President Obama’s budget allocates $634 billion towards health care reform but only half of that amount will come from new sources of revenue (namely, reducing itemized deduction rates for families with incomes over $250,000). The other half is already in the health care system, but we’re wasting it.

Up to $700 billion a year is wasted on unnecessary or ineffective care and the Obama administration believes that it can re-orient some of those dollars to fund health care reform.

Part of that waste comes from unnecessary care. In fact, according to the most recent Dartmouth study which looked at “variations in spending growth and spending patterns among U.S. regions,” certain areas of the United States were spending more on care than others because physicians in higher spending regions “were much more likely than those in lower spending regions to recommend discretionary services.”

More care, however, does not always translate into better health outcomes. In fact, evidence suggests “that the quality of care and health outcomes are better in lower-spending regions.” Here is the Medicare data:

Part of the problem is that current payment methods — which reimburse doctors for the number of treatments they prescribe — encourage “hospitals and doctors to try to expand their services”; doctors also often don’t know if certain treatments work better than others.

So to eliminate over-spending, Obama’s budget bundles payments for post-hospital providers and links a portion of Medicare payments for acute in-patient hospital services to hospital performance. The stimulus bill smartly invested in comparative effectiveness research.

The Dartmouth study argues that “to slow spending growth, we need policies that encourage high-growth (or high cost) regions to behave more like low-growth.” Some providers (like academic health centers or providers in high spending regions) may oppose restructuring the payment system, but insurance companies (who now reimburse for every procedure) and patients (who’ll be able to avoid unnecessary surgeries) would likely embrace the change. Overall it’s smart policy: it will reduce health spending and improve the qualify and efficiency of care.

Fortunately, the Obama budget adopts some of these cost-saving measures and reinvests the savings into health reform. But as the Dartmouth study suggests, there is more that can be done.

Previewing the Republican attack on the budget, Sen. Kay Bailey Hutchison (R-TX) appeared on CNBC this morning to spew-off the kind of neo-Hooverism that confuses ‘principles’ and ‘ideology’ for economic reality:

ANCHOR: Senator, do you believe it’s necessary to postpone our nations answers to health care because it costs too much?

BAILEY HUTCHISON: I do. I certainly do, and I think that again going into this nationalized health care, universal health care, takes it out of the private sector, and again that’s jobs…You start taking that out of the private sector and put it into government, more government spending and less private sector jobs that — what is happening to our free enterprise system?

Watch it:

As Peter Orszag suggested this morning during the budget unveiling, getting health care costs under control and expanding access to coverage is the “single most important thing” we can do to solve the economic crisis. Health care costs “are the long-term driving force in federal and state budgets” and health spending consumes “$1 out of every $6 in the economy, dwarfing automobiles and all other economic segments.”

In fact, the health care crisis is best pronounced in Texas. The state leads the nation in “the highest percentage of residents without health insurance,” and ranks last in children’s access to health care.

The current economic recession and growing unemployment numbers are likely exacerbating the problem. A look at December’s unemployment figures (the latest date for which data is available), for instance, reveals that an 11,500 additional Texans lost their jobs every day, and many likely lost their employer-based health insurance coverage.

But while the crisis is real for Texans, Bailey Hutchison, who as a Senator receives government subsidized health insurance, is concerned about “more government spending” on health care. Of course the point of real health reform is to eliminate wasteful expenditures, improve quality, and reduce overall health care spending (now at an unsustainable 16% of the GDP), not increase it. Unfortunately, by postponing reform, health care spending will only increase. By 2017, health care will consume 20 percent of the GDP.

Greg Sargent asks President Clinton about President Obama’s chances of passing comprehensive health reform and the challenges of shepherding a plan through Congress:

It’s gonna be much harder to get the doctors and the business community to come out against reform than it was 14 years ago…The only way they can beat it this time is if they can convince public opinion and enough members of Congress that reforming health care now will cost more jobs than it will save. And I think that’s gonna be a pretty hard sell…The President’s gonna be on strong ground…The last election showed a cultural shift in America which had been building for a decade, and a rejection of the economic and social policies of not just the eight years of President Bush but the 12 years before me. There’s a willingness to take a fresh look at all this. I believe he should try, I’m glad he’s going to, and I think it’s a better than 50-50 chance he’ll succeed.

Indeed, Obama has explained the health care crisis in the context of the economic recession. It’s a connection more and more Americans can personally appreciate, as rising unemployment numbers translate into an increase in the uninsured. In fact, during a time when the automakers are shedding health care benefits to remain competitive and employers are struggling to provide coverage, the nay-sayres are sounding like Hooverites — out of touch with Wall Street and Main Street.

A crisis is a terrible thing to waste and if Obama’s stimulus package and budget are any indication, he plans to take full advantage of it to reform the health care system.

Details are slowly leaking about the health care provisions in Obama’s budget and so far, the news sounds promising. The administration plans to set aside $634 billion over 10 years for reforming the health care system, lower costs and expand coverage.

Because this is a budget proposal, we have some details on where the money is coming from, but we don’t really know how that money will be spent. The basic idea is this: cut-back on the waste in our health care system, improve the efficiency of Medicare and Medicaid and then re-invest that money back into the fund (for health care reform).

Where will the $634 billion come from? The administration wants to limit “the tax break on itemized deductions for families with incomes above $250,000″ and strip approximately $300 billion from both Medicare and Medicaid, without cutting benefits.

They believe that there is enough waste in the health system to finance at least part of the down payment for reform:

- Eliminate Medicare Advantage overpayments and modernize the competitive bidding process.

- Drug companies would be required to increase the rebate they now provide for medications sold to Medicaid.

- Competition in generic medications (move forward with creating a generic version of biologic drugs)

- Bundle payments for post-hospital providers.

Overall, the fund is a good start, but it’s certainly not enough to reach universal coverage. Still, the Obama administration has learned from the mistakes of past reform efforts. Unlike the Clinton strategy, which didn’t include any money for health reform in the budget, and left Congress to digest a 700+ page health plan, Obama and Congress will fill in the details of reform.

They’ll decide how to spend the fund and divide the pie between preventive care, managed care, reimbursement reform, etc. This leaves a lot of room for compromise, but in working out the details of reform, progressive principles of true universality and affordability must remain intact.

Today’s Senate Finance Committee hearing underlined one of the more important lessons from President Clinton’s failed effort to reform the health care system: when pushing through your plan, don’t let economists be the messengers for reform.

A high Congressional Budget Office score sunk Clinton’s reform plan, and today’s Democrats are trying to challenge the importance of “the number.”

Henry Aaron, a senior economics fellow at the Brookings Institution, has noted that “it’s not infrequent to hear people say it doesn’t make any difference what it really costs. It only matters what CBO says it costs.” But health care, of course, is about more than just numbers. It’s about securing the health of the nation, and real reform will require an upfront investment that doesn’t make for a balanced budget sheet in the short term.

The Congressional Budget Office has admitted as much. It uses a limited amount of evidence to score changes, without really examining the interactions of separate policies (for which there is little evidence) and as Sen. Pat Roberts (R-KS) suggested, insofar as the CBO “tries to predict people’s reactions to our policy changes, it’s almost impossible.”

Consider this interesting exchange between Sen. Max Baucus (D-MT) and Congressional Budget Office director Douglas Elmendorf:

BAUCUS: We’re not in the old situation where whatever CBO says is God. In my judgment you’re not God. My judgment is that the press — there’s a whole new era and, um, you might be Moses, but not God. But I do believe that there are several different intellectually honest pathways to get from here to there. It’s not just one automatic. And so it mean we gotta be ever more creative to find intellectually honest pathways to get the savings we’re going to have to have [inaudible] politically to get health care reform.

Listen to the exchange:

Paul Begala made a very similar argument during the Families USA health care conference, urging Obama to ignore traditional economic caution. In fact, reforming health care on an economic tight rope, is like deciding to respond to a terror attack by first determining if you can fund it. In both cases, there are other factors one must consider.

Today, during a Senate Finance Committee hearing on the costs of reforming the health care system, Sen. Bill Nelson (D-FL) asked Douglas Elmendorf, the director of the Congressional Budget Office, to debunk the myth that that comparative effectiveness research would lead to the rationing of health care:

NELSON: We got some extremist statements that came out from some sectors of the body politic about the stimulus bill, that there were in this comparative effectiveness research that it was going to cause a denial of medical treatments…Why don’t you debunk that theory?

Listen:

Elmendorf explained that comparative effectiveness research is a way to find out which treatments and procedures work, and which don’t. By itself, research “doesn’t change the care that is delivered; it provides the information,” Elmendorf stressed. The separate question is how will doctors and hospitals respond to this information and what incentives are “provided for them.” “The challenge is that information alone is not enough. It’s acting on the information”:

To generate more savings, we will need legislation to provide incentives on penalties for following or not following where that information leads and this particular legislation does not do that… it’s complicated…the studies are not going to say in general this whole type of medicine is completely worthless or this whole type of medicine is completely useful. It will be much more nuanced than that and that’s part of the challenge in creating incentives for providers to do these things that are useful and not.

In the long run, comparative effectiveness research could be used to make health care more cost-effective and government should be able to design policy (by tweaking Medicare reimbursement rules and getting doctors to adopt best practices) that promotes the best practices and lowers health care costs without refusing to pay for popular treatments. So as Elmendorf suggests, the argument isn’t about rationing or denying care; that’s a red herring. The question is: how do we encourage doctors to improve health quality and eliminate the use of wasteful and harmful treatments?

Just a quick note on Gov. Bobby Jindal’s (R-LA) remarks from last night. Note that, with just a few exceptions, the section about health care sounded like a Democratic press release:

To strengthen our economy, we also need to address the crisis in health care. Republicans believe in a simple principle: No American should have to worry about losing their health coverage – period. We stand for universal access to affordable health care coverage. We oppose universal government-run health care. Health care decisions should be made by doctors and patients – not by government bureaucrats. We believe Americans can do anything – and if we put aside partisan politics and work together, we can make our system of private medicine affordable and accessible for every one of our citizens.

So what’s the difference between progressive and conservative health proposals? Listening to Jindal’s speech, one can’t really tell.

Jindal is shrouding deeply unpopular conservative health principles in progressive rhetoric (and that’s no accident). Republicans don’t really want to guarantee everyone affordable care, they just want to sound like they do. As Sen. John McCain (R-AZ) indicated during the campaign, Republicans believe that health care is a responsibility, not a right. And as such, the Republican consumer-driven approach won’t produce universal coverage.

But most Americans support comprehensive reform that lowers costs and gets everyone into the health system and oppose consumer-driven plans. Republicans like Jindal are trying to co-opt some progressive buzzwords without tipping their hands.

Tonight, during his prime time address to the nation, President Barack Obama said, “let there be no doubt: health care reform cannot wait, it must not wait, and it will not wait another year.”

I suffer no illusions that this will be an easy process. It will be hard. But I also know that nearly a century after Teddy Roosevelt first called for reform, the cost of our health care has weighed down our economy and the conscience of our nation long enough. So let there be no doubt: health care reform cannot wait, it must not wait, and it will not wait another year.

Watch it:

Obama’s urgency is well placed. Skyrocketing health care costs are threatening the country’s economic stability and Congress cannot help American families or address the economic woes “in a lasting, meaningful way without health care reform.”

Indeed, his budget will include a “historic commitment to comprehensive health care reform – a down-payment on the principle that we must have quality, affordable health care for every American.” While the budget lays out his principles for reform, Obama left the details of the plan to Congress.

Thankfully, that body has already started working on reform. In November, Sen. Max Baucus (D-MT), the powerful chairman of the Senate Finance Committee, released his own principles for health reform and has held numerous meetings on restructuring the system.

Under the direction of Sen. Ted Kennedy (D-MA), “many of the leading figures in the nation’s long-running health care debate have been meeting secretly in a Senate hearing room” and “appear to be inching towards” a consensus on what a reform bill could look like.

The stakeholders agree on several principles: reform should preserve the current employer-based system, allow Americans to purchase affordable and comprehensive coverage through a health insurance exchange, control costs by reforming reimbursement practices, invest in coordinated care, preventive care and health information technology, all the while improving care quality.

But the devil will certainly lie in the details. How will we finance reform? Will insurance companies accept new regulations of price and coverage and a new public plan that will compete with private insurers? Will the pharmaceutical industry allow for the reimportation of safe drugs? Will ideological conservatives accept a government mandate to purchase coverage? And will business groups support a plan if it mandates employers to provide coverage?

Many questions still linger, but the American public and key lawmakers are pushing for imminent health reform. During Monday’s fiscal responsibility conference, for instance, Sen. Chris Dodd, a member of the Banking Committee, said that he wants the Senate to pass a comprehensive health reform bill by Memorial Day.

Today, during an appearance on MSNBC’s Hardball, former Gov. Howard Dean (D-VT) said that a public insurance option is essential to any health reform effort:

If Barack Obama’s bill gets changed to exclude the public entities, it is not health insurance reform…it rises and falls on whether the public is allowed to choose Medicare if they’re under 65 or not. If they are allowed to choose Medicare as an option, this bill will be real health care reform. If they’re not, we will be back fighting about it for another 20 years before somebody tries again.

Watch it:

Progressives argue that regulated competition between a public and private health insurance plans would lower health care costs and improve quality. In other words, allowing patients the choice of a private plan or a public plan would re-invigorate real market competition. Private and public plans would have to deliver the highest quality at the lowest possible cost to attract patients.

This is certainly a familiar argument, but Dean is going one step further. He’s suggesting that a public option is a key progressive value, on par with universality and affordability of coverage. President Obama is expected to lay out his health care principles during tonight’s address. We’ll have to see if the President agrees with the Governor.

As President Barack Obama prepares to outline his vision for comprehensive health care reform in tonight’s national address, several new polls suggest that the Americans strongly support the Obama’s intention to turn the page to reforming the health care system:

- Besides the economy, health care is the domestic policy area Americans want Obama and Congress to concentrate on most. [NYT/CBS News Poll, (2/18-2/22)]:

- 72 percent favor “a program that would increase the federal government’s influence over the country’s health care system in an attempt to lower costs and provide health care coverage to more Americans. [CNN/Opinion Research Corp Poll, (2/18-2/19)]

– 66 percent of Americans that it is “the responsibility of the federal government” to “make sure all Americans have health care.” [Fox News/Opinion Dynamics, (2/17-2/18)]

But the problem is not in convincing the American people that we need reform; they’ve heard that message in 1993 and they agreed with it then. The real goal for Obama is to mobilize the public support into action for change. It’s about getting all the troops behind a proposal that lowers costs and expands coverage.

During yesterday’s fiscal summit, Obama said that he intends to educate the public about the need for health care reform by hosting a summit on health care next week:

Everybody here understands a lot of the trade offs involved in health care and that there are no perfect solutions. But in the sound bite political culture we have got, it is hard to communicate that. We think that it’s very important to have some forums….that there’s a process that the public an listen to about what these trade offs are.

Indeed, Obama can use the presidential bully pulpit to lay out the case for reform and demonstrate that he’s really serious about reforming the system. Tonight and then again on Thursday, when the administration lays out its budget priorities, he’ll have that opportunity.

During today’s HELP committee hearing on the 25 million Americans who are underinsured, Sen. Michael Enzi (R-WY) laid out the conservative solution for providing coverage to individuals who are not adequately protected against catastrophic health care expenses:

We also know that when consumers bear some of the costs of their health care, total spending is reduced. It is common sense that we are more vigilant with our own money than if someone else is paying the bill, and this is especially true in health policy. Going all the way back to the Rand study in the 1970’s, we know that reasonable cost sharing reduces spending, without adversely impacting the quality of care. Anyone needing further proof of this need look no further than our recent experience with health savings accounts. HSAs require consumers to pay for more routine services, and as a result, HSAs have seen premium increases that have been dramatically lower than other types of insurance.

[...]

We need a private health insurance market that can deliver choices of high quality products to all types of people – not a one size fits all federally determined solution.

It’s this ideology that underlines the conservative health vision: allow Americans to buy insurance on their own and you’ll reduce health care spending. It is based on the theory that increased financial exposure will encourage patients to act like consumers, comparing quality and costs and negotiating lower prices. It also, according to the rhetoric, gives people greater control over their health care.

But Enzi is wrong in assuming that purchasing health insurance is the same as buying any other consumer good. If one car is too expensive, a consumer can chose a cheaper model or rely on public transit for transportation. But health is about life and death and high-deductible plans only discourage consumers from seeking any care, even when it is high quality or critical.

According to a survey from the Employee Benefit Research Institute, while people in such plans were more cost conscious, they were twice as likely to report delaying or avoiding care and about three times as likely to report paying a large fraction of their income on health costs as those in comprehensive insurance.

Ironically, Enzi’s solution to dealing with Americans who don’t have enough insurance is to encourage them to use even less care.

The Wall Street Journal is reporting that Ford “has reached a tentative deal over unionized retiree health benefits”:

Ford, which faces $13.6 billion in legacy health costs, said up to half of its future payments to a retiree fund could be made in stock rather than cash under the terms of the pact. The proposed terms mirror those contained in the federal loan guarantees extended to GM and Chrysler, which the auto makers have to meet by March 31. Ford has not sought U.S. government aid.

At first glance this agreement is just another example of the UAW accepting serious concessions on health care benefits. Allowing Ford to substitute a cash contribution for stock seriously undermines the security of the health care fund. Should the value of the stock decline sharply, the union “may have to make up the shortfall over a relatively short period of time in order to continue to pay benefits.”

But on the whole, this entire arrangement screams for health care reform. The automakers are complaining that financing retiree health in cash undermines their liquidity and weakens “their competitive position versus overseas auto makers.” Now, they’re throwing workers health benefits under the bus to receive government assistance.

Need we still argue that allowing Americans to purchase affordable and comprehensive coverage outside of the employer system is a net positive for businesses and their workers?

Ezra Klein sums up the theme of today’s White House Fiscal Summit: “Fiscal responsibility, in other words, is no longer a stand-in for entitlement reform. In Obama’s Washington, it means health reform.”

Indeed, for decades, so-called budget hawks have argued that growing Medicare spending will bankrupt the nation. To save ourselves from pools of red ink, we must either cut benefits, increase the eligibility age, or increase the amount beneficiares pay for services.

But blaming Medicare for the fiscal crisis ignores the fact that private health care spending grows at the same rate as public spending:

The real problem then, is not “entitlements” but rather skyrocketing health care costs as a whole (we’re spending too much money on each beneficiary). Obama is arguing that until you contain the health care spending of the entire health system, you won’t set the nation on a sustainable fiscal path.

One could start controlling costs eliminating the extra reimbursements for private health insurers that operate Medicare Advantage plans, re-orienting Medicare reimbursement rates to reflect value instead of quantity, addressing the enormous variation in service under Medicare across geographical areas and investing in coordinated care, but any cost savings must be reinvested into health care reform.

Thankfully, Obama is willing to address the actual root of the ‘budget crisis’ — rising per capita cost of health care — and put the choice honestly to the public: “accept limits on health spending or pay for the care you insist on having.”

During the debate surrounding the $787 billion stimulus law signed into law this week by President Obama, several Republicans and lobbyists for drug groups and the insurance industry strongly objected to a provision that dedicated $1.1 billion to researching the effectiveness of medical drugs and procedures.

Rep. Charles Boustany Jr. (R-LA), a heart surgeon, opposed the provision because he feared that the government would use the research to deny treatments to Medicare patients because they cost too much. In fact, “when the House Ways and Means Committee debated the stimulus measure, Boustany offered an amendment that would have prevented Medicare from basing coverage decisions on cost alone.”

Once it was defeated, Boustany went on the offensive:

- Federal bureaucrats will misuse this research to ration care, to deny life-saving treatments to seniors and disabled people. [NYT, 2/15/2009]

- Congress should fund research to improve the quality of patients’ medical care, instead of creating new barriers to deprive them of beneficial treatments. [Press Release, 12/12/2009]

Today, in an interview with Congressional Quarterly, Boustany revealed that he hadn’t read the final version of the bill, but would have “voted against the stimulus bill even if the comparative effectiveness provision had been written to his liking“:

While I see some value in doing research to see what’s the best clinical approach, taking into consideration cost and quality, I’m just deeply concerned about cost alone being a factor in making clinical decisions.

Had Boustany read the final language, he would have discovered that the legislation actually addressed his concerns. In fact, the bill states that the research will compare “clinical outcomes effectiveness,” not cost:

That the funding appropriated in this paragraph shall be used to accelerate the development and dissemination of research assessing the comparative effectiveness of health care treatments and strategies through efforts that: (1) conduct, support, or synthesize research that compares clinical outcomes effectiveness, appropriateness of items, services, and procedures that are used to prevent, diagnose, or treat diseases, and other health conditions...”

The conference report addressed the matter more boldly, “the conferees do not intend for the comparative effectiveness research funding included in the conference agreement to be used to mandate coverage, reimbursement, or other policies for any public or private payer.”

The stimulus legislation established an agency to “conduct and support research that would assess the benefits of competing treatments,” regardless of their cost. As Robert Laszewski points out, “comparative research–which drugs or medical devices work the best–makes a lot of sense. That is especially true in the wake of decades of research that continues to point to wide overuse of technology as the primary cost driver in our health care system.”

In the long run, comparative effectiveness research could be used to make health care more cost-effective. That is, to improve the quality of care, lower health care costs and make insurance more affordable, Medicare could spend health care dollars with “an eye to lifting the quality and reducing the cost of health care” without refusing “to pay for popular treatments that it covers today — unless the research reveals serious risks.”

The New York Times has an intriguing piece on the behind the scenes negotiations surrounding health care reform:

Many of the parties, from big insurance companies to lobbyists for consumers, doctors, hospitals and pharmaceutical companies, are embracing the idea that comprehensive health care legislation should include a requirement that every American carry insurance.…

The 20 people who regularly attend the meetings on Capitol Hill include lobbyists for AARP, Aetna, the A.F.L.-C.I.O., the American Cancer Society, the American Medical Association, America’s Health Insurance Plans, the Business Roundtable, Easter Seals, the National Federation of Independent Business, the Pharmaceutical Research and Manufacturers of America, and the United States Chamber of Commerce… But so far Republican aides have stayed away from the sessions, saying they felt they would be relegated to a secondary role, with no opportunity to set the agenda or choose the outside participants.

Idealists will object to the special interest presence and interpret the meetings as ‘big business writing our health care reform plans’; pragmatists will argue that reform is impossible without negotiating with all of the different stakeholders.

I’d make the case that you can negotiate with the moneyed interests and then use the Presidential bully pulpit to ask for more. So for instance, while the insurance industry would offer everyone insurance if the government mandated coverage, it opposes allowing a new public plan to compete with private insurers and doesn’t want to charge everyone the same price for insurance (community rating).

But negotiations have this way of moving people (hopefully in the right direction). As Families USA’s Ron Pollack recently revealed, the insurance industry is now close to accepting community rating; a public plan, however, is unlikely to win any insurance industry converts.

It’s a give and take, but what’s the alternative? This way, you take what compromises you can get and if you’re still not happy with that consensus, take your case to the American people and convince them of your policy. Ignoring the stakeholders and ramming your plans down their throats is no way to achieve change. We saw that movie in 1993. It didn’t end well.

A new study published in the New England Journal of Medicine has concluded that “treating some heart attacks with drugs alone is less costly and as effective as using stents“:

The study found that patients who received stents stayed in hospitals 1.2 days longer than those who received medication. The average cost of care for stent patients during the first 30 days of treatment was $22,859, compared with $12,683 for those using only medication, according to the study. The cost difference narrowed after two years, but patients using medication alone saved $7,000 on average. According to the study, an estimated 100,000 heart attack patients in the U.S. do not need stents, which could translate to savings of $700 million.

We spend about $700 billion on treatments that just don’t work, and comparative effectiveness research (like this) is just one way to chip away at the waste. As Dr. Sean Tunis of the Center for Medical Technology Policy pointed out a recent AEI event, creating evidence “that allows patients and clinicians and payers to compare risks, benefits, and costs of alternative health care interventions is that that information is essential for informed decision making and informed decision making by consumers is essential for markets to work efficiently.”

In an interview with the Politico’s Ben Smith, Peter Orszag offers some valuable insight into the Obama administration’s plans for health care in the budget.

According to Orszag, “the moves in the stimulus package are just a hint of what to come in a budget that will begin in earnest the arduous process of health care reform.” The administration plans to unveil “What has already been accomplished is a huge start toward a more efficient [health care] system, and I think you’re going to see more in the budget next week,” [Orszag] told Politico:

Though the budget’s details have been closely held, Orszag revealed, in broad terms, two: A continued focus on health care policy; and a plan “to restore the nation to a sustainable fiscal trajectory over the five-to-ten year window.” The next step on health care, he said, is a set of “changes to Medicare and Medicaid to make them more efficient, and to start using those programs more intelligently to lead the whole healthcare system.”

With a growing body of research finding some practices more cost-effective than others, the programs reimbursement rules can be used to force changes at those hospitals – a sort of back door to health care reform.

By applying reimbursement reform and other cost effective measures to Medicare and Medicaid, Obama hopes to reduce spending in the public health sector and basically muscle health care providers into changing their business practices.

But this plan “to restore the nation to a sustainable fiscal trajectory,” sounds like an incremental approach to expanding coverage. Economists have argued that real push for getting everyone into the system will require a large upfront investment, with savings accruing down the road. You can’t offer universal coverage and balance the budget. But down the road, you can’t achieve fiscal responsibility without fundamentally reforming the health care system.

Top advisers to President Obama are telling the New York Times that Gov. Kathleen Sebelius (D-KS) — the former insurance commissioner and two term blue governor from a red state with a knack for bipartisanship — is Obama’s top choice to head the Department of Health and Human Services:

It remained unclear whether the White House would finish vetting Ms. Sebelius in time to nominate her by next week. Advisers described her as “the leading candidate,” although they said other names were still in discussion and emphasized that no final decision had been made.

While Sebelius certainly lacks Tom Daschle’s connections to Obama’s health team (and greater Washington), she is no stranger to the club. As a member of the National Governors Association’s executive committee, Sebelius led the health-care portion of the December 2 meeting with President Obama and Vice President Biden and has promoted the health care provisions in the stimulus. According to the AP, Sebelius has even budgeted “a small part of its federal stimulus money” to “add about 8,000 kids to the state’s Children’s Health Insurance Program.”

In fact, a review of Sebelius’ record suggests that she’s a practical proponent of Obama’s health principles, willing to pursue, promote and defend comprehensive reform, despite political opposition.

As Insurance Commissioner for Kansas from 1994 to 2002, Sebelius refused to accept contributions from the insurance industry and blocked a merger between Blue Cross Blue Shield of Kansas and Anthem, an Indiana insurer. The merger “drew opposition from many Kansas doctors, hospitals and nurses, as well as an advocacy group for poor and working-class families” and would have increased premiums “by $248 million over fiver years.” [Associated Press, 6/11/02] Sebelius, however, “turned the office of the Insurance Commissioner into an activist regulator, pursuing HMOs who denied care and pushing for cheaper prescription drugs for seniors.”

Sebelius continued to promote health care reform in the governor’s office, focusing primarily on cost containment. To improve efficiency, Sebelius ordered that all of the state’s major health care programs, including Medicaid, be “streamlined into a new business division called the Kansas Health Policy Authority” and launched the HealthyKansas initiative to promote prevention and wellness initiatives.

Moreover, the Governor’s Health Care Cost Containment Commission pursued many of the health care ideas incorporated into the stimulus. The commission included “representatives of the health care provider community, business community, health plans, legislators and other stakeholders in the health care community” and developed strategies to reduce unnecessary administrative costs and facilitate the adoption of a state-wide health information technology and exchange system.

The group explored ways to establish an “interoperable health information exchange,” created task-force to develop state-wide standards for health insurance ID cards, and formed a public-private partnership to plan and implement “a health information infrastructure capable of accurately and efficiently recording and tracking all aspects of health care delivery and payment.”

It wasn’t until January 2007, however, that Sebelius made a coordinated public push towards expanding health coverage for children under five. “We must commit ourselves to the goal that all Kansans will have health insurance and we must begin now,” Sebelius said during her State of the State address. “My budget takes an important step toward achieving that goal by making sure every young Kansas child has health coverage.”

While the effort ultimately failed, Sebelius’ decision to pursue expansion in the political jungles of Kansasian conservatism, suggests that the governor is more than capable (and willing) to fight the uphill battle for health reform. All in all, her ability to reach health policy decisions by soliciting the views of a broad spectrum of stakeholders suggests that she’ll be an important player in promoting Obama’s health reform agenda and a strong consensus builder.

In an effort to undermine health care reform, some fairly prominent conservatives argue that the estimated number of uninsured Americans (currently 45.7 million) is inflated. Some Americans are uninsured by choice, they contend, pointing to the 11-13 million uninsured Americans in their 20s who allegedly “shun insurance either because their age makes them feel invulnerable.” Here is a sampling:

BOB DOLE: Where do you get the number 47 million? When you watch CBS, they may tell you that number. However, 11 million of that total are illegal immigrants. Ten million more are people who can buy their own insurance. Finally, another 10 million are people your own age who think they are never going to get sick or hurt and are not vulnerable. [Tufts Daily, 12/2008]

MIKE HUCKABEE: Of those 47 million, one-third don’t have it because they are self-insured. Another one-third don’t have it because they think they’re healthy and invincible. There is one-third that don’t have it because they can’t afford it. [FactCheck.org, 12/11/2007]

But as today’s New York Times points out, a great majority of these so-called “young invincibles” lack insurance because they can’t afford it:

Young adults are the nation’s largest group of uninsured — there were 13.2 million of them nationally in 2007, or 29 percent, according to the latest figures from the Commonwealth Fund, a nonprofit research group in New York. … In dozens of interviews around the city, these so-called young invincibles described the challenge of living in a high-priced city on low-paying jobs, where staying healthy is one part scavenger hunt and one part balancing act, with high stakes and no safety net.

Indeed, as James Kvaal and Ben Furnas reiterate in a forthcoming report, [chart on the right], approximately “66 percent of people aged 18-34 without insurance are poor or near-poor.”

Former Gov. Howard Dean (D-VT) chimes in on the manufactured controversy surrounding comparative effectiveness research (CER):

When I do something for a patient, I want the scientific research that tells me its the best course for my patient. But the far right, led by people like Rush Limbaugh, hopes to somehow convince Americans that more and better research is a bad thing. Medicine is and should always be science based – not driven by ideology.

A doctor’s perspective has a way of swaying skeptics, and Dean’s testimony goes a ways in unraveling the fear-based arguments of the other side. He pits pragmatism and common sense against the right’s orgy of emotional hysteria.

Dean personalizes this debate — comparative effectiveness can help save patient lives by keeping doctors informed on the latest medical treatments — and couples it with some reasoned debunks. Progressives tend to focus on the latter wonky responses without considering the real-world consequences of CER for individual patients.