Insurance group reverses on health-care overhaul

Sixteen years ago, the opposition that killed President Bill Clinton's massive plan for universal health-care coverage was distilled in a 30-second ad showing "Harry and Louise," a fictional middle-class couple, shuffling papers and complaining about "government bureaucrats" who limited their choices.

But last week, at the conclusion of the White House summit on health-care reform, the head of the trade association of insurance companies - the successor to the group that spent millions on those commercials - pledged to support President Obama's push for a comprehensive overhaul of the health-care system to cut costs and expand access.

"We understand we have to earn a seat at the table," said Karen Ignagni, president of America's Health Insurance Plans, addressing Obama in the gilded East Room. "You have our commitment to play, to contribute, and to help pass health-care reform this year."

The turnabout was a striking illustration of how much health-care politics have changed, analysts say. Former adversaries are agreeing that something must be done: Costs are spinning out of control, harming business and government alike, and 47 million Americans lack insurance. The sharpest economic slide in six decades has only intensified the discussion.

"Now is exactly the time for us to deal with this problem," Obama said. "It's one of the greatest threats not just to the well-being of our families and the prosperity of our businesses, but to the very foundation of our economy."

His approach shows that Obama has learned the lessons of the downfall of the Clinton plan, the last major systematic attempt at a goal - universal health-care coverage - that has eluded presidents since Harry S. Truman.

Exhibit A was Thursday's summit, which gathered 150 people with diverse stakes in the system: congressional leaders; representatives of the insurance and pharmaceutical industries; doctors, nurses, and hospital administrators; union leaders; and corporate executives.

In 1993-94, a plan was drafted, largely in secret White House meetings, by a task force headed by first lady Hillary Rodham Clinton. With little public input, the group coughed up a 1,324-page bill that interest groups picked apart for months. And because members of Congress had not been consulted, they either opposed the bill or, at best, were unwilling to defend something they had no hand in creating.

The Clinton plan was complex - relying on government's shepherding of people into managed-care plans through purchasing cooperatives - and it was presented all at once, in mind-numbing detail. By contrast, Obama has been vague, preferring to build consensus around general principles. He has made clear that Congress would write the legislation; congressional leaders say they want to pass a bill this summer.

Obama eased some fears by signaling that he wanted to build on the current system rather than create a nationalized single-payer system. That, analysts say, has eased fears in the health industry and among the middle class, though Obama has angered some liberals.

In addition, Obama has taken an incremental approach and proposed a down payment. He included a $634 billion health-care reserve fund in his 2010 budget proposal. That money would be raised, in part, through targeted cuts in government health-program payments to insurers, doctors, hospitals, and drugmakers - and through a rollback of the Bush-era tax cuts for the wealthy.

Driving the medical lobby into the administration's arms: the lure of tens of millions of new customers. If Obama succeeds in covering many more Americans, they will take their insurance to go to the doctor, buy drugs, and have surgery - increasing revenue for providers.

Other businesses want relief from the ever-rising costs of health care.

"A lot of businesses have decided recently they have more to fear from the status quo than from change - that's the opposite of 16 years ago," said Robert I. Field, professor of health-care policy at the University of the Sciences in Philadelphia. "Insurance companies see costs escalating out of control, and themselves losing customers as fewer and fewer businesses are able to buy insurance."

Rep. Allyson Y. Schwartz (D., Pa.), who attended the summit, said change is a "fiscal imperative" for the private sector and the government. "A double-digit increase in the cost of health care every year is just unsustainable," Schwartz said in an interview.

Fear is at work, too. Tom Donahue, president of the U.S. Chamber of Commerce, said that momentum was clear toward major change and that the stakeholders wanted to try to shape it. "If you don't get in this game, then . . . you're on the menu," he said.

Still, hard questions lurk beneath the cheery surface of consensus. Should the government mandate that people buy insurance, or that employers provide it? How will it be paid for? Should a government health-insurance plan compete with private insurers? Such an approach might get insurance to more people, but would it be unfair to private-sector firms because the government could undercut them on price?

Already there is opposition, even among Democrats, to an Obama proposal to raise money for reform by taking away the tax deduction for health-care benefits. Some oppose the rollbacks of the Bush tax cuts. And the AARP objects to a proposal to have wealthier senior citizens pay more for Medicare.

"Everybody agrees we ought to get rid of inefficiencies, focus on primary and preventive care, and get everybody in the system with affordable coverage," Schwartz said. "The difficulty, of course, is what do we mean by that? . . . Now the hard work begins."

Senate Finance Committee Chairman Max Baucus (D., Mont.) agreed. "This is going to be incredibly difficult," he said at the summit. "Let's not be naive on the cost."

But lawmakers told Obama they were willing to try. Leaders in both houses also have said they would let Republicans help write the legislation, raising hopes that the process will be more bipartisan than the recent fight over the economic-stimulus package.

"Bipartisanship is not just a nice thing we say to each other before we touch gloves, go to our corners, and come out swinging when the bell rings," Sen. Robert F. Bennett (R., Utah), a veteran of the battle over Clinton's plan, said at the summit.

Overhauling health care would represent "wrenching change," Bennett said, and the only way to bring that about is if leaders in both parties are willing to "join hands and jump off the cliff together."

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