The Obstacles to Real Health-Care Reform
American presidents have tried seven times to bring us into the community of nations that provide health care to all citizens. Seven times the effort failed. More accurately, it was blocked. In the 1940s, the anti-reform movement was led by doctors, through the American Medical Association. In the 1990s, it was led by the insurance and small-business lobbies.
This time everything has been different. The town hall meetings and right-wing distortions of this summer drew attention away from a far more significant fact: Most of the traditional enemies of reform have been quiet, absent, or divided. Many -- including the conservative American Medical Association -- are almost supportive of reform. Large and small businesses understand that reducing their health-care costs and making them predictable will be good for their bottom line, and the chief lobbyist for the U.S. Chamber of Commerce, Bruce Josten, has said, "The reality with the business community is that we want reform." Even the National Federation of Independent Business, which took the lead in opposing reform in the Clinton years, now participates in some pro-reform coalitions. And while insurance companies have much to lose from legislation that includes a public option and tight regulations, many large insurers know that they can survive and thrive when every American purchases insurance.
Still, new obstacles emerged to take their place. Some, like the traditional opponents, fought the legislative battle, using public fear and political manipulation to try to stop the bill from passing or to influence it so it fails to achieve the goal of universal coverage. Other obstacles will not fully emerge until a health-reform bill becomes law. The bill that is coming together as of this writing is a product of delicate and complex maneuvering around not only the outright opponents of reform but also around the fallout from choices made earlier in the game by supporters of reform. The course taken around those obstacles will define the legislation and its ultimate direction. Will it lead to universal coverage? Will it reduce costs and bring insurance companies under control? Or will it do too little and create the wrong incentives? Worst of all, will it lead to a public backlash, like the one that led to the abrupt repeal of catastrophic care for seniors in 1989?
Those questions won't be answered on the day that President Barack Obama signs a bill. His signing ceremony will be just one momentous step along the road to universal coverage. The forces that seek to undercut the promise of reform will still have plenty of room to maneuver. And the choices made by reformers will still define the path of what's possible, for better or worse.
Before the 1994 health-care battle, William Kristol wrote a legendary memo advising Republicans to block everything that had to do with reform -- but not everyone stayed on message. Moderate Republicans participated in the process because they did not want to be seen as obstructing a popular reform, and a bipartisan group of senators came surprisingly close to agreeing on a bill.
In the current episode, however, Republican legislators have been almost unanimous in taking Kristol's advice. Claims from critics like the long-discredited Betsy McCaughey that the legislation would create "death panels" moved smoothly into the GOP bloodstream and became arguments not just to delete the elusive offending provision but to kill the entire bill. Even the small-business and insurance lobbyists have been more cooperative than the party they bankroll. The result of opting out of the legislative process is that Republicans have sacrificed the opportunity to craft the bill, and if they fail to block it, they have one option: Incite a backlash.
And that is not a far-fetched option. One of the great advantages of broadly bipartisan legislation is that, with both parties invested in it, neither can exploit a backlash. But if there is even a single moment of hesitation about the costs, slow implementation, or some unintended consequence, the GOP will aggressively remind voters of the "Democrat bill." While the conventional wisdom -- assumed by the Kristol strategy -- is that health reform will be a lasting political victory for Democrats, there is still potential for trouble after the initial glow wears off.
While Republicans bowed out of the health-reform game, the fear they stoked infected key Democrats, most notably Senate Finance Committee Chair Max Baucus of Montana. Baucus and his colleagues like Bill Nelson of Florida or Blanche Lincoln of Arkansas have never needed an excuse to avoid all political risk (even though they won their last elections with an average of 63 percent of the vote), but the Republican fear campaign about Medicare cuts, "death panels," and government takeover sent Baucus and his ilk fluttering to safety, opposing strong versions of the public option and weakening the bill in other ways. Some of these Democrats are conservative "Blue Dogs," but more often they seem driven less by ideology than by a conditioned response to the Reagan-Gingrich years and have resumed old patterns of learned helplessness.
Even that may be giving them too much credit. While the Republicans are actually doing few favors for their lobbyist allies, the Democrats causing the most difficulty often seem to be the most deeply embedded in the culture of influence. A recent study by the Sunlight Foundation, for example, found five former Baucus staffers lobbying for 27 different companies with interests in the bill.
The recession and the urgent need for fiscal stimulus created a brief moment when we genuinely didn't have to worry about the federal budget deficit. The Obama administration embraced the view, promulgated by Peter Orszag when he was head of the Congressional Budget Office, that the fiscal problem is a health-care problem and that over-hauling the entire system is the only way to bring the costs of Medicare and Medicaid (the entitlement programs driving the long-term deficit) under control.
By late summer, both ideas seemed to be fading away. The economic stimulus and other costs had set us on a path toward annual deficits in the trillion-dollar range that even most liberals recognize as unsustainable, and Orszag's successor at the CBO, Doug Elmendorf, in his critical role of "scoring" the legislative proposals, was much more hesitant to embrace the idea that health reform creates savings. Meanwhile, the well-funded fiscal-responsibility lobby has been insistent that health reform not add to the deficit. There are savings possible in Medicare without reducing services, but the mere mention of changing Medicare created an opening for Republicans to stoke fear among the elderly.
As a result, the political obligation to satisfy deficit hawks like Sen. Kent Conrad, together with the diffident Democrats' fear of even painless Medicare cuts, forced the legislation through the eye of a very small needle.
As George W. Bush loved to say, "I'm not going to negotiate with myself." Long before the health-reform debate began, progressives began to make a series of negotiations with ourselves and with interest groups. The deals were probably necessary, and some were brilliant, but each came at a cost.
The first and savviest deal, embraced by all the major Democratic presidential candidates in 2008 and the main pro-reform coalition, Health Care for America Now, was to push not for single-payer health care but for a "public option" in a system of regulated private insurance. Candidate John Edwards promised that a well-designed public option might eventually become the main source of health insurance for Americans, a de facto single-payer system. That hope drew most of the single-payer constituency to the public option, even though the vision of a public plan that covers most Americans has long been abandoned.
What if single-payer advocates had stuck to their guns and then fallen back on the public option as a compromise? That's a question progressives have been asking themselves all year. The answer is probably that the single-payer advocates would have been marginalized and left without much leverage, as was the case in 1993. This deal may have been necessary for reform, but it nonetheless limits the possibilities.
Other deals cut by the White House helped placate the pharmaceutical companies, hospitals, and doctors. Each compromise with lobbyists limited Congress' freedom to craft a bill that might be more appealing to voters or expand coverage at a lower cost. The deals did successfully keep the old enemies of reform at bay. But as health reform moves toward implementation, the cost of making these deals will be undeniable.
Although a child born during the last health-reform fight would now be preparing for her SATs, the lessons of 1993 and 1994 loom over the current debate. Don't write the bill in the White House. Don't be too complicated. And above all, don't mess with what people already have. Not surprisingly, it was Hillary Clinton, as a candidate in 2007, who set the tone -- if you like the plan you have, you'll get to keep it. Obama and the other candidates followed suit, and that promise -- nothing will change, and you have nothing to fear if you are already insured -- has become the one pillar of reform.
Like the deals, that assurance was probably necessary. Health-policy wonks often forget how closely fear is associated with health care and insurance. And as behavioral economics shows, people's fear of losing what they have, even if it's inadequate, outweighs the value they place on getting something better. But the promise that nothing will change creates a perception that reform benefits only the uninsured -- it's a program for "them," not "us." Members of the insured majority, then, bear the cost but see no benefit. The assurance that nothing will change excluded some of the most promising approaches to reform, notably those that would end employer-based health insurance completely.
It's also a false promise. Any major change in health-insurance markets is likely to ripple through the entire system. And insurance changes in dramatic ways of its own accord -- within a few years after the failure of the Clinton plan, the HMO revolution had achieved much of the cost reduction proposed in that plan. If voters take the promise that "nothing will change" too seriously, there is further risk of a backlash, because things will change.
A Caveat: Some things are just difficult! While some of the obstacles to reform can be given names and faces, probably the biggest barrier to a better health-care system is a bit more mundane: Reform is just inherently difficult. Implementation will take years and during that time, may be derailed by economic or political shifts. The quest to provide every American with decent health care will continue for years, if not decades, even if 2009 turns out to be the turning point in this long history.