The Five Biggest Hurdles to Health-Care Reform

The Five Biggest Hurdles to Health-Care Reform

Since he took office in January, President Barack Obama has made clear that he views this year as the best opportunity in decades to overhaul the nation’s ailing health-care system; more recently he has stressed that he wants the House and Senate to pass their respective bills before their month-long August recess. That, to say the least, is not going according to plan. The Senate said last week it will not make this deadline and the House is also looking increasingly unlikely to produce a bill by then. This slows the momentum behind the President’s top priority, giving opponents extra time to sow doubts in both politicians and the public. But it also raises the question: Why can’t a popular president with poll numbers in the 60s and super majorities in both chambers of Congress get this done? Here are the five biggest hurdles to health care reform.

1. Curbing Costs

The top goal of health-care reform for Democrats on either end of Pennsylvania Avenue has always been to bring down the long-term costs of health care on the government, companies and individuals. It’s the overriding justification for attempting such an ambitious overhaul while the economy is in such dire straits and the federal budget deficit is skyrocketing.

Two weeks ago the Congressional Budget Office found that neither the bill produced in the House nor the one written by the Senate Health, Education, Labor and Pensions Committee – Ted Kennedy’s panel – would yield savings in the long run. On the contrary, Democrats on Capitol Hill are having a hard time coming up with ways to keep reform from raising the cost of health care over the next decade. This has given lots of ammunition to both Republican and fiscally-conservative Democratic critics of the health-care proposals. And it puts a lot of pressure on the Senate Finance Committee — the last Senate committee dealing with health care reform and the one long expected to generate some bi-partisan support — to produce some tangible cost cutting. The negotiators – three Democrats and three Republicans — are weeks behind schedule and are rushing to finish a bill before recess. But even if they’re successful, the leadership would still need time to marry the HELP and Finance bills together and at least two weeks of floor debate before they could pass a final version — a process now bumped until September at the earliest.

A lot of different avenues for cost cutting have been explored, including preventing fraudulent claims in Medicare and Medicaid and cutting programs and services that aren’t deemed cost-effective. But one of the most recently touted potential methods, creating an independent board to take away from Congress the job of overseeing the rates of Medicare payments, took a hit late last week when the CBO estimated it would only save $2 billion over ten years. The CBO did acknowledge that the savings could turn out to be higher in the long run, but that qualifier only highlighted one of the biggest problems for health care backers; so much of the potential cost savings of overhauling the entire health care system is unknown and impossible to predict with any accuracy. The CBO, for instance, has no real way to determine how much investments in prevention might save down the line.

2> Raising Revenue

All of this makes the $1 trillion/10 year price tag of health reform very tricky. A good two-thirds of the bill is already paid for: $237 billion would come from fines on employers and individuals who don’t comply with new rules to provide or buy health insurance; $525 billion would come from reductions in Medicare payments to private insurers and money ponied up by drug companies – as touted by Obama in a high-profile White House event; and corporate and foreign tax changes totaling $37.2 billion.

Still, Democrats have said they won’t pass anything that isn’t fully paid for, and finding the money to plug an estimated $200 billion to $320 billion shortfall has been particularly tough. Obama’s original proposal to raise the tax deduction for charitable giving by the nation’s highest earners seemed dead on arrival, while the House idea of taxing the rich directly has run into resistance with conservative Democrats known as Blue Dogs. One proposal that has gained traction in the past week is to tax pricey, so-called Cadillac health insurance plans, either directly or by taxing the insurer who provides them. The plans given to many Wall Street and Fortune 500 executives, for example, are worth about $40,000 a year. But even if the threshold could be set at such a level that it doesn’t apply to many union insurance plans, which in some states are worth upwards of $20,000 a year, that approach is expected to raise no more than a third of what is needed.

Other revenue raising proposals include: prohibiting the use of Flexible Spending Account money — tax free funds withheld by individuals to pay for certain medical expenses — for over-the-counter drugs; imposing a tax on alcohol, sodas and other unhealthy beverages; rescinding the non-profit status of hospitals that act like for-profit companies and no longer offer charity care; and $100 billion that would come from a windfall tax on insurers based on their U.S. market share. But many of these are controversial and face significant opposition from members and senators representing areas where local companies or hospitals might be adversely impacted.

3> Coverage Questions

Hard to believe, but money is actually only half the problem. The flip side of cutting costs is adding coverage for the nearly 50 million uninsured Americans. To that end both the House and Senate HELP bills include a public plan that would compete with existing private plans – a highly controversial idea that Republicans say is tantamount to the socialization of health care, but which many Democrats say is essential for any overhaul of the system. The Senate Finance Committee’s bill takes a middle-of-the-road approach, including a coop plan, essentially a non-profit version of a government plan that some critics say couldn’t possibly compete effectively the way a public option could. The legislation does include provisions for a public plan, but such an approach would only be triggered if the coop plan doesn’t prove to work in certain states or locales – a backup model based off of President George W. Bush’s Medicare Prescription Drug Plan. But many wonder if that will garner enough votes in the Senate, since it will likely lose votes from both ends of the spectrum.

There are other thorny issues. The House, for example, envisions giving insurance to about 10 million currently uninsured by broadening the guidelines of Medicaid, the state/federal program for the poor. The problem is that many governors of already cash-strapped states are already voicing their vocal opposition to this proposal; while the current bill says Washington would foot the bill for these new Medicaid enrollees, states that are having a hard enough time as it is paying their share of the program are wary of what might happen several years from now. At the same time, Blue Dogs in the House are upset at some of the proposed cuts to Medicare insurers. They worry that these cuts will lead to a dangerous decrease of Medicare services in already under-served rural areas. This was the biggest sticking point in House negotiations over the weekend.

4> Personal Touch

From the beginning, President Obama has taken almost the exact opposite route than President Bill Clinton did in 1993. The Clinton health care plan was written in secret, without input from Congress, before the Administration tried to ram it down the throat of the legislative branch. The catastrophic failure of that strategy is still burned in to the minds of many former Clinton staffers, including Obama’s Chief of Staff Rahm Emanuel.

Obama, by contrast, has given Congress a free hand to draw up legislation as Democratic leaders like Nancy Pelosi see fit, with limited input from the White House. But Obama’s decision to leave the details up to Congress while only providing the broad principles he wants to see in the finished product has, by most accounts, gone too far to the other extreme. Congress can’t function without some guidance and political cover from the White House, and the last few weeks has heard much grumbling from Demcratic staffers on the Hill that nothing will get done unless the White House gets more intimately involved.

The President tried to breathe some life into the process with his prime time news conference last week, but he remained quite vague and his response to a question about the disorderly conduct arrest of Harvard scholar Henry Louis Gates ended up dominating the news coverage. Still, the White House does now seem to realize that a series of press conferences or political speeches across the country, or even an historic address of a joint session of Congress , will not be enough to get over the finish line. Health care reform is so politically fraught that it needs a strong White House presence in the room, something that only happened late last week in the House when Emanuel became personally involved in the talks with the Blue Dogs, but has yet to start with the Senate.

5> Public Perception

The double blow of both the House and Senate likely failing to pass legislation before his own deadline is the worst setback Obama has seen in his six months in office. The month long break will give critics ample time to hone their messages of “too much, too soon” and stir up grassroots opposition, and members of Congress will go home to hear what constituents have to say. As President Lyndon Johnson, the great master of the Senate, warned his staff after his 1964 landslide, “every day while I’m in office, I’m gonna lose votes.” Some 56% of Americans believe that Obama can implement a national health plan in the next four years, but that’s down from 63% six months ago and the number of doubters has risen from 31% to 39% in that same period, according to a July 22 Associated Press poll. Simply missing the deadline adds to the perception that health-care reform is nearing a still-born death.

To counteract any loss in momentum the political wing of the Obama Administration — Organizing for America — is launching a massive grassroots campaign throughout the August recess to try and drum up a groundswell of support for health care reform. It will be the first major test of Obama’s campaign apparatus in a non-campaign setting. If the President hopes to get health care done in the fall, he will need the support of all eight million supporters on his e-mail lists and many, many more. The White House is clearly trying to change the terms of the debate; during the press conference, Obama borrowed an argument from Steven Pearlstein of the Washington Post by warning that the biggest risk is not passing health care reform, since the status quo only promises higher costs and less coverage. Over the weekend, Obama also tried to counter the notion that reform will add costs to small business employers, a frequent attack of the current plans.

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