Congressman Brian Higgins (photo: Rose Mattrey)

Congressman Brian Higgins make the case for the healthcare reform bill House Democrats introduced this week.

For the past year, Congressman Brian Higgins of South Buffalo has served on the House Ways and Means Committee, one of five committees working on healthcare reform. So on Friday, when Speaker Nancy Pelosi unveiled the Democrats’ 1,900-page healthcare reform bill, Higgins was one among those Democrats who jumped out front to defend the proposal against relentless Republican opposition.

Here are the essentials of the bill: It provides a public option, a government-administered insurance program offering several levels of coverage. (The minimum coverage offered by the public option establishes a floor for private policies, as well.) Service rates for those who are insured under the government plan will be negotiated by the Department of Health & Human Services. (Many Democrats argued that public option rates should be pegged to the relatively cheap rates paid by Medicare, but middle-ground and conservative Democrats won the day.) The public option will compete with private insurance companies on a government-regulated national exchange, where individuals and small businesses can join together to negotiate premiums and coverage. Everyone will be required to carry insurance, and businesses with payrolls of $500,000 or more will be required to offer insurance, or face penalties. Low- and moderate-income Americans will qualify for tax breaks or other subsidies to make insurance more affordable. Private insurers will be forbidden to deny coverage because of pre-existing conditions and from yanking coverage when customers develop expensive illnesses.

The 156 million people who are currently insured through their employers will not need to change their coverage. The CBO estimates that the new system will lead to 46 million more Americans being insured—about 96 percent of the population. Between five and 10 percent are expected to choose government-managed insurance, with private insurers competing for the rest.

The cost of Democrats’s proposal is either $894 billion or $1.05 trillion over 10 years, according to the CBO, depending on how it is scored. Either way, the CBO says it is revenue-neutral: The cost is covered by taxes on high-income individuals, penalties for larger businesses and individuals who lack insurance coverage, measures to arrest the growth Medicare spending, savings through efficiencies, and investment in new technologies like portable electronic medical records. Taking into account the precipitous rate at which costs are rising under the current system, the CBO projects that the House Democrats’ bill will actually reduce the national deficit by $104 billion over 10 years.

On Tuesday, House Republicans produced a bill of their own, but Democrats say the proposal, arriving six months into the process, is too little, too late. When AV sat down to talk with Higgins on Sunday, he said he expects that the Democrats’ bill will be passed next week. Meantime, the Senate is trying to reconcile two healthcare reform bills, both far less ambitious than the House Democrats’ bill. Senate Majority Leader Harry Reid allows that Senate deliberations may last beyond Christmas, but Higgins expressed confidence that Congress would present President Barack Obama with a bill to sign by the end of the year.

What follows are excepts from our talk with Higgins about his party’s healthcare reform. You can watch the full interview on Artvoice TV at Artvoice.com.

The House Bill

AV: Can you describe the bill House Democrats submitted this week?

Higgins: The bill coming out of the House will have a strong public option. The rates will be negotiated between the providers and the secretary of health and human services. The debate in the House was whether or not they should be Medicare-tied or negotiated rates: The progressives wanted Medicare-tied, the more conservative members wanted negotiated rates.

[The House bill] will provide almost universal coverage, about 96 percent of the population. There will be a mandate that people have to have coverage. Small businesses will benefit because those businesses with a payroll of $500,000 or less than 25 employees—which is about 74 percent of the new employees—will basically be taken out of the insurance business altogether, which they shouldn’t be in in the first place.

AV: Why is that important?

Higgins: There was a New York Times article last week that projected a 15 to 24 percent increase for small businesses by some of the larger for-profit insurance companies. So if you’re paying $4,800 for healthcare coverage this year, you’ll be paying $5,500 next year. That’s five times the rate of inflation.

Big businesses also saw an increase, but because they are larger and have more leverage to negotiate, their increases aren’t quite as high. The idea here is to create exchanges to give individuals and small businesses, by pooling together, the leverage that they currently don’t have. That competition will create more choices, drive down costs, and create better healthcare outcomes.

To give you some context: The healthcare industry is a $2.5 trillion annual industry. It is 17 percent of the American economy as measured against the Gross Domestic Product.

We pay 50 percent more for healthcare in America than any other industrialized nation, but, according to the World Health Organization, we’re 37th of 192 countries in terms of overall healthcare quality—37th, despite paying more than any other industrialized nation. Unacceptable. We are 41st in infant mortality. Unacceptable. We are dead last of any industrialized nation in terms of preventable deaths.

In the last 10 years insurance premiums have doubled; in the next 10 years they will double again, at least; healthcare premiums are growing at five to eight times the rate of inflation. The current system is unacceptable, it’s unsustainable, and we need a new way.

The Cost

Higgins: The cost of the bill is about $900 billion, as scored by the Congressional Budget Office, over a 10-year period.

But there are mechanisms within the bill for creating comparative effectiveness research. If you have an irregular heartbeat, comparative effectiveness research will tell you what it is, what the symptoms are, and what the treatment options are. And because these would be available through electronic medical records, everybody would have access to those records—in a positive way; they would be secure, but that information would be available in real time.

It’s not only more efficient; the quality that you end up is much better. Some areas of the country have very high-cost healthcare, due in part to over-prescription and over-utilization. Atul Gawande is a writer for The New Yorker, and he’s also a practicing surgeon. He wrote an article for The New Yorker a few months ago called “The Cost Conundrum,” and what he did, he identified the highest-cost healthcare in the nation. It was a place called McAllen, Texas. In Western New York, we pay about $7,500 per Medicare beneficiary. In McAllen, it’s $16,000. Why is this? Gawande concluded that it was over-utilization because of the profit motive in the fee-for-service culture. The more tests that you prescribe, the more surgeries that you do, the more imaging that you do, the more money the doctor and everybody down the delivery food chain is going to make.

AV: And the cost of not moving on healthcare reform?

Higgins: Healthcare won’t be 17 percent of the American economy as measured against Gross Domestic Product, it will be 35 percent. And as premiums continue to grow and outstrip wages, it kills the competitive edge of American business. It punishes people. It throws them into bankruptcy. This year there will be 800,000 people filing for personal bankruptcy; 70 percent will be a result of medical debt. Another 70 percent of that will be people who already have health insurance but, because the cost of insurance is increasing so aggressively, their employers pull back on the coverage, increasing out-of-pocket expenses in the form of co-pays. That’s why the current model is unsustainable: It’s bankrupting government, it’s bankrupting individuals, it’s bankrupting businesses.

The Cleveland Clinic

Higgins: Several months ago, when the president kicked off this debate in Congress, he communicated to Congressional leaders, and he basically said this current system we have is unaffordable, it’s unsustainable, and it’s unacceptable. We have to find a new way, not only in terms of the cost of healthcare but also quality. Again, we are 37th in overall quality, 41st in infant mortality, dead last in preventable deaths. Unacceptable in this country, particularly given the amount of money that we pay for healthcare—$2.5 trillion.

In that communication, [the president] made reference to the Cleveland Clinic, the Mayo Clinic, and Johns Hopkins as exceptions to the rule. What is Cleveland Clinic known for? It is the lowest cost, highest-quality healthcare not only in the nation but in the world.

I decided to call the president and CEO of the Cleveland Clinic—his name is Toby Cosgrove—and spoke with him probably four or five times, for durations between 15 minutes to an hour and a half. It took the first hour for the lights to go on: It’s an entirely different culture.

AV: How so?

Higgins: It’s not-for-profit. None of the doctors are tenured. Everyone is salaried, so there’s not a profit motive for a doctor to order a lot of tests. If you’re at the Cleveland Clinic and you do 15 procedures a month or two, you’re paid the same. The culture that’s grown up at the Cleveland Clinic is to collaborate, to deliver care in a highly integrated, collaborative way, accruing to the benefit of who? The patient.

Because they’re a not-for-profit, they’re not paying shareholders. The profits they make at the Cleveland Clinic are being invested back into healthcare. They are early adapters of new technologies and innovations. We talk about health information technology and electronic medical records? They’ve been doing that at the Cleveland Clinic for a decade and a half.

About 10 percent of primary care physicians in Western New York are fully integrated with electronic medical records. I’m talking about patient histories, I’m talking about physician notes. In England, it’s 95 percent. In New Zealand, it’s 98 percent. What have we been doing? We’re not investing into healthcare technology, not just to be fresh and agile but to be more efficient and cost-effective. These other countries are doing it; that’s why their healthcare costs are less. We’re behind, and we have to catch up.

The good thing is that the stimulus bill included $19 billion for electronic medical records. Electronic medical records are the enabler that get us from where we are, fee-for-service, to where we want to be, complete care.

AV: The Cleveland Clinic is famous for preventative health measures, too.

Higgins: You can’t be hired at the Cleveland Clinic if you smoke. They recognize that 80 percent of all lung cancers could be avoided if we eliminated tobacco use, and 30 percent of all cancers…add in heart disease and all these other chronic illnesses that represent about 70 percent of the healthcare dollar. All of these are diseases that could be avoided if you eliminated smoking, if you promoted healthier lifestyles. The Cleveland Clinic offers free smoking cessation classes to Cuyahoga County, where the Cleveland Clinic is located. In four years they’ve reduced the instance of smoking from 28 percent to 14 percent.

You can get second opinion online at the Cleveland Clinic. This what a Web-enabled world, a Web-enabled institution, does for the client, for the customer. That’s not currently available to everyone in American and it ought to be. We should be leading the world in healthcare innovation.

The Cleveland Clinic, the Mayo Clinic, and Johns Hopkins University should not be the exceptions, they should be the rule. They are the public plan models that I look at. That’s the health care that I want for my family, that’s the healthcare that I want for my community, that the healthcare that I want for my nation. That’s the care that Americans should insist on. Right now we’re being ripped off.

Where The Dollars Go

Higgins: The CEO of United Health last year made $24 million. On average we pay a primary care physician in Western New York and throughout the nation $147,000. We pay a nurse $41,000. Yet we pay the head of United Healthcare $24 million. That’s where the healthcare dollar is going. Everybody’s buying private health insurance stock because they’re making a boatload of money.

AV: It’s been suggested that, facing the inevitability of some kind of reform, insurance companies are hiking rates in order to make hay while the sun shines.

Higgins: That may be true, which I think is further evidence that we need healthcare reform with the strongest possible public option.

Listen, I’m all about people making money. But the fact of the matter is we already have a lot of people that are covered by the government: Medicare and Medicaid cover about 81 million people. Also as a large employer, the federal government has a huge stake in this.

Part of your problem is the business model for private, for-profit health insurance used to be to pool risk. Now it’s to dump the risky. Insurance companies have a fiduciary obligation to their shareholders to make a profit. So what they will do is they will find technicalities within policies, be they for individuals or for small businesses, and they will cancel those policies despite the fact that those individuals or businesses have paid premiums throughout the life of that insurance. When you’re diagnosed with a serious illness that is going to be costly, they have people who they pay incentive bonuses to find a technicality—it’s called recision, and it’s pervasive throughout the industry.

We need a public plan to be the countervailing force against the for-profit insurance business. The irony here is that if you’re seeking to insure 96 percent of the populations, and the Congressional Budget Office says that only five to 10 percent of the newly insured will go into the public plan, then you still have tens of millions of people for which the private, for-profit insurance companies can compete…and most of the people who don’t have insurance are probably healthy. They’re young kids who are no longer on their parents’ insurance who figure they don’t need it—they’re not going to get sick, they’re young. This is a healthy segment of the population which will now be mandated to get insurance. That will accrue to the benefit of everybody. You will bend the cost curve. You will contain the growth of healthcare moving forward, and you will produce greater quality.

The Republican Opposition

AV: Republican opposition to healthcare reform defined the terms of the debate early on. How will Democrats sell this plan?

Higgins: The opponents of change, the defenders of the status quo, who were financed in large part by the for-profit health insurance industry, misled people deliberately by invoking death panels. That’s outrageous…it’s also reckless, shameful, and irresponsible. But it achieved the political objective, which was to scare people just to the extent that they didn’t understand what was going on, but they were fearful that change and the uncertainty of that change were not good for them.

Everybody in Congress, Democrat and Republican, supports healthcare reform in the abstract. They’ll all say, “We just want an opportunity to participate.” Well, you had an opportunity to participate. The bottom line is that there doesn’t seem to be any Republican support for this plan. Probably the reason for that is the private, for-profit health insurance industry paid about $300 million in campaign contributions in the last six months alone. Before there was even a bill filed, very early on in the process, a Republican pollster, a guy named Frank Luntz, sent a 28-page polling memo to Republican members of Congress to teach them how to talk against healthcare reform. That’s where the whole idea of a massive government takeover of healthcare came from…before there was even a bill filed, members who opposed healthcare reform were coached into talking against healthcare reform. So it’s hard to take the opposition seriously [when they say] that they want to participate in healthcare reform.

I would love to have Democrats and Republicans working together, but we have a moral obligation to change the direction of this massive industry. We’ve been debating this issue for at least six decades. Healthcare reform in American doesn’t need a finish; it needs a start. This is going to be the start. This is a seminal issue, this is epic in terms of its impact on future generations.

We’re a great nation in decline. It’s the environment, it’s transportation, it’s healthcare. We’re declining not only because we’re not investing enough into the future, but, as Fareed Zakaria says in his book The Post-American World, [because of] “the rise of the rest.” With this Web-enabled world, everyone can plug in and play. Regardless of size, distance, and increasingly language, everyone can compete in this global marketplace.

We have to do some nation-building right here at home. But we can’t begin to fix the economy until we fundamentally address 17 percent of it, which is healthcare. The shame is that we didn’t do it four or five decades ago. Other countries were innovating, they were embracing the idea of universal coverage as a moral obligation. That we’ve fallen behind is shameful.

AV: There are people who hope (and others who fear) that the current movement to reform our healthcare system will lead to a single-payer system.

Higgins: I don’t think it will. I think that may be the goal of some people, I get that. But if you can change the culture by having the public option be the countervailing force to the current for-profit model, and if that forces changes in the for-profit private insurance industry that are beneficial to the patient, let’s see where that takes us. If it doesn’t work, we’ll have to move to a stronger incentive.

AV: Another argument that has been made against the public option is that it will lead to some sort of rationing of healthcare.

Higgins: First of all, you have rationing going on today, and it’s by nonmedical professionals. They’re bean counters, they’re accountants. They’re working for the insurance companies to give them a financial incentive to deny paying claims. It’s going on every single day. There’s no doctor, there’s no member of Congress, who wants to ration anyone’s care. We need to make sure that the system provides all the care you need, but not not what you need.

These are all just myths that are advanced by opponents of reform. Rationing of care is going on every single day. The problem is it’s people are doing it with the wrong motivation—it’s the profit motive—and they’re not qualified to do it.

We’re going to have a bill that creates exchanges that will really work, that are national, with a strong public option, with minimal benefits to establish the basis from which we want everybody covered. That will be the countervailing force that will force changes in the for-profit insurance industry, because everybody stands to gain by insuring another 46 million people. The for-profit private insurance industry, despite the fact that they’re fighting like hell to beat this, are not afraid that the public plan won’t work. They’re terrified that it will.