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John Neffinger

John Neffinger

Posted: September 6, 2009 02:42 PM

The 3 Lost Lessons of Healthcare History: Will Obama Re-Learn Them in Time?

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Lesson 1: The Center Does Not Hold Without the Left

Not long after Bill Clinton's health care reform proposal went down to defeat in the Senate, Bill ran into Bernie Sanders, Congress's only avowed socialist. Bernie approached him with a grave look on his face. "Mr. President, I am so sorry. I failed you on health care."

Clinton was puzzled. Sanders had supported his reforms. "What do you mean, Bernie?" said Clinton. "You were with me every step of the way!"

"Exactly," replied Sanders. "I should have been burning you in effigy on the steps of the Capitol. Then people would have understood how moderate your plan really was."

The policy now known as the "public option" began life as a middle-of-the-road compromise proposal between the right's preferred option - keeping all private health insurance - and the left's preferred option - switching from private insurers to a "single-payer" plan like Medicare, which would take the profit motive out of health coverage and save $300+ billion that private insurers spend on administrative costs every year. It is a market-based, "third way" approach rather than a government-imposed solution, and its main purpose would be to use competition to hold down costs in the health insurance industry as a whole.

Yet today the "public option" is seen as a dangerously liberal idea, so much so that self-styled "budget hawks" criticize it as a big-spending plan even though cost containment is its primary virtue. Why? Because in today's debate, it literally is the most liberal thing imaginable - there is nothing to the left of it. The more liberal, "single-payer" approach was seen as not politically feasible, so Obama did not bother to make sure it was on the table, and the few people trying to explain and promote it have been marginalized from the start. Like Sanders in 1994, liberals have embraced the moderate third-way "public option" approach. But liberals' support does not strengthen the moderate position, it weakens it. Think about it: if liberals all give up their own way for the moderate third way, then there are not three ways anymore. There are just two: the conservative way and the moderate way. The "third way" becomes the new liberal position, just shifted further to the right.

Obama has re-learned this lesson the hard way. The "public option" that was at the core of all three Democratic candidates' health plans is now on political life support, a free-market policy tarred as a government takeover.

Lesson 2: For the Right, Compromise is Death

On December 2nd, 1993, as Bill Clinton was gearing up to pass his healthcare reform proposal, Bill Kristol sent his fellow Republican leaders a memo. It read, in relevant part:

"... [T]he long-term political effects of a successful... health care bill will be even worse - much worse... It will revive the reputation of ... the Democrats as the generous protector of middle-class interests. And it will at the same time strike a punishing blow against Republican claims to defend the middle class..."

In short, Kristol urged his follow Republicans to oppose any health care reform, not because they thought the policy would not work, but because they knew it would work, and Americans would like it, and they would reward Democrats with their political loyalty the way Depression-era voters voted Democratic forever out of gratitude for the New Deal and Social Security. Healthcare reform became an existential battle for the Republicans: lose it, and they would be banished to the political wilderness for generation or more. At the time, Republicans were already in the wilderness, having just lost the White House and controlling neither house of Congress. But by following Kristol's recommendation, successfully demonizing and defeating healthcare reform, they staged a great political comeback and seized control of Congress in the 1994 elections.

If Kristol's advice was spot-on in 1993, it is even moreso today. Ronald Reagan is a distant memory, and George W. Bush has badly tarnished what was left of his legacy. Barack Obama was ushered into office as a historic and potentially transformative figure. If he delivers on sweeping health insurance reform, the Republican party could be utterly discredited. Do not look to Republicans to help pass a healthcare reform bill. It would be political suicide, and they know it.

Obama has re-learned this lesson the hard way too. His incredible patience with the Senate's dithering bipartisan "Gang of Six" has sapped the momentum not only of health reform, but of his Presidency as a whole: his approval numbers have steadily sunk as Americans have become increasingly frustrated and unnerved by what they see out of Washington. A few weeks ago, Republican Senators finally admitted in public what Kristol had recommended in private: that they have no intention of supporting the kind of moderate bi-partisan compromise they've supposedly spent the last few months trying to craft. But they only gave up the game because they think the damage has already been done.

Lesson 3: To Win the Middle, Go Left

In July 1964, Ronald Reagan stood before the Republican National Convention to discuss Democrats' "Medicare" proposal to provide guaranteed health insurance for the elderly. "Will you resist the temptation to get a government handout for your community?" Reagan asked. "Realize that the doctor's fight against socialized medicine is your fight. We can't socialize the doctors without socializing the patients. Recognize that government invasion of public power is eventually an assault upon your own business." He didn't mention any death panels, but Reagan and his fellow Republicans were every bit as adamant in their opposition to Medicare as conservatives are in their opposition to health insurance reform today.

A year later, President Lyndon Baines Johnson guided the original Medicare bill through the Congress despite all those Republican objections. But a curious thing happened as the bill neared passage. Once Congressional Republicans saw that Democrats were going to make Medicare a reality despite their scare tactics, many of them quietly switched their votes and supported the bill. In fact, more than 40% of Republican Senators and more than half of the Republicans in the House voted for the bill in the end, despite all the earlier Republican opposition.

If this inconsistency surprises you, go read Kristol's memo again: Republicans oppose health insurance reform not because they think it won't work, but because they know it will. And they are right: Medicare recipients report much higher satisfaction with their health care than privately insured Americans do, and independent studies find that they receive better care. Faced with a reform that is going to pass with or without them, and which they know their constituents will like, any Republican who might ever have to fight to get re-elected is going to support it, because they don't want to have to explain to their constituents why they voted against their favorite policy. That's how Medicare was passed as a bi-partisan bill: Democrats came together and presented it to Republicans as a done deal, and Republicans got smart and came around.

Today, the political situation is ideal for Democrats to use the same strategy again. The electorate has not only demanded change, it has given Obama Democratic majorities in both Houses of Congress to make it happen. Obama has made his preference for a bi-partisan outcome very clear, and that's exactly what LBJ got.

But it is not clear whether Obama has learned this last lesson. Instead, he has seemed to seek bi-partisan compromise in the center, where Kristol's memo makes clear he will never find it.

The Choice: Pivot or Capitulate

So what do these history lessons suggest to Democrats today? First and foremost, Obama should do what LBJ did to pass Medicare in the first place and forge a Democratic bill that Republicans will be forced to support. His speech on Wednesday is the perfect occasion to pivot to this new strategy, starting by re-telling our story so far: Democrats have made every effort to accommodate Republican ideas, but Republicans have shown themselves to be opposed to any change in the system and willing to deliberately mislead and scare their fellow citizens to get their way. With that understood, Obama can explain that he has no choice but to work with Democrats alone to do the work he was sent to Washington to do. This would finally show strong leadership: Democrats would be overjoyed, and the independents who voted Obama into office would be greatly reassured to know that their guy was finally taking charge in Washington.

Obama should also act on Bernie Sanders' lesson, however belatedly. When Obama explains that it is time to forge a Democratic plan, he opens the door to consider the full range of Democratic proposals, including ones to the left of anything currently under discussion. For instance, Teddy Kennedy's recent passing offers a perfect opportunity to spotlight his Medicare-for-all approach, which would just replace all private insurers with a Medicare-like system - the "public option" without the option, basically. Democrats could also suggest consumers should be able to choose a government-run health plan with care providers on government salary, like at the Veterans' Administration health system (rather than a Medicare-style plan where government-run insurance pays private care providers). Both of these policies are significantly more liberal than a Medicare choice/"public option," and both have strong policy arguments behind them. By bringing these ideas into the public discussion, Obama would make the "public option" moderate and palatable again.

(Obama might also seize the opportunity to rechristen the "public option" with a less unappealing term. Recent polling found that using the word "choice" to describe the policy pushed its public approval numbers from 43% to 77%. Just calling it a "Public Choice" or a "Medicare Choice" or something more lively could do wonders for this effort.)

The happy ending is right there waiting for us, but it's not clear that that's where we are going to end up. The danger now is that Obama will not heed LBJ's lesson to pursue a Democratic plan. Instead, Obama may apply Bernie Sanders' lesson against himself, and drop the "public option" policy that has become tarred as an extreme liberal measure so he can portray the remainder of his reforms as a moderate, acceptable compromise and just pass those. The New York Times recently reported that the Obama Administration is heeding a list of six lessons from previous efforts to reform health care. Unfortunately, the three most crucial lessons (above) were left off the list. Instead, their lesson 6 counsels "Take what you can get" - in other words, "Drop the public option."

Dropping the "public option" may seem like the path of least resistance, but it's actually much riskier than just getting Democrats together to pass their own plan. Liberals who gave up Medicare-for-all for the compromise of just giving people a choice of a Medicare-like plan are in no mood to support a watered-down bill that leaves that out too, as that would leave private health insurers in place un-threatened, able to continue to raise costs at will. And as Kristol makes clear, when push comes to shove no Republican will support any bill they think will be effective enough to win any middle-class gratitude. If Obama tries to force a bill without the "public option," there is a real possibility that no bill will pass at all. That would be a political catastrophe for Obama, and leave his Presidency and his party looking impotent. Remember where we were left after President Clinton's reform effort went down, with the President of the United States reduced to asserting that he was still relevant?

We will not repeat the history of failed reforms if we just heed history's lessons. This administration is run by a lot of smart people and students of history. I still have hope. We will see on Wednesday night.

 

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