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Health Reform: A Political Mistake?

15 Jan 2010
Posted by Bruce Bartlett

Premier political analyst Charlie Cook argues today that Obama made a serious error in plunging into health reform until the economy had fully recovered. He says that Obama should have focused like a laser beam on the economy pretty much to the exclusion of all else. If unemployment is still high in November, as it probably will be, Democrats will be very vulnerable to the charge that they took their eye off the ball to pursue a longheld ideological goal that may have been worthwhile but was not by any means time-sensitive. Given that expanding health coverage is an issue that has been kicking around for decades, would it really have mattered substantively if Obama had waited until 2011 or even 2013 to push it?

Of course, the obvious political response is that health reform had to be done when Democrats had historically large majorities in the House and Senate or it would have been impossible to overcome Republican opposition. Given the almost certainty that Democrats will lose net seats in both the House and Senate this fall, that argument looks unassailable. But if Democrats hadn't spent so much time on health reform, which has weak public support according to a number of polls, perhaps their political prospects this fall would be better.

I suppose that right-wingers will argue that any electoral setback Democrats suffer this year will be just one step backwards on the road to socialism, while the expansion of government resulting from health reform will mean two steps forward. More likely, Republicans will discover that Obama's reforms are actually pretty modest and don't change the health care system nearly as much as they thought would be the case. Given that they have lately positioned themselves as the die-hard defenders of Medicare, which Republicans also said would lead to socialism, they may eventually conclude that health reform was really their idea all along.

Addendum:

The sharp-as-a-tack Dave Weigel notes that Democrats have only had 60 votes in the Senate for four months.

Political Cover

I think the Democrats made a mistake in not including some sort of jobs program for low and lower middle class workers in the stimulus package. Doing so, in my opinion, would have created the sort of political cover necessary to pass a more significant health care reform package. Demonstrating an understanding of the public’s fears and uneasiness about the economy might have limited the appeal of the Tea Party movement, or at least made it smaller and isolated. Of course, had Nancy Pelosi and Harry Reid not spent valuable political capital helping former president Bush pass the TARP monstrosity, the Democrats might have also improved their standing the with public. And no, I do not count myself as one of the nihilistic simpletons who think we should have let the economy collapse.

I have trouble understanding the low poll numbers for healthcare reform, as I honestly don’t know a single person that is happy with the current system. It seems everyone I know has a family member that has either been denied care because of a pre-existing condition, or had to go through multiple layers of insurance company bureaucracy to get some form of surgery or treatment paid for. Then there are the always pleasant negotiations with the insurance companies regarding what amount they are willing to pay for any particular service.

Had the Republicans actually presented an alternative plan that seemed workable, then I suppose I could understand the opposition to the current package. But as far as I can tell, the Republicans have offered nothing they haven’t been offering for the last twenty years. And while I think a couple of their ideas—namely interstate competition among the insurance companies—are nonsensical. I do think if the saner members of the party had let the Democrats have a limited public option, they could have gotten health savings accounts and some form of limited tort reform included in the package.


Isn't a big part of the

Isn't a big part of the problem that businesses are drowning in health care costs and that if we bend the curve on these costs businesses will have more money to hire people.

Same with energy. If we encourage more efficient energy use and new forms of cheap renewable energy, businesses save money on the bottom line, allowing them to hire more people.

I don't understand how it's not connected.


One of the myths of the debate

Isn't a big part of the problem that businesses are drowning in health care costs and that if we bend the curve on these costs businesses will have more money to hire people.

No. This is one of the great urban legends of the debate.

A business can pay its employees compensation up to their value to it, say $X. In a competitive market it will pay that $X, because if it pays less competitors will bid away its employees by paying them that $X.

But as to what form that compensation takes the employer doesn't care, as long as the cost doesn't exceed $X. Cash salary, health benefits, pensions, child care, car service, hams at Christmas, whatever -- it's all the same to the employer as long as the total doesn't exceed $X.

Now say that health care is 20% of that $X. Then say the government picks up the full cost of health care, all of it (the extreme case) so the business from then on pays none.

The myth imagines that the business's compensation costs then drop by 20% of X, so it profits increase by that much, so it can invest that much more or spend it on new employees.

But that also imagines the unions (and all other employees, but with the deal the unions just rammed through for themselves they are the clear example) somehow go soft in the head, and don't say: "We are worth $X to you, that's what we generate for your business -- but you now plan to cut our compensation to $0.8X and pocket the difference or give it to someone else?? Fat chance!"

They'll say "We'll keep that full $X, and the 20% of it we used to take in health care we'll now take in cash and bigger retirement benefits, and a bigger Christmas ham." And they will get it, because that is what they are worth to the business.

Since the compensation cost to the business is unchanged, so are its profits, investment and employment.

Same with energy. If we encourage more efficient energy use and new forms of cheap renewable energy, businesses save money on the bottom line, allowing them to hire more people.

That is a different issue entirely: increasing productivity. When a business increases productivity it "gets more from less", so profits go up and it can afford to increase $X.

The government picking up the health care costs of its workers doesn't increase their productivity at all, so what they produce for the business remains unchanged, and thus so does their value to it, $X.


In Response to Political Cover

Two (main) reasons why people oppose the proposed health care reform bill:

1. Prefer the devil you know over the devil you don't. Sure, the current system is horrible, but (whether true or not) people fear the proposed system will be worse. Note this would be true under any circumstance I believe no matter how "perfect" a proposed health care reform bill is.

2. People oppose government in their lives unless they get something from it. The proposed bill helps the uninsured, the underinsured, lower class/poor. Most people don't fall within those categories so they don't support it. Of course, they may someday should they lose their job or lose their coverage, but the "I got mine, too bad for you" mentality prevails among many.


Let me offer a quick argument

Let me offer a quick argument as to why people might oppose HCR ranging from real to imagined.

On the real side, it is highly likely IMO that current versions of HCR will result in higher premiums than a world without the version. This is consistent with the analyses of the Medicare trustees and, as an opinion, will likely get worse once Congress is now officially on the hook for rationing.

Also on the real side, in a world with debt that will probably exceed $10 trillion over the next decade, offsetting revenue increases with more spending makes the deficit position worse.

On the less real side, people tend to fear what they do not understand and there is very little about the current bill pending that is understandable. Sure there are parts that are appealing (preexisting conditions, etc) but there's a lot more in the bills than those appealing provisions. Maybe there needs to be as Krugman and others have argued, but that doesn't address the fear of the unknown.


Political mistakes

The biggest political mistake is that they are doing too little, too late. Not just with healthcare (which should have included a public option), but also financial regulatory reform. I'm waiting for them to reinstate uptick, ban naked shorting, and regulate hedge funds, derivatives, CDS, etc.

Americans have had enough. They are now taking direct action (such as "Move Your Money"):

http://www.huffingtonpost.com/2010/01/14/faith-group-to-lead-exodu_n_423...


Fear of the unknown is costly

Not having a universal healthcare system is very expensive.

I just met a woman today who told me the story of her daughter (30-some with three kids). Daughter was at risk of stroke, and had many mini-strokes. She went off her blood-thinning drugs (Coumedin) because she couldn't afford them. The next thing that happened was a massive stroke, which has left her disabled for life. So . . . she's on SS disability and lives with her parents, who must care for her and the kids (who will also be on government assistance for many years).

Seems like a basic universal healthcare plan that covers drugs might have prevented this tragedy . . . something like Medicare for all.

I hear stories like this constantly. Why are we being pennywise and pound foolish in this country?

Why is doing something for the greater good considered a "political mistake"? What happened to serving people and preventing suffering in this country?

If this is what we've been reduced to ("what's in it for me?") as a civilization, then count me out.


Follow Up

I had the I've got mine so to heck with you argument with my mother-in-law over Christmas. She was of the opinion that healthcare reform is some sort a give away to, "people who are too darn lazy to go out and work for a living." As I politely pointed out to her, she works for a company that does not offer health insurance, and in the event her husband passed away or lost his job she would be among the millions of working uninsured. She then proceeded to tell me this was not the case because she would be covered under her husband's plan if he died. Her husband then proceeded to tell her she was livng in a fantasy world, and if he died she would only have insurance for a year under COBRA, and that it would cost her approxiamately $1600 a month to keep the same level of coverage she now has. Needless to say she was speechless.

I also think most people fail to realize the reform package would end the insanity of being denied coverage because of preexisting conditions every time someone changes jobs or their employer changes insurance providers.

While I do not wish to sound like an elitist--whatever that is--I am realizing that much of the opposition to the reform package is the result of the fact that a significant part of the public has no idea what is in the plan or what it is going to do for them. Ultimately, I suppose it is the Democrat's fault for not better communicating the details of the plan, but then again, the fact that practically every Republican is running around the country telling grandma that the government is going to cut her medicare and then euthanize her like a cat doesn't exactly lead to a productive discussion.


Republicans

Denial of coverage because of a pre-existing condition is a very serious problem that conservatives tend to either ignore or misunderstand. For example, Peggy Noonan recently wrote that Congress should just legislate that and not do the rest. What she is apparently either too stupid or ignorant to understand is that without the mandate NO ONE WOULD EVER BUY HEALTH INSURANCE UNTIL THEY WERE SICK. This is obviously economically untenable, therefore mandated coverage requires that everyone has to buy health insurance or the system will collapse. But if you force people to buy health insurance you have to have subsidies for those that can't afford it. And subsidies have to be paid for with taxes. That logically leads to a system almost exactly like what Obama has proposed. If you accept the premise you have to accept the conclusion.


HCR/Jobs

How was Obama going to concentrate on creating jobs? He couldn't get more stimulus passed, gov spending is a huge issue, and incessant talk would simply leaqve him open to partisan pot shots. The mistake is letting the Congress suck up the oxygen with abortion, public option, etc. and not hammering contantly on why we need HCR. Nobody can look down the road and see any light at the end of the tunnel economically without meaningful reform of the health care system. However, we are in the process of handing the decision to the Demint's, Snowe's and Nelson's of the world. Lord help us.


Then maybe the Dems shoulda paid attention...

What she is apparently either too stupid or ignorant to understand is that without the mandate NO ONE WOULD EVER BUY HEALTH INSURANCE UNTIL THEY WERE SICK. This is obviously economically untenable...
~~~
Why such vitriol for Peggy?

This is exactly the situation with the Massachusetts Plan that is experiencing costs exploding so rapidly it is being driven to capitation -- a form of rationing with many perverse incentives, unpopular when tried and abandoned in the past, and radically different than the plan's original promised design -- in spite of the fact that it has mandated individual coverage.

Why? Because the politicians set the penalty for not having individual insurance so low that it is far cheaper for people to drop/not get insurance and just pay the penalty until they get sick -- they can always get insurance then! So they are doing it.

And also because imposing a mandate requiring people to get insurance in the real world doesn't make people get insurance. Auto insurance is mandatory, and the uninsured rate is double-digit nation-wide, 18% in California, which drops tough penalties on the uninsured. Suppose California instead said, "You can always get auto insurance after you crash." What would its uninsured rate be then?

And NOW the Democrats' plan, which they've modeled on the Massachusetts plan, even while they ignore all the lessons from the Massachusetts plan, is doing the *same thing* -- the penalty it sets for not having insurance is far below the cost of insurance ... and persons who claim they can't get insurance they can afford (at less than 8% of income) are exempted from the penalty!

Moreover, Democratic politicians and their naïf journalist friends like Ezra Klein are actually promoting this as a benefit! One of the great things about reform is that you preserve your right to insurance later if you can't afford it now by paying only a modest fee (from which you may even be exempt!) . Hello???

Peggy only thought about it. The Democrats are actually doing it. Might your barbs be more constructively aimed?


Redistribution

States cannot effectively redistribute income because it's too easy for those that suffer the consequences to just move. Same goes for things like health insurance where you have an adverse selection problem--health people leave and sick people move in. That's why such things have to be done on the national level. Of course, people can still leave for other countries if they choose, but that's a lot harder than moving to another state.


Redistribution

States cannot effectively redistribute income because it's too easy for those that suffer the consequences to just move. Same goes for things like health insurance where you have an adverse selection problem--health people leave and sick people move in. That's why such things have to be done on the national level. Of course, people can still leave for other countries if they choose, but that's a lot harder than moving to another state.


The Dems' big basic mistake

Obama and the Dems have burned through a huge advantage at record rate.

Bush and the Repubs dug themselves a hole so deep the proverbial elephant could fall into it with no sign of it ever seen again, then jumped in.

Some people said (even here, IIRC) that the Repubs were so far gone they wouldn't be able to get together and rise again for a generation. But big political power swings don't come from challengers rising with new ideas (though they always flatter themsleves with that belief) but rather from incumbents failing (or getting hammered by events beyond their control).

Hoover didn't lose to FDR, he lost to the Great Depression. LBJ had majorities much bigger than Obama's -- then, *poof* he was unelectable and Nixon was in. Nixon carried 49 states then *poof* he was effectively impeached and gone and a Democratic tide came in. Which lasted until Jimmy Carter produced double-digit inflation and hostages in Iran, and the Reagan Republicans came in. Go through the list here and in Britain. In 9 times of 10 when there are big power swings, the challenger doesn't win, the incumbents lose.

And that's exactly what the Dubya Repubs did to themselves. Deservedly so.

The big problem with Obama and the Democratic committee chairs causing their historic plunge in the polls (... that people are even talking about a Republican winning Teddy Kennedy's seat!! ...) is that after the election they promptly forgot that the Republicans lost, and they've been fantasizing ever since that instead they, and their left-side agenda, won!

Now during the election this wasn't so. Remember that McCain was ahead of Obama in the polls -- in spite of all the anchors pulling him under -- well along in the campaign, until the real financial crisis hit.

Obama responded by going for and pulling away all the centrist independents with one promise after another targeting them, such as: "Negotiations will be on C-SPAN! [repeat, repeat, repeat]... The text of bills will be placed on the Internet for public review before being voted upon ... Post-partisan politics... Cutting waste in the budget line-by-line ...etc. etc.," Remember?

And it worked! The independents voted for him overwhelmingly, enough to give the Dems 60% in both House and Senate.

But the independents didn't vote "left" -- they voted moderate, anti-Repub, anti-"bridge to nowhere" pork-and-waste, pro-common sense ... for negotiations on C-SPAN, for bills posted on the Internet before enacted, for post-partisan politics ... as promised!

They *didn't* vote for spending $70 billion of taxpayer money to bail out GM and Chrysler, while screwing their secured creditors, for the benefit of the UAW ... *or* for the corporatist cap-and-trade bill that gave 100% of permit revenue to big corporations (when CBO said they should get 15% -- and Orszag said it would be "the biggest act of corporate welfare in history") ... *or* for today's exemption of the unions to the health care rules that will apply to everybody else -- because they are the unions, you know ... or for the $100 million "Louisianna Purchase" for one vote, or the Ben Nelson "Nebraska only" buyout ... or all the other massive secret backroom buyouts going on, that we will find out about only later after the bill is passed ... or for Obama's deficits that are projected to be in eight years larger than those run up by Dubya and Reagan (who had a horrible recession too) in 16 years combined, and never again be as small as the horrible awful Dubya deficits ... or...

To which the Democratic base says: So what? We won!

You can't negotiate on C-SPAN, it's scurrilously political even to mention the idea ... Bills on the Internet? Why? you wouldn't understand them anyhow ... The unions are porking out through the stimulus, bailouts, etc.? They're our team! ... Big backroom deals to reshape 16% of the economy?? Duh! That's how politics works.

Quit all your carping. We won!.

Except they didn't win. It was the independents who turned the election -- and now the independents are going away as fast as they came over before.

All polls agree. The independents are driving the shape of those poll lines. (It's sure not the Republicans, who remain as brain-dead as ever.)

The Democrats forgot who elected them -- and are doing to themselves what incumbents do.

Now it is kind of amusing to see people in the Democratic base look at poll numbers like linked to above (Obama-Health Care, approve 38%, oppose 55%) and wonder here and elsewhere, "How could anyone really oppose this? ... What's there in it to object to? ... Oh, it must just be fear of the unknown".

It brings to mind the old, "How could Nixon have carried 49 states when I don't know anyone who voted for him?"

And as to the notion that Obama's real problem behind his poll line plunge is that he hasn't gone near far enough doing what he's been doing ... well, sure, and our problem during the Viet Nam war was that we didn't drop enough bombs there.

BTW, just as the unions got out of ponying up their share towards the cost of the health care plan today, AARP said it is mobilizing to block cuts to Medicare.

If you truly belive that, as solemnly promised to us all, 40% of the cost of this health care reform will be covered by cuts to Medicare, please raise your hand!


Massachusetts against the health care reform.

Has the health care drive been a political mistake?

"The 7News/Suffolk University Poll shows Brown, with 50%, in front of Coakley with 46%. Independent Joe Kennedy gets 3% and just 1% still undecided....

"How quickly has this race turned around? In November, Coakley was beating Brown by 31 percentage points...

"Coakley is not being helped by her pledge to help pass the Democrat's national health care bill. Fifty-one percent of likely voters here say no to it while 36% say yes. Sixty-one percent think Washington can't afford it. "
~~~

So in Massachusetts voters are against the health care plan by 15 points, 51-36. That's Massachusetts.

Might've been a mistake.


Numbers Breakdown

It would be interesting to see a breakdown of the numbers showing why people are against the current bill. I have a suspicsion that roughly twenty percent of liberals are saying they are against the bill because it does not include a public option. In my opinion, this is the only way to reconcile the current bill's low approval ratings with other polls showing upwards of sixty percent of the public favoring a public option.


"It would be interesting to see a breakdown..."

Sixty-one percent think Washington can't afford it.

Just Massachusetts, but if the great liberal state of Massachusetts thinks this, what does the rest of the country think?

It continues to impress how -- in spite of visible flood of independents, centrists, running away from this bill, as documented in every poll -- liberals continue to think its problem must be that it is not liberal enough.


Correct, I don't like the health care bill

It should have a public option.

I have said I'm against the health care bill (in telephone polls) for exactly this reason.

It falls short, and that's unacceptable.

The polls aren't asking enough questions. I tried to tell them that I'm against it because it doesn't go far enough, but they didn't have a way to record that.


It's the independents...

Brown ... crushes Coakley by 41 points among self-described independents. [Politico]

Obamacare's problem (and Obama's) simply isn't the Democratic base not getting what it wants -- it is the independents who elected Obama hemorrhaging away en masse after getting the exact opposite of what they were promised.

The way that, in spite of all evidence of this, so many in the Democratic base keep believing the problem is Obama hasn't been "left" enough to please them is really ... impressive.

The biggest enemy of any party that gets all the power is always itself. Its minority base takes over, imagines that it won the election, becomes oblivious to the fact that the 40% of voters who are independent really determine the course of politics, and implodes the party.

Clinton Democrats 1992-94, Bush Republicans 2000-06, Obama Democrats 2008-... just one year until Ted Kennedy's seat is in mortal danger.

But it's for the better.

The periods of best government of the past generation have been Clinton 1995-2000 and Bush I, during which the president was of one party and the legislature of the other -- so each party blocked the other's excesses, and bipartisanship was a forced necessity to get anything done.

With a bit of luck now the Democrats can get us back to that sooner than anyone imagined.


I Don't Think It Will Be The Same This Time

I think the political climate is drastically different now than in the two prior periods you mention.

Just because everyone on the right keeps saying Obama and the Democrats have lurched to the far left doesn't make it so. As people such as Mr. Bartlett have pointed out, Obama gave the Republicans a sizeable package of tax cuts in the stimulus package and they still overwhelmingly opposed it. He then tried to include them in the healthcare debate, and what did he get for his efforts--tea partiers, death panels, and one Republican vote in the house. And this after virtually every item the so called liberals wanted in the bill was stripped out.

The Republicans have decided their way back to power is to oppose everything the Obama adminstration wants, paint him as a far left liberal, and prey the public forgets about the fact that they and president Bush are responsible for a big part of the debt.

We are not entering a period of bipartisan effective government, but rather a period of gridlocked hyperpartisanship.


"The right" doesn't matter.

Just because everyone on the right keeps saying Obama and the Democrats have lurched to the far left doesn't make it so.

The people on the right don't matter -- they have dug themselves into a hole of irrelevance.

When the people in the center say Obama and the Democrats have lurched too far to the left for them, it matters.

The Democrats lost the independents in Mass by 40 points today. Those were the same independents who elected Obama and gave the Dems their supermajorities. That matters.

If the Democrats are going to start governing with their supermajorities more effectively than they have to this moment, they have to get over their fixation on "the right" (the evil, lyin', nasty "right") and start paying more attention to holding the center -- which every poll reveals is hemorrhaging away from them.

If you are left of the center, you are left. That's definitional.

If you are so far left of center that you lose the center, you are too far left -- and you lose.

That's pretty much definitional too.


Will you back up what you profess?

By reading your comments throughout the blog, you have made it clear you have a strong distate for Obama and the Democrats.

Like you, I also believe government works best when one party holds the White House and the other controls Congress.

But I think you also have overlooked the real reason that the Democrats are in trouble both tomorrow in Massachusetts and in November: 10% unemployment and the woeful state of the economy.

Whatever you think about the health care reform bill, any sane individual knows our health care system is broken and needs reform. Independents know it too. So, I think, what they are really doing is using the health care reform bill as a vessel for their rage and anger regarding the economy.

If the economy was doing well and unemployment was 5-6%, Martha Coakley would win tomorrow even if the same HCR bill was in front of Congress.

Now, if the GOP takes over the House in November, they will be forced to govern. The problems won't go away just because they won.

However, this is a different GOP from even 1996-2000 under Clinton. I believe this GOP will be the "Party of No" (even if they control the House) until 2012 in a desire to destroy Obama.

If I am right, and you really believe split government is the best, will you put your money where your mouth is, and vote Obama in 2012 or fuel the nihilism of the GOP?

Unfortunately I believe the latter . . .


By reading your comments

By reading your comments throughout the blog, you have made it clear you have a strong distate for Obama and the Democrats.

No more so than for the Republicans of the recent generation.

Which is why I have the strong preference for split-party govt, as during Bush I and Clinton 1995-2000. Forced bipartisanship that blocks the excesses of each party. Those periods went OK -- other periods of one-party govt where the excesses got released, rather less so, IMHO.

I don't dwell much on the Repubs much these days because they've made themselves irrelevant. What's the point of criticizing the irrelevant?

They're flatlining. Kick someone who's flatlining, they won't even feel it.

Like you, I also believe government works best when one party holds the White House and the other controls Congress.

We can be friends. ;-)

But I think you also have overlooked the real reason that the Democrats are in trouble both tomorrow in Massachusetts and in November: 10% unemployment

Well here, by the miracle of Youtube, is a focus group of Mass. Democratic voters explaining why they voted as they did yesterday.

They can speak for themselves.


Obama's mistake

Irony is, Obama did not understand the concept of TRIAGE.

Fix the critical problems first. The bleeding artery is more critical than the broken leg.


Perception vs. reality

"If you are left of the center, you are left. That's definitional.
If you are so far left of center that you lose the center, you are too far left -- and you lose."

Or, if the PERCEPTION is that you are too far left of center. Republicans have been masters of manipulating perception through semantics -- "socialist", "nazi", "death panels", "re-education camps" (my Bachmann favorite).

The truth is that Obama is centrist. But just try telling that to the angry masses after the Republican/TEA party propaganda machine spins to dizzying heights.

The truth is that the truth has been the greatest casualty in this . . .

Franken said it best the other day, when he lamented the lack of real fact-based debate in the Senate.

Today's Franken quote (love this humor): "Brown won his race by about 100,000 votes. That's 100,000 more votes than I won by."




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