In January 1993, newly elected President Bill Clinton put together a task force to create a plan that would take over the nation’s health care delivery system. Headed by his wife, Hillary, and Ira Magaziner, the task force’s goal was to develop a comprehensive plan that would provide universal health care for all Americans. The central element of the plan was an employer mandate to provide health care coverage to all employees through 200 regional ‘health care cooperatives.’ The plan would require every US citizen and permanent resident alien to enroll in a qualified health plan. These new cooperatives, also called ‘regional alliances,’ would be run by 50,000 new bureaucrats working through 50 new government agencies with 177 new state mandates and almost 1,000 new Federal powers and responsibilities. The hand-picked task force was to develop a ‘basic benefits package’ that would determine the type and amount of health care every American would receive. The added costs, which were projected at more than $1.5 trillion over the first five years, were to be funded by a new payroll tax of 14% to 17% along with 17 other new taxes. One year later, the proposed plan was declared dead by the Senate Majority Leader George. J. Mitchell. (1,2,3)
On March 23, 2010, President Barak Obama signed into law the Patient Protection and Affordable Care Act (PPACA, Obamacare). The law was drafted by members of the President’s health care advisory team, some of who were reportedly employed by the Service Employees International Union (SEIU), and was supported by the pharmaceutical industry, the governing boards of the American Medical Association (AMA) and the American Association of Retired Persons (AARP). Projected to add over 32 million lives, the new legislation centers around an individual mandate to acquire coverage that would be provided by Accountable Care Organizations (ACOs) set up in each state or region. Part of the additional funding would come from shifting $500 billion out of the Medicare program to cover these new lives. The law calls for hundreds of new agencies and thousands of additional federal employees to monitor and administer the program.
There are marked similarities between President Clinton’s and President Obama’s visions. Both were developed without much input from the physician community. Both propose mandates for coverage. The ongoing covered services and appropriate fee schedules would be developed and controlled by a ‘hand-picked’ board (the Independent Payment Advisory Board with the PPACA). Both would help create regional delivery systems (ACOs in the PPACA) to determine cost efficiencies that would ultimately answer to the ‘hand-picked’ board. In order to pay for the added lives, extra funding had to be infused into the system. Both called for many new agencies and thousands of additional federal employees to run, monitor and control the newly created system.
There are distinct differences too. Instead of trying to include a diversity of input as in the Clinton attempt, even though the physician community was largely excluded, the over 2300+ page law in the Obama plan was put together by a very small cadre of President Obama’s inner circle. The increased cost was to be shouldered by the employers in the Clinton proposal. The burden created by the Obama law will be shared by the Medicare recipients and the business community. The Board of Trustees of the AMA did not support the Clinton plan, while they are openly supportive of the PPACA. Finally, where Clinton’s plan failed, Obama’s passed.
Although the vote was mostly split along party lines that gave the Democrats a distinct advantage, it was the additional deals ‘arranged’ by the administration that made the difference in the final outcome. The ‘not-so-secret’ promises to certain elected representatives that were widely circulated in the media come to mind: Senator Ben Nelson’s “Cornhusker Kickback” and Senator Mary Landrieu’s “Louisiana Purchase.” However, the real genius of the current administration, as opposed to the Clinton task force, was in President’s handling of the pharmaceutical industry, AARP and the AMA.
“The drug industry backed Obamacare and, in return, got a 10-year limit of $80 billion cut in prescription drug costs. (A drop in the bucket of their almost $3 trillion projected cost over the next decade). They also got administration assurances that it will continue to bar lower-cost Canadian drugs from coming into the United States. All the pharmaceutical industry had to do was put its formidable advertising budget at the disposal of the administration.” (4) Of the estimated $120 million spent lobbying for the passage of Obamacare, $26.1 of that total was funded by the drug companies. (5) (6)
Through its subsidiary company, AARP was one of the main suppliers of Medi-gap insurance, a privately purchased coverage that picked up where Medicare benefits left off. The George W. Bush administration passed the Medicare Advantage program that was a lower-cost alternative to the Medi-gap coverage. More than 11 million seniors took advantage of the program that significantly cut into the AARP Medi-gap revenues. President Obama eliminated subsidies for the Medicare Advantage program that made the more-expensive Medi-gap coverage more competitive.
Even though $500 billion flagged for the Medicare program would be shifted out to cover the new enrollees under the PPACA and although seniors would end up paying more money for their coverage, the leadership at AARP threw its support behind Obamacare. (4) Appearing to be more concerned with corporate revenues than abandoning the seniors who comprised its membership, the leadership of AARP donated millions of dollars toward the advertising campaign and lobbying efforts in support of the proposed legislation. Referred to as ‘corporate cronyism’ much of their membership openly rebelled against its leadership. (7) (8)
When the Board of Trustees (BOT) of the American Medical Association, and reaffirmed by its House of Delegates (HOD), openly supported the current administration’s proposal to solve the growing problem of the uninsured (Obamacare), it came as a shock to much of the physician community. A survey by a physician recruitment firm, Jackson & Coker, revealed that only 13% of physicians surveyed agreed with the organization’s decision. Another study, the National Physicians Survey, reported that more than three times as many physicians believed that the quality of the American health care system would ‘deteriorate’ rather than ‘improve’ under Obamacare and nine out of ten thought the proposed legislation will have a negative impact on their profession. (9)
Several reasons have been floated for the AMA’s surprising support: Guarantees to preserve the AMA’s government supported monopoly over medical coding, close ties of the AMA’s new CEO, Dr. James Madera, to Michelle Obama when they were on a board together at the University of Chicago and the commitment that the President would not push for major tort reform that could supersede preexisting state legislation. (10)
However, the major reason given to its membership by the AMA’s BOT was that the President would throw his support behind a permanent ‘fix’ to Sustainable Growth Rate (SGR). Since the 1997 Balanced Budget Act first went into effect in 2002, the SGR formula, which is used to calculate levels of Medicare reimbursements to physicians, has not taken a realistic approach to increases in patient volume and the complexity of the science. Therefore, each year physician organizations across the country have groveled at the feet of the representatives in Washington only to be granted a temporary reprieve from the fee cuts mandated in the Balanced Budget Act. Each year they had been promised a permanent fix. Each year there wasn’t. (11,12)There was real hope that, with the President’s influence, this time it would be different. It wasn’t. The flawed SGR formulae still looms over their heads. And, the AMA’s already dwindling membership has taken another hit.
Even with the apparent disdain by the vast majority of the physician community for the PPACA (Obamacare), why then has there been continued reaffirmation of support by the leadership of the AMA?
With 47% of those physicians who recently have not continued their association with the AMA stating their reason is the organization’s continuing support for the legislation, one has to ask why. (9) What does the AMA leadership know that the majority of the physician community doesn’t?
A Fox News story released on July 18, 2011, the then current President of the AMA is quoted as saying “no group other than the AMA speaks for doctors.” That quote seems questionable coming from the leader of an organization that comprises just 17% of eligible physicians. In the eyes of the national media, but not the physician community, he is probably correct. The problem turned out to be that after President Obama garnered the AMA’s endorsement, the AMA and the rest of the medical community, for the most part, were pushed to the sidelines, but on the President’s side, during the debate on this contentious legislation. (10) It’s referred to as emasculation.
Somewhere there is a disconnect between the leadership of AARP, the AMA and those they claim to represent, and President Obama was able to capitalize on it.
- Heritage Foundation analysis, 10/23/93