A Spoonful of Sugar: On the Affordable Care Act
Obama found his work cut out for him in the spring of 2009. A year earlier he, Hillary Clinton and John Edwards had collectively stipulated the outlines of a future Democratic health bill during the primary campaign, incorporating private insurance companies into the delivery system (“If you like your health insurance, you can keep it”) but prohibiting the denial of coverage to people with pre-existing conditions. All three agreed to look for ways to rein in Medicare costs by standardizing levels of, and procedures for, reimbursement. All agreed to reduce and eventually eliminate government subsidies (or overpayments) to Medicare Advantage programs, most of which flowed through to the profit margins of private insurance companies. All sought reductions in overall delivery costs through insurance “exchanges”—what President Clinton had called “alliances”—intensifying competition among insurers. These exchanges would become the means to make coverage more or less universal, providing subsidies for the uninsured while putting them into normal modes of preventive care—thus reducing dependence on emergency wards. All agreed to something like a “public option” on the exchange, and all assumed that costs for claims processing and administration would drop, owing to information technology and economies of scale. Subsidies for the uninsured would be paid for by eliminating Bush-era tax cuts for the wealthy.
Obama’s only real point of disagreement with Hillary, which he eventually conceded, had been about mandating that all citizens—including healthy, employed young people who think they are immortal—buy insurance. Obama had first proposed a mandate only for parents to insure their children; by July 2008 he said simply, “I kind of think Hillary was right,” and that was that. (The mandate, of course, was crucial to the act’s balance sheet, though it launched the raft of lawsuits that the Supreme Court will begin hearing in March.) Given the history that Starr so lucidly recounts, it’s clear that America’s healthcare reform was bound to look, at best, more like Switzerland’s mixed, complicated system, also based on private sector insurers, than like England’s simple, unified one, in which doctors are essentially government employees. Nor, once Obama assumed office, was he going to make the mistake of excluding the heads of key Congressional committees from writing the legislation within the parameters described. If they wrote it, they’d own it. He also succeeded where Bill Clinton had failed, lining up the hospital and drug industries—too discreetly for some critics—in advance of the Congressional push.
Through the summer of 2009, Obama waited for Senator Max Baucus, chair of the Finance Committee—an ally of House Blue Dogs from the conservative state of Montana—to try to bring around Olympia Snowe, one of Maine’s two moderate Republican senators. Baucus failed; there is no point rehearsing the sad story Starr tells. But did this mean Obama was deluded by his own rhetoric of bipartisanship and could have gotten a better deal had he been more combative? Not at all. Starr shows that Obama’s real goal was “bipartisanship in one party,” the not-monolithic Democratic Party. He worked with Blue Dog sympathizers in the Senate like Baucus (and Kent Conrad of North Dakota, Ben Nelson of Nebraska, etc.) to woo Snowe and the few other Republican moderates, not because he expected to gain Republicans but because he feared losing Democrats. If the reputations of moderate senators did not become inextricably bound with the health reform effort, they’d be able to walk away and face no censure from their voters.
What emerges most vividly from reading Starr is how reckless it was for critics to charge Obama with not making his own views clear enough, or losing control of the narrative, because he resolved to leave to Congress—within an agreed timetable—the work of filling in the details. Yes, the schedule did slip a few months as Baucus worked his committee, but a few months in a century-long effort was a trivial delay. And it would have been widely recognized as such but for the righteous indignation Obama endured during his first spring in office, when anger over the bailouts was white-hot, and his administration’s determination to regulate rather than nationalize the banks (remember Tim Geithner’s “stress tests”?) gave critics, especially on the left, an opening to depict the president as a creature of Wall Street—catnip for the nascent Tea Party, as it turned out.
Starr shows that when the details of the health legislation finally came out, including proposals to stipulate new Medicare standards of care, talk of “death panels” inflamed latent anxieties about government interfering with personal choices. The left was also incensed by the deal the White House had cut with Big Pharma prohibiting, as part of the legislation, direct negotiations with Medicare over prescription drug prices and excluding medicines imported from Canada. (The industry group PhRMA agreed, in return, to find $80 billion in discounts to Medicare, and to pay for an ad campaign supporting the legislation.) Starr adds that, although this was not publicly known at the time, the health insurance industry wrote an $86.2 million check to the Chamber of Commerce to mount a campaign against the legislation. “If Obama and the Democrats had been in a stronger position politically,” he writes, “they could have insisted on stronger cost containment and avoided making as large concessions to PhRMA and the hospitals as they did.” But sixty Senate votes meant everything. “Reform needed interest group allies: there would be no way to pass it if the entire health-care industry went into all-out opposition.”
* * *
Nevertheless, Obama pushed back hard. He called a press conference for July 22, laid out the elements of the plan as best he could and said of the insurers: “Right now, at the time when everybody’s getting hammered, they’re making record profits and premiums are going up.” Starr—tactful to a fault this time—neglects to add that the real news made at the press conference was Obama’s offhand remark that Cambridge police had acted “stupidly” in arresting Harvard professor Henry Louis Gates in his own home. The remark was true, but it put Obama on a kind of probation because it gestured toward the incipient gulf between the young, black, brainy president and lunch-pail whites like Sgt. James Crowley (the arresting officer), people who had first backed Hillary and then, like “Joe the Plumber,” went in large numbers for John McCain.
Ironically, working-class voters stood to gain much more predictable medical coverage from healthcare reform, because pre-existing conditions and unemployment would no longer interrupt it. But the Gates incident reinforced how hard it would be for Obama to overcome latent suspicions that his healthcare plan was a new kind of affirmative action program or a new bailout for losers, foisted on ordinary people by a patronizing elite shuttling between Harvard Yard and Goldman Sachs. Obama finally stemmed the tide against the bill with a landmark speech to Congress in September, Starr recalls. But much damage had already been done. Months later, the Democratic nominee for Ted Kennedy’s seat, Martha Coakley, campaigned ineptly, as if the healthcare proposal pending in the Senate, for which her vote would be crucial, did not exist. The loss of the Massachusetts Senate seat required Obama to hit the road and to embrace a tactical maneuver by which the House simply adopted the Senate bill.
Criticism of the Obama administration gained momentum through 2009, and even became strangely vogue among economists and columnists who were widely thought to be on the president’s side. It was in this context that voices who had lionized Obama—from seasoned pragmatists like Robert Reich (who blurbs Starr’s book) to MoveOn.org—spoke of the “public option” as the holy grail, and of Obama as its perfidious guardian. Perhaps it was the magical word “public,” or the vague sense that Obama, having worked to salvage banks and restructure the car companies, was now protecting the profits of insurance companies. Perhaps it was the way this insinuation was magnified by the charge that the members of Obama’s economic team were mostly disciples of Robert Rubin, thus to blame for deregulating investment banking and causing the financial crisis in the first place. Perhaps it was the way Obama’s half-heartedness about a public plan, which he knew the Senate would never give him, suggested timidity. In any case, Obama’s left critics now lambasted him. Former DNC chair Howard Dean declared in November 2009 that without the public option “this bill is worthless and should be defeated”—not grounds for drug testing, perhaps, but possibly for prescribing some Xanax.
The bill eventually passed, but it had become advantageous on the right, and fashionable on the left, to hold Obama responsible for failing to bring unemployment down to pre-recession levels in just twelve months. The most photogenic attack—already ubiquitous in Republican ads—came in the fall of 2010 when Velma Hart ingenuously upbraided Obama in a nationally televised town-hall meeting, complaining that she was “exhausted” from defending his administration. (“I’ve been told that I voted for a man who said he was going to change things in a meaningful way for the middle class,” she said; “I’m one of those people…. I’m waiting, sir. I don’t feel it yet.”) There followed a spasm of second-guessing: the pleasure principle unbothered by the reality principle. Obama should have put “jobs” first: that is, the stimulus should have been larger, as if the stimulus had not come before healthcare and been considerably larger than Congress had first been inclined to pass; as if Obama had not made healthcare the centerpiece of his campaign and had not gone back for a second stimulus, which the Senate killed; as if “jobless recoveries,” which reflect tectonic shifts in the technologies of production, are not structural innovations Keynes may not have thought of in an age of telegraph, short-wave and surface mail; as if Fox News does not give a whole new meaning to the phrase “bully pulpit.” The Affordable Care Act, Starr shows, even gave relief to badly strapped state budgets by assigning 100 percent of the responsibility for Medicaid to the federal government for the first three years; traditionally red states, “with historically low Medicaid eligibility and large uninsured populations”—along with the highest rates of unemployment—stood to gain the most. “If ideology did not trump self-interest,” Starr laments, “these states would be the Affordable Care Act’s biggest fans.”
For the first African-American president, surely the cruelest charge from the left was that in pursuing healthcare the way he did, he had wasted an “FDR moment.” Unlike Obama, presumably, Roosevelt had summoned the courage to take a radical case to the people against Congressional resistance—to be transformational, not merely transactional. Starr’s review of the New Deal refutes that myth, reminding us that Roosevelt avoided a healthcare fight almost from the start, not only because he didn’t want to take on the doctors but also because he didn’t want to ruffle the feathers of Southern Democrats. Indeed, FDR’s entire reform strategy depended on holding together a coalition that required him to ignore, if not pander to, the grotesque racism of the South. He got Social Security (and other bills) passed by appealing to immediate and universal pocketbook interests, and with a larger Senate majority, which reserved the filibuster mainly for civil rights; to appease Southern Democrats, he agreed to exclude domestic servants and farm laborers (e.g., sharecroppers) from the initial Social Security program.
* * *