In a post for The Democratic Strategist, Ed Kilgore offers an analysis of the intra-progressive split over health reform. It suffers from a number of flaws that derive from structural flaws of “Third Way” thinking, and is thus very useful for illustrative purposes.
Kilgore argues that the Obama White House has embraced, on health reform and carbon pricing and a number of other fronts, “the strategy of deploying regulated and subsidized private sector entities to achieve progressive policy results.” He contrasts this approach with a politically useful but analytically unsound characterization of the conservative “privatization” strategy, which he describes as follows:
To be clear, this is not the same as the conservative “privatization” strategy, which simply devolves public responsibilities to private entities without much in the way of regulation. In education policy, to cite one example, New Democrats (and the Obama administration) have championed charter public schools, which are highly regulated but privately operated schools that receive public funds in exchange for successful performance of publicly-defined tasks. Conservatives have typically called for private-school vouchers, which simply shift public funds to private schools more or less unconditionally, on the theory that they know best how to educate children.
Of course, conservative advocacy of vouchers has ranged from highly regulated schemes that bear close resemblance to charter public schools to support for tax-credits designed to forestall regulatory interference. As Kilgore understands, the evolution of the Third Way owes something to the tradition of socialist revisionism but also to center-right ideas that were borrowed and adapted to make them more palatable to public sector unions and various other critical constituencies. This has been central to the continuing debate over the charter public schools movement, with labor unions making a strong and in many cases successful effort to co-opt charters, merit pay, and a wide variety of other ideas designed to introduce greater institutional diversity.
I should note that I doubt that Kilgore’s mischaracterization is deliberate — it lies at the heart of the self-conception of Third Way progressives, who feel a need to justify their embrace of neoliberal, pro-market ideas by distancing themselves from the right. Of course, this creates structural problems, as evidenced by Tony Blair’s struggles with the Labour Party’s activist base. The Blairites managed to take control of a working class party by promising to deliver middle class votes, and they kept the coalition intact by waging a culture war on the political right. When Conservatives finally understood the new cultural terrain, this approach came undone. This, however, is a digression.
Kilgore goes on to argue that the Third Way strategy has led to tension with liberals who prefer social democratic strategies, in which public institutions take the lead in social provision.
In the health care reform debate, the Obama administration pursued legislation that utilized regulated and subsidized private for-profit health insurers to achieve universal health coverage. This approach was inherently flawed to “single-payer” advocates on the left, who strongly believe that private for-profit health insurers are the main problem in the U.S. health care system. The difference was for a long time papered over by the cleverly devised “public option,” which was acceptable to many New Democrat types as a way of ensuring robust competition among private insurers, and which became crucial to single-payer advocates who viewed it as a way to gradually introduce a superior, publicly-operated form of health insurance to those not covered by existing public programs like Medicare and Medicaid. (That’s why the effort to substitute a Medicare buy-in for the public option, which Joe Lieberman killed this week, received such a strong positive response from many progressives whose ultimate goal is an expansion of Medicare-style coverage to all Americans).
Now that the public option compromise is apparently no longer on the table, and there’s no Medicare buy-in to offer single-payer advocates an alternative path to the kind of system they favor, it’s hardly surprising that some progressives have gone into open opposition.
This is an astute reading of the situation, which acknowledges the crucial role of the public option. One of the ironies of the debate over the public option is that many advocates insisted that it wasn’t terribly important and that conservatives were wrong to see a strong public option as a roundabout route to single-payer. But of course that was the whole purpose of a strong public option — it was the most politically palatable route to a health system dominated by a single public insurer for Americans under-65.
But then Kilgore offers the following:
To put it more bluntly, on a widening range of issues, Obama’s critics to the right say he’s engineering a government takeover of the private sector, while his critics to the left accuse him of promoting a corporate takeover of the public sector. They can’t both be right, of course, and these critics would take the country in completely different directions if given a chance. But the tactical convergence is there if they choose to pursue it.
Actually, it is entirely possible for both sets of critics to be correct. The concern from the right isn’t that the Obama approach will literally nationalize for-profit health insurers. Rather, it is that for-profit health insurers will continue evolving into heavily subsidized firms that function as public utilities, and that seek advantage by gaming the political process. Profits, including profits governed by medical loss ratios, can and will then be cycled into political action, which leads to the anxiety concerning a “corporate takeover of the public sector.” Again, progressives don’t literally believe that such a takeover is happening. Instead, they believe, rightly, that subsidies without effective cost containment represent a massive windfall for the private insurance sector, including non-profit insurers that generate salaries for large numbers of politically active middle and upper middle class professionals..
So yes, Obama does not intend to nationalize the private insurance industry and then turn around and auction off the new nationalized health agency to Rupert Murdoch or Monsanto. But the anxieties of critics on the left and right are, to italicize for a moment, perfectly compatible.