The White House Blog

The Senate Debate Begins

The Thanksgiving holiday is over, and attention now turns to the Senate floor debate on its health insurance reform. Today's Washington Post explores one aspect of this debate– and that's what the impact of health reform will be on our deficits and fiscal situation.

There are three things to keep in mind when assessing this issue.

First, according to the non-partisan Congressional Budget Office (CBO), the Senate bill (pdf) – and the House bill (pdf) – will reduce the deficit over the first 10 years, and then substantially reduce it by hundreds of billions of dollars in the second 10 years as well.  That would be up to ¼ percent of GDP. CBO scoring is, by design, conservative, and we should not take their assessment lightly. Contrary to what many thought when this process began, the health reform bills represent the biggest deficit reduction legislation since the 1997 Balanced Budget Act.

Second, we also need to understand the limits of CBO scoring. Some of the most auspicious reforms that health policy experts believe will transform the health care system from one that delivers more care at an increasingly growing price to one that delivers better care are not analyzed by CBO for the fiscal effects. Why? Since they have never been done before ordone in concert with each other, they are hard to assess.  For CBO, past results is an important indicator for future savings.  I know this firsthand, having served as the CMS Administrator when the agency implemented the Balanced Budget Act of 1997 (BBA). The BBA was first estimated to extend the Medicare Trust Fund's solvency through 2017, but by the end of the Clinton Administration, the savings in the BBA were re-estimated and found to have extended the life of the Trust Fund to 2029.

Ironically, while some opponents of reform have tried to dismiss the CBO scores as underestimating the costs of reform, the opposite is almost certainly the case. Indeed, Jon Gabel wrote a New York Times op-ed in August spelling out why both history and logic argue that the CBO almost always underestimates savings in reform of the health care system, and are likely doing so now solely by virtue of their methodology:

"The budget office's cautious methods may have unintended consequences in the current health care reform effort. By underestimating the savings that can come from improved Medicare payment procedures and other cost-control initiatives, the budget office leads Congress to think that politically unpopular cost-cutting initiatives will have, at best, only modest effects."

In addition to historic investments in health information technology, research into what works and what doesn't, and prevention and wellness investments that were included in the Recovery Act, some of the key provisions under consideration in the health reform bills include:

• Changing the way we pay hospitals, to discourage mistakes and unnecessary and costly readmissions.
• Creating incentives in the payment system to reward quality of care rather than just the quantity of procedures.
• Giving physicians incentives to collaborate in the coordination of patient care.
• Reducing hospital-acquired infections and other avoidable health-center acquired conditions through rigorous reporting and transparency.
• Imposing a fee on insurance companies offering high-premium plans — which would create a strong incentive for more cost-efficient plans that would help reduce the growth of premiums.
• Establishing a Medicare commission — which would develop and submit proposals aimed at extending the solvency of Medicare, slowing Medicare cost growth, and improving the quality of care delivered to Medicare beneficiaries. 

These elements are included in the Senate bill, and they will be deliberated upon and strengthened and modified where necessary over the coming debate.

Third, health reform is necessary, but not sufficient to curing our fiscal problems. The growing cost of health care is the number-one, long-term fiscal challenge we face. If we do nothing, by 2017, 20 percent of GDP will be spent on health care – and eventually it will swamp the federal budget. Fiscally-responsible health insurance reform that does not add a dime to our deficits and that reduces the rate of health care cost growth will help put our nation on a more sustainable, long-term trajectory. In fact, just "bending the curve" – reducing the annually rate of health care cost growth -- by 15 basis points (or .15 percent) is the equivalent of wiping out the entire actuarial deficit in Social Security.

So, it's essential that we get health care costs under control by wringing out the waste in the system. But it is not sufficient to plug the massive deficits built up over the past several years. The President understands that, and that’s why as part of the budget process for next year he has tasked the Office of Management and Budget and his entire economic team with exploring ways to reduce our medium-term deficits.

As the debate gets under way, there will be those who will find fault and raise serious questions; we welcome their considered critiques. But a little perspective is in order; the bill passed by the House and the one being considered in the Senate do more to take health care off its unsustainable course than anything in history. And the critics of these efforts rarely offer any alternatives. One thing is clear: doing nothing is not an option.

Nancy-Ann DeParle is Director of the Office of Health Reform

Host a Community Discussion and Be Part of the President’s Forum on Jobs

UPDATE: Due to overwhelming response, with thousands of people having signed up to host, we have extended the deadline to January 7, 2010.

This Thursday, the President is hosting a discussion at the White House to explore every possible avenue for job creation and get ideas from CEOs, small business owners, economists, financial experts, labor union representatives, nonprofit groups and regular Americans who have felt the impact of this economic crisis firsthand.

But you don't need to be at the event in DC to participate.  Today we’re announcing nationwide community job forums that will run from November 30th through January 7th.  These discussions, among neighbors, co-workers and friends, will be a source of insights and ideas that will inform the President’s approach to job creation.  Through WhiteHouse.gov, hosts can upload the results of their discussions. Back here at the White House, we’ll compile the feedback into a report that will be sent to the Oval Office for review.

Let us know if you are interested in organizing a jobs forum in your community, and we’ll follow up with discussion questions and other materials to make your event as productive as possible. We’re not able to offer an events center where you can find events already happening, so if you haven’t heard of one in your area, start your own and reach out to your network for participants.

UPDATE: Watch the video about what's going on with the local economy in Allentown, PA that was shown at the beginning of the President's forum:

What Health Insurance Reform Means for Rural America

I have seen the consequences of a health care system in need of reform – too few insured, too costly for others and too little quality for all. Unsustainable growth in the cost of health care and the continued denial of coverage to millions of Americans is evidence that our health care system has failed.

These failings are amplified in rural America, where folks pay more for health care than their urban counterparts, but are still more likely to experience chronic illness and poor health.  I applaud the National Farmers Union for their  recent endorsement of the U.S. Senate's health care reform bill and their prior support of the House’s bill.  Their support of the legislation and thier courage in this critical debate says a great deal about the need for reform and the consequences for rural America if we do not get it.

Consider the following statistics:

• Rural Americans pay 39% of their total health care costs, out of pocket – the highest percentage for all Americans.
• Almost one in four Americans living in towns with less than 2,500 people have no health insurance coverage.
• Rural Americans are more likely than their urban counterparts to postpone or forego medical care because of the cost – 9% say they delayed care and 7% skipped treatment.
• Approximately 80% of Rural Americans are self-employed or work for a small business – two groups greatly impacted by the rising cost of health care premiums.
• Rural residents are more likely to report fair to poor health status than urban residents, have a higher mortality rate and are more likely to have a chronic condition.

For more information, check out this recent report detailing how health insurance reform will impact rural America.

These numbers aren’t just statistics – they tell the real story about the health and well-being of rural Americans.  When high costs or lack of insurance deters someone from seeking needed health care, illnesses go undiagnosed and long term costs increase.

Soaring health care costs are also hurting rural economies and businesses. Small businesses create most new jobs in rural America, but they are at a disadvantage in our current health care system, paying up to 18% more per worker than large firms for the same health insurance policy.  And over the last 16 years the number of small businesses offering health care has dropped to less than 40%.  We can overcome this by creating a new insurance exchange where individuals and small businesses will have greater leverage to bargain for better prices and quality coverage.

The debate we are having is a good one and it will result in legislation more beneficial to the American people.  But we cannot forget - we have been debating health care reform since Harry Truman was President and the status quo is unsustainable.  We must seize the unprecedented opportunity for reform that will improve the health care security and stability that Americans value, strengthen our economy and maintain the character of our rural communities for decades to come.  The time is now. Rural America can’t wait any longer.

Tom Vilsack is Secretary of the Department of Agriculture

On the PERAB Tax Task Force

The President's Economic Recovery Advisory Board released the following statement today:

Statement from PERAB Chairman Paul Volcker on Tax Task Force

The tax subcommittee of the PERAB was scheduled to release its report on December 4th. But we have received more than 500 submissions of serious tax reform ideas from the public both in person and on our website and we had to cut them off to meet the original deadline.

I want us to review as many suggestions as possible and to have sufficient time to fully consider the hundreds of suggestions that have come in already. I have asked the Administration to extend our deadline and to reopen the website for submissions so that we can hear the widest possible range of ideas.

We still have the same specific mandate: to discuss the pros and cons of a spectrum of reform ideas relating to tax simplification, enforcement of existing tax laws and reform the corporate tax system without considering policies that would raise taxes on families making less than $250,000.

The PERAB is not tasked with providing its own policy recommendations for the Administration and the final report will be an almanac of options from a broad range of viewpoints.

We will be reopening the web submission form and extending the deadline for any suggestions in keeping with our mandate (suggestions may also be submitted via email) and will be scheduling more public meetings over the coming weeks. We expect to report back to the Administration after the holidays.