What is going on in Washington? The panic-induced response to Scott Brown's special election victory has pushed President Obama and Congressional Democrats into an obviously incoherent health care strategy:
President Obama signaled on Wednesday that he might be willing to scale back his proposed health care overhaul to a version that could attract bipartisan support, as the White House and Congressional Democrats grappled with a political landscape transformed by the Republican victory in the Massachusetts Senate race.
“I would advise that we try to move quickly to coalesce around those elements of the package that people agree on,” Mr. Obama said in an interview on ABC News, notably leaving near-universal insurance coverage off his list of core goals...
On Capitol Hill, Democratic leaders said they were weighing several options. But some lawmakers in both parties began calling for a scaled-back bill that could be adopted quickly with bipartisan support, and Mr. Obama seemed to suggest that if he could not pass an ambitious health care bill, he would be willing to settle for what he could get. In the interview with ABC, he cited two specific goals: cracking down on insurance industry practices that hurt consumers and reining in health costs.
“We know that we need insurance reform, that the health insurance companies are taking advantage of people,” Mr. Obama said. “We know that we have to have some form of cost containment because if we don’t, then our budgets are going to blow up, and we know that small businesses are going to need help so that they can provide health insurance to their families. Those are the core, some of the core elements to this bill.”
Republican Congressional aides said a compromise bill could include new insurance industry regulations, including a ban on denying coverage based on pre-existing medical conditions, as well as aid for small businesses for health costs and possible steps to restrict malpractice lawsuits. But as Mr. Obama noted on ABC, a pared-down package imposing restrictions on insurers might make coverage unaffordable, which is one reason he prefers a broad overhaul...
The idea of "a scaled-back bill that could be adopted quickly with bipartisan support" makes no sense:
1. Why would liberals in the House support a stripped-down bill? They already oppose the Senate bill as too conservative. If they're willing to accept more moderate legislation, the House could just pass the Senate bill and the process would be over.
2. Why would Mitch McConnell or the GOP caucus support a stripped-down bill? Republicans wouldn't cut a deal when the Democrats were in a position of strength -- there's no reason to think they would abandon their scorched-earth strategy right when it seems to be inflicting damage on the Democrats. As the New York Times notes, when McConnell was asked if the health care bill was dead, he said, “I sure hope so."
3. Does anyone think Congress has the patience to go through the legislative process again with a new bill?
4. What is the magical proposal that will attract bipartisan support? As Jonathan Chait correctly notes, any compromise that includes a ban on denying coverage based on pre-existing conditions but lacks a mandate and subsidies won't work:
Cantor does say he wants to ban discrimination against people with preexisting conditions, but for reasons I've explained over and over again, you can't do that without an individual mandate, and you can't do that without subsidies for those who can't afford the mandate. So the preexisting condition stuff is just a way of posturing for a popular goal without admitting you oppose the necessary steps to accomplish it.
The Democrats have very few options besides (a) passing a bill on a party-line vote or (b) abandoning health care reform. The panic has made the party desperate to believe that a bipartisan compromise is possible, but I don't see how it can work.
Update 1/21 12:20 PM: Chait makes a similar point:
[T]he chances of [a scaled-back proposal offered by Ezra Klein], or something remotely like it, passing into law are approximately zero. The Democrats' biggest worry right now, I have been reliably informed (Yes -- reporting! I try not to make a habit of it), is that they think health care has just taken too much time. The want to pivot to an economic message. Writing a new, even smaller health care bill takes a lot of time. There are delicate compromises with interest groups who have the power to destroy legislation if they feel threatened. There are negotiations in two chambers. The senate is feeling incredibly skittish right now and probably unwilling to vote for anything stronger than a resolution saying that if anybody dies because they couldn't afford medical treatment it would be a darn shame. (And that resolution would come after months of begging Olympia Snowe to cast the filibuster-breaking vote.)
There are only two options on health care: Something that involves passing the Senate bill through the House, and nothing. There's no fantasy moderate bipartisan alternative. Once Congress gets that through its head, I think -- I don't know but I think -- they'll make the obvious choice.
In light of what Brendan and Chait have written, what are we to make of President Obama's statement? Was it a head fake, intended to mislead the public and Congressional Republicans and give House Democrats some respite from public criticism while they go about lining up the votes to pass the Senate bill? Or does it reflect a lack of understanding by the President of the most fundamental principles of health insurance reform, principles that are obvious to Chait and Nyhan? Or, a possible third alternative, is the President simply mouthing the equivalent of platitudes about hope and change, devoid of substance?
Posted by: Rob | January 21, 2010 at 01:04 PM
As an insurance professional, I am staggered by the ignorance of those creating the so-called "reform." No doubt Sarah Palin and George Bush are also ignorant of health insurance, but they're not proposing to tell us how we can and cannot do it.
For example, cost containment is the opposite of a ban on denying coverage based on pre-existing medical conditions. If people can wait until they're sick to start buying insurance, the price will obviously have to go up. And, providing some sort of government premium supplement to selected recipients doesn't reduce the cost; it just shifts the cost.
Although I don't work in the specific area of health insurance, I feel insulted by President Obama's bigoted comment, "We know...that the health insurance companies are taking advantage of people..." Actually, insurance companies, like other businesses, are trying their best to provide a service to their customers. By and large, health insurance companies are doing so in reasonable fashion. Many of the leading health insurance providers are non-profit organizations. Rule changes enacted by ignoramuses like President Obama are likely to make health insurance worse, rather than better.
Posted by: David | January 21, 2010 at 04:50 PM
As to the inseparabilty of mandates, subsidies, and a ban on pre-existing conditions - I grasp the logic, but Obama himself steadfastly refused to include mandates in his plan during the campaign and bashed Hillary for doing so.
Maybe it is all too obvious but a reminder that Obama has flip-flopped back to his original fantasy might be appropriate here.
And my proposal that would free people from job-lock - legislate that anyone currently holding insurance from Company A cannot be denied comparable insurance from Company B based on pre-existing conditions if the insurance change is due to a change in job status of the insured or a spouse.
That does nothing for the currently uninsured who are holding off on buying insurance until they get sick but solves the problem for a lot of other people.
Posted by: Tom Maguire | January 21, 2010 at 05:28 PM
I don't know whether Tom Maguire's proposal would do more good than harm, but I have a couple of general comments.
Insurance companies like to write insurance. When people are being denied coverage, chances are the reason is that misguided laws are preventing companies from insuring them. In Mr. Maguire’s example, some of the misguided laws creating the problem may be:
1. Employer-paid health care receives special tax benefits, encouraging that approach. If the tax treatments were equalized, we might move to a system where workers bought their own health coverage. Then the portability problem would disappear. IMHO this is somewhat analogous to the problem years ago of company housing preventing workers from leaving a particular company’s employment.
2. Laws restricting interstate sale of health insurance
3. Laws restricting how companies can charge. In particular, when laws force companies to charge some people less for insurance than the comapany can expect to pay in claims, the company won’t wish to insure those people.
It's better to solve a problem by by eliminating or fixing wrong-headed laws, rather than by adding new laws that may create unanticipated new problems.
My second point is that insurance is quite complex. Even insurance professionals often get the design of insurance programs wrong.
One thinks about the football play President Nixon supposedly foisted on the Washington Redskins in 1971. http://espn.go.com/page2/wash/s/allen/020308.html
It failed spectacularly. Yet, Nixon knew much more about football than most of us do about health insurance. He was on the team in school and no doubt spent years of Sundays watching pro games on TV. Most of us wouldn't have the arrogance to tell a top football coach how he must run his offense; I think we should be equally modest about telling health insurance companies how they must operate.
Posted by: David | January 22, 2010 at 07:41 AM