Chip Kahn, President of the Federation of American Hospitals, Looks at Health Reform 17 Years After 'Harry & Louise'

Chip Kahn has been a major player in Washington for many years — as a health policy adviser to key Republican Senators, a representative of the health insurance industry and now as president for the past eight years of the Federation of American Hospitals. Here Mr. Kahn talks about the prospects of health reform and how it would affect the nation's hospitals.

Q: You campaigned very aggressively against Bill Clinton's health reform proposal 17 years ago, but now you are a strong supporter of many aspects of the Democrats' current health reform initiative. Why is that?

Chip Kahn:
U.S. hospitals and the healthcare they deliver are at a pivotal point. The healthcare system is in dire need of fixing. If we in this country continue down the same road we are on now, there will be more erosion of health coverage, which is not good for patients and not good for hospitals.  
Chip Kahn
Health reform has been on the association's agenda for some time. More than two years ago, before the current debate in Congress started, the federation produced a health reform proposal, called the Health Coverage Passport, which spelled out in great detail what we thought health reform should be like.

Q: Your views seem to have evolved since you were executive vice president of the Health Insurance Association of America. Back then, HIAA ran the "Harry and Louise" ads, which are seen as a major factor in the defeat of Pres. Clinton's health reforms.

CK: People usually have the misperception that the HIAA was against health reform. That is not so. HIAA was against the Clinton brand of heath reform. The Clinton proposal was devised in secret, without input from Congress, and it would have destroyed the business model for health insurers.

Q: One major thrust of the health reform bills is to move U.S. healthcare toward universal coverage. Why do you support universal coverage?

CK: Unlike the public option, universal coverage is something that most of us can agree on. Specifically, it would be good for hospitals. Rather than showing up at an emergency room for essentially charity care, everyone would be covered by an insurer and the hospital would be paid-for care.

Q: The federation does not support all aspects of the reform bills. What aspects does it not support?

CK: There are a few provisions we do not support. For example, we don't favor a public insurance option. If it were to be included in the final version of the bill, it would be a bad thing for hospitals. That's because payment rates in the public option would be tied to Medicare rates, and Medicare rates are lower than private insurance rates.
Furthermore, my suspicion is that supporters of the public option view it as the first step toward a single-payor health system, which would be a path to destruction of the healthcare system as we know it. It's a shame that the left decided to define health reform in terms of having a public option rather than in terms of universal coverage.

Q: As the bills stand now, how would they affect hospitals?

CK: As the legislation stands now, hospitals would probably feel comparatively little impact in the first three years. Provisions such as lowered disproportionate share payments would begin after the third year. In the first three years, there would be some reductions in payments in the marketbasket update for hospitals, but they would be fairly minor.

However, as the bills read now, there would be a number of demonstration projects such as post-acute bundling and pay-for-performance. Post-acute bundling involves combining payments to hospitals with post-acute providers such as rehab hospitals and long-term care facilities. If the provision passes, how it functions still needs to be worked out. It's a good concept, but the problem with a good concept is that it's still a concept. So the jury is still out on this provision.

Q: Can you offer any insights into the Republicans' position in the current health reform debate?

CK: For many years I worked in the Republican Party, but I am not following the Republican Party on this issue. I work for hospitals, and hospitals have a strong stake in the health reform process. That said, I understand the Republicans' point of view on health reform. Their objections to the Democratic proposals are based on deeply held principles, such as keeping big government in check.

Q: Why do all but a few Republicans oppose the Democrat's health reform bills?

CK: Republicans in Congress have not been signing on to the Democrats' reform proposals, and from their perspective I don't blame them. Participating in health reform doesn't do Republicans any good. Bipartisanship only serves the majority. Let's say something gets passed. It will be viewed as legislation passed by Democrats in Congress, with the president's signature on it. The Republicans are not going to win any political points helping out the Democrats.

Q: What are the future prospects of the bills?

CK: The House has passed its version of health reform, but the Senate version now faces a high hurdle. Harry Reid, the Senate majority leader, still needs to pull together sufficient votes for the reform proposal. He needs 60 votes. He's not there yet.

Learn more about the Federation of American Hospitals.

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