THE BLOG
03/28/2010 05:12 am ET Updated May 25, 2011

Way Forward on Health Care Reform

Health care reform has been one of America's biggest policy challenges for more than 40 years. The Clinton administration's attempt to address it in the early 1990s was abandoned after it failed to gain broad support. Without real compromise -- really soon -- the Obama plan faces a similar fate. If Ted Kennedy were alive, and if last week's political tsunami in Massachusetts had happened elsewhere, I can imagine the conversation he might have had with Republicans Orrin Hatch and John McCain in the Senate gym. (As a onetime aide to Kennedy, I speak from experience.)

"John, Orrin, we have a mess on our hands with health-care reform," Kennedy would say. "Let's see what we can do to fix this for the American people." Before they left the gym, they would have agreed that they all wanted to bar insurance companies from denying coverage to people with preexisting illnesses. Hatch and McCain would have added that there must be tort reform, and Kennedy would have said that universal coverage should be a goal. Then they would have returned to their offices and told their staffs, "Let's fix this."

Their compromise would look something like this: Universal health care would be retained as a goal, to be phased in over time as the country can afford it. It would expand with specific cost and care triggers, starting with children and continuing gradually until all groups are covered. Insurance companies would be required to cover each group triggered, and each group's members would be legally required to obtain insurance with defined minimum benefits, and subsidies if necessary. This would satisfy lawmakers who want insurance companies to stop denying coverage to people with preexisting illnesses, as well as insurers who want a mandate in exchange for changing their current practices. Kennedy would give up the public option for now, but it could be on the table again if costs are not controlled.There would be real cost controls. (There is very little real cost control in the current bills, and their projected cost of about $1 trillion over 10 years will inevitably fall far short of the actual amount.) The cost controls would include tight fee schedules for prescriptions, physicians, and hospitals, based on the quality of care, not the quantity of procedures. New treatments, procedures, and drugs would not be covered until they have been shown to have more than marginal benefits. 

Kennedy would demand, and Hatch and McCain would agree to, broad use of generic drugs and permitting safe drug importation. Medicare would not be cut. Smart veteran politicians understand that it can't be, especially given the gross underfunding of Medicaid. Finally, there would be tort reform. Standards of care, if followed, should protect providers from frivolous lawsuits. Malpractice suits and defensive medicine have a direct effect on health providers' operating costs, which has been estimated at $200 billion a year. Yet the 1,000-page reform proposals in the House and Senate are silent on the issue, as is the White House and the entire Democrat Party. This is not only a mistake of huge financial proportions, but also a strategic blunder. Aside from the savings tort reform could generate, it could also be among the missing links that bring Republican legislators on board.

Unfortunately, Kennedy is not alive to help broker such a compromise. Given that and the result in Massachusetts, President Obama should honor Kennedy by doing what he would have done to realize his longtime dream of reforming health care. The president has said that he wants monumental health care reform to be one of the defining achievements of his administration. But if he doesn't compromise now, the issue could become his first major failure, just as it was for Bill Clinton. Kennedy believed small steps forward are better than a step backward. Obama should follow in his footsteps.

Stuart H. Shapiro is the president and CEO of the Pennsylvania Health Care Association. He can be reached at sshapiro@phca.org.

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