Magazine | July 20, 2009, Issue

Obama’s Health-Care Gamble

The stakes for the president are high

All of a sudden, Obamacare doesn’t look quite as inevitable as Washington thought it was in the spring. The early cost estimates are frightening some Democrats, as are the ideas being thrown about for how to pay for the cost. The health-care industry isn’t staying united behind the Democrats. The party’s schedule for producing legislation is starting to slip, and Republicans are starting to get their act together.

A June CBS/New York Times poll, criticized by Republicans for including too many Democrats, nonetheless found that only 44 percent of the public approves of the job that President Obama is doing on health care. President Clinton had slightly better numbers in January 1994.

Today’s Democratic majority is more committed to enacting major health-care legislation than the one Clinton had back then. But the Democrats are encountering several obstacles, some of them of their own creation.

Perhaps the biggest problem is that the public is not solidly on their side. Many Democrats are still in denial about public opinion. Liberal health-policy guru Jacob Hacker recently urged Democrats not to make too many compromises since “there’s little question about the popularity of bold action on health care.”

At that level of abstraction, Hacker is right. But the public is not deeply committed to any specific set of actions. Gallup recently tested twelve different, and clashing, health-care proposals from across the political spectrum. It found majority support for all twelve. The Kaiser Foundation’s polling in June found a similar pattern. Respondents like the sound of almost any proposal. Expose them to obvious counterarguments, though, and support evaporates. More than two-thirds of the public favors “requiring employers to offer health insurance to their workers or pay money into a government fund that will pay to cover those without insurance.” But if that requirement caused layoffs, 64 percent of the public would oppose it.

The overall impression the polls create is that the public dislikes the cost and insecurity of health insurance. But most people are reasonably satisfied with their coverage, and do not want any “reform” that might cause them to lose it or pay more for it. Right now most people think that they will come out ahead or even from reform. But it should not be hard to persuade a lot of people that reform will cost them. Stanley Greenberg, a pollster who worked for Clinton during the 1993-94 debacle, recently asked the same questions he asked then and found, to his dismay, that in general “the desire for change and support for reform was slightly stronger 16 years ago.”

The passage of time is a second problem. Roy Blunt, the congressman charged with coordinating House Republicans on health care, says, “I think if Tom Daschle had become secretary of health and human services in January, then [the Democrats’] overconfidence may have been justified. But the longer this issue stays out there, the more Americans see the real pitfalls and the likely long-term bad consequences of the president’s approach.”

The administration felt compelled to enact a large stimulus bill early this year, but that too has made its task on health care harder. The stimulus increased public concerns about federal spending and the deficit. And this has left Obama with unattractive options.

The public concern about the deficit, combined with his own desire to portray liberal health-care reform as a boon to the economy, has led him to claim repeatedly that his policies will reduce health-care costs and even protect the federal government from bankruptcy. The potential for savings has been Obama’s central message on health care. So there is added sticker shock when the Congressional Budget Office reports that Democratic health-care legislation will add at least a trillion dollars to the deficit over the next ten years. Those estimates not only raise the price tag of Obama’s reforms, but call into question his rationale for them.

To pay for reform, some congressional Democrats have suggested limiting the existing tax break for employer-provided health benefits. The White House has signaled its openness to the change, but it is in a delicate position. As my colleague Jim Geraghty has pointed out, Obama’s campaign spent $44 million last year savaging John McCain for seeking to end that tax break (and replace it with another, which the campaign ads did not emphasize). The political danger goes beyond the flip-flop. Limiting that tax break enough to raise serious money would amount to the largest tax increase in 16 years — and the largest middle-class tax increase since even before then. That middle-class taxes would not rise was another of Obama’s campaign promises.

The administration also says that it can pay for reform by cutting $600 billion out of Medicare and Medicaid, something it claims can be done without making patients worse off. If that is true, it suggests that we might want to be careful about spending new money on government health-care programs. We also may want to wait until the savings materialize before we start spending them.

The cost of Democratic plans is one of their biggest vulnerabilities. The other is the possibility that people will lose their existing coverage. Here, too, Obama has compounded the political risk by saying again and again that everyone who likes the health care he has will be able to keep it. The truth is that no comprehensive reform plan, including a free-market one, can live up to that guarantee. The Democratic plans certainly don’t. The Congressional Budget Office estimates that under one of the leading Senate Democratic plans, 10 million people would find themselves losing their employer-provided coverage and enrolling in a new government-run insurance program. (Another 10 million would choose to make the switch.)

In recent days, President Obama has been wavering on this point. First, on June 19, an AP story reported that an anonymous White House aide said that the president’s promise that people who like their coverage could keep it shouldn’t be taken literally. Then Obama himself, in a June 23 press conference, said that what he meant was merely that “the government is not going to make you change plans under health reform.” The next day, in his ABC special on health care, he reverted to the old line. You can see the difficulty Obama is in: He has to say both that the system is a complete mess and that people can keep everything the way it is if they so desire; remembering his lines must be tricky.

Whether reform should include a new government-run insurance program is probably the hottest topic in the Beltway debate about health care. The American Medical Association is against it, as are private insurers and the pharmaceutical industry. Republicans are united in opposition, and moderate Democrats are wary. The Left is ecstatic about the idea, though, and Obama has come out in its favor.

The president has employed a clever bit of sophistry in its defense. If a government-run plan would do a poor job, he says, then nobody will choose it. If it is as expensive as the critics say, the argument continues, private insurers have no need to fear being undercut by it. The argument proves too much: It is an argument for government to set up a new company in every industry. It is also fallacious: Government programs have ways of passing their costs to their competitors. Medicare and Medicaid, for example, use their bargaining power with providers to keep their prices down, but private insurance costs more as a result.

And there is little doubt that the Left wants to use the government plan — what it calls the “public option” — to take the country toward a government health-insurance monopoly. The House Democrats’ health-care plan allows the public option to tell doctors who participate in it that they cannot participate in private plans. Obama, in the ABC broadcast, suggested that doctors and hospitals be given incentives not to provide allegedly unnecessary care. Doubtless the public option would increase the government’s ability to create the incentives it deems proper.

Whenever he starts to have trouble in a debate, Obama reaches for straw men. During the fight over the stimulus bill, he claimed that his Republican critics did not want to do anything to combat the recession. As June ended, he was returning to the theme: Now Republicans are supposedly delighted with the current health-care system and want to make no changes. Meanwhile the president and his aides are scrambling to make a deal, any deal, that keeps the interest groups and nervous congressmen on board.

President Obama has not staked his presidency on health care as overtly as Clinton did in 1993. But no piece of legislation is more important to his claim to have inaugurated a new political era in which Clintonian compromise with conservatism is no longer necessary. If the Democrats cannot enact a liberal bill, Obama will have proven unable to deliver the change liberals have been waiting for. His presidency will, on its own terms, have failed. That does not mean that Obama cannot go on to have a successful presidency — but if he does it will be different, and less liberal, than the one he hopes to have.

At some level Democrats understand the stakes. Right now that’s the biggest thing Obama has going for him.

 

Ramesh Ponnuru is a senior editor for National Review, a columnist for Bloomberg Opinion, a visiting fellow at the American Enterprise Institute, and a senior fellow at the National Review Institute.

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