Why France's Health Care Is So Good, The Public Option So Bad and the Co-Ops So Incomplete: An Interview With Kent Conrad.

Sen. Kent Conrad chairs the Budget Committee, serves on the Finance Committee and was a member of the Gang of Six. I spoke to Conrad today about what Americans can learn from other health-care systems, why he opposes the public option and what felled the Gang of Six.

Let's talk about T.R. Reid's The Healing of America.

I think that book is very instructive in terms of analyzing alternative systems around the world for possible lessons for us, not that we're going to adopt some other country's system, as we're not. We won't adopt the German system or French system or anything of the like. But I think we can get clues on the fundamental differences of various systems. In the book, he talks about four different kinds of systems. The Bismarck model, which is like Germany, the Beveridge model, which is like England, the national health insurance model, which is like Canada, and then out of pocket.

The distinction he makes between the Bismarck model and the Beveridge model is a very important distinction to keep in mind for the debate here. Both achieve universal coverage, Both have quality outcomes. Both are less costly on a GDP basis than ours. But there are big differences. In the Beveridge model, which is Great Britain, waiting lines are an issue. The Bismarck model, which has largely been adopted in France, Germany, Japan, Belgium and Switzerland, is not government-run. That doesn't mean there's no government involvement. But it's not a government-run system. They have largely private insurance, with employers contributing.

The big difference between those systems and ours is that private insurance is not-for-profit insurance. That is the distinction he draws. They're not government-run. The major role for government is to help people who can't afford coverage on their own. That's the proper role.

But that runs over some fairly large variations. In France, for instance, the insurance really is government-run. The vast majority of people are on public insurance, and there's private supplementary insurance atop that. So too with Japan. They're not confined to simply subsidizing the poor.

But it's not government-run. The doctors and hospitals are private. You're right that in France there's more of a government involvement beyond providing money for those who can't afford coverage. There's a regulatory involvement in terms of what's required by the plans. But the plans themselves, the mutuals, are not government.*

You're talking about France here? Not Germany?

Both of them. The intermediaries are not-for-profits. The model is universal. Employers contribute. Reid says we are in part a Bismarck model, where employers contribute. Part which is that Beveridge model, like the Indian Health Service and the Veterans Health Service. We have a national health insurance model with Medicare. And then out-of-pocket for people with no coverage. We have a real mixed system. We really don't have a system. That's kind of what you get down to.

I remember being at the Prepare to Launch event that kicked off the Senate Finance Committee's work. Sen Baucus spoke, and so did T.R. Reid. But building what Sen. Baucus calls a "uniquely American" system seemed to limit our ambition. A lot of people would look at the British and French and Canadian and Germany systems and say, sure, much separates them, but what unites them is they pay half what we do, cover everyone, and get comparable outcomes.

Actually, some of them have outcomes better than ours.

But we decided not to change that much. The real lesson from Reid's book is that we do this badly. If the French came up with a great new medical procedure, we wouldn't say that's just some French procedure. We'd adopt it. But when they come up with a better way to do health care, we dismiss it as French, and inapplicable.

Yeah. We don't want anything to do with it. He talks about that in the book. It's an odd thing.

How much of this is a product of political systems? Reid has a line in the book where he says the difference between America and France is that the French love their system and change it all the time. The Americans hate their system and can't seem to touch it.

It's fascinating, isn't it? I just don't know. I've been trying to figure this out for a long time. I was very involved back in the '90s reform effort. I was part of the Chafee-Durenberger centrist alternative to the Clinton plan. I've been searching ever since for models that I thought would fit America's values and American culture. I've felt for a long time that a system that's not government-run, but does have universal coverage, does a good job on quality and containing costs, and has the elements we see in some of these other countries is most likely to fit here and win political acceptance and be effective. Somehow in this debate, we've gotten very sterile. If it's not public option, somehow it won't be effective at providing competition to the insurance industry. I just don't think that's what the Reid book shows or what other observers of international systems would conclude.

The question of values always runs into the existence of Medicare. You can imagine people saying that Medicare was simply too government-driven when President Johnson was trying to enact it. But Americans love Medicare.



I've thought about that a lot. T.R. Reid's book is so interesting on this point. Different parts of our system fit different models. Part fits the Beveridge model. Part fits the Bismarck model, where employers and employees contribute and it's private doctors and hospitals. And other parts are national health insurance, which is Canada, and that's Medicare. For our senior citizens, we have adopted the model that is closest to the Canadian model. But there are serious issues with that model if it spreads society-wide in terms of waiting times. I don't think that fits American culture.

Isn't that a simple question of funding, though? The Canadians spend much less than we do, as do the British. If they spent as much, they'd presumably not wait as long.

But if that system spread nationwide, I would be concerned that we would wind up in the waiting lines issue. I think America would be much less accepting of waiting lines than the Canadians or British have proven to be. France and Germany and Japan have no trouble with waiting lines. But in Canada, [it can take] months to see a specialist for your shoulder.

One more question before we move to the public option. We can agree that Clinton's plan was much more ambitious and transformative than this plan. It would have done much more to change the average American's system.

Can I interrupt you for a second? When we were working on that plan, a high official in the Clinton administration came to see me and said, "What do you think, Kent?" I said I'd spent hundreds of hours trying to understand how this will work, and I didn't understand it. He laughed, and he said, "Don't tell anybody, but I don't understand it either!" That;s a true story. I won't out who it was. But a high official!

But for all of its ambition and all of its flaws, the political trajectory was very similar. Obama is doing a bit better, but back then, there was one solid Republican vote in Sen. Jim Jeffords, there were angry grassroots events, and lots of lies and anger and polarization. It's been striking how much the two plans have not created a different political conversation. No Republicans say they've really trimmed their ambitions on this. They're really trying to take into account American values and culture.

It's very striking. I don't know. It's incredibly hard to do.

When you were involved in the Gang of Six, you produced a plan very similar to the one we're looking at. It's also a plan similar to the one proposed by Sen. John Chafee, a Republican, in the '90s. And it's very similar to what the Republican members of the Gang of Six said they wanted. But it emerged without their support. What happened? What lesson did you take?

I honestly don't know. I think part of it is we ran out of time. We were very close to reaching a conclusion. Now whether or not the politics would have ever permitted all three of the Republicans to agree, I don't know. But I can tell you in those discussions, right up to the end, they were very collegial. They were very professional. There appeared to be solid agreement on the outlines of the plan. If somebody had participated in those discussions, I don't think you could have said there was an ideological divide or a partisan divide. it was very professional discussion. You know, we met 61 times.

It seemed that as time went on, agreement became harder. The politics made it more difficult.

You're right about the politics making it more difficult. The dynamic in that room was very positive and very constructive. We kept making progress until we just sort of ran out of time. I felt we were getting to the point where we were reasonably close. Several more weeks, and there might have been an agreement. But that's outside the political discussions.

Do you support the public option?

No.

Why?

I go back to the T.R. Reid book. I don't think a government-run plan best fits this culture. A plan that's not government-run has the best chance of succeeding in being passed into law.

Second, and this is very important to my thinking, the public option as defined by the committee of jurisdiction in the House, the Ways and Means Committee, is tied to Medicare levels of reimbursement. My state has the second-lowest level of Medicare reimbursement in the country. If my state is tied to that reimbursement, every hospital goes broke.

People say, "Just fix it." I've been on the Finance Committee more than 15 years. I've been trying to fix the unfair aspects of Medicare reimbursement all the time. We run into the House. Membership is determined by population, and the big population states write levels of reimbursement that unfairly treat hospitals in states like mine. My hospitals get one-half as much as urban hospitals to treat the same illnesses.

What about a public plan that can't use Medicare rates?

There are discussions going on about that. Obviously, it would be very important that it would be clear that it's not tied to Medicare levels of reimbursement. Those of us in low-reimbursement states would have our health infrastructure put at risk.

I was also struck when I read the chairman's mark that the co-op option seemed shackled. It couldn't sell to large employers. It couldn't set payment rates. The co-ops are not public. But they were being prevented from competing with insurers on a level playing field. It seemed like private insurers were being protected from competition.

I think there are things I would like to see that would make certain co-ops be given the full ability to compete that others are.

So you would like to see those restrictions lifted.

I would.

Why are they there?

Because that came out of the Group of Six discussions.



*The French mutuals provide supplementary private insurance. Basic insurance is provided by a program the French call Social Security.

Photo credit: AP Photo/ABC News, Fred Watkins.