A Spoonful of Sugar: On the Affordable Care Act
The second, and even more important, counterforce is accumulated material incentives. The tax reforms and IRS clarifications of the Eisenhower years—during which modern medicine and research hospitals rose in parallel with employment in large corporations—enabled businesses to deduct nearly all sums spent on employee group health insurance. Accordingly, businesses began to offer employees healthcare as a matter of routine in order to lure and retain talent in a hot employment market. Today, about 60 percent of Americans under 65 are covered through a private sector employer, while about 9 percent purchase health insurance directly, often through a trade association. (Plans negotiated by large unions in the 1960s and ’70s were especially generous.) For this group, the goal of any reform was minimizing the risk of lapsed insurance if a job was lost and, upon being rehired, getting excluded from insurance pools for pre-existing conditions.
Since Medicare and Medicaid were passed in 1965, moreover, almost all seniors have grown attached to the status quo, as have their providers. Medicare has increased to become some 40 percent of total hospital revenue; 10 percent of patients incur about 70 percent of the costs. For a generation, seniors reasonably came to believe that unless the government ran out of money, their care would not be disrupted. By the time Obama came along, the vast majority of likely voters—the employed and seniors—saw health insurance less as a moral “right” to be extended than as an earned, established “benefit” to be reinforced.
The bottom line for voters, Starr explains, was that healthcare reform became practicable only as a guardian of, well, the bottom line. Premiums kept rising: overall expenditures jumped from about 9 percent of GDP in 1980 to about 14 percent in 1992 and 17 percent today. This frightening increase in the cost of care might seem to suggest an emerging conflict of interest between young and old (though the young worry about their parents, after all). What the increase really created, Starr shows, was a natural alliance in favor of “bending the cost curve” down while keeping the benefits up. Meanwhile, the expansion of “managed care” in Medicaid’s network allowed most voters to feel, vaguely and incorrectly, that the indigent would not be abandoned.
A third counterforce is regional lobbying. Starr reminds us at the start of his book that “every dollar spent on health care is also a dollar that someone earns from health care.” During the Clinton push, Florida legislators backed away from reform when the insurance industry mounted a TV campaign to convince seniors that Medicare benefits might be cut. And was there ever any point in trying to persuade Joe Lieberman, “the senator from Aetna,” to allow people over 55 to buy into Medicare? Nancy Pelosi’s staff told Starr that health industry lobbyists from states in which Medicare payment schedules were lowest are the ones who really killed the “public option,” because the only conceivable plan of this kind would rely on Medicare to establish rates of compensation, and even Democratic representatives refused to appear to be forcing the short end of the stick on their state’s providers. (Regional disparities, reflecting differing living standards, competencies of physicians and such, are pretty much inevitable and create permanent conflicts of interest impeding the creation of any uniform system of compensation. Canada’s notionally single-payer system avoids the problem because it is actually a constellation of single-payer systems, with each province managing its own plan and negotiating rates independently with its providers.)
Given that “cost containment” became the game, and esoteric opinions about the numbers qualified one to play it, most voters were easily swayed by the claims and doubts of industry lobbyists presented as experts. Which is why it would have been irresponsible for Obama to try to pass reform without first lining up groups like the AMA, the drug companies and the hospital industry—all of which stood to gain new “customers” under the plan—in order to generate the kind of headlines that imply consensus.
Fourth, and finally, are the politics of the not-quite-ideological sort: the egos of senators who expect to mark up bills (and slide in parochial advantages), Congresspeople who would not feel safe endorsing something that has not been demonstrated to work (which, for Obamacare, meant pointing to satisfaction rates in Massachusetts) and so forth. In this context, Starr emphasizes that Republicans under Obama became an all-but-monolithic party with a singular ambition: to regain the presidency. Starr implies, but does not say, that mainstream journalists have inadvertently colluded with Republicans by scoring politicians more on their electoral guile than on their public policies. Republicans have thus plausibly assumed that Obama would be blamed for any economic difficulties, even if they created or deliberately worsened them. Republicans were eager to subvert the administration’s healthcare plan, never mind that Bob Dole (and, more recently, Mitt Romney) had pretty much designed it.
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