When America’s Health Insurance Plans (AHIP) — the lobbying arm of the health insurance industry — released its health insurance plan late last year, the Wonk Room was quick to point out that while the health insurance industry has co-opted the language of universal coverage, they do not support major progressive proposals like community rating (a.k.a. everyone pays the same premium).

But today, at a roundtable with bloggers, Families USA president and CEO Ron Pollack — who has built some of the major ‘strange bed fellow coalitions’ and has attended numerous meetings with the health insurance industry — suggested that the insurance industry is close to accepting community rating:

They’re pretty close to it…they know it’s not just guarantee issue, you have to deal with the premiums.

During an interview with the Deseret News editorial board, President Bush’s Health and Human Services Secretary Mike Leavitt appeared to distance himself from the Republican alternative to universal health reform — consumer driven health care. While it’s unclear if Leavitt was endorsing an Obama-like proposal, Leavitt’s suggestion that the government — and not just the free market — has a role to play in providing affordable coverage seems to rebuke conservative campaign talking points:

“The solution isn’t to continue to keep doing what we did in the past,” he said. “The role of government needs to be worked out. Is it to own the system or organize the system?”

Leavitt said he foresees three possible outcomes for making comprehensive changes: incremental steps with expansions of health-care insurance for children and by expanding Medicare for seniors, the Big Bang change with details to be worked out later, the Big Bang carefully done.

Over at GoozNews, Merrill Goozner flags an industry-sponsored effort to define President Obama’s comparative effectiveness research initiative. A coalition of groups who accept money from the pharmaceutical industry has sent a letter to Capitol Hill demanding “that any agencies conducting comparative effectiveness reviews be run ‘through an open and transparent process that allows for patients, providers and other stakeholders to participate equally in governance and input, starting from the research planning stage‘”:

The letter’s program is nothing less than an effort to strangle comparative effectiveness research in its cradle by giving industry the right to veto controversial inquiries and limit the scope of the research that gets done. Do publicly traded companies have a seat on the governing board of the Securities and Exchange Commission? Should we give Boeing and Airbus the right to determine the scope of the National Transportation Safety Board’s inquiry into airplane crashes? Does the current financial crisis suggest the banks should have more say over how they are regulated? Its simply bad governance to give industry a seat at the table that decides which comparative effective studies get done.

Comparative effectiveness research could save up to $700 billion annually in health spending by identifying treatments that do not produce the best medical outcomes and President Obama and Sen. Max Baucus (D-MT) want to establish an independent body that would be “responsible for setting national priorities” for head-to-head trials. But Big Pharma is seeking to define the process; an independent institute could cut into revenue for branded drugs and steer people towards more generic medications, lowering prices for consumers but cutting into industry profit.

Industry concerns aside, a comparative effectiveness institute must surely retain its independence, but generic drugs — which could certainly lower health care costs — are not without their pitfalls. As US News & World Report’s Heart To Health blog points out, “generics are far more likely to be made in factories in parts of the world like India that have cheap labor and overhead.”

According to a “scathing report issued by the Government Accountability Office in September foreign countries escape rigorous FDA inspection, documentation of their practices, and follow-up monitoring even when serious manufacturing or drug-handling problems have been identified. Worse, the GAO has identified these problems with FDA oversight in the past, and they have gone largely uncorrected—at the same time that outsourcing of generic drugs to Asia has been skyrocketing.”

Responding to Republican criticism that expanding SCHIP eligibility to more low-income children would “crowd out” private coverage, Sen. Max Baucus (D-MT) suggested that rather than worrying about more children moving into a public plan, Republicans should focus on reforming private health insurance to insure that it is an affordable option for working class families:

The dilemma is to make sure people in our country have good public health insurance at premiums they can afford, benefits that make sense. The Children’s Health Insurance Program has good benefits and so clearly a mother whose income is quite low, would probably want her child to be enrolled in the Children’s Health Insurance Program. We have to bolster private health insurance in this country.

Watch it:

“We have to take-up health care reform this year, in this Congress,” Baucus said, “it’s so important.” In early November, Baucus released a set of principles for comprehensive health care reform designed to expand health care access and improve affordability.

Today, during an appearance on CNN’s American Morning, Rep. James Clyburn (D-SC) again suggested that the best way to get to universal health care coverage is through incremental reform and “to use community health centers as a foundation”:

I have always believed that the way to get to universal access to health care is to use community health centers as a foundation. If you go back to 1994 when we were doing this I was working with Congressman Roland from Georgia, I was trying to get this to be the foundation upon which we do this in 1994. So I’m not late to this, you guys are just beginning to listen to a little bit of what I say.

Watch it:

Clyburn agrees with the goal of affordable health care for all, he just doesn’t see how we get there in one big push. But again, it’s all in how you talk about it. Health care costs have contributed to the economic crisis and the ill economy is making patients sick. Politicians can build support for reforming both systems by educating the public and building support for reform.

After all, it’s what good policy making and politics are all about. First you lay out the situation, and then you suggest solutions. In this case, isolating the economic downturn from the health care crisis and pretending that the two are not related not only distorts reality but also undermines the cause.

Americans understand, (far too well these days) that unemployment can lead to the loss of health insurance coverage and that an unexpected medical emergency can send a family into medical bankruptcy. Yes people need jobs, but during a time of economic crisis, they also need health insurance to protect their families from financial disaster.

It’s that kind of urgency that will make reform possible. And, politically, isn’t it the easier case to make? As Atul Gawande argues in the latest New Yorker, European nations achieved universal health insurance during a period of crisis: their reforms came out of necessity, not slow investments in community health centers and expansions of a tiny program here or there.

There is nothing wrong with community health centers, they’re just not the answer to solving our health care crisis. Chris Jennings recently pointed out that “if you’ve looked at the debates in incrementalism, what happens is people don’t care enough about the incremental population you’re trying to deal with“:

The only people who really tend to care are the people you’re hitting to pay for them – it’s the offset population, the paid for population. In a comprehensive reform debate, when you have all levers on the table, people are willing to compromise more in certain areas in order to get something else.”

Instituting comprehensive reform is the kind of flamboyant political theater that ropes in “the incremental population.” Unfortunately, Clyburn is missing the opportunity for adopting such change. He’s sacrificing a compelling case for health care reform for what’s what’s politically comfortable.

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Since September, the Wonk Room has argued that spiraling health care costs have contributed to the current economic crisis. But on Sunday, the Boston Globe reported that the opposite is also true — the economic crisis is increasing health care costs:

In hospital wards and medical clinics across Massachusetts, doctors see growing evidence that the ill economy is making patients sick, spawning headaches and churning stomachs, and even causing bouts of anxiety and depression among people who never before sought psychiatric help.

As Amanda Terkel points out over at ThinkProgress, conservatives have started complaining and mischaracterizing a provision of the stimulus bill that would “grant waivers to states to allow them to cover family planning services and supplies to low-income women who are not otherwise eligible for Medicaid.” According to the text of the provision, “the bill would give states the option to provide such coverage without obtaining a waiver. States could continue to use the existing waiver authority if they preferred.”

Adding his voice to the already vocal conservative opposition, Fox News’ Neil Cavuto pretended that preventing unplanned pregnancies and promoting maternal and infant health would do nothing to stimulate the economy.

Watch it:

Cavuto’s rant is bizarre, if not unsurprising. Giving women access to critical health care stimulates the health industry and ensures that women are healthy enough to continue providing for their families. Reducing the number of unplanned pregnancies also insulates the government from greater financial obligations — since low income families often turn to the government for assistance — and generally lowers health care costs.

In fact, according to a 2007 Congressional Budget Office report, publicly funded family planning services would save the federal government $200 million over five years, and $400 million over ten.

But, keeping healthy women is also just good policy. It’s difficult to imagine how unwanted pregnancies help struggling families make ends meet and afford health insurance for their families.

Yesterday, during an appearance on CSPAN’s Newsmakers, Rep. James Clyburn (D-SC) suggested that an incremental approach to covering the uninsured would be better “than to go out and just bite something you can’t chew“:

I don’t know exactly what the President’s plans are with moving for universal coverage, But I know this — If you take what we’ve done with SCHIP and you follow that with community health centers, you will have gone a long way toward building a foundation on which to build a universal access health care program. I would much rather see it done that way, incrementally, than to go out and just bite off something that we can’t chew. We’ve been down that road. I still remember in 1994.

Watch it:

Clyburn is correct to highlight the political challenges of passing comprehensive health care reform. As Bob Laszewski has often pointed out, the only way Obama can accomplish health care reform “is if he and his administration spend the time to bring the American people up to speed on just what those sacrifices look like” to “force the stakeholders out of their ‘me’ mode and ready to accept the ‘difficult choices and issues of sacrifice and responsibility an duty.”‘

Despite its challenges, however, the heavy lifting of health care reform is politically rewarding. Since we can’t fix the economy without addressing skyrocketing health care costs or lower rising costs without bringing everyone into the system, a broad approach to health care reform is the only politically viable option.

To lower the health care costs of his constituents, Clyburn would have to bring everyone into the system. “In 2002, uninsured South Carolinians cost the system $1,936 per uninsured individual” and without extending coverage to the 16 percent of South Carolinians lacking health insurance or reversing South Carolina’s dubious and costly distinction of falling into the top ten unhealthiest states for eleven years in a row, Clyburn is wasting his voters’ money.

Pushing for big health reform is politically rewarding precisely because it will ultimately save the government and American taxpayers money and help restore the economy. In fact, rather than serving as a deterrent to comprehensive reform — as Clyburn suggests — the consequences of failing to achieve reform in 1994 are a stark warning against incrementalism, or worse, inaction.

Clyburn certainly understands and appreciates the facts, statistics, and economic arguments — he just doesn’t think that it’s politically feasible. But given the intimate connection between the economy and health care costs and general popularity of taking a “bite” out of the health care crisis, comprehensive reform seems not only politically possible, but absolutely essential.

As Pat Garofalo points out in today’s Progress Report, most conservatives have been attacking the stimulus on the premise that its initiatives “may be worthy in themselves, but have little to do with ‘stimulating’ the economy.” Yesterday, for instance, Republican strategist Jennifer Millerwise Dyck suggested that boosting funding to Medicaid would not create jobs and should not be part of the Democrats’ economic stimulus package.

Today, Sen. Charles Grassley (R-IA), the ranking Republican on the Senate Finance Committee, said he could “buy into 90 percent” of the emerging plan but “opposes the nearly $90 billion in aid to states for Medicaid because some governors would use the money to mask poor decisions in other portions of their budgets.”

But allowing sates to plug their budget holes with federal funds is sort of the point. While Medicaid is one of the largest drains on every state’s budget, giving governors some latitude to use the funds balance the budget, keeps the government running and reduces other painful cuts in essential services or tax increases.

Yesterday, the House Energy and Commerce Committee marked-up the health care portion of the economic stimulus. Here are the guts of the proposal:

- Subsidizing COBRA: The bill provides a 65% subsidy for Cobra premiums to workers involuntarily terminated between Sept. 1, 2008, and Dec. 31, 2009. The assistance, expected to cost upward of $30 billion, would cover premiums for up to 12 months and would end sooner for those who get hired and are offered employer-sponsored health-care coverage.

- COBRA as stop-gap: The bill would permit Cobra-eligible individuals who are 55 years or older and who have worked for an employer for at least a decade to retain Cobra coverage at their own expense until they become eligible for Medicare at age 65, or secure a new job with health-care coverage.

- Increasing Medicaid funding: Medicaid would receive upward of $87 billion under the bill, with additional federal matching funds to help states maintain their Medicare programs through 2010.

- Investing in Health IT: Information technology would get $20 billion of federal funding under the bill, which calls for the Department of Health and Human Services to develop standards by 2010 for a nationwide system to exchange health data electronically.

Health care wonks interpret the stimulus as a down-payment on broader health care reform. Cover more Americans now and the road towards universal coverage will be a little bit easier and less expensive, they argue. The more Americans have health insurance and access to regular care, the less health care costs they incur once they’re brought into the system.

As Dean Waldman suggests over at the Huffington Post, “Health is infrastructure. Health care is the maintenance and repair service for this key element of our productive capacity. As a nation we need to treat the health of our people just like repaving a road – as an investment in our future.”

And Obama does this two fold: he gets more people into the system and lays down the infrastructure for the expansion. The lessons of the Massachusetts Health Care Reform Plan of 2006 “make it clear that an expansion of insurance coverage quickly uncovers the debilitating problem of the crumbling infrastructure of primary care. In Massachusetts, inadequate primary care capacity resulted in many newly insured residents not being able to find a medical home and gain access to medical care.”

Nationally, “the trajectory of the supply of primary care physicians for adult patients is now falling behind the growth of the adult population” and HHS estimates that “by 2020 there will be a shortage of 66,000 primary care doctors nationwide.”

The slowing growth in primary care physicians is traditionally attributed to the pay gap between generalists and specialists but Kevin Grumbach at Health Affairs blog argues that even “more consequential is the lack of investment in the core infrastructure of primary care“:

Specialists, who spend many of their work hours in operating rooms, hospital wards, come-and-go surgery and endoscopy centers, and imaging facilities, have much of their practice infrastructure… Primary care physicians spend most of their work hours in ambulatory care in their own offices and clinics, paying all practice overhead from their own billings. Purchasing and maintaining an office-based electronic medical record and hiring an extra staff person to work with diabetic patients on self-management skills are daunting expenses for a small primary care office operating on the slender margin of “evaluation and management” billing codes. Equally problematic is obtaining the technical assistance to effectively deploy these types of modernization and practice improvement resources.

Investing in Health IT not only saves money, creates jobs and reduces medical errors, but it also helps primary care physicians — who often bear the burnt of tech implementation without seeing immediate benefits — afford the infrastructure for expansion. Done correctly, Health IT can truly serve as the “infrastructure” of broader reforms.

Just as the New York Times reported that “Medicaid rolls are surging, by unprecedented rates in some states,” Republican strategist Jennifer Millerwise Dyck appeared on MSNBC this afternoon to argue that extra federal funding for health care initiatives (expanding Medicaid, subsidizing COBRA) would not create jobs and should not be part of the Democrats’ economic stimulus package:

There is money in there getting us prepared for universal health care. I mean, this is supposed to be a stimulus package that gets people into jobs, that gets the economy moving, gets money back into the pockets of the people and I think this is ideologically where you see a real difference between Republicans.

Watch it:

In fact, investing federal dollars in Medicaid, as House Democrats have proposed, is far from an “ideological divide”; it actually generates business and “gets people into jobs.”

A recent report by Families USA, for instance, found that “every dollar a state spends on Medicaid pulls new federal dollars into the state—dollars that would not otherwise flow into the state. These new dollars pass from one person to another in successive rounds of spending”:

For example, health care employees spend part of their salaries on groceries, which adds to the income of grocery store employees, enabling them to spend part of their salaries on new shoes, which enables shoe store employees to spend additional money on home improvements, and so on. The new dollars pass from one person to another in successive rounds of spending, generating additional business activity, jobs, and wages that would not otherwise be produced. Economists call this the “multiplier effect.” The magnitude of the multiplier effect varies from state to state, depending on how the dollars are spent and on the economic structure of, and conditions in, the state.

Moreover, health insurance protects families from medical bankruptcy and allows healthy individuals to keep looking for employment.

Throughout the presidential campaign the Wonk Room emphasized the deficiencies of Sen. John McCain’s (R-AZ) consumer-driven health care model (in which the individual purchases health insurance coverage from an unregulated insurance market). In short, we argued that his plan allowed insurance companies to market sub-prime health insurance plans to the healthiest Americans while leaving individuals with pre-existing conditions without coverage.

Yesterday, the Journal of the American Medical Association, highlighted another consequence of commodifying health care — a fundamental re-ordering of the patient-physician relationship:

What has not received attention is that the consumer driven model implicitly calls for a fundamental reordering of the patient-physician relationship, placing increased reliance on commercial ethics while eroding professional ethics as the guiding force for patient-physician interactions.

The article argues that consumer-driven care — in which the consumer pays high-out of pocket fees and only uses health insurance for catastrophic expenses — could push physicians to “promote their own services to would-be patients, making unverifiable assertions about the cost and quality of the services they are selling.” Commercial competition would require physicians to deliver desired products at competitive prices without prioritizing their professional knowledge and “expertise to inform patients’ medical decision making and encourage judicious use of scarce health resources.”

In other words, with consumers “driving” their care, professional ethics, which “demand a fiduciary responsibility to the patient putting his or her needs above all else” would be swapped for market pressures, lowering health care quality and only increasing costs.

All this gets at the fundamental problem with consumer-driven care: it pretends that buying health care is the same as buying an IPod and ignores the fact that health care — in which the patient simply can’t know about the complexities of the treatment, outcomes are uncertain, and treatment is sometimes essential — is not subject to the benefits of the market. Indeed, the market often distorts the product.

The Politico is reporting that President Obama is planning a big push for health care reform “following passage of an economic stimulus package in February”:

President Barack Obama will convene a White House working session on health care reform in the late winter or the early spring, according to sources familiar with the plan…The health care meeting, which would bring together members of Congress and other stakeholders, could come as early as March.

Throughout the transition, Obama and his team reaffirmed their commitment to tackling health care in a big way and the president’s inaugural address was no exception. Twice Obama referred to the high costs of health care, promising to “restore science to its rightful place, and wield technology’s wonders to raise health care’s quality and lower its cost.”

But how does Obama plan to finance his $50-$65 billion proposal? During the campaign he pledged to roll-back Bush’s tax cuts for the wealthiest Americans, and that pledge is still on the official White House website, despite indications that he may delay the roll-back:

A Commitment to Fiscal Responsibility: Barack Obama will pay for his $50 – $65 billion health care reform effort by rolling back the Bush tax cuts for Americans earning more than $250,000 per year and retaining the estate tax at its 2009 level.

Bush’s tax cuts will expire in 2010. If health care reform is not implemented before then, Obama’s could presumably finance health care expansion through the revenue generated by their expiration and a wide-array of cost containment measures.

Still, the costs of inaction far outweigh the price tag of reform. Bringing everyone into the system, helping businesses afford health care coverage, insulating Americans from catastrophic health care bills and improving the quality of care will require a significant upfront investment in coverage and health care infrastructure. But it’s smart economic and social policy, well worth the investment.

At the National Journal Online, health policy analyst Uwe Reinhardt explains why the United States is lagging behind other industrialized nations in the adoption of health information technology (like electronic medical records or electronic prescriptions):

One explanation is that our health system has not been spending enough on HIT overall. It often is the stepchild in the budgeting process of hospitals and medical practices….A second reason for our lagging in HIT is that, by the very nature of our pluralistic health system and the equally pluralistic HIT industry, we have produced a veritable HIT Tower of Babel….A third reason for our lagging in HIT is that there have been too many fly-by-night outfits in this industry, often elaving their clients in the lurch over the longer run. HIT applications must be serviced reliably, over the long haul. Many users have been sorely disappointed in that area in the past.

But underlying all the questions about health IT is the question of who should pay for it. That is, while insurance companies could benefit from reduced costs in moving from a paper-based system to electronic health records, the costs of implementation are far higher for providers.

An analysis by the Center for Information Technology Leadership (CITL), for instance, found that “while providers are footing the bill for HIT, they may experience only 11 percent of the potential gain. Other stakeholders, payers principally among them, may reap 89 percent of the gain.”

Also, as Dana Blankenhorn of ZDNet speculates, “there’s another, deeper problem. Fear“:

Many doctors fear automation because documentation invites lawyers. As one correspondent put it: The Democrats love it because it will make it much easier to sue physicians. Auditing care will find mistakes, and mistakes will lead to lawsuits. Mistakes are inevitable, however, so don’t put anything down and maybe no one will be able to find out.

Still, according to a new Commonwealth Fund opinion survey of health care leaders, 78 percent of respondents thought that investment in health information technology was a very important or “absolutely essential element of a stimulus package.” In other words, the benefits of health IT — in terms of eliminating health errors, creating jobs and containing health costs — far outweigh its perceived dangers. The fear that doctors face in terms of increased litigation costs can certainly be addressed by designing a system that dismisses unmeritted or flimsy lawsuits, while at the same time punishing doctors for real medical errors. Smart policy can make that distinction, no?

Over at his new blog, The Treatment, Jonathan Cohn highlights a Wall Street Journal story with “this genuinely newsworthy item:”

The incoming administration plans to move fast on his proposal to overhaul the health-care system, with a major event at the White House, likely in March, two Obama officials said. There, members of Congress and interest groups will hold a working session of sorts to launch the debate. … Mr. Emanuel declined to say whether the new White House wants Congress to deal with health care or climate change first, though another transition official said the assumption is that health care will top the agenda.

The anatomy of the Obama’s administration’s proposal is still somewhat murky and Cohn wonders if the new team will “seek legislation designed to achieve universal coverage (or something very close to it)? Or will it try to achieve universal coverage sequentially? (And if it’s the latter, what will the sequence be?).”

The Obama team and its health-conscious senatorial counterparts (Sens. Max Baucus (D-MT) and Ted Kennedy (D-MA), among others) have promised to do “big serious things” for affordable health care reform and conventional wisdom suggests a single bill, with SCHIP expansion and the stimulus laying the groundwork for universal coverage.

Still, some health care pundits worry that key elements of Obama’s proposal — establishing a health insurance exchange, employer mandate, building a new public plan — will encounter fierce partisan opposition. Bob Laszewski of Health Care Policy and Marketplace Review rang the first alarm bell, warning Democrats that excluding ranking Senate Finance Committee member Chuck Grassley (R-IA) from the SCHIP expansion compromise, “does not bode well for bipartisan health care reform.” “This is the kind of dumb stuff the Clintons did in their failed 1993 unilateral health care reform effort,” Laszewski writes.

Joe Paduda of Managed Care Matters also predicts a drown-out process:

As much as I’d like to believe the battle for health reform will commence soon and while tough and unpleasant, end soon thereafter, experience teaches otherwise. I’d suggest that anyone who thinks this will get done quickly recall DC pundits’ statements about the Civil War (lets watch the fun at Bull Run, win the war, then ride home for dinner), the First World War (trench, what’s a trench?), or for those more current on their history, the Iraqi conflict (they’ll welcome us with open arms).

In some ways, the Civil War has already begun. Since the election, the Wonk Room has chronicled the right-wing’s smear campaign against universal coverage. In fact, just this week, the Wall Street Journal published two new pieces attacking the Federal Health Board and SCHIP expansion.

Progressives should answer these attacks by defending progressive proposals on their merits, rather than resorting to the comfortable/familiar rhetoric of “affordable health care for all” or “shared responsibility.” Such buzz language has doomed past reform efforts. As Haynes Johnson and David Broder argue in their analysis of President Clinton’s failed health care reform effort, by relying on hollow buzz words, rather than policy specifics, the Clintons allowed the opposition to ascribe meaning to reform rhetoric. Let’s hope that Obama doesn’t make that same mistake again.

A little-noticed provision in the House’s version of the SCHIP expansion bill prohibits the construction of physician-owned specialty hospitals, or “focused factories” that specialize in lucrative cardiac, orthopedic, or surgical services.

The restrictions would prohibit new physician-owned hospitals from opening and limit the expansion of existing hospitals. “In order to expand, the facilities would be required to receive approval from the HHS secretary,” Kaiser reports.

Without missing a beat, Physician Hospitals of America, the trade group for physician-owned specialty hospitals, is already lobbying the Senate to pass a clean SCHIP bill:

It is completely counterintuitive that at a time when our country is experiencing an economic downturn, high rates of unemployment and inadequate access to health care, Congress would consider killing an industry that provides over 55,000 jobs nationally and that provides patients access to the best quality health care available in America.

Proponents argue that the small-scale operations — the average orthopedic specialty hospital has 16 beds and the average surgical specialty hospital has 14 — allow doctors to focus on patient-centered care that not only improves clinical outcomes “but also satisfaction among their patients and physicians.” And while a recent study found no difference in the quality of care delivered in a cardiac physician-owned specialty hospital, physician owned hospitals do offer patients a truly luxurious experience. Some hospitals are equipped with dim mood lighting, gourmet menus, wireless capabilities, and other resort-like vacation perks.

So why ban these islands of opulence? Well, critics maintain that physician-owned operations have an unfair competitive advantage with regular community hospitals. That is, by providing a narrow array of profitable services without having to maintain an emergency department or offer services to anyone who walks through the doors, specialty hospitals skim off the most profitable patients and undermine “community hospitals’ ability to subsidize the less profitable services they furnish to their communities.”

But if physician-owned hospitals seem to have a competitive advantage over general hospitals, their effect on community hospitals (and the community) is still unclear. A 2005 MedPac report concluded that overall, physician-owned hospitals had “little impact on community-hospital profitability through 2002.” Yet the report also expressed “concerns that physician-owned specialty hospitals could have incentives to disregard their role in effectively serving Medicare and Medicaid beneficiaries in their communities or to compromise clinical judgment in the pursuit of hospital financial goals.”

Similarly, a 2008 report released by the Office of Inspector General for HHS concluded that “most physician-owned specialty hospitals are poorly equipped to handle medical emergencies.”

“It’s unbelievable that a facility that calls itself a hospital would, at times, not even have a doctor on call or a nurse on duty. It is unacceptable that these facilities are not designed or equipped to handle emergencies,” Sen. Max Baucus (D-MT), a critic of physician-owned hospitals, said.

A new survey released yesterday by the Main Street Alliance found that a majority of small business owners “believe government should provide a public alternative to private coverage” and “are willing to contribute their fair share toward a system that makes health care work for small businesses.” Despite the conventional wisdom — which states that small businesses oppose government involvement or mandates — the survey concluded that small business attitudes actually echo progressive policy prescriptions:

- 73 percent: willing to contribute financially to achieve quality affordable health coverage for their employees.

- 63 percent: willing to contribute 4 to 7 percent or more of total payroll costs, in place of current health care costs, to guarantee quality health coverage.

- 61 percent: expressed interest in being able to buy into a statewide or national health care pool.

- 59 percent: expressed interest in reform that included a public insurance option.

- 70 percent: said government should play a greater role in guaranteeing affordable coverage.

Small businesses grapple with the difficulties of a small risk pool, higher administrative costs and unpredictable premium spikes. In fact, rising prices have led many businesses to drop coverage entirely, increase cost sharing or switch to coverage with higher out of pocket costs and skimpier benefits.

Fifty eight percent of all small-business owners say they’re having a hard time keeping up with the cost of health care and the percentage of businesses with fewer than 200 employees that offer insurance fell to 59 percent last year, “down from 66 percent as recently as 2002, according to the Henry J. Kaiser Family Foundation.”

Comprehensive health care reform can certainly help insulate small businesses from growing health care costs and provide workers with options for coverage. While President-elect Barack Obama’s health care proposal requires large employers to provide health insurance to their employees, small businesses are exempt from the mandate and will be eligible for a new Small Business Health Tax Credit that will “provide small businesses with a refundable tax credit of up to 50 percent on premiums paid by small businesses on behalf of their employees.”

Small business owners and their workers would also be able to purchase coverage through a new Health Insurance Exchange that will allow public and private insurers to compete for applicants. As Sam Blair, the Director of the national Main StreeAlliance, explains “Small business owners recognize that the only way to stop this routine hostage-taking is to create a public alternative that gives those who are tired of the industry’s game another option. That means government is going to need to step in and play a role.”

Today, during a Senate Finance Committee hearing about SCHIP expansion, Sen. Jon Kyl (R-TX), like his Republican colleagues in the House, argued that expanding SCHIP would force millions of children with private coverage into a public program.

During last year’s SCHIP debate, Republicans similarly used this “crowd out” argument — the idea that expanding a public program would motivate families of children who currently have private coverage to voluntarily “drop that coverage for their children and enroll the children in SCHIP or Medicaid instead” — to keep from expanding the program.

Kyl cited the Congressional Budget Office’s (CBO) estimate that 2.2 to 2.4 million children who would gain SCHIP or Medicaid coverage would have otherwise had private coverage. But as the Center for Budget and Policy Priorities explains, “crowd-out is not the same as voluntarily dropping private health insurance for public program coverage”:

In other words, a large share of the SCHIP “crowd-out,” as estimated by CBO, involves children who are uninsured now but who would obtain private coverage at some later point if SCHIP (or Medicaid) coverage were not available to them. These are not children who had private insurance that their families voluntarily dropped for public program coverage.

In fact, as the center points out, “only a small share of children had private health insurance before enrolling in SCHIP or Medicaid.” An Urban Institute study that examined how 18 states are addressing crowd out concluded, “among the 18 study states, SCHIP and Medicaid officials, as well as other key informants, consistently reported little to no concern over crowd out; many believed it was a non-issue.”

Moreover, “the Congressionally-mandated 10-state evaluation of SCHIP found that while 28 percent of newly enrolled children had private coverage before joining SCHIP, half of them — or 14 percent —lost their private insurance for involuntary reasons before enrolling in SCHIP, such as when parents lost their jobs or became divorced or employers stopped offering health insurance for dependents.”

Indeed, the harsh economic climate has certainly made insurance less affordable and has led many Americans to lose their employer-sponsored coverage. As Sen. Olympia Snowe (R-ME) pointed out during the hearing, “it’s the cost of private insurance that excludes them from having coverage. More and more Americans are losing coverage becay they can’t afford it. Small businesses can’t afford to provide it.”

Today on CNN’s American Morning, host John Roberts asked former Senate Majority Leader Bill Frist (R-TN) why Republicans didn’t “allow the government to negotiate with drug companies” when they passed Medicare Part D. Frist argued that “having competition and competition for prescription drugs” saves more money than “having the government come in and having a mandated price:

Well initially it was because the Congressional Budget Office said there’s absolutely no savings because what you want to have are people who are competing- 2 million against 5 million against 4 million against 3 million people- get them around the table and that would bring the cost down. And indeed they were right. Right now there’s about 30 percent savings this year, 20 percent savings last year, by having competition in competing for prescription drugs instead of having government coming in and having a mandated price undercut—that no one’s going to come to the table.

Watch it:

But as Dr. Bernadine Healy, the Health Editor for US News & World Report, explained, the debate isn’t about “mandating prices,” but allowing for fair competition. Permitting Medicare to use its market power to negotiate drug prices on behalf of its 46 million enrollees could have a great impact on drug prices. According to a report by economist Dean Baker, “if Medicare were to negotiate on behalf of its beneficiaries, it would be able to substantially reduce” the growth rate in drug prices and “negotiate prices that reflected actual production costs“:

Such negotiations should in principle allow for very substantial reductions in price, because the pharmaceutical industry sells prescription drugs fro prices that are typically more than 200 percent above their cost of production. This means that if a large buyer, like Medicare, were to demand substantial discounts, then the industry could still make a profit on its sales, even if it charged much lower prices than it does at present.

In fact, “in surveying the prices that various countries pay for drugs, the CBO found costs ranged from 35 to 55 percent less than the prices paid in the United States,” suggesting that a single buyer can use its market clout to significantly lower costs. Baker concluded that direct negotiation could reduce drug prices by as much as 70 percent.

Frist, of course, has a long history of defending Big Pharma’s profits. In December of 2005, First and House Speaker Dennis Hastert inserted a provision in the Defense Appropriations bill that granted vaccine manufactures near-total immunity for injuries or deaths. The provision, which was essentially written by vaccine-industry lobbyists, was inserted in the dead of the night, after House and Senate conferees had agreed the provision would not be included in the bill.

Today, as the House debated legislation expanding the State Children’s Health Insurance Program (SCHIP) to cover 11 million children, House Republicans warned that an expansion would “fund benefits for illegal immigrants,” not “cover poor children” and “push children with private insurance into state insurance.” Watch it:

House Minority Leader John Boehner (R-OH) and his Republican colleagues argued that since the original 1997 bill targeted children with incomes below 200 percent of the federal poverty level (FPL), any extension of the program should honor the original threshold and “cover poor children first.”

But as a new report by the Robert Wood Johnson Foundation and the Urban Institute concludes, since 1996, “health insurance costs have risen so much that [even] for families at 300 percent of the FPL, ESI [Employer Sponsored Insurance] premiums for family coverage now make up 19 percent of income on average for a family of four“:

Put differently, ESI coverage is less affordable for families at 300 percent of the FPL today than it was for families at 200 percent of the FPL when SCHIP was passed.

Indeed, health insurance premiums have grown faster than paychecks, placing health insurance out of reach for many working class families. As an article in today’s LA Times points out, “at least 44 states are facing budget shortfalls over the next two years” and many “have been scrambling for months to cut aid to schools, universities and, increasingly, residents who rely on the state for medical care.”

But as a growing number of families are losing their public or private health insurance coverage, conservatives seem more concerned about Americans being forced-into public insurance plans and the nearly non-existent threat of illegal immigrant infiltration.

Undocumented immigrants or immigrants in the US on a temporary basis have always been ineligible for SCHIP and there is no evidence that undocumented immigrants are currently enrolled in the program. In fact, in a recent survey, “six states spent $16.6 million in state and federal taxpayer money to administer the Medicaid citdoc requirement, and identified only 8 undocumented immigrants, who likely would have been identified anyway through existing immigration documentation requirements.”