Code Blue! Health Care Reform May Be Dying
“Back to the drawing board,” announced Democratic House Majority Leader Steny Hoyer on health care reform. Indeed, it seems that in one short week, the single most important item on the president's agenda is in need of some critical care. Politico reported:
Democrats’ triumphant rollout of a sweeping health care reform bill earlier this week already feels like a distant memory.
Rank-and-file Democrats don’t like it -- and aren’t afraid to say so. The speaker has already backpedaled on a key tax increase -- putting her in a weaker negotiating position. And one outspoken Democratic critic doesn’t think his leaders are “even close” to the votes they need to pass it.
But perhaps the biggest blow came from Congressional Budget Office Director Douglas Elmendorf, who told a Senate committee Thursday that legislation offered in both chambers “significantly expands the federal responsibility for health care costs.” In other words, it doesn’t fix the problem of runaway cost.
The president rushed to the microphone on Friday afternoon to assure the country the patient was fine, just undergoing some expected surgery and far from terminal. Absent was any mention of his August deadline, however. He appeared miffed at "Washington" and the "24-hour news cycle." He took no questions, likely because he had few answers to the hard queries. (Why is his own party in revolt? Why would he raise taxes on small businesses? Why don't people like the idea of a "public option" as much as they did a few months ago?) Despite Obama's lecture and show of bravado ("this is going to happen"), all signs pointed to the demise of the House Democrats’ trillion dollar, soak-the-rich public option scheme. And it is far from clear what replacement plan might be offered.
Twenty-one freshmen congressmen and a second-termer banded together to write a letter opposing the House Democrats' proposed surtax on the “wealthy,” complaining that now is no time for a tax hike on high income earners which includes thousands of small businesses. They wrote, “Especially in a recession, we need to make sure not to kill the goose that will lay the golden eggs of our recovery. We are concerned that this will discourage entrepreneurial activity.”
Meanwhile, a bipartisan group of moderate senators announced they would not be rushed. Sen. Joe Lieberman (I-Conn.), Sen. Ben Nelson (D-Neb.), Sen. Mary Landrieu (D-La.), Sen. Ron Wyden (D-Ore.), Sen. Susan Collins (R-Maine) and Sen. Olympia Snowe (R-Maine) and others declared:
While we are committing to providing relief for American families as quickly as possible, we believe taking additional time to achieve a bipartisan result is critical for legislation that affects 17 percent of our economy and every individual in the U.S.
So much for the president’s exhortation to get this done ASAP.
Nevertheless, the problem remains: what sort of health care plan can get through both the House and Senate which meets the president’s own demand to both expand coverage and contain costs? The Congressional Budget Office chief, in devastating testimony earlier in the week, asserted that the House version wouldn’t save money, and indeed would make our budget woes worse.
Moreover, even the Washington Post editors could spot the problematic funding mechanism:
The measure would cost just over $1 trillion between 2010 and 2019; the income tax surcharge on those earning more than $350,000 a year would bring in $544 billion over 10 years, while cuts to Medicare would take care of the rest. But the program appears to be paid for during the 10-year window only because the Medicaid expansion and insurance subsidies don't begin to kick in until 2013; the tax surcharge would apply beginning in 2011. Meanwhile, the trajectory of rising costs is alarming: The net price tag of expanded coverage would be $202 billion in 2019, up 8 percent over the previous year. The tax surcharge, however, would bring in just $86 billion in 2019, up 5 percent from 2018. So to keep the program adequately financed, Medicare savings would need to be $116 billion -- and growing by some 10 percent annually, an awfully optimistic stretch.
Translation: even by soaking the rich and socking it to small businesses, the House Democrats' plan doesn't begin to pay the cost of the plan.
Both sides in the health care debate understand time is of the essence. The longer the debate goes on, the more the public hears about the mind-numbing costs and rationing entailed in a government take-over of health care and the higher unemployment goes (raising qualms about any new taxes), the less chance there is to pass a gargantuan health care overhaul. Moreover, as the president’s approval ratings continue to decline, his ability to offer “cover” to nervous lawmakers diminishes on a daily basis.
All of this must seem eerily familiar to our secretary of state, who saw her own health care plan meet its demise fifteen years ago. Then the White House tried to ram its own plan through. Now the Congress is running the show. But the result may be the same. It may be that despite liberals’ optimism about an opportunity to remake America in the wake of an economic crisis, not much has changed since Bill Clinton was president. Americans still don’t want the government running health care. And they really don't want their taxes raised.
The success of Obama’s presidency, not to mention the future of the nation’s health care system, will hinge on whether in the next two weeks Obama can convince them otherwise.
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