Book Reviews

Unpacking Obamacare

How the president's signature law came into effect, and what might come next

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America's Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System, by Steven Brill, Random House, 528 pages, $28

Overcoming Obamacare: Three Approaches to Reversing the Government Takeover of Health Care, by Philip Klein, Washington Examiner, 112 pages, $9.99

Near the beginning of America's Bitter Pill, journalist Steven Brill describes an episode in which he was whisked through a hospital on the way to a major heart surgery. His book, he then promises, will be a "roller-coaster story of how Obamacare happened, what it means, what it will fix, what it won't fix, and what it means to people like me on that gurney consuming the most personal, most fear-inducing products-the ones meant to keep us alive."

This is an exaggeration; the narrative is less of a rapid roller-coaster thrill ride and more of a long journey on a rickety wagon. But it is accurate in the sense that Brill's book is largely focused on the "what" of Obamacare. Although he frames his text as a chronological narrative, and though it contains scattered moments of tension and drama, it is chiefly concerned with collecting and arranging for easy consumption the mind-numbing litany of details that informed the law's creation. Brill is always perfectly clear and at times even evocative in his scene setting, but his book is best understood as a compendium of Obamacare minutiae.

The sheer volume of detail in America's Bitter Pill can make for exhausting reading. But the journalistic record it provides is invaluable. Brill's book is a thoroughly reported look back at the law's history, from the drawn-out negotiations before its passage to the fumbled rollout of the health insurance exchanges in 2013. Brill interviewed almost all the major players in the story, and he obtained mountains of memos and internal documents, including private notes kept on high-level administration meetings and diary entries by at least one White House staffer. It is the most comprehensive single account of Obamacare's creation yet, and it effectively serves as an extended Obamacare origin story.

Many of the details Brill provides will be familiar to those who have followed the law's saga. But even the savviest Obamacare watcher is likely to find a few new nuggets, and a clearer explanation of a familiar issue. The problem comes when Brill changes roles from journalist to pundit and tries to propose an alternative approach to health care. The reader interested in different reform ideas would be better off perusing another new book, Philip Klein's Overcoming Obamacare.

Dirty Deals

Brill is particularly adept at describing the process by which the law's backers cut deals with major health industries. These agreements grew partly from a desire to avoid vocal industry opposition, which many believed had killed Bill Clinton's health care reform plan in the 1990s. On the government side, the negotiations also stemmed from a sense that the industry should shoulder much of the financial burden associated with the law; health care companies, meanwhile, were motivated to minimize damage and perhaps create an even more profitable new system.

The industry strategy was led by Billy Tauzin, the former congressman who headed the drug-industry lobbying group Pharmaceutical Research and Manufacturers of America, better known as PhRMA. The model for Tauzin's approach was the Medicare prescription drug benefit that had passed under the Bush administration, providing a boon for drug makers. If PhRMA resisted instead of playing ball, he reckoned, Democratic health care reformers were certain to impose harsher measures. As one anonymous drug industry CEO tells Brill, Tauzin "liked to say that if you're not at the table, you're going to be on the menu."

The health insurance lobby, too, knew from state-by-state experience that it was likely to wind up on the menu, so America's Health Insurance Plans, the health insurance lobbying group, soon signaled its willingness to negotiate as well. The American Hospital Association also joined in.

Some of these deals were cut with the White House, which proved complicated because it wasn't always clear that the congressional offices writing the law were bound by the agreements. Much of the negotiation, however, occurred directly between industry representatives and Congress-primarily staffers working for Sen. Max Baucus (D-Mont.) on the Senate Finance Committee. Baucus' team included Antonios "Tony" Clapsis, a former Wall Street health care industry analyst who, Brill says, specialized in tracking "how much expanding healthcare coverage was going to benefit each sector of the industry."

When Finance Committee staffers met with industry lobbyists, they thus came armed with numbers showing not only what costs they believed the industry should incur but what improvements the law would make to their bottom lines. With PhRMA, for example, Clapsis estimated that the law would boost drug makers' revenues by roughly $200 billion over a decade-substantially more than the $130 billion the congressional staffers wanted the companies to kick in to help fund Obamacare.

In the end, the drug lobby agreed to take an $80 billion hit in conjunction with the law, while also becoming the primary backer of a series of ads supporting the law. The existence of the deal, as well as the group's role in supporting the ads, was intended to be secret.

Similar negotiations and similar deals with the insurance and hospital lobbies followed. Insurers were promised that the law would include a coverage mandate for individuals. Hospitals were initially exempted from potentially onerous cuts to their reimbursements. In exchange, the health care groups offered various forms of financial and promotional support. In effect, the industries negotiated profit-sharing agreements with the feds, with side deals to pay for marketing costs.

Government and industry were partners in the law. But not everyone approved, then or now.

Staff Squabbles

Jeanne Lambrew was one of the key players in both the design and the rollout of the Patient Protection and Affordable Care Act. A former Clinton official, Lambrew directed the Office of Health Reform at the Department of Health and Human Services. She was a major influence on the design of the law, and she led the implementation effort from the White House.

Lambrew hated health insurers. She expressed her hatred openly at staff meetings, according to staff notes obtained by Brill, referring to sellers of inexpensive policies as "bottom feeders." Lambrew was often charged with designing and implementing regulations that would directly affect large chunks of the health insurance industry's business, but according to Brill she frequently refused to deal directly with them, or even to communicate basic information, claiming not to trust them.

In Brill's telling, Lambrew comes across as both arrogant and incompetent, a fussy bureaucratic queen bee whose deep loathing of the insurers played a direct role in two of the health law's biggest fiascoes.

In the first mistake, Lambrew led the charge for ultra-strict rules regarding the "grandfathering" of existing insurance policies that did not meet the law's broader, more expensive requirements. She wanted them to disappear immediately, but eventually she settled for a compromise that nixed the plans at the end of 2013, when the insurance exchanges were set to go online. As a result, millions of individuals' policies were abruptly cancelled, directly contradicting President Barack Obama's repeated promises that those who liked their insurance could keep it. The affair caught Obama by surprise, Brill reports, because Lambrew had assured him it was a fake controversy conjured up by the insurers.

Lambrew's mistaken assurances also came back to bite the president when the federal health insurance exchange crashed out of the gate in October 2013. She had been in charge of the effort to create the exchanges, but repeatedly delayed decisions, holding up the process to micromanage insignificant details. When a report by consultants at McKinsey warned in March 2013 that the project was not on track, Lambrew ignored it. Throughout 2013, she repeatedly assured Obama and senior administration officials that the system was on schedule to open and work on day one. When the exchange flopped, the White House was blindsided.

Brill delves into the ways these sorts of personality-driven internal disputes shaped the law. While Lambrew looked for ways to teach insurers a lesson, the economic team pushed for aggressive cost-saving measures, many of which were cut or watered down, including a tort reform pilot program that was killed due to objections from trial lawyers. Yet the economic team made a show of aggressively touting the cost savings-so much so that Larry Summers, the National Economic Council director, wrote a memo complaining that White House budget director Peter Orszag had given the president a "snow job" by overstating their effects.

Brill emphasizes the ways poor communication, outright lies, and obscure departmental turf wars plagued Obamacare's implementation. He reports at length on the bureaucratic culture and complexity that defined, always for the worse, the contracting process, the decision making system, the flow of information, and the assignment of blame and responsibility. The book also suggests that these problems were exacerbated by an administration more interested in politics than in management. The White House put the bulk of its effort into campaigning for the law, not into trying to make it work.

Priced Out

Though most of Brill's book is dedicated to these machinations, a substantial fraction explores other areas of the medical system. Brill tells several detailed stories of individuals faced with staggeringly high medical bills, using them as the backdrop against which the larger legislative drama unfolds.

The details that concern Brill most are the dollar amounts listed on the bills. America's Bitter Pill often quotes prices for individual services provided to patients, including some of his own: $6,538 for a series of CT scans, $908 for the use of emergency room facilities, $451.59 for portable chest x-rays, $24 for a handful of niacin pills, $77 for a box of gauze pads, $186.54 for therapeutic exercise. At other times he gives us the grand totals: $149,872.50 for a cardiac surgery and eight-day in-hospital recovery, $9,418 for a visit to the emergency room that ended in stitches, $902,452 for a series of bills following a lung cancer diagnosis.

Brill quotes prices frequently enough that they become a kind of refrain. In the process, they begin to lose their meaning. This may also be because they are essentially meaningless.

When Brill presents his bills to hospital administrators, demanding explication, several decline to respond in detail. But the responses he does elicit are telling. A senior vice president for payer relations at Yale New Haven Health System admits that he has "no way" of explaining multiple items on one bill he's given. An executive from UnitedHealth Group looks at a confusingly worded bill and says, "I have no idea what that means; I would have no idea how to decode that."

The prices Brill quotes appear in most cases to be semi-arbitrary, and they are usually negotiated down by significant, highly variable percentages before being paid. In other words, the prices themselves are not the real prices.

Unfortunately, Brill's solution-payment rules and price controls, especially on pharmaceuticals-would not ground the bottom line in reality, either. Instead of arbitrary numbers negotiated between hospitals and insurers, it would be arbitrary numbers dreamt up by bureaucrats, who, as Brill's reporting on Obamacare makes clear, would surely be lobbied heavily by the industry. Indeed, when several states implemented restrictive price controls in the late 1970s and '80s, that's exactly what happened: The rules became complex to the point of incomprehensibility, and the big hospitals who were supposed to be reined in by the system effectively controlled it. Hospital costs, meanwhile, continued to rise.

In addition to calling for price controls, Brill concludes his book with an extended call to transform health financing and care into a kind of quasi-public utility, with highly integrated, highly regulated hospital/insurer oligopolies replacing the more fragmented scene we have now. This is a strange end for a book that reports, in deep and often damning detail, the follies of federal management of health care. The book's biggest success story-the functional state-based exchange developed in Kentucky-is a success built on local methods and local control. Even the federal exchange was only fixed when the standard bureaucratic playbook was scrapped, the federal-employee lifers were pushed aside, and a team of outsiders from Google and elsewhere took over the recovery effort.

Brill's book examines every little incident with remarkable clarity. It is a pointillist portrait of legislative failure, viewed through a microscope. But it fails when it pulls back to reveal the bigger picture.

Republican Replacements

The big picture is where journalist Philip Klein shines. If America's Bitter Pill answers the question of how Obamacare came to be, Overcoming Obamacare explains what it might become, at least if the law's free market antagonists get their way.

Klein, the opinion editor of the Washington Examiner, divides the law's critics into three broad groups: the Reform School, which wants to build on the law, improving it and using it to further other health policy goals; the Replace School, which believes that Obamacare must be repealed but also that it's necessary to have a replacement that promises health coverage in the wings; and the Restart School, which argues not only that Obamacare should be repealed but that its opponents should not let it define their health policy goals.

Like Brill, Klein is an astute reporter with broad access to the principal players. Overcoming Obamacare features revealing interviews with legislators and health wonks, as well as extensive but easy-to-grasp summaries of the major plans within each school.

The Reformers, for example, include Avik Roy of the Manhattan Institute, who for the last several months has been promoting a plan that would keep Obamacare but deregulate its exchanges and transition Medicare and Medicaid into the same system. In this way, Obamacare would become a vehicle for major entitlement reform with the potential for huge budgetary savings over time. The Replacers, who include many prominent conservative wonks, hope to use the substitution process to expand access to coverage in ways they believe are more market-friendly, such as through refundable tax credits, which could be paid for by limits on the tax breaks for employer-sponsored health care. The Restarters, including Louisiana Gov. Bobby Jindal and Michael Cannon of the libertarian Cato Institute, argue that Obamacare should not be the baseline from which alternatives work; they focus on flexibility and affordability more than coverage, in part by expanding health savings accounts.

As his title suggests, Klein is sympathetic to the anti-Obamacare cause. But he takes no sides, and he warns of the tradeoffs required with each approach. The Reformers would leave much of Obamacare in place, making it easy to ramp back up, and might not secure any liberal support. The Replacers would have to tread carefully around the dicey politics of capping tax breaks for high-end employer coverage. The Restarters would cede the goal of dramatically expanded coverage to the left.

But Klein's real strength is in laying out the conceptual underpinnings of each school. The Reform School works from the assumption that Obamacare cannot be repealed and that some Democratic support will be necessary for any alterations to be politically sustainable; the Replace School believes that the health law's persistent unpopularity means that it must be repealed before putting something in its place; the Restart School worries that replacements that work from Obamacare's coverage and budget baselines will turn out to be little more than Obama­care Lite.

Klein, in other words, not only explains what each faction believes, he also explains why. It is this sense of why, of motivating principle and organizing theory, that is missing from Brill's otherwise illuminating book. The details Brill amasses are impressive, the minutiae he compiles are valuable for the historical record. But it's not enough to simply know what happened, especially when it comes time to decide what to do next.

Peter Suderman (peter.suderman@reason.com) is a senior editor at reason.

NEXT: Andrew Napolitano: Can the President Kill Americans?

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  1. a long journey on a rickety wagon.

    Obligatory.

  2. OT: I’m on a desktop computer, and no matter what I try, H&R is serving me the mobile version by default. (I mentioned this yesterday, but I can’t find the post and think I failed to mention I’m on a desktop.) Any setting to make H&R serve the desktop version by default? I’ve tried multiple browsers, all of which serve the mobile version.

    Waiting for the link to “View Desktop Size” takes forever because the site serves up so much cruft first. I’ve tried Ghostery and Ad Block, and those are worse cures than the disease, being severe memory hogs. So don’t tell me to try a plug-in.

    1. At the risk of bureaucratic shuffle, try submitting your “Site Technology Question” to webmaster@reason.com .

    2. I’ve tried Ghostery and Ad Block, and those are worse cures than the disease, being severe memory hogs.

      It may be time to put that 486 out to pasture.

      As for browsers, try this.

      1. And that’s flat out wrong, by the way. Ad block is currently consuming 67 MB, and Ghostery 14 MB on my PC. If that qualifies as memory hog, then the problem lies with your PC.

    1. Spoiler:

      Albert’s first comment says he knows Bernard can’t know the birthday. Since there are two 14ths, two 15ths, two 16ths, two 17ths, and only one 18th and one 19th, Albert was given a month that doesn’t include either the 18th or 19th. (If he was given that month, Bernard could have been given that date and known when the birthday is.) So Albert was given either July or August.

      Bernard obviously wasn’t given the 14th.

      Albert figures out that Bernard wasn’t given the 14th, and since he claims to know the birthday now, he must have been given a month with only two choices. Therefore he was given July, and the birthday is July 16.

      1. I think this correction/explanation by SASMO is still incorrect. Even if Albert is informed by Bernard that Bernard doesn’t know the answer at the beginning of the logic chain, the answer is still July 16. They make the flawed deduction that May 15/16 remain valid candidates when the rules of the problem require that if Albert can rule out any given day of the month, then he must rule out all of the days of that month. That leaves you with the same problem even if you start with the additional knowledge from Bernard.

  3. The book also suggests that these problems were exacerbated by an administration more interested in politics than in management. The White House put the bulk of its effort into campaigning for the law, not into trying to make it work.

    That’s all they knew. Obama hadn’t governed a day in his life before stepping foot into the Oval Office. They’re entire process for getting anything done was propaganda, and up until recently the only accomplishment under the Obama team’s belt was to get elected, which was down through sheer bullshit.

  4. The existence of the deal, as well as the group’s role in supporting the ads, was intended to be secret

    Most transpa — oh fuck it.

  5. The affair caught Obama by surprise, Brill reports, because Lambrew had assured him it was a fake controversy conjured up by the insurers.

    One starts to wonder if the guy is really just a puppet.

    1. For someone who is “so smart” he certainly doesn’t have a very good grasp of the concepts of project management.

      1. Obama? He appears to be little more than a figurehead at times.

  6. “Unpacking Obamacare” out of our asses

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  10. No one seems to be interested in actually stripping the US health care system of its government enforced monopolies that allow those involved in health care to almost charge whatever they want. (parallels with the cable TV industry).

    A true free market systems starts out with the repeal of prescription laws for most medical drugs. An exception might be justified for narcotics and habit forming drugs subject to abuse. However this is a small fraction of the total number of medical drugs in use. Preferably there would be no drug laws at all so far as adults were concerned. The technology now exists to effectively replace primary care doctors for much of what they now do. It would not be difficult for say “Google” to create medical software accessible to everyone for a small monthly charge. Much as is done for those using Google’s Chromebooks, which use Google’s servers for “storage in the `cloud’.”

    Given people the legal right to take care of their own health as far as they are able to is a good first step towards reducing health care costs. This also resolves the issue of a so-called “shortage” of primary care providers. Which exists mainly because the AMA, acting as a “closed shop union”, is well aware of the economic principles of supply and demand and wishes to make sure that supply is always less than needed so that its members can charge higher prices for their services

  11. For 75 years, it was said that Roosevelt’s New Deal saved capitalism. By softening the rough edges of the free market capitalism, FDR may have prevented adoption of much more radical changes.

    75 years from today it is unlikely that anyone will think Obama saved market-priced medical care. Rather, he only prolonged it, and that will not be thought of as a good thing.

    The USA is the last holdout with market-priced medical care not because of any inherent conservative or free market ideology. Rather, as the wealthiest nation that ever existed we are the last ones who can afford it. Switzerland was one of the last advanced economies to abandon market-priced medical care. It is arguably a greater bastion of conservatism than the USA. Switzerland’s women were not granted the right to vote until 1971.

    The reason that no nation, including the wealthiest can allow markets to set the prices of medical care indefinitely is that demand for medical care is inelastic. Demand for a good or service is inelastic if a percentage increase in price results in a smaller percentage decrease in the quantity demanded. Basic economics tells us that sellers facing inelastic demand will continuously raise prices until prices reach the elastic portion of the demand curve. Consequently in every developed country in the world, all goods with inelastic demand have their prices regulated by government. Medical care in the USA being the only exception…”
    http://seekingalpha.com/article/1647632

    1. This is a very simplistic and unsatisfactory way to look at the health care market. There are a vast number of “products” with very different characteristics. Some have inelastic demand, some don’t. Some have transparent value to the end user, some are virtually opaque. Some are perfect candidates to be financed via insurance, others absolutely not. So a one-size-fits-all approach is probably not the answer. And I fail to see where it’s been proven that non-market driven approaches are superior to market approaches. Markets are a way to allocate scarce resources. Taking away markets does nothing to alleviate scarcity. So an allocation process still has to take place.

      BTW, your source for the implication of inelastic demand for the pricing of products is weak in its understanding of economics. There are other factors that come into play besides the demand curve, such as the product cost curve. And demand curves aren’t static. They change over time as competitors react and the environment changes (e.g. technology). So price controls may not be the best long-term answer, as that reduces the incentive to develop and improve products.

      1. It’s a completely retarded post. Food is inelastic by his definition since we have to eat. Do we need to recall what happened to the communist block with its price and production controls? Even worse is the nonsense that Switzerland abandoned market based pricing. Providers and insurance are still private entities but are regulated by the government, but Barrycare does much of the same in the US.

    2. “…every developed country in the world, all goods with inelastic demand have their prices regulated by government. Medical care in the USA being the only exception…”

      Nonsense. Medical care was regulated by the states before the federal mafia took it over so they could extort more money from the Amerikan suckers, oops, I mean populace. We haven’t had a free medical care market for at least 50 years.

  12. If you liked your healthcare plan you are probably a bitter clinger.

  13. “In addition to calling for price controls, Brill concludes his book with an extended call to transform health financing and care into a kind of quasi-public utility, with highly integrated, highly regulated hospital/insurer oligopolies replacing the more fragmented scene we have now. This is a strange end for a book that reports, in deep and often damning detail, the follies of federal management of health care.”

    Peter Suderman, your problem is that you won’t admit that what passes for intelligent leftist thought is actually typical leftist stupidity wherein they believe that the proper fix for a government fuckup is more government. Reporting on events doesn’t take a lot of intelligence, intelligent analysis of events and their consequences so you can develop sensible solutions does take intelligence. So no matter how much you might respect Brill as a reporter with some skill at his job, it is time for you to admit that you can’t fix stupid.

  14. Medical cannabis if fully implemented could save between a $1/2 trillion and $ 1 1/2 trillion a year in medical costs.

    Funny – no mention of that in the books.

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