Thursday, February 26, 2009

Obama's "Down Payment" On Health Care Reform: How Far Down?

Advocates for an aggressive, first-100-days push for universal coverage in the Obama Administration can't have enjoyed much of what they heard in the Presidential Address to Congress February 24.

For the biopharma industry--whose trade associations are among the stakeholder groups publicly urging action on health care--it is hard to gauge how disappointing that outcome will be, though the President's budget proposal (due out Thursday) could make that picture clearer.

There are at least three reasons advocates for universal coverage may be disappointed by the Presidential address.

First, it is clear that while health care reform is a priority for the Administration, it is not the priority. To no one's surprise, Obama focused initially on the response to the economic crisis, including the recently enacted stimulus legislation and the next installment of relief for the financial system. But when he turned to the next item on the agenda, he didn't single out health care, instead listing energy, health care and education as equal priorities.

Indeed, among the three key areas for investment cited by Obama--"energy, health care, and education"--health care was always listed second, and was also the second theme discussed at length in the speech. (As graduates of the IN VIVO Blog School of Rhetoric know, being second on a list of three is worse than being last: debaters are trained to use their strongest argument first, the second best last, and leave the weakest in the middle in hopes that no one listens too carefully.)

Second, Obama stopped well short of making universal coverage the goal of health care reform in the near term, describing his upcoming budget proposal as offering "a down-payment on the principle that we must have quality, affordable health care for every American."

Leaving aside the odd metaphor in a speech shaped so fundamentally by the collapse of the mortgage market, "down-payment" sure sounds like a synonym for "incremental." Indeed, Obama himself described the expansion of the Children's Health Insurance Program already signed into law as a "down payment."

Third, the discussion of health care reform was framed clearly in the context of addressing the long-term economic health of the country rather than as a response to the short-term economic crisis. Translation: reform proposals will be judged on their ability to reduce spending and shrink deficits--there will be no stimulus-style spending to expand coverage with promises to restore balance in the future.

All in all, Pharmaceutical Research & Manufacturers of America CEO Billy Tauzin and Biotechnology Industry Organization CEO Jim Greenwood did a pretty good job of predicting how the address would go. (See our post here.)

In particular, the address lends credence to Tauzin's suggestion that the departure of Tom Daschle from his expected position as the Obama Administration's health care general means incremental change driven by the the economic team rather than comprehensive, policy-first reform.

Therein lies the danger for the biopharma industry: in the context of budgetary priorities, measures to restrain pharmaceutical prices are tempting offsets with little political downside compared to say, slashing physician payments or forcing hospitals to close. We've already noted some rhetorical parallels between Obama's first remarks to Congress on health care and President Clinton's in 1993.

That reform was supposed to be budget neutral, to avoid undoing Clinton's first legislative victory, a tough fought balanced budget (remember those days?). With that mandate, Clinton's working groups quickly moved into aggressive proposals for restraining spending, especially on drugs and biologics before the whole initiative collapsed in the face of opposition from across the spectrum of health care sectors.

In 2009, there is no doubt that the budget comes first, quite literally. Obama's next "down payment" on health care reform will be unveiled Thursday; a bipartisan summit on health care reform kicks off on Monday. Just don't call it the Health Care Reform Task Force ...

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