Tuesday, July 7, 2009

The Big Picture: Grading Progress on the Eight Big Goals, Focus on Health Care

Now that I've aired my concerns with the drift of Obama's Presidency, it's time to get down to evaluating progress on the Eight Big Goals. Health Care reform has been the major item Obama has been pushing, so today I'm going to evaluate his progress in that field.
1. Health Care Reform: Last month we had this at the 50-yard-line, and gave Obama and A- for his handling of the issue. There has been a fair amount of progress made toward passing a bill through Congress, although it's much less clear whether the resulting bill will actually be significant reform or will be too watered-down to be meaningful. It's not just the public option that is in dispute. Yesterday our favorite analyst Ezra Klein made the insightful point that, given that we're not about to pass Medicare-for-All, which is highly unfortunate but still the reality, the mere existence of a public plan isn't nearly as significant as it's made out to be, because "This public plan is simply another insurer run by the government. It would be good for competition and transparency and experimentation. It might have some small price advantage due to lower administrative costs. It might end up a dumping ground for the sick and the ill. I could imagine a world in which this public plan does a lot of good and a world in which it barely causes a ripple. Either way, it is not the point of health-care reform. It's more a perk of health-care reform.

But it has captured the process. Its existence, or lack thereof, is how the left and right are both benchmarking their success. The only problem is that it's not necessarily a very good benchmark. The left may win a political victory by including it in the policy but find that it hasn't won a particularly large substantive victory at all. The right could give up a lot to block the public plan only to find their concessions worth more than their triumph."

He says that five elements are more important, with by far the most important being the structure of the proposed health insurance exchange where insurers would compete to provide coverage. The question is whether this exchange will be big enough to replace our current dysfunctional system, or it will be limited to a dumping ground for those who can't get insurance, it won't become a viable alternative, and we'll be left with the same system. In other words, will everyone have the right to choose their health insurance, including a public plan, or will it be limited to only 20% of the country, in such a way that it won't be sustainable? That makes all the difference. He relates this to a central theme: while Obama promises that if you like what you have, you won't have to change, the big question is, if you don't like what you have, will you have the freedom to choose an alternative, or will you be stuck in a plan you don't like because centrist Democratic Senators want to preserve employer-based health care and private insurance companies. The news on this front has not been promising, because Obama has barely discussed this critical sticking point, while a number of those centrists, and even supposedly more liberal House Dems, have said they don't want to threaten employer-based health care and wouldn't allow people the freedom to choose.

Another related element is defining the minimum benefit package. As everyone who's ever dealt with an insurance company knows, just having something called health insurance doesn't mean you're actually protected in the event of a health crisis, because so many insurance plans are chock-full of holes. Will the minimum benefits make it real protection against catastrophe, or will they be a politically motivated illusion of coverage?

The other key elements are how much we expand Medicaid, and the conditions of the subsidies to allow people to conform to the insurance mandate: will they pay enough? will they extend into the middle class? This connects with the choice question for the long-term political viability of health care reform: will it just be for the poor, meaning it will be a chronically under-funded program with a smaller, almost powerless constituency (the truest axiom in politics is "a program for the poor becomes a poor program) or will this deliver for the middle class and make health care a cherished entitlement, as it is for seniors with Medicare, that will therefore be adequately funded and have an invicincible constituency? Obama really needs to think about that.

The prognosis on all these elements isn't too positive, primarily because they aren't being prominently discussed by Obama, reform proponents in Congress, or activists. Without that pressure to bring the issues to the fore, the millions of dollars a day the health industry is spending on lobbying will surely enable them to stymie reform on any issue under the public radar.

Also, it's not clear to me that Obama has found a solid productive strategy for using his bully pulpit, his broad and deep popularity, and his activist army to actually shift the contours of legislation in his favor. There isn't a good model for this: it's very very difficult to rally a public movement when confronting such a complex problem, where the devil is in the all-important but highly technical details, and there is such an enormously rich and powerful constituency that wants to protect the status quo at all costs. But I also don't think that Obama has been nearly as tough as he could be with these centrists, because it's always him that's open to the compromise, and never them, so the debate keeps shifting toward less and less consequential reform. For example today the blogosphere was up in arms because Rahm Emanuel said he was open to compromise on the public option, and Obama, while saying he stood for the public option, did not say he had to have it. Which, for the reasons outlined above, would not be so dispiriting if we were actually getting some other major pieces of reform in exchange for a weak public option. But there's no evidence of that as far as I can tell. I haven't seen the centrists give in on anything.

At the same time, the debate has become all about costs and deficits, and there has not been effective pushback that the cost of reform is miniscule in the perspective of how much we spend on health care, that where were these fiscal concerns when we were cutting taxes for the top 1% or invading Iraq or giving subsidies to prescription drugs, or the biggest point: spending a lower amount on reform now just means that the costs of the status quo will be higher because reform will be less sweeping and less effective. The liberals in the Senate keep paring back reform, cutting out many of the key elements that will make it popular and effective, all to lower the "sticker shock" and keep it below some arbitrary number. Obama and other advocates haven't effectively combated this conventional wisdom.

And we haven't even addressed the issue of how this will be financed. As we've said, it will probably be a big mistake if Obama allows employer tax benefits to be taxed, reneging on multiple campaign promises, and more importantly, committing the cardinal political sin of taking something away from people in the short term for a vague promise that it will be better overall. Give them the improvement first, and make the rich pay for it. That's the winning political strategy. But it's slipping away.

It's close, but ultimately I still think there will be some form of health care bill signed by Obama, and I think that will be success as long as it can be built upon in the future. But I'm worried the politically necessary compromise will prove too ineffective and unpopular and fiscally unsustainable - too much like the 2003 Republican prescription drug benefit which Emanuel bizarrely used as a model today - that it will not be an effective building block. Therefore, we're going to move health care reform five yards back, to our own 45. And we're going to downgrade Obama's grade to a B.

We'll be back tomorrow with our coverage of the other goals.

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