In the Wake of the Healthcare Summit

Yesterday's Healthcare Summit held few surprises.  As widely speculated, the 7 and 1/2 hour session largely turned into a Capital Hill version of a TV reality show.  Obama opened laying out an agenda to consider the various objectives of Healthcare Reform.  Alexander for the GOP followed forcefully urging the Democrats to scrap their plans and start anew citing backing of the American people.  He further requested that the Democrats pledge not to take the bills through Congress utilizing the reconciliation process and warned them of the consequences of it.

The opening comments set the stage for the remainder of the meeting.  Sure there were some agreement on various objectives but not on form and substance of how to make it happen.  For example, all agreed that Americans should not be denied coverage due to pre-existing conditions.  The GOP  agreed that some regulation on the insurance industry would make sense.  Coburn (R) put forth an idea to send investigators as fake patients into MDs offices in an attempt to root out Medicare fraud and abuse.  Both sides agreed that this was a good idea.  But that was as far as agreement really got. Agreement on some objectives and some minor points.

Huge positional gaps exist over coverage of the uninsured. Dems want to spend up to 3/4 of a trillion dollars over next 10 years to cover 30 million. The GOP covers about 3 million (Boehner bill as reviewed by the CBO).  In terms of approach, Dems want exchanges, many Repub proposals want to open up state regulations so that insurance companies can more easily enter other state markets (easier said than done due to large market entry barriers).  Some Repub proposals do include exchanges.  Republicans tend not to favor pay or play schemes nor do they want government mandated benefit packages. Repubs also favor establishing high risk pools.  There was also a big discussion on budget impact of the plan.  Dems say it will reduce the budget (due to increased taxes and large cuts in the Medicare Advantage programs).  Repubs point to the huge cost of the current Dem proposals.  Nothing new here.  This posturing has been ongoing ever since the COB released the financials around the House and Senate bills.

An interesting area for the Pharma industry was the filling of the Donut Hole.  Dems want it filled.  The GOP appeared to come out against it due to the additional costs of the benefit.


What happens next?  It will depend on the polls.  The spin machines are already churning with soundbites filling big media channels.  If we see a favorable tick toward approval of comprehensive healthcare reform, the Democrats will be emboldened and pursue reconciliation.  Obama did not mention the R word (reconciliation), but it was pretty clear that he implied that it was an option for the Democrats and hence a threat. Don't be surprised if Obama takes a couple of minor republican ideas and amend his proposal with them for window dressing.  

If public opinion does not tick upward toward the Dems, we still will see movement forward but perhaps less aggressive as the Democrats have little political capital left to lose and can roll the dice hoping that they can spin whatever gets passed as good for the voting public.