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Miles Mogulescu Headshot

Is Obama a Back-Room Blue Dog on Health Care?

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The news media -- particularly 24-hour cable -- has focused its health care coverage on the raucous demonstrations by tea-baggers and other middle aged and elderly white fringe elements who are being ginned up by the right-wing of the Republican party.

It makes for good television, but it's a side-show to the main event. The real story should be about the back room deals reportedly being negotiated between the Obama administration and Blue Dog Democrat Max Baucus, on the one hand, and Big Pharma, for-profit hospitals, and the private insurance industry, on the other hand. This is where the real action is taking place and it's looking increasingly likely, as a result, that the Health Care bill which ends up emerging from Congress could represent a massive public subsidy to the private health care industry.

Failing to pass Health Care reform would be a set-back to President Obama and the Democrats. But passing a bad bill which subsidizes wealthy private interests; reverses Obama's campaign promise to allow Medicare to negotiate lower prices with drug companies; and mandates that people without insurance must buy inadequate policies from for-profit insurance companies (or a neutered, non-competitive "public option" or co-op which is too weak to reduce costs) lest they be fined by the IRS, could turn a generation against the Democratic Party, revitalize the Republicans, and "prove" to many Americans that government intervention in the economy is a bad thing.

The first hint of the real story came when Rahm Emanuel summoned leaders of liberal organizations to the White House and reamed them out for criticizing Blue Dogs who were trying to gut the public option, telling the liberals that they were "f..king stupid" and ordering them to stop, as though popular movements that helped get Obama elected should be nothing more than an arm of the White House.

The next hint was a New York Times story in which the White House confirmed it had cut a back-room deal with Billy Tauzin, chief lobbyist for Big Pharma, to block any Health Reform bill that would allow Medicare to negotiate for lower drug prices. In return, Big Pharma made an unenforceable promise to lower federal drug prices by a mere $8 billion a year, a fraction of the amount which could be saved by using the market power of Medicare to negotiate meaningful price cuts, as almost every other capitalist democracy in the world does, reducing their drug costs to about half of what Americans pay. It was a direct repudiation of Obama's campaign promise to revoke the Bush Administration's bill which banned Medicare from negotiating for lower prices.

A few days later came Business Week's cover story entitled "The Health Insurers Have Already Won: How UnitedHealth and rival carriers, maneuvering behind the scenes in Washington, shaped health-care reform for their own benefit". The Business Week story begins:

"As the health reform fight shifts this month from a vacationing Washington to congressional districts and local airwaves around the country, much more of the battle than most people realize is already over. The likely victors are insurance giants such as UnitedHealth Group (UNH), Aetna (AET), and WellPoint (WLP). The carriers have succeeded in redefining the terms of the reform debate to such a degree that no matter what specifics emerge in the voluminous bill Congress may send to President Obama this fall, the insurance industry will emerge more profitable. Health reform could come with a $1 trillion price tag over the next decade, and it may complicate matters for some large employers. But insurance CEOs ought to be smiling...The industry has already accomplished its main goal of at least curbing, and maybe blocking altogether, any new publically administered insurance program that could grab market share from the corporations that dominate the business...[It has] also achieved a secondary aim of constraining new benefits that become available to tens of millions of people who are currently uninsured. That will make the new customers more lucrative to the industry."

Thursday's New York Times confirmed Business Week's analysis, reporting that the White House, in conjunction with Sen. Baucus, has made a deal with hospital lobbyists limiting reductions in hospital costs to $155 billion over 10 years and crippling the public option by agreeing "that the final legislation would not include a government-run health plan paying Medicare rates -- generally 80 percent of private sector rates -- or controlled by the secretary of health and human services". According to Chip Kahn, a top industry lobbyist, "We have an agreement with the White House that I'm very confident will be seen all the way through conference".

This is consistent with a White House-brokered deal that Chairman Henry Waxman made between Blue Dog Democrats and the Progressive Caucus to drop a provision which would set rates for the public option at 110% of Medicare rates in exchange for a meaningless floor vote on single payer which is certain to be defeated. Moreover, the New York Times article indicated a high probability that the White House will accept a final bill that jettisons the public option entirely in exchange for co-ops that will be too small and powerless to negotiate lower health care costs or compete with private insurance, and, I would add, would be good for the private insurers because they can be a dumping ground for older and sicker patients whom they don't want to cover anyway. The New York Times article concludes that according to Rep. Waxman,

"'The president has said he wants a public option to keep everyone honest. He hasn't said he wants a co-op as a public option'. Still, industry lobbyist say they are not worried. 'We trust the White House,' Mr. Kahn said. 'We are confident that the Senate Finance Committee will produce a bill we can fully endorse".

So the real story isn't the right-wing rallies. The real story is that it appears that the Obama administration has made back-room deals promising that health reform will protect the profits of the health insurance industry, Big Pharma, and private hospitals, at taxpayer's expense; that a "public option", if any, will be ineffective; and that health care costs will continue to rise.

Obama may get a "Health Reform" signing ceremony on the White House lawn declaring victory. But if the "reform" subsidizes industry profits and mandates that individuals must buy bare-bones policies which they can barely afford and which don't cover many of their health care costs, the raucous town hall meeting could end up being just a precursor to the wrath that American voters will end up aiming at Democrats in a few years when the true effects of this industry-friendly reform become clear.

Republicans have warned that failing to pass a health care bill could be Obama's Waterloo. Passing a bad bill could be an even bigger Waterloo, not just for Obama but for the Democratic Party, and for idea that government intervention is needed to counter-balance the power of free markets and corporate oligarchies.

Liberal organizations who have supported incremental health care reform like Move On, Health Care for America Now, the AFL-CIO, Families USA, and the SEIU need to make clear to Rahm Emanuel and President Obama that they are not an arm of the White House and will mobilize their supporters to oppose a deeply compromised, industry-friendly, health care bill. The House Progressive Caucus needs to make clear to the White House that they have the guts to vote down such a bill. No less than the future of liberalism, as a counter-weight to free market conservatism, may be at stake. If Obama ends up siding with the health insurance industry over ordinary Americans, progressive Democrats in Congress enable him to do so, and liberal and progressive organizations don't speak out, then what's left for millions of Americans whose homes, jobs, and health care are under attack except right-wing populism? The tea parties could end up being, well, just tea parties, compared to the shit-storm to come.

I truly hope the analysis in this article is wrong. Deep in my heart, I hope that Obama is throwing a series of ball fakes at the health care industry and in the end, he will pivot to his left, take off from the foul line like Dr. J, and slam home meaningful health care reform. But articles like those in the New York Times and Business Week provide strong evidence that the fix is already in on health care reform and the endgame is a lobbyist-brokered bill that will boost health care industry profits and not do enough to help most Americans.

If I take any hope, it's from yesterday's syndicated column by Helen Thomas, dean of the White House Press corps, who's been observing the ebb and flow of American politics about as long as anyone still writing:

"I covered the battle to create the Medicare system back in the 1960s. The cries of 'socialized medicine' worked for years until President Johnson rammed Medicare through Congress in 1965...

What kind of a nation are we if we do not provide everyone with the excellent medical care that only
some of us now receive?

In 2003 before he became a U.S. senator from Illinois, Obama actually called himself a single-payer "proponent." But now that he is president, Obama has buckled to Republicans and conservative Blue Dog Democrats in pursuit of consensus. My question is if Congress passes a watered-down version of health care that doesn't truly cover everyone, is the result worth it?

...[President Obama has] worked out a deal with the drug manufacturers not to use the federal government's massive bargaining power to negotiate lower drug prices -- although now the White House appears to be having second thoughts...

It's understandable why the president has bent over backwards to appease Congress, having studied Hillary Clinton's failure to touch base with key lawmakers in selling the program she drafted in her years as first lady. Her recommendations died on Capitol Hill, aided by the phony 'Harry and Louise' television distractions.

President Obama should lay down markers for real health care reform -- meaning we all kick in to a national program instead of fattening the pocketbooks of the insurance financiers.

Instead, the president has given up on Medicare for all, calling single payer 'impractical.'

He still has time to do the right thing and nothing to lose."

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