Health Care Reform Now at a “Which Side?” Moment for Progressives

After a year’s arduous work on health care reform, some progressives are throwing up their hands in exasperation: what did we really get for all the struggle and strife? Will it make a real difference? Should we even support it?

The answers to those questions are ‘little’, ‘no’, and ‘no’, if you ask Robert Kuttner, Norman Solomon (who calls the bill “the next phase of healthcare apartheid”), Dr. Marcia Angell (“Is the House bill better than nothing? I don’t think so”), or a number of other prominent progressive commentators. According to them, Democratic legislators have compromised too often and conceded too much. The bundle of policies we’re left with is deeply flawed – imperfect half-measures unable to deliver on any of our major goals. Why bother fighting, in the end, to secure passage of a reform that’s so weak?

Voices of progressive critics like these have been a recurring feature of U.S. healthcare debate for decades. They tend to forget – improbably enough, for people who genuinely want to transform our screwed-up health care system – that only a political victory can change that system.

Again and again, over more than seven decades of this debate, progressives have focused their energies on arguing for the best (smartest, most humane, most efficient, etc.) policy, rather than on putting together a political strategy to get a real reform bill signed into law.

Are there real weaknesses and imperfections in the reform bill the House passed? Without a doubt. And they are not trivial matters. Anyone who cares about the health of our nation’s people and economy should take a good hard look at those weaknesses, and think seriously about what we can do to overcome them. (More on this below.) But to conclude that the bill should be opposed because of those weaknesses – or, perhaps more commonly among progressives, to conclude that the reform is nothing to get too excited about, derive hope from, fight for – is downright foolish. If President Obama signs a version of this bill into law, it will be a huge moment in our nation’s history. Such a moment has eluded would-be reformers for more than 70 years. From Truman to Johnson, from Nixon to Carter to Clinton, U.S. presidents have fought hard for policies that would overhaul our health care system. Countless progressive activists and organizations have led the push for systemic reform and universal coverage. They have been joined in these efforts at times by prominent centrists and Republicans. Innumerable economists, analysts, public health officials, and medical professionals have lent forceful support. Yet other than the 1965 creation of Medicare and Medicaid, these efforts have led only to defeat after bloody defeat.

In short: what is so extraordinary about this moment is not the policy contours of the bill but the prospect of actual legislative victory on a broad reform that dramatically expands coverage.

Formidable obstacles

The peculiar development of our health care system has produced powerful interest groups hell-bent on maintaining an obviously flawed status quo. They fight hard, and often dirty, to defend their revenue streams. This creates a fundamental paradox. As formulated by Jonathan Oberlander, “rising health costs put health care reform on the agenda, but the more likely a reform proposal is to control costs, the less likely it is to be politically viable.” The interest groups have a concentrated self-interest and an established political power that, decade after decade, have easily overwhelmed the diffuse concerns of the general public and the interests of the uninsured. In addition, many people are attached to the health care they receive through employer-based insurance and fear any change to that coverage. As was seen clearly in the last attempt at health care reform (during the Clinton administration), opponents can mobilize that fear of change among the already-insured with relative ease.

And yet the House has voted for a broad reform, and the Senate stands more than a fighting chance of doing the same. Politically, the Democratic Party is on the verge of fulfilling a longstanding nightmare of intelligent leaders on the right. As Bill Kristol famously warned (when marshalling opposition to the Clintons’ attempted reform), Democrats could cement their majority if they ever deliver another vast, popular benefit on a near-universal basis, like Social Security and Medicare. If Obama’s health care reform passes and proves successful, it will be a colossal political victory for the Democratic Party.

How were the obstacles overcome this time around? Sizable majorities in the House and Senate certainly help, as does a popular new president who decided to make health care reform his top priority. Swiftness matters too: it took the Clinton administration more than a year to put together a proposal, whereas health care reform headlined the legislative agenda this year as soon as the stimulus bill got through. By the time the Clintons’ bill was ready for public debate, his honeymoon was already over; the administration had even alienated much of its base by pushing NAFTA’s passage.

But along with all these factors making success more possible this time around, clearly the Obama administration made a strategic judgment from the outset that, in order to weaken opposition, they would have to make policy concessions to some of the major interest groups. The American Medical Association, for example, has endorsed Obama’s reform – after leading a successful effort to kill Truman’s and playing an ambivalent role during Clinton’s. The pharmaceutical companies have been pretty quiet. Many hospital and clinic systems are on board. Naturally, some of the concessions made to weaken opposition in turn significantly weaken the bill.

Even more importantly, the Obama administration made a strategic judgment that, in order to not frighten many of the insured with disruption of their coverage, the reform should build around the existing, obviously flawed employer-based system. It should not seek to remake the whole of our health care system – such wholesale transformation being a necessary goal if the vast inefficiencies in our health care system are to be done away with, yet a demonstrably impossible dream in the arena of U.S. politics.

Exaggerated judgments

Some proponents of the bill tend to overstate its virtues as policy, as though it would bring a definitive end to the injustices and inefficiency of our health care system. It will not.

On the other side, critics – meaning not the opposition-at-all-costs Republicans, whose arguments and counterproposals now lack all credibility, but thoughtful principled people who want something better than what the Democrats have on offer – tend to either a) decry or b) remain oblivious about the political calculations that have shaped the policy.

Progressive critics tend to focus exclusively on questions of policy design and principle. Often they regard politics as simply a corrupting influence or dirty intrusion. In the health care debate, more than any other arena of U.S. policy-making, radical activists and “neutral” policy analysts appear to be gripped by the same mystical faith in the triumph of principle over politics. “Speak Truth to Power,” both groups say, apparently believing that people who wield power are somehow incapable of withstanding their “Truth”. In health care policy the surprising affinities are especially clear because the two groups (radical activists and microeconomics-loving policy analysts) are often found advocating the same sorts of policy solutions: the demonstrably more efficient and humane health care policies already well established in other developed countries.

Oberlander nicely sums up what is wrong with such an approach: “The search for a technical solution to what is fundamentally a political problem is not likely to succeed.” As Jacob Hacker – on whose reform proposals the Obama administration’s approach is based – argued when presenting his “Health Care for America” plan in 2007: “Limits on public budgets, resistance to measures that might be seen as taking away what Americans already have, and the embedded realities of the present system all stand squarely in the path of grand policy redesigns.” As a result, political success requires “build[ing] around,” instead of dismantling, “the most popular elements of the present structure” like employer-based coverage and Medicare. But, as we see in the current debate, such concessions to political reality threaten to alienate progressives, whose vigorous efforts are needed to pass the reform.

The weaknessesWhile it is important to call out this unhelpful idealism among many activists and analysts, it is also important not to turn a blind eye to the deep imperfections of the reform. To stand any chance of improving on this package of policies, we must attend very carefully to its weaknesses. And we must be ready to continue the fight long after the bill’s passage into law, to strengthen and improve it.

A brief catalogue, then, of some of the principle areas where the reform needs improvement, needs continued attention and political efforts well beyond its passage into law:

• The most obvious area of concern for progressives, in these first days after the House vote, is the abortion provision (the “Stupak amendment”) that was pushed through on the morning of the vote in order to appease conservative Democrats. This provision would significantly expand restrictions on women’s ability to have abortions covered as part of their health insurance. The New York Times editorial page provides  a quick, useful summary of the reasons why the Stupak amendment is such a problem. Unlike the other weaknesses of the bill listed here, this is one that stands a decent chance of being corrected (either in the Senate or in conference committee) before President Obama signs a reform into law.
  
  
• The switch, in the final weeks of debate in the House, to having the public plan negotiate rates with providers instead of having rates pegged to Medicare means less progress in “bending the cost curve.” Pegging public plan reimbursement rates to Medicare (the so-called “robust” public option) would have imposed more serious restraints on cost growth, generating more competition among private insurers (which in turn would have further restrained cost growth). The negotiation of rates does not by any means ensure the public plan’s failure to help bend the cost curve, but it makes success or failure in achieving that goal largely a product of implementation decisions and regulatory toughness rather than an established fact set in place by the policy.
  
  
• The reform does not take definitive steps away from the “fee-for-service” payment system, which rewards medical professionals for the volume of services they provide rather than the quality of their care and patients’ health outcomes. Fee-for-service payment is, in many economists’ view, one of the most important factors accounting for the great inefficiencies of the U.S. health care system. While the House bill makes no immediate challenges to fee-for-service, it calls for the creation of a commission to study regional variations in health care costs and quality and possible policy solutions for improving the payment system. Under the House bill, policy recommendations from this commission would automatically become law unless Congress votes to overrule them (making it unnecessary for members of Congress to make a politically sensitive vote on payment reform that might have obvious virtues for the country as a whole yet bring significant cuts in payments to many districts’ health care providers). The Senate is expected to include a similar payment reform process in its version of the bill. It would be hard to overstate the importance, for the long-run goal of restraining health care cost growth (and thus keeping our economy from ruin), of the strength of this commission’s mandate. It can be safely assumed that most hospitals and insurers will fight hard to have the commission removed from the final bill, or to have its mandate so weakened that it becomes a procedural bauble rather than a serious policy-making body. The fight to get a commission with a strong mandate into the final bill, then to get good people appointed to the commission, then to push the appointees toward real departures from fee-for-service in favor of quality and outcome measures, will play a central role in determining whether this health care reform ultimately delivers on President Obama’s goal of reducing the rate of health care cost growth.
  
  
• The House bill does not aim for truly universal coverage. The Senate is not likely to change this. To reach universal coverage, progressives will have to continue to fight hard to extend the reach of this historic expansion of coverage until it encompasses everyone. In particular, it will only be through tremendous efforts by progressives – not just on health care reform, but on other policy issues and in other political arenas – that all immigrants to this country will one day have access to the same quality, affordable health care as everyone else.
  
  
• The implementation timeline for the House bill – as well as the likely Senate bill – is dramatically longer than it ought to be. Why should full implementation of the new health insurance exchange and public plan wait until 2013? Beyond the obvious policy and moral virtues of moving in a direction known to be better sooner instead of later, there is the political side of this unfortunate timeline: how are the Democrats going to reap benefits from this reform if voters do not see its full effects until three elections from now? Republicans can continue to run on anti-government animus, forecasting economic and spiritual calamity once the public plan gets implemented, instead of being confronted with the established fact of an efficient, popular public plan. Shortening the implementation timeline should be a top priority, out of pure self-interest, for any Democrat in elected office. For progressive activists, it should be a priority for reasons of principle as well as politics. Why should people have to wait four years for access to a public plan option, if they need it now?
  
  
• Under the House bill – and likely even more so under the Senate bill, which is expected to have an “opt-out” provision for states – the Exchange, and the public plan option within the Exchange, will not initially have enough people enrolled in them to make a serious dent in the pace of health care cost growth. To help “bend the curve” of cost growth, the public plan needs to amass significant bargaining power (like Medicare does). Projections of major savings from an Exchange with a public plan option have assumed that a much larger number of people would access health insurance through the Exchange than the House bill promises. If, upon implementation, this health care reform resembles the state-level reform in Massachusetts – if in expanding coverage it simply generates more business for highly uncompetitive private insurers, failing to introduce competition through the efficiency of public provision of coverage – cost growth will continue apace. “Our country’s financial health will … be determined primarily by the growth rate of per capita health care costs,” as the current Office of Management and Budget director Peter Orszag summed it up in a New England Journal of Medicine piece he cowrote with Phillip Ellis two years ago. Without more people in the Exchange, the Obama reform will fail to deliver on the promise of reining in that growth rate.

Those are some of the principal weaknesses of the House bill. Another matter entirely is the Senate Finance Committee bill, some elements of which may end up in the bill the full Senate considers. If they do, this list of weaknesses could grow longer. If, on the other hand, Joe Lieberman and conservative Democrats have their way and the full Senate ends up voting on a package that differs little from the Senate Finance bill, the reform would, in my opinion, no longer be worthy of progressives’ support. In other words, we have our work cut out for us in the coming weeks just to make sure the Senate votes on a reform closer to the House’s bill than the Senate Finance Committee’s bill, so that the final version after conference will be worth fighting for.

The crucial pieces of the Finance Committee bill to be fighting against – to insist do not make their way into the bill the full Senate considers – include:

• most obviously and most importantly, the Finance Committee’s abandonment of the public plan option (in favor of insurance “cooperatives”);
• their decision to maintain state-level regulation of the private insurance industry (instead of empowering federal regulators to oversee this powerful national industry, as the House bill calls for); and
• their failure to level the playing field by ensuring that all employers contribute to the provision of health care (abandonment of the so-called “play-or-pay” employer mandate).

The argument put forward in the rest of this essay assumes that progressives are successful in preventing the incorporation of these three components of the Finance Committee bill in the final reform. To achieve that, however, progressives will have to fight hard over the next few weeks.

Still worth fighting for?

Even if we assumes success in blocking the worst parts of the Senate Finance Committee’s bill, the list of policy deficiencies in the House reform is long. After contemplating that list, many progressives may be tempted to throw their hands up, dismiss it as a “sell-out,” or simply move on to other issues. That would be a grave mistake.

First, if the Democrats fail to pass a broad health care reform bill in the next couple months, it is unlikely that there will be any opportunity for them to pass other progressive policies in this Congress. The too-small stimulus package, enacted in a moment or real national panic and openness to new thinking about economics (an opening that closed very quickly), would prove the only real legislative accomplishment of Obama’s first two years in office. After a retributive landslide against Democrats in 2010, President Obama would either be rendered irrelevant or tack hard to the right. In either case, little or none of the progressive agenda for which Obama was elected would be passed into law.

Thankfully, that’s an unlikely scenario. More likely than not, enough Democrats will coalesce around a compromise health care reform bill that includes a public plan option for President Obama to sign it into law and then move on to other pieces of his legislative agenda. The Democrats will still lose seats in the House and Senate in 2010 – a party controlling the White House, Senate, and House almost always has, in U.S. history – but they will continue to advance a relatively progressive agenda in 2011 and 2012, and with luck for four more years after that.

But beyond such practical political considerations, the House bill would mark a watershed in U.S. social and economic policy. It vastly expands coverage. It bars exclusion from insurance based on preexisting conditions. Sick people won’t get dropped from coverage. Women will no longer be charged more than men for insurance. Employers who choose to not provide coverage will no longer gain an economic advantage from it. Regulation of the powerful, national insurance industry will take place at the correct scale: the country, not individual states. Finally and crucially, the reform will create a new institution (the Exchange, with a public plan option in it) capable of enhancing competition and reining in the pace of cost growth. Once created, the Exchange can be improved upon and expanded.

After the political debate of August and September, few would have expected both the House and Senate bills to include a public plan option. Most people thought the public plan would be, or already had been, dropped in the Senate. Then Democratic leaders resuscitated it, after the Senate Finance Committee concluded its molasses-paced efforts at “bipartisanship” (yielded a single Republican vote, already gone now that the public option with opt-out is on the table). Pressure from progressive activists – and in particular a turn toward direct confrontation with private insurers – gave Democratic leaders the opportunity to perform this unexpected retrenchment around the public plan option, without which the reform bill would stand little chance of reining in cost growth. (See my earlier post here for a summary of why the public option is so critical for cost control.)

In this moment of extraordinary political opportunity we can create a new institution to restrain cost growth, improve quality, enhance equity, and expand coverage. If we do not seize this moment, it is unclear when and how we could expect to begin a real overhaul of our deeply inefficient and unjust health care system. Unless one holds a mystical conviction in the inevitable triumph of Truth over all, it is hard to see why we should expect to ever get a better chance than this one.

Each individual policy compromise in this reform package can be subjected to useful scrutiny. But in the end a reform package that includes many concessions and weaknesses must come up for a vote on which there are only two options.

The concessions and weaknesses are products of strategic judgments that a) we must build around a peculiar, inefficient employer-based health care system in order to prevent serious public opposition to reform, and b) we must reduce interest-group opposition by inviting some groups into the fold and partially appeasing others. Whether those strategic judgments justify any one particular policy component of the ultimate reform package can be endlessly debated – and surely in some cases the proper judgment will be that too many or too deep concessions were made, that it was not necessary to give away so much policy substance in order to improve the political odds of passage. Yet in the end a bill comes to a vote – as it already has in the House, and hopefully will soon in the Senate – and at that moment the policy options are reduced to two.

That is what makes this moment fundamentally different from all the months of debate on health care reform up to this point. Contrary to what many supporters of the Obama administration’s approach have argued, activists calling for more ambitious reforms like single-payer have played a vital, entirely constructive role in the debate. If that contingent of activists had been larger and louder during the debate, the bill would surely be better than it is. The strength of a position more progressive than the administration’s pulls the eventual compromise in a progressive direction. But now we are all faced with something quite different from that process of debate, pressure, agitation and negotiation. We are faced with defined proposals to support or oppose.

If the question is “Is this reform better than nothing?” or “Which side are you on?,” there can be only one reasonable progressive answer. After more than 70 years of political failure, we fight with everything we’ve got for this reform. We celebrate without apology or equivocation, if we win. It will be a historic victory in the realms of both policy and politics. And then once it becomes law, we continue to fight with everything we’ve got to improve and expand it.

As if there weren’t enough reasons already to throw all the energy we can muster into this fight, the radical right provided another this past summer: to deny hateful tactics and ideology an enormous political victory. If their efforts were to succeed, both their techniques and their ludicrous convictions would multiply like wildfire. Denying them this victory serves our long-term societal health and stability at a level far beyond the policy question of health care reform.

Conclusion

As the economist Victor Fuchs has pointed out in regard to health care reform, while it is surely true that – as policy-focused commentators so often say – “the devil is in the details,” the logical implication of such a statement is that “God is in the essentials.” Progressive activists too often join microeconomics-loving policy analysts in worrying that the policy details must be exactly right for a reform to be worthy of their support. In attending to the correctness of policy, they turn away from politics. They also fail to recognize that the establishment of broad new institutional frameworks and principles – “the essentials” – has a much more lasting and decisive effect on policy outcomes than do the details of a reform when it is first enacted (cf. Social Security). There are many flaws in the details of this health care reform package; but the essentials usher in the first fundamental change in our health care system since Medicare and Medicaid, and a change with wider effects. Tens of millions more people will have coverage. And the institutional infrastructure will be in place to start reining in cost growth – if we continue to fight like hell, beyond passage, to strengthen and deepen the reform.

It has taken extraordinary efforts to reach this point. Generations of our predecessors have failed, despite strenuous efforts, to get this far. And Joseph Lieberman and several conservative Democrats still stand in the way of the absolutely critical public plan option. The fight requires the energies and attention of every progressive in the country, to see this reform across the finish line, to enable other policy and political gains under the Obama administration after health care, and to deepen and strengthen the reform once it’s passed into law.

Sitting out such a historic fight is simply not an ethical option. And at the moment of a “Yea” or “Nay” vote, denouncing the compromises in this reform – in the name of some purer policy ideal – is the same as sitting it out.

Phillip Cryan received a Masters degree from UC-Berkeley’s Goldman School of Public Policy in May. His report on the effect on employment of a “play-or-pay” employer mandate for health care was jointly published by the Institute for America’s Future and the Economic Policy Institute. He lives in St. Paul, where he is the Assistant Organizing Director of SEIU Healthcare Minnesota.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future