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Ted Kennedy's Prescription For Change

Paul Krugman nails it today: The battle over doctor fees and the Medicare Advantage plans is one of the best signs yet that health care reform, an elusive political goal for so long, may have a shot this time around.

For those who didn't follow the battle, the basic parameters were this: Medicare's reimbursement system includes an automatic pay cut for physicians whenever the program's cost exceeds a certain threshhold. Reducing physician fees isn't necessairly a bad idea, if done smartly and in modest increments. But, because of the automatic trigger, doctors this year were in line for a 10.6 percent cut--a cut so severe and sudden that, if enacted, some might actually stop seeing Medicare patients. (Usually it's a pretty empty threat; this one seemed more real.)

The cut was to take effect July 1. And as the date approached, leaders from both parties promised to find some sort of the fix.

But what kind of fix would it be? In the past, Congress has dealt with this issue by hasitly passing some sort of bipartisan deal, essentially suspending the formula for twelve months--in the hopes that, by the following year, they'd have worked out a more permanent solution. They'd pay for it by running higher deficits.

This year, Democrats knew, there was an easy place to find some real money: In Medicare Advantage. Medicare Advantage is the program that allows seniors to opt out of the tradiitional, government-run program and enroll instead in a private health insurance policy. It was created as part of the infamous Medicare prescription drug package and, for some seniors, it's turned out to be a pretty decent deal. But the Medicare Advantage plans have an advantage: They get extra subsidies. The government pays an extra 17 percent for every beneficiary that enrolls in the program. (Here's Health Beat's Maggie Mahar with the background.) Numerous experts have concluded there's no reason to shovel this extra money at private insurers, when traditional Medicare can do the same job for less.

So the Democrats, in effect, conjured up a swap: Take some money from the insurers in Medicare Advantage and give it, instead, to the physicians.

The measure passed both houses easily. But then it ran into President Bush, proud father of the 2003 law creating Medicare Advantage and frequent ally to the insurance industry. Forced to choose between cutting physician pay and insurance company subisdies, he chose the former--and vetoed the bill. And he had enough support from Republicans on the Hill to sustain that veto.

Bush figured the Democrats would relent and come to a bipartisan deal suspending the fee cut. And why wouldn't they? They always had in the past. But this year Democrats are a little more feisty. With the help of lobbying groups like the AARP and AMA, they accused Republicans of favoring insurers over physicians--and, by extension, the well-being of senior citizens.

The campaign was intense. (See Sarah Arnquist's account at The Health Care Blog.) And, eventually, a few more Republicans broke ranks--until the Democrats were one vote short of the two-thirds needed to override Bush's veto. That's when Ted Kennedy made his surprise appearance on the Senate floor and cast the deciding vote in an emotional moment that, quite literally, led the evening news. (At least it did on ABC, the network I was watching.)

Fine, fine. But what does this have to do with universal health care? Krugman explains:

Eearly next year, President Obama will send his health care plan to Congress. The plan will face vociferous opposition from the insurance industry — but the Medicare vote suggests that this time, unlike in 1993, Democrats will hold together.

Unless Democrats win even bigger than expected, however, they won’t have the 60 Senate votes needed to override a filibuster. What the Medicare fight shows is that the Democrats could nonetheless prevail by taking their case to the public, daring their opponents to stand in the way of health care security — so that in the end they get some Republicans to switch sides, and get the legislation through.

A lot can still go wrong with this vision. But the odds of achieving universal health care, soon, look a lot higher than they did just a couple of weeks ago.

I think that's right. And I'll have more to say about Health Care for America Now very shortly. In the meantime, though, I'll add one more reason why the Medicare battle is an encouraing sign for universal coverage.

From the late Progressive Era, when medical socieities in California and New York squelched drives for "compulsory sickness insurance" in those states, physicians have been a powerful--and at times pivotal--opponent of universal coverage. The American Medical Association famously attacked Harry Truman's proposal for national health insurance in the late 1940s, turning "socialized medicine" into a permanent part of the political lexicon. And it fought bitterly, if unsuccessfully, to block the creation of Medicare in the 1960s.

But physician opinion about universal health care seems to be shifting, as noted previously in this space. And one reason, it's widely assumed, is their exasperation with the health insurance industry. Historically, it was doctors' intense desire to remain autonomous--clincially and financially--that drove their opposition to universal coverage. But in the 1990s, as insurers turned to the techniques of managed care, doctors learned that insurance company overseers could be just as onerous--and, seemingly, even more arbitrary--than government.

The fact that Kennedy, of all people, should emerge as the physicians' savior says it all. For most of his career, many doctors saw him as public enemy #1, since he was the lawmaker most closely identified with universal coverage. 

To be sure, the medical community opinions are far from unanimous. Plenty of physicians still hate universal health care--and Kennedy!

But if a large segment of physicians see their interests diverging from the insurance industry's, that changes the political calculus about universal coverage. Doctors are a powerful lobbying force, as much for their symbolic power as their leverage in Washington. A coalition of reformers that counted physicians among its strong supporters would be difficult to defeat. In fact, I've always thought the winning strategy for universal coverage was one that pit both doctors and employers (who would benefit from more consistent and controlled benefit costs) against insurers and drugmakers.

Like any political strategy, an alliance with physicians has its pitfalls. In the long run, no health care reform can succeed without doing something about cost and quality--which will mean changing the way we pay for medical care and, in some cases, paying doctors less. (Believe it or not, sometimes the insurers are the good guys and the physicians are the bad guys.) On the other hand, insofar as every stakeholder will have to bear some pain in reform, having the docs on board may make it possible to make these changes in a rational, gradual way that enlists the medical community as a partner in better medical care.

Update: For more, see Robert Laszweski, also at The Health Care Blog (which, by the way, you should read regularly if you care about this stuff).

--Jonathan Cohn