Economic crises come and go, but entitlements are forever. The Great Depression eventually dissipated, but Franklin Roosevelt’s crown jewel the Social Security system is still with us. And so it will be with the Obama Administration. The early headlines have been all about the President’s efforts to repair the financial system and jump-start the economy. If he succeeds, he probably will be re-elected. But Barack Obama’s place in history will be determined by the long-term structural changes he initiates, and his most important legacy battle is just beginning as Congress tackles the holy grail of modern liberalism, a universal health-care system.
The President has been clever about this. He hasn’t made it the centerpiece of his Administration and a fat target for his opponents as Bill Clinton did. He hasn’t proposed a specific plan, allowing, instead, a proposal to percolate through the Congress. “Everything about this process seems the polar opposite of 15 years ago,” says John Rother of AARP. “The Administration seems determined not to make the same mistakes as Clinton did.”
Indeed, Democrats have a history of strategic idiocy when it comes to health care. Nearly 40 years ago, Richard Nixon proposed a universal system in which employers would be required to pay for their employees’ coverage, but Democrats blocked it because they favored a government-run single-payer system. Twenty years later, Bill and Hillary Clinton proposed a system similar to Nixon’s but failed to bring aboard moderate Republicans, who favored a universal system based on requiring individuals rather than employers to participate. In the 2008 campaign, Obama and Hillary Clinton proposed plans that looked very much like the 1993 Republican scheme do you detect a pattern here and the congressional debate, which will take place this summer, begins there.
This time, with significant Democratic majorities in both houses of Congress, there is real optimism that a universal plan will be passed and enacted. But Clinton also had Democratic majorities and strong public approval, at first. This time, because of the rules agreed on in the arcane budget process, Democrats will need only a simple majority vote in the Senate. But the process could run into the same two roadblocks that caused universal health insurance to fail in the past: the specter of “socialized medicine” and the fear that the cost of the program will, like that of other entitlements, spiral out of control.
In the 2008 campaign, Obama and Clinton worked overtime to assure voters that if they liked their current health-care coverage, they could keep it that is, the system would remain a private one, presided over by a more strictly regulated insurance industry. And in the months since the election, the insurers have indicated that they will play ball: they’ve said they will cover everyone, at the same rate, regardless of pre-existing condition. But more-liberal Democrats have decided to press the issue. They have proposed a “public” health-insurance option, similar to Medicare. They argue, correctly, that the profits made by insurance companies are a good part of what makes health care so expensive in the U.S. and that a public option is needed to keep the insurers honest. Needless to say, the insurers are vehemently opposed to this and will unleash a torrent of negative advertising and lobbying power if the final bill includes it.
The President recently told a remarkable story about his grandmother. In the last months of her life she was dying of cancer she broke her hip and received a hip replacement from Medicare. “I don’t know how much that hip replacement cost,” Obama told the New York Times, and he questioned whether giving people “a hip replacement when they’re terminally ill is a sustainable model.” This is the most sensitive health-care issue imaginable. But the question of whether the government can decide which health-care treatments are appropriate is central to whether an affordable universal system can be devised. Part of the answer is implicit in the electronic medical-records system that Obama has proposed: it will be easier to determine which treatments are cheaper and more effective. The other part of the answer involves an essential change in Medicare, from fee-for-service to a managed-care system that decides whether a hip replacement is necessary for a terminal cancer patient. Since most of the baby boomers about to enter the Medicare system have been living with managed care for the past 20 years, a gradual transition may not be impossible.
My guess is that the public option is a bargaining chip that will be cashed in to gain support from moderate Republicans and Democrats as crunch time approaches. The real battle, and the fate of this liberal dream, will be fought over what gets covered and who decides.