Peculiarities of Obama-care Politics: A Fireside Chat

There is no better codebook to the present health care reform legislation than Jacob Hacker's book The Road to Nowhere which began as an academic thesis several years after the Clinton Plan met ignominious defeat. The episode was by then quiet and forgotten, and innermost participants in the matter felt it was safe to talk big-shot politics to a college student writing a thesis. The resulting book was easy to follow, had a strong ring of authenticity, and advanced the author's career. Advanced it so much that the same Jacob Hacker is now visibly near Democratic policy circles, even seemingly advising in a few political deals. The similarities between the Obama initiative and the Clinton strategy as related in Hacker's book, are quite striking. One might have supposed it to be a cautionary tale, not a guidebook.

Boiling it all down, the Clinton strategy was to confront a House-Senate conference committee with a vast pile of often conflicting proposals sent to a House-Senate conference committee to sort out. In fact the proposal really wouldn't exist until the President sent that committee his list of deletions. It existed only in the sense that Michelangelo's statues resided within the stones from which they were carved. It's very hard to oppose such an omnibus bill, until the outline appears. From that point forward, passing it would be a matter of rushing it ahead of the criticism. It would also not be the first time a few little zingers, never discussed by either the House or the Senate, got slipped into a conference bill, which would likely be seven or eight hundred pages in length. And the timing for release of the omnibus legislation could be selected, quite likely the day before Thanksgiving or Christmas when newsmedia were away from work. Or else after a long series of preparatory news events, building public expectations before a spectacular revelation day. Either way, it was useful to control events. And everyone could claim it had never been done before.

As matters turned out for the Clintons, some industrial heavy hitters decided they wouldn't play this game, and the Clinton health proposal was withdrawn. Nose-counting, yes, but no vote. It remains a matter of dispute among professional politicians whether quiet retreat saved Clinton from far worse debacle, or whether his transparent retreat triggered the Republican Congressional resurgence in the following election, the one which propelled Newt Gingrich into the Speaker's chair. Ordinarily, you don't get a chance to do these things twice, once each way, but maybe this time it will be different. No doubt, the bitter 2008 nominating contest with Hillary Clinton had some effect on Obama thinking. If politicians keep doing the same thing, the public eventually catches on, and this time it is almost certain the arcane antics of budget reconciliation will get minute scrutiny. Budget reconciliation is supposedly limited to budget matters, circumventing filibuster and cloture in the Senate rules for one main reason: to assemble the overall effect of myriads of plus and minus offsets before new debt is authorized. True, the rules must be lax for a mammoth rush job like that, but that opens the doors for less justified rush jobs. Pulling fast ones about health care, under present conditions of foreign and financial affairs could prove hard to forgive.

Senator Edward Kennedy's death, Senator Byrd's incapacity, and the contentiousness of the health reform topic make it uncertain the Democratic Senate leadership can assemble 60 votes in favor of any healthcare proposal; one betrayal and you're dead. The Democratic Massachusetts legislature took away the right for Republican Governor Romney to fill a vacant Senate seat, and restored it for a subsequent Democrat governor. Since Massachusetts is finding difficulties with their new mandated health insurance law, there will be political consequences for such cynical behavior. In circumstances like this, every single Democrat senator can hold the proposal for ransom, while every single Republican senator will unite in opposition. When the majority shifts to Republican, which could be rather soon, the roles will be reversed in an almost certain effort to repeal whatever has passed this year. Since a 2010 Republican senate with 60 votes is almost inconceivable, grievances will carry forward to the 2012 Presidential campaign. The public wonders whether healthcare legislation is worth hindering Iraq, Iran, Afghanistan and the national debt. The Democrat Congress must worry it is not worth the political damage from hammering it through. Quiet withdrawal is damaging, but defeat is cataclysmic. Is a health insurance reform victory worth the risk, not only of defeat but that a disaster in some more important national issue will be blamed on the healthcare distraction?

Former Senate Majority Leader Bob Dole has appeared on television, and revealed a remarkable insight about Senate behavior. Senator Baucus has told the press that a Public Option cannot pass the Senate, so he is not including it in his proposal. Extreme left-wing members of the Democratic party have said they will "take a walk" if the Public Option is dropped, but it is included in the House version and can be restored in the conference committee. This maneuver thus removes Public Option from senate debate, still hoping to preserve those 60 votes. Essentially, Public Option is a proposal for the Government to go into the health insurance business itself, in order to create pressure on the insurance industry. In 1965 this was impossible, in 1992 it was unprepared for, in 2009 it is merely chaotic. It is widely rumored the Public Option is a punishment for the reluctance of the health insurance industry to cooperate more fully with the President, or at least a threat of what could happen if they don't cooperate soon. Bob Dole was a gracious, gentle old man, musing about what might be going on. You don't suppose, he mused, the Public Option might be nothing more than a red flag in front of a bull, to be surrendered with a great show of disappointment. But actually, just a feint creating an uproar, to divert attention from the real zingers in the rest of the bill, which can then pass through unnoticed. But, no, Bob Dole didn't really imagine such a thing. It was just a wild thought he happened to have.

Political observers agree that rancorous partisanship is the worst in a century. Just about everyone agrees gerrymandering is the cause. Changes in the way voter redistricting is conducted, some say the use of computers, have made gerrymandering much more effective. When safe seats arise in this way, it is only a matter of time before the seats are filled with heedless, reckless partisans, beholden to no one. The seniority system then takes over, and safe-seat partisans get control over committees and party discipline. This happens to both parties because incumbents unite to achieve it. Contestants for the dwindling number of uncertain districts are forced to be more cautious, tend to be more competent. But once elected, they are powerless in the face of the more unrestrained partisans who control matters. And more likely to be singled out for sacrifice in the next election. Scientific gerrymandering has coarsened and hardened the political atmosphere, considerably reducing public control of its representatives. It should be noted that Senate seats cannot be gerrymandered, but state legislative seats definitely can, leading to a coalition between state legislators who are almost always party hacks, and U.S. Representatives, who are increasingly so. It is said that in New Jersey and Florida, it is possible to predict the next ten years of politics with precision, if you only know how the gerrymandering was arranged. The Senate could probably devise a Constitutional amendment to fix this problem, with no chance of passing the House, or getting ratified by the States. Therefore, the main hope for representative government lies in the national party leadership of some party intervening into the party nominations for safe seats. Even that, would take extraordinary luck. It remains to point out that 2010 is the year for a census, 2012 for redistricting.

There's lots more; in politics there always is. A main hidden causes of the present crisis in health care financing lies in the Medicaid programs, run by the states, but mostly financed by federal taxes. Nursing homes are not originally included in the 1965 legislation, but most states receive strong pressure to pay for elderly indigents in nursing homes, stranded because they have run out of savings. Perhaps it would be a good thing to include nursing home coverage in a reform bill, but Obamacare is advertised to reduce costs not raise them. So in variable degree the circumvention has grown up of paying for nursing homes with money intended for hospitals, but then underpaying the hospitals. The prevailing estimate is that Medicaid programs only pay hospitals about 70% of the actual costs. Hospitals escape insolvency by raising the reimbursement demands on Medicare (to about 106% of costs) and private insurance (to something approaching 150% of costs). Various other accounting tricks account for the rest. The outcome of all this is that nursing homes are in effect supported by Blue Cross and other private insurers of younger people, raising premiums to employer groups and individuals by something estimated like $900-1500 a year. Because this juggling lacks straight-forwardness, results are inefficient; only about 42% of hospitals actually break even. As might be expected, knowledgible employer Human Resources departments and hospital administrations know about and object to this system, and are cooperating with Obamacare more than might be otherwise expected, but only in the hope this cost-shifting can be adjusted more in their favor. Mandating that all employers must participate would of course increase the base to share this exaction, but would ultimately link all corporation treasuries to all government deficits. The dream of the service unions would be to use this excuse to mandate unionization of hospital employees.

The participation of physicians in the Obamacare effort is riven by their own politics. For surgeons, the premiums for Malpractice insurance can run to $200,000 a year. An appalling proportion of obstetricians have been sued by their patients, to the point where women have no doctor to deliver their babies in certain parts of the country. For doctors in this high-risk category, relief from the plaintiff lawyers is the most pressing of all problems. On the other hand, many physician specialties have almost no malpractice risk, and are much more exercised about the reimbursement freeze, which has been in effect since the administration of Lyndon Johnson, and has been severely undermined by inflation. With physician ranks divided by two different priorities, the way is open for a ruthless politician to promise both and reward neither.

Senators Baucus, Grassley and Snowe come from sparsely settled states. Former Senator Daschle is from South Dakota, and there are perhaps twenty states potentially in this category. With a sparse population, it is difficult to develop sufficient insurance business to support effective competition; these states need to combine into regional areas to do so. On the other hand, populous states like New York, California, etc. are adamantly opposed to regional groupings, for obvious reasons. These population disparities create different attitudes about modifying the 1945 McCarran Fergusson Act, which limits insurance regulation and control to individual states, and thus makes it difficult to achieve interstate health insurance sales and portability. The fact that large employers have already achieved this freedom through ERISA makes them unwilling to see the problem, or waste political capital achieving it for others.

And finally, Obamacare raises some questions about judicial remedies. Certain Op-Ed commentators have raised a question of the constitutionality of mandates and pre-emptions, depending on how they are phrased. The U.S. Constitution was only narrowly ratified, in large part because the states were fearful of government getting bigger and more powerful than necessary. It was in response to this strong feeling the the Tenth Amendment reinforces in no ambiguous words, that anything not specifically assigned to the national government was to be the province of the state governments. If ever there was an original intent, it was that one.

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