Memo to President Obama: Ensure that Health Reform Finally Succeeds

Henry J. Aaron
Henry J. Aaron The Bruce and Virginia MacLaury Chair, Senior Fellow Emeritus - Economic Studies

February 4, 2009

Congress has quickly passed the State Children’s Health Insurance Program in its opening days, but the Obama administration and congressional leaders want to do far more to extend health insurance coverage and reform the delivery of care. Paradoxically, the current economic crisis makes reform easier, not harder.

Americans wonder why we spend so much — twice the average of the 10 richest countries — but cannot avoid rampant medical error that causes nearly 100,000 avoidable deaths and still more injuries.

Although these health care problems are not new, no recent president has succeeded in reform. The obstacles that have frustrated prior reform attempts remain powerful now. Further, the health system is so large — with anticipated spending this year of $2.6 trillion — that transformation with one new law, or even in one administration, is unlikely. But another failure as total as that suffered by President Clinton would be catastrophic.

Obstacles to “big bang” reform include the fact that even now there is no ideological consensus on how to tackle the job. Underlying this quagmire is the inherent complexity of modern health care and geographic diversity in how much we spend and in how care is delivered.

The political clout of the multiple and well-funded groups of providers, device manufacturers, insurers and drug manufacturers provide yet another complication. Any substantial reform inevitably will mean that some payers, doctors, hospitals, drug companies and others will get less. Potential losers will fight hard and have ample resources to do so.

During your campaign, you proposed various ways to improve our health care system. But, how shall we proceed now? An omnibus approach has appeal; it gets the problem over with — swallowing the bitter medicine in one gulp. Many Capitol Hill leaders — notably Sen. Edward Kennedy of Massachusetts — support a single, large piece of legislation. But, such a bill would be staggeringly complex and would elicit a wall of naysayers. It would require difficult coordination of multiple committees in both the Senate and House and would generate the same sort of complexity that helped opponents kill the 1,342-page Clinton plan.

If the “big-bang” approach is risky and likely to fail, stasis is intolerable. The key is to identify specific reforms that move us toward your long-term vision of what U.S. health care can and should be. A “leverage-point” approach runs far less risk of political failure. In fact, two opportunities to achieve limited gains are already on the table. The economic recovery package that you have endorsed and has already passed the House increases Medicaid matching funds by an estimated $87 billion. The Medicaid support will help states avoid ruinous cutbacks in services to the neediest Americans and provide fiscal relief that will forestall cuts in other services that would worsen the economic slowdown.

Other promising reforms also drawn from your campaign platform include support for measures to improve the operation of the inefficient market for individual insurance, research on the comparative effectiveness of medical treatments, and support for state reforms, such as that in Massachusetts, that expand access and test new quality and cost control strategies.

All four steps would lay the groundwork for continuing reform. Health information technology avoids duplicative tests and simplifies administration. It will facilitate comparative effectiveness research. And both will help improve the quality and efficiency of care. Improvements in the small-group and individual insurance market will help millions of the currently uninsured buy coverage at reasonable cost.

Finally, given the cost pressure from new health care technology and population aging, nothing will prevent health care spending from increasing. And that means that it will be necessary to boost revenues earmarked for health care. But these steps would help assure that each dollar is well spent.

These efforts alone would not achieve universal coverage, end substandard care or stop excessive spending increases. But, they would insure millions who are now uninsured. They would build the data base and management information necessary to avoid duplication and medical error. They will jump-start a sustainable reform process. Putting all your eggs in one legislative basket is just too risky. Given the stakes, health reform must begin, and this strategy will assure that it does.