Wednesday, September 2, 2009

The Obama Administration––What Will They Do Next?

How’d you like to be a fly on the wall in those White House health care meetings this week?

It looks to me like they have two choices—neither attractive to them:

1. Full Speed Ahead, Damn the Torpedoes – This might also be called the Pelosi Option for the Speaker’s intransigence for compromise. Just keep driving the existing Democratic bills through. This has the advantage of keeping the liberal wing of the Democratic Party happy but has some pretty tough potential negative consequences.

With a health care approval rating in the low 40s, this invites the continued strong opposition on the right and lots of continued middle-America nervousness over a “government takeover of the health care system” and “spending another trillion dollars when we can’t afford it.” Even if the public option is ditched, that means continuing to push a thousand page health care bill in an environment when the health care reform well has likely been poisoned.

This option includes the threats for using reconciliation rules. As I have said before, you don’t ram anything through with a 41% health care approval rating. And that presumes the reconciliation idea makes sense in the first place. I don’t think it does:
  • The Republicans have a ton of parliamentary maneuvers they can use to tie things up indefinitely.
  • The suggestion to “split” the bills into one unpopular bill and one popular bill––presuming moderate Democrats and some Republicans might be dumb enough to vote for one and pretend that second bill had nothing to do with the more problematic first one––is foolishness.
IF any of this did work and result in a very controversial bill you have to wonder just what the consequences would be come November 2010—or even 2012. You also have to wonder what the consequences would be for simply trying it.

2. Scale Health Care Reform Down to Something at Least Moderates in Both Parties Can Live With––This sounds easier than it really is.

As I have posted before, doing just health insurance reform would cost something close to a trillion dollars. Getting rid of pre-existing conditions provisions and medical underwriting requires getting about everyone in the health insurance pool to avoid the insurers getting stuck with only the sick. Health insurance subsidies to accomplish this are by far the most expensive part of the existing bills. In the House bills, the insurance subsides are worth almost $775 billion and the Medicaid expansion is worth almost $450 billion more. Scale those subsidies back and you are still in the $800 billion to $1 trillion range.

A bill that costs that much still scares those worried that this kind of entitlement expansion is too costly—particularly because the bills on the table so far have had little in the way of real cost containment.

An even more modest bill would likely be necessary to get moderates onside.

You could probably get a smaller cost bill—perhaps $250 billion over ten years—by targeting subsidies on the small employer market. Dollars could be targeted, limited in scope, and make a “down payment” toward covering at least a few million people. A targeted expansion of Medicaid could be part of such a package but nowhere near the 130% target in existing bills.

This has the advantage of creating a bill you could likely get moderate Democrats and even a lot of Republicans to support. It would settle down voter opposition.

But it would also constitute a “huge missed opportunity” to really create a universal health insurance system. Liberals would likely go ballistic believing the White House has abandoned the signature domestic promise of the campaign.

The Democrats are in a hell of a health care political hole.

Neither of these options is politically attractive--each has both extreme opportunity and consequences.

Sort of reminds me of what Stan told Ollie: “Well, here’s another nice [health care reform] mess you’ve gotten me into.”

Or, you could just hope for a miracle phone call:

Earlier post: There Will Not Be Health Care Reform in 2009 Without Republican Leadership
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