President Obama on Wednesday addressed Congress with a plan for health care reform that would cost $900 billion over 10 years and address rising costs, access to care issues and professional liability. Obama’s plan would:

• Provide several consumer protections against insurance companies, including barring insurance companies from denying coverage for pre-existing conditions, rescinding coverage, placing year or lifetime caps on insurance benefits and limiting on maximum spending for out-of-pocket expenses
• Create a new “insurance exchange,” which he described as a “marketplace where individuals and small businesses will be able to shop for health insurance at competitive prices”
• Require individuals to have health insurance, and require medium and large businesses to offer coverage to employees or pay into a fund to cover the costs of their works
• Create a public insurance option

Obama promised that the plan would be budget neutral and said the savings would result from eliminating waste and abuse within the existing health care system, as well as reducing payments to Medicare Advantage plans. Another form of financing would be a fee for insurance companies’ highest cost plans to “encourage them to provide greater value for the money.” Obama also addressed medical malpractice. He said, “I am proposing that we move forward on a range of ideas about how to put patient safety first and let doctors focus on practicing medicine.” He proposed authorizing the Health and Human Services secretary to test potential solutions as demonstration projects in states.

Reflections
President Obama is a remarkable orator, no doubt about that. He made his case for health system reform fairly effectively despite the Republican cold shoulder and overt heckling. It was pretty apparent to me that the public option wasn’t “off the table” from the smile and almost jack-in-the-box bobbing up and down of Speaker Pelosi behind him during his remarks, but there were some code messages in the address that may not have been apparent to many.

First, his apparent enthusiasm for the public option was tempered significantly by his acknowledgment that it was not an essential part of the strategy. That frees Mr. Baucus up to propose something different (the Snowe amendment).  And his comment that health care reform will not contribute one dime to the deficit is another way of possibly approaching that the solution for getting a bill passed will be reconciliation. Reconciliation is an extreme measure in the U.S. Senate that only requires a simple majority of 51, rather than the 60 votes otherwise required in the Senate. To use reconciliation, which the Republicans will hate (although they used it to get the Bush tax cuts passed), the net has to be budget-positive or budget-neutral.

There are some problems with reconciliation that could affect our issues in reform. Under our health care reform campaign, Quality First, the ACC has endorsed six principles for health care reform, including: universal coverage; coverage through an expansion of public and private (pluralistic) programs; focus on patient value—transparent, high-quality, cost-effective, continuous care; emphasis on professionalism; coordination across sources and sites of care; and payment reforms that reward quality and ensure value. However, among many other reasons, not all of these are able to be scored by CBO, which would make them more difficult to include in a bill pushed through with reconciliation.

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