise." Doing a big comprehensive health reform bill, linking cost, coverage and quality, is complicated and difficult as we all know. But a scaled back bill is also easier said than done. Cost, coverage and quality are so interlinked, you chip away at one and the others may fall apart (and, in the political arena, some reform allies may bolt -- half a loaf to some may be stale bread crumbs to another).

As lawmakers come back to work, they will also be reminded that doing nothing is not an option. There's no such thing as the status quo in health care. We're on a trajectory where the costs -- and the ranks of the uninsured -- go up and up. So back to basics. Figure out the money. It's hard. But after our summer of televised screaming, we're looking forward to an autumn of action.