Why Obama's health reforms are in trouble

He has given Congress too much say and shifted the rationale. The electorate is over-stressed. Time for incrementalism, if Obama and the Hill Democrats can pull it off.
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Time to shift to change we can absorb?

He has given Congress too much say and shifted the rationale. The electorate is over-stressed. Time for incrementalism, if Obama and the Hill Democrats can pull it off.

We are only a few days away from a reconvening of Congress and resumption of work toward, among other things, a health-care reform bill. We need to talk. This may take awhile.

The August recess has been filled with toxicity on the issue — and not just from critics of the Obama Plan which, at this late date, has not yet been fully defined. Senators and Members of Congress will return from recess with worse polarization existing than before they left.

Political and media supporters of Obama would like us to think that congressional health forums this month have been fractious and sometimes angry because of false depictions of Obama's and Democratic congressional health proposals by villains ranging from Sarah Palin to Rush Limbaugh to Glenn Beck to "right-wing extremists" to greedy insurance companies. Critics, for their part, have focused on the public costs and government controls inherent in the plans, often grossly exaggerating their statist and socialist implications. House Speaker Nancy Pelosi is their favorite poster girl.

President Obama has not helped his cause with a series of public appearances in which he often has offered his own misrepresentations or attempted to shift the subject from the substantive content of his and congressional proposals to the alleged misdeeds of insurance companies. It was painful to watch Obama attacking critics Friday at a Montana town hall during which Senate Finance Committee Chair Max Baucus, attempting to develop a bipartisan health bill, sat grimly on-stage nearby.

The White House has now renamed health-care reform as "health-insurance reform" in an attempt to frame debate as an argument between publicly-interested reformers and unpopular (according to White House polling data) insurers. Former President Bill Clinton, newly popular after his help in releasing hostages from North Korea, has been drafted into the effort to demonize insurers and is out on the stump doing so. Critics, on their side, have focused on the omission from legislation of any tort reform and demonized equally unpopular trial lawyers.

How did it come to this?

For openers, it was never in the cards that a remake of a huge part of the American economy — and one vital to the well being of most citizens — could be framed and legislated easily.

Since 1965 passage of Medicare and Medicaid, a number of attempts have been made to make major changes in our health-care system. The most recent, and successful, was President George W. Bush's proposal for a Medicare drug benefit, passed with bipartisan support. The most notable and unsuccessful was the 1994 Clinton effort, which had to be withdrawn because it lacked even Democratic congressional support. President Lyndon Johnson, seeking passage of Medicare and Medicaid, took great care to generate "consensus," which he treated as a precious concept, in undertaking fundamental health-policy change. The Clinton bill, by contrast, was developed behind closed doors by like-minded private task force members in a process which guaranteed polarization.

White House chief of staff Rahm Emanuel, an alumnus of the Clinton White House, drew the wrong lesson from the 1994 debacle. Rather than centering formulation of health legislation in the White House and executive branch, while drawing in Congressional and private-sector leaders for consultation, he concluded that content of the legislation should instead be left to Democratic committee chairs in House and Senate. Obama would campaign for the general concept of health-care reform but leave the details to Hill Democrats. Afterward, when actual legislation evolved, Obama could make it his own — or reject those parts he did not like.

That is what has happened. Obama is presently out there advocating "reform" but without any bill which is truly his own.

Meanwhile, in the House, Speaker Pelosi has responsibility for melding three committee-passed bills into one which will come to a vote on the floor. She has been in intensive negotiations with some 70-75 moderate Democrats, who want less costly and intrusive legislation, and an even larger number of progressive/liberal Democrats who want no compromise on such issues as the establishment of a public entity to compete with private insurers. In the Senate, the main game is Sen. Baucus' continuing attempt in the Finance Committee to produce legislation which can gain even a few Republican votes. The Obama White House "has not been helpful" (Baucus' words) because it has sent changing signals to both Senate and House Democrats on those provisions which it will or will not accept — especially regarding financing mechanisms.

The biggest obstacle to legislation is its cost. The White House has shifted away from its principal early argument that health reform would save public money. Congressional Budget Office and other independent estimates have indicated added costs of about $1 trillion over the next 10 years, depending on the plan's eventual content. The White House now claims that unspecified savings could be made in Medicare, thus frightening senior citizens, and that "new taxes only on the rich" would make up the balance of any financing shortfall.

There are alternative Republican bills in the Congress. Unsurprisingly, they feature wholly-private reforms. They are not a part of the dialogue because Republicans hold neither the White House nor House/Senate majorities and thus have no leverage to gain consideration for them. Since this is the case, they have focused their efforts on opposition to Democratic proposals that are controversial. That is what opposition parties do when they lack power to press their own proposals.

There has always been a tension in post-1965 efforts to make any major change in our health-care system. Various cost-saving proposals have been offered. But, to get legislative majorities for them, expansions of coverage always have been added. The net result: Ever-rising costs.

Fact is, it is almost impossible to both cut costs and expand coverage at the same time. Yet that is the context — again, this year — in which proposals are made.

There is one important change which could be made which would expand coverage importantly but add few incremental costs — a program of catastrophic (or major-medical) insurance for all. If deductibles are set at the right level, such a program is easily financable. It also would remove from families their major fear that an expensive illness or injury could wipe them out financially. Tries have been made in the Congress to do this but they have not gotten far. One ironic reason: Proponents of more general reform fear that universal catastrophic coverage, if established, would lessen the demand for something bigger.

If all the obstacles cited above were not enough, there are what Marxists would call "the objective conditions" of this time.

Obama had made health care and cap-and-trade proposals a centerpiece of his 2008 Presidential campaign. He reemphasized them in his nomination-acceptance speech in Denver, even when the economy clearly was in downturn. By the time he became President, financial/economic distress had become quite deep.

I, among others, thought he would focus solely on the financial and economic crises and only later return to domestic proposals which were unfinancable in the present trough. But he chose to press ahead with them — mainly, it is explained, because he worried that his honeymoon period otherwise would end before he got a chance to push them forward. I still think that he should have focused solely on financial/economic renewal. Then, when recovery came, he would have had a fresh rush of popularity behind him for the rest of his agenda.

What now? The public meetings this month have been so turbulent, in part, because voters are just plain overwhelmed by the enormity of the issues in front of them. First came a hugely expensive financial-industry bailout, which left taxpayers as part owners of some institutions. Then came a similar auto-industry bailout. There was a huge federal budget, containing egregious earmarks of the kind Obama earlier had said he would reject. There was the $787-billion stimulus package, designed on the Hill, which in fact will bring little economic stimulus until next year, when recession is expected to have ended.

Then came the health proposals, still not fully defined, which voters suspect will bring new red tape and taxes, no matter what its adherents claim. Meantime, projections of federal deficits and debt keep rising to historic levels. Soon after Senators and Members of Congress return they will be hit with new budget projections which, almost certainly, will point to even deeper red ink ahead.

This is the unforgiving context in which health proposals will be considered.

Despite all these difficulties, however, it remains possible for Obama and congressional Democrats to salvage some kind of incremental legislation — if factions within their party are willing to accept incrementalism.

A so-called "public option" (the establishment of a public entity to compete with private health insurers) probably would have to be dumped. Some insurance-market changes could be passed on a bipartisan basis. The establishment of an independent board to set desirable fees for various medical procedures? Maybe. But grander promises would have to be shelved.

The rising anger and cacophony surrounding the issue remind me of similar circumstances at the 1968 and 1972 Democratic national conventions. The internal struggles were intense. Outside the conventions and the Democratic Party, ordinary citizens got turned off and worn down. They voted twice for Republican candidate Richard Nixon because they just plain disliked and distrusted all the conflict and urgent cries for change emanating from the Democratic side.

Citizens today also feel themselves engulfed by big problems, many of them urgent and personal such as a lost job or foreclosed mortgage. For many, the confusion and noise level surrounding the issue are just too much to cope with.


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About the Authors & Contributors

Ted Van Dyk

Ted Van Dyk

Ted Van Dyk has been active in national policy and politics since 1961, serving in the White House and State Department and as policy director of several Democratic presidential campaigns. He is author of Heroes, Hacks and Fools and numerous essays in national publications. You can reach him in care of editor@crosscut.com.