America's Bitter Pill

by Steven Brill

  The draft of the merged bill required the federal government to pay the entire cost for states to expand Medicaid to all people below the poverty line for the first three years and then 90 percent after that. Ben Nelson of Nebraska thought that wasn’t generous enough. Reid gave Nebraska—only Nebraska—100 percent forever. At the Republicans’ urging, the press came to call that deal the “Cornhusker Kickback.”

  Mary Landrieu wanted hundreds of millions more in federal aid for her Louisiana Medicaid recipients. She got it. That provision was quickly dubbed the “Louisiana Purchase.”

  The last bargain was with Joe Lieberman. The Connecticut senator finally got rid of the public option, including a version that allowed individual states to choose to implement it or not. Lieberman also shot down an alternative that would have allowed people fifty-five years old or older to buy into Medicare so they could be protected but pay lower premiums from 2010 until 2014, when the exchanges, with their premium subsidies, would kick in.

  “This is essentially the collapse of health reform in the United States Senate,” Howard Dean, the former Vermont governor and Democratic presidential candidate, told the Vermont public radio station when he heard about the elimination of the public option and the Medicare buy-in.

  Zeke Emanuel and others at the White House wanted, among other priority items, that the comparative effectiveness provisions be toughened up and that the tort reforms be turned into something real. Reid gave them none of that.

  “The Administration will put its foot down in Conference,” one aide wrote in a journal, referring to additional opportunities to make changes during the closed-door negotiations in which a bill passed by the Senate would be merged with one passed by the House. The House and the Senate bills each included language encouraging the bundling of care as an alternative to fee-for-service, but “the design of the bundled payment program will have almost no effect on the payment system and practices of physicians,” one memo circulating among the staff conceded, before listing five bundling provisions that they had to push for in the anticipated conference.

  Meantime, Reid moved not only to lock in votes with any amendments necessary to keep his Democrats on board, but also to head off some Republican mischief. In December, the Republicans hatched a plan to launch a poison pill that would cause the drug companies to walk away from the deal and launch an attack reminiscent of the “Harry and Louise” ads that had scuttled Hillarycare fifteen years earlier. They were going to vote for an amendment sponsored by liberal Democrats to allow for consumers to buy drugs from Canada. This was the dreaded importation provision, the threat of which was one of the reasons Tauzin and PhRMA had come to the table in the first place.

  Of course, Republicans, more beholden than Democrats to PhRMA, had always led the charge to block importation. Yet suddenly they had become consumer advocates. Their plan was to support the amendment, which, because it was amended to a pending bill, only needed a majority vote to pass. If that happened, Tauzin would have to call in enough favors from moderate Democrats to doom the entire law’s prospects for getting the requisite sixty votes. The whole thing would be dead.

  On the merits, most Democrats loved importation. It would save consumers—and cost the drug companies—$400 billion over the next ten years.

  Jay Rockefeller, the West Virginia Democrat, summarized the awkward choice that the Republican scheme had forced on him. “I don’t think that’s going to get my vote,” he told The Huffington Post, explaining that even though he had been a supporter of importation, he was concerned that if it passed it would blow up the overall deal. “I’m not messing around with anything without 60 votes. Nothing,” he said. “And I’m a co-sponsor of the amendment.”

  Reid spared Rockefeller and others the dilemma of voting against something they favored. He refused to let it come up for a vote at all.

  “I’M GONNA GO SEE TEDDY”

  On December 19, 2009, Reid introduced a “manager’s amendment” to the final bill that incorporated all of the deals he had made, meaning that all fifty-nine Democrats and Sanders would vote for it because even if they thought something like the Cornhusker Kickback or the reduction in the device tax was wrong, there was another nugget in there especially for them.

  Reid would later be hailed by healthcare reformers as a hero for keeping the Senate in session day and night through the week leading up to Christmas as he carefully introduced the amendments that were in the package of the deals he had negotiated but blocked all others.

  But Snowe was disgusted, she told me, that the most important piece of domestic legislation in decades was being rammed through that way. Nonetheless, expanding health insurance had been an issue she had worked on since serving in the Maine state senate. So she was still on the fence for the final vote.

  On December 23, Snowe traveled through a morning blizzard in Washington to meet with the president. It was the eighth time they had met one-on-one about healthcare reform.

  Snowe sat down and quickly told the president she couldn’t vote yes—yet.

  “I urged him to take a breather, and let us have a hiatus over the holidays and then have a full, open debate—not the closed process that Harry [Reid] was running,” Snowe recalled. “I told him the opposition was only going to grow if he passed a bill this way by ramming it through with no Republicans. But he told me that the heat would subside. He compared it to how the opposition to his surge in Afghanistan had subsided once it started.”

  On Christmas Eve morning, in a moment of high drama, the Senate passed the bill with no Republican votes.

  Liz Fowler was sitting with Baucus and Dodd on the Senate floor when the sixtieth vote was recorded at about 7 A.M. After the tally was announced, Dodd turned to them and said, “I’m gonna go see Teddy.” He got up and left to go to Arlington National Cemetery, where Senator Kennedy had been buried in August.

  * * *

  *9. As of the fall of 2014, the board had never met and, in fact, no members had been appointed to it.

  CHAPTER 12

  NEW TROUBLE, THEN MOUNT EVEREST

  December 2009–March 2010

  WHILE ATTENTION WAS FOCUSED ON THE SENATE DEBATE AND Harry Reid’s retail sales skills, a different debate was percolating in the White House that seemed to spell trouble for the reform push, no matter the Senate vote.

  The optimists on Obama’s staff had begun looking ahead to how they would implement the new law—including the setup of the online health insurance exchanges with all of its varieties of bronze, silver, gold, and platinum plans. Now the split between the healthcare reform policy team and the economic team began to take a different turn. They began skirmishing over who would be in charge of making the law work.

  On December 14, 2009, Zeke Emanuel and Bob Kocher—the McKinsey alumnus and physician who worked for Larry Summers—wrote Summers and Orszag a memo warning how difficult implementation was going to be. They urged that Summers and Orszag lead an effort to make sure the White House got it right by looking to the private sector for leadership.

  “When health insurance reform legislation passes, there will be two important consequences,” they wrote. “First, the federal government will be viewed as having responsibility and accountability for much of the health care system. Indeed, changes in the health care system, for good and bad, will become associated with reform. Second, implementation of a complex piece of legislation in a very short timeframe poses significant challenges, and will become a dominant public policy issue.”

  They proceeded to identify issues to be decided in the conference that they expected would be held to resolve the differences between the bills that had now been passed by the House and Senate that would affect the challenges of implementing the law—for example, whether the insurance exchanges would start in 2013 or 2014. Similarly, they highlighted the necessity of sticking with the House’s plan to have one national online exchange rather than risk the chaos of operating fifty-one exchanges, one for each state and the District of Col
umbia, as was called for by the Senate bill.

  Then they issued this warning about the difficulty of launching even one online marketplace: “The tasks of creating and operating an Exchange are monumental,” requiring, they wrote, eight key challenges, from developing contracts with each insurer, to building the software for people to select insurance, to having the right amount of subsidies paid to the insurers through the Treasury Department after the IRS verified what people seeking subsidies reported about their income.

  It was going to require “a whole new technology system,” they warned. That could only be accomplished if the program operated under a “strong central authority” with one leader, and “if the Exchange can have the flexibility of the private marketplace rather than the government contracting system.”

  By now, Zeke Emanuel had told his brother he was thinking of himself as that strong central authority. But Kocher had been talking to another potential leader working in the Obama administration with stronger credentials for the job. Todd Park, who was thirty-six in 2009, had been recruited to be the chief technology officer of the Department of Health and Human Services (HHS). When he was twenty-four he had cofounded Athenahealth, which became one of the country’s trailblazing healthcare information technology companies and made him a multimillionaire. A Phi Beta Kappa graduate of Harvard, Park had then helped start other healthcare-related technology ventures, some for profit, others nonprofit.

  Everyone seemed to like Park. He was modest and soft-spoken, yet as with Athenahealth, he usually seemed to have a new idea that was practical and ended up working.

  Park seemed like a natural for this job.

  One would have thought that as the Department of Health and Human Services chief technology officer, or CTO, he was actually going to be in the line of fire, anyway. Why wouldn’t the HHS CTO be responsible for the launch of the high-tech insurance exchanges? After all, however the organization chart turned out, HHS was going to be the agency where the exchanges would reside.

  That was not how the management of technology worked in Washington. A CTO at a federal agency had a great title but didn’t have a line-of-fire job. Park was involved in setting his agency’s broad technology policy, not implementing anything.

  In fact, those most likely to be in charge of implementing technology at HHS didn’t even report to Park; most worked at the Centers for Medicare and Medicaid Services (CMS), a unit of HHS, where responsibility for the health insurance exchanges would likely be placed. And they reported to their own CMS chief technology officer, who reported to the head of CMS, not to Park.

  Moreover, the people doing procurement, who would issue the contracts to those building the website, didn’t really report to any of them; they were career civil servants who were supposed to be independent in order to prevent corruption.

  Kocher still hadn’t come to appreciate the culture of the bureaucracies in his new hometown or the rigid organizational charts that governed them. He only knew from his McKinsey days that Park was reputed to be a superstar. So he began meeting with him, sometimes over lunch, to talk about how to get the project going.

  Shouldn’t they bring in a seasoned healthcare executive from the outside as the CEO? Kocher asked Park. And shouldn’t that executive then be allowed to outsource the building of the e-commerce exchange—or exchanges if the calamitous Senate version allowing for individual state exchanges prevailed—to one of the Silicon Valley e-commerce companies that really knew how to do this?

  Park thought that seemed like a good idea. The two agreed that there was no way the technology piece could be done in the usual Washington way, with the usual-suspect government contractors, who, both men agreed, were better at using their influence and their skill at dressing up bid proposals with extravagant promises to get contracts than they were at fulfilling those contracts.

  However, whatever sharp elbows and ambition Park might have been born with had long since been softened after he had made his first millions. He told Kocher that he thought that someone who had run a much bigger organization than he had—perhaps a CEO from one of the insurance companies—would be better for the job.

  Kocher also talked with the U.S. chief technology officer at the White House, Aneesh Chopra, about the need to do the healthcare reform project differently. Chopra heartily agreed.

  Two weeks later, at the urging of Kocher and Emanuel, David Cutler, a Harvard economics professor and universally recognized healthcare expert, had weighed in with a memo of his own to Larry Summers, urging that the new law required a structure and management team worlds away from what he knew HHS or CMS were capable of. And it had to be run by a seasoned business executive.

  Nearly five years later, President Obama would tell me he agreed: “In hindsight,” he told me, “there should have been one central person in charge, a CEO of the Marketplace.” But in late 2009, as the sweeping new law moved closer to passage, Obama and his team rejected that approach, choosing instead to parcel the work to the usual players eager to protect the turf that came with their titles.

  Nancy-Ann DeParle wrote her own implementation memo to Rahm Emanuel, with a copy to Valerie Jarrett. DeParle’s version of how Obamacare would happen was not complicated: She would run the program from the White House. She was, after all, head of the Office of Health Reform and had run CMS in the Clinton years.

  In DeParle’s memo, an HHS Office of Consumer Information and Insurance Oversight would oversee the exchanges, the CMS Office of Information Services (the in-house tech team) would build them, and the CMS Office of Public Information would work on marketing them. It would all be overseen by Jeanne Lambrew, who would supervise day-to-day implementation from HHS. Lambrew, too, had the right title: head of the Office of Health Reform at HHS. DeParle, in turn would supervise Lambrew.

  When Kocher and Zeke Emanuel got wind of DeParle’s memo they pushed Summers and Orszag to talk to Rahm Emanuel about the problem. The chief of staff’s response, according to what his brother later told me, was that he didn’t want to have to deal with this “bureaucratic crap” now. They could worry about all that after they got a law passed.

  A CANDIDATE TAKES A VACATION

  Meantime, on December 9, 2009, a Massachusetts woman named Martha Coakley decided to go on vacation with her family. Like Richard Nixon getting caught up in Watergate, Wilbur Mills’s companion wading into the Tidal Basin in Washington, Tom Daschle becoming ensnared in a tax controversy, or Ted Kennedy getting brain cancer, this became another curve ball from out of nowhere that threatened to block the reformers.

  Coakley, the Massachusetts attorney general, was the Democrat running for Ted Kennedy’s seat to replace the temporary stand-in appointed by the governor following Kennedy’s death. She was heavily favored to win. However, her Republican opponent, an attractive state senator named Scott Brown, seemed to be gaining more traction than anyone had expected—running, in fact, on a platform that included a promise to block Obamacare.

  Frank Luntz’s “words that worked” seemed to be working for Brown in his race to replace Kennedy, the icon of healthcare reform.

  Coakley’s widely publicized decision to leave town little more than a month before the January 19 election was regarded by political pundits as a major blunder.

  The Democratic Senate candidate was, of course, Harry Reid’s sixtieth vote. Without Coakley, the conference bill that had to be negotiated and blended into one bill that the House and Senate would then have to approve in a second vote would fail. Reid would never get it past a Senate filibuster.

  Nonetheless, by the first week in January, the House and Senate staffs—by now only Democrats, because there were no Republicans who were going to vote for anything they came up with—were meeting with the Obama advisers to negotiate the differences in the two bills, plus consider any new details the White House people wanted to add. They divided into groups to consider how to resolve the gaps in various aspects of the two massive bills.

  The meetings were long and tedious.
Progress was slow. Shouting matches sometimes erupted. Many of the House members and their staffs clearly hated the Senate bill. For them it was far too stingy. They complained that there was no public option, and that having fifty state exchanges, which the more conservative Senate had written in to make the law as much like Romneycare as possible, was absurd. The Cornhusker Kickback and Louisiana Purchase were an embarrassment to the country, they argued. And the Cadillac tax was a nonstarter because of union opposition.

  We need all that or we lose our sixty votes, the Senate side insisted. “Bullshit,” the House negotiators shot back more than once.

  Occasionally, one or both sides stormed out of the room amid profanity-laced arguments.

  There was an arcane legal debate that seemed to meander endlessly about how to set up the now-weakened comparative effectiveness panel so that it could be independent but still part of the executive branch. The economic team was horrified when DeParle told them that if they couldn’t solve that one in the next day or two, they should just forget the whole comparative effectiveness thing.

  The Democratic negotiators spent the entirety of January 12, 2010, getting through thirty-five pages of what was going to be a more than nine-hundred-page bill. Zeke Emanuel was kicked out of the room for arguing too much.

  The next day a column in The New York Times by David Leonhardt argued that CMS needed new, strong leadership to implement reform and that the lack of that leadership “suggests that The White House is not giving attention to what will happen once Mr. Obama signs a bill.” The policy team was sure Zeke Emanuel had instigated the article, which he indignantly denied.