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Ron Radosh

by Ron Radosh

Health Care and the Fall of Obama

January 15th, 2010 - 1:21 pm

If  you want to know why President Obama’s poll ratings are slipping daily, and why  in Massachusetts the unthinkable may actually occur- a win for Republican Senate hopeful Scott Brown over Democrat Martha Coakley in the forthcoming Special Election- look no further than the new deals being made in an effort to pass health care legislation.

As a New York Times blog explains today, “the White House and Congressional leaders struck a tentative deal with organized labor groups on a proposal to tax high-cost, employer-sponsored insurance policies as one way to pay for the legislation. The bill the Senate passed included a version of this excise tax that the Congressional Budget Office said would generate $149 billion over 10 years toward the cost of the legislation. But after making changes to mollify organized labor groups and reduce the number of union-sponsored insurance plans that will be hit by the excise tax, the version of the tax to be included in the final bill will probably generate only $90 billion, officials said.”

To get through the double-talk, what the compromises with special interests means, as the news report makes clear, is  “an approximately $50-billion hole…[in the deficit that] is expected to grow even bigger as top White House officials and Congressional leaders work through other issues that will raise the cost of the legislation.”

As another Times report explained, “under the bill passed last month by the Senate, the federal government would have imposed a 40 percent tax on the value of employer-sponsored health coverage exceeding $8,500 a year for an individual and $23,000 for a family. The tax would have taken effect in 2013. White House officials, Democratic Congressional leaders and labor unions said Thursday that they had agreed to an increase in those thresholds to $8,900 for an individual and $24,000 for a family. Moreover, they said, starting in 2015, the cost of separate coverage for dental and vision care would be excluded from the calculations. In addition, they said, health plans covering state and local government employees and collectively bargained health plans would be exempt from the tax until 2018.”

Then there is the Medicare problem, and the plan to increase the Medicare payroll tax.   The Times explains: “One criticism is that the approach would undermine one of the core original concepts of Medicare, which is that it serves a social insurance compact between generations of Americans, with the working population contributing premiums (the payroll tax) that pay benefits after retirement. By this argument, as a smaller number of wealthy Americans pay a larger share of the future benefits of Medicare for everyone, the program looks more like traditional welfare than a prepaid retirement benefit.”

Then, of course, there are the special deals made by the Obama administration with the big pharmaceutical companies and the insurance lobby, whose stock has soared in recent days and who will win big time by passage of the legislation. As former Mayor Ed Koch of New York wrote in a recent blog, “If the president had totally committed himself to this health care legislation and had called in every wavering Democratic Senator –  and yes, the two or three Republican Senators who appeared cooperative as well — they would have come along and the final legislation would now include anti-trust prohibitions aimed at preventing insurance companies from continuing to conspire to fix prices.   It would also include a tort reform scheme that could have saved the government $54 billion over the next ten years; authorization for insurance policy shopping across state lines; use of U.S. funds by poor women to pay for abortions; allowance of Medicare to negotiate volume discounts on prescription drugs that over a ten-year period could have saved a trillion dollars; and a government option that would have provided insurance companies with competition.” As Koch concluded, “the President sold out to the insurance companies and the prescription drug companies.”

Koch says it will be left to historians in later years to explain why. I think the reasons have already been well stated, by the most astute commentator writing today, Charles Krauthammer. As he puts it, “ it is not that Obama is too cool or compliant but that he’s too left.” Obama, he writes,  has favored legislation that amounts to “government health care by proxy, single-payer through a facade of nominally ‘private’ insurers.”  In a country that remains center-right, Obama acted ideologically, seeking “to introduce a powerful social democratic stream into America’s deeply and historically individualist polity.”

Krauthammer does not say Obama is a stealth communist or socialist, as some on the Right do. There is a difference between social-democracy and communism or socialism. But as most Americans understand, the European social-democratic states created huge welfare benefits for their relatively small populations. Yet today they are nations that are in an economic state of stagnation, and their benefits packages are stifling their economies.

Even if Scott loses in Massachusetts, the election will be close. Perhaps it might even fall to the libertarian third party spoiler, Joe Kennedy, whose Tea Party followers might succeed in ushering in a win for Coakley. Thus Kennedy would have the same effect in Massachusetts as Ralph Nader had in Florida in 2000, when his percentage of the vote led the state to fall to George W. Bush.

As Krauthammer says, the age of Obama is over, one short year into his Presidency.

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