Health Care Reform’s History of Utter Failure

Health Care Reform’s History of Utter Failure

Pain Machine

Why our health care system is broken.


The American health care system is a notorious disaster. On the one hand, even “good” private employer-based insurance is often a nightmare to actually use, while tens of millions of people have much worse coverage or none at all. At the same time, our system is also incredibly expensive—eating up 17 percent of the US gross domestic product, or nearly twice what peer rich nations spend on average.

Our Rube Goldberg mishmash of public and private programs is simultaneously miserly when it comes to people getting the care they need and a colossal pain in the neck to use, and somehow it still costs an arm and a leg. If we count insurance premiums as taxes—which makes sense, since they are basically mandatory—American workers are the second most highly taxed among all rich nations (behind only the Netherlands). Just our existing tax revenues would be more than enough to fund a universal Medicare-style system as it exists in similar countries. If we could somehow transplant Canada’s system into the United States, taxes would actually go down.

Why are we stuck with this expensive, broken system? One good answer can be found in Ten Year War: Obamacare and the Unfinished Crusade for Universal Coverage, an excellent new book by veteran health care reporter Jonathan Cohn about the political history of health care reform in this country. Cohn shows how repeated failures by both Democrats and Republicans to get a decent policy through our rickety 18th-century constitutional structure led to the strategy that produced Obamacare, formally known as the Affordable Care Act—a policy that improved our system in many ways but also entrenched some of its worst elements. For advocates of universal health care of any political stripe, Cohn’s book is essential reading.

The story starts in the early 20th century, when medicine was being rapidlyrevolutionized to provide treatments that actually worked (as opposed to quackery like bloodletting) and a number of countries were setting up national health care systems. Mutual aid societies proliferated in the United States in the late 19th and early 20th centuries, including for the purpose of providing health insurance, but their scope and resources were necessarily limited. In the 1930s, Franklin Roosevelt considered creating a universal national health insurance system as part of the New Deal, but he eventually decided against it for fear that it would “jeopardize Social Security or other proposals,” Cohn writes. Harry Truman promoted legislation for such a system in 1945, but opposition from the American Medical Association, the insurance lobby, and Southern segregationists, who worried it would mean integrated hospitals, blocked it. Even in the best of times, it was very difficult to get anything through the House and Senate and signed by the president, let alone sweeping reforms.

Lyndon Johnson took those failures into account when his administration was working up Medicare and Medicaid, which apply to the elderly and the poor, respectively. Johnson was an unparalleled master of legislative procedure and had enormous Democratic majorities in 1965, but he still aimed his Great Society programs at only those groups—two increasingly difficult-to-insure populations—and did not attempt a more robust and expansive health care policy. By 1970, Medicare and Medicaid covered 21 million and 14 million Americans, respectively, who were previously uninsured, but the programs also provided some handy benefits to medical providers and insurance companies by allowing doctors to make money treating old people and by allowing private insurers to focus on the more profitable employer-based market.

Health care remained off the table for the rest of the Johnson administration; in fact, only with a Republican in office did it return to the political front burner. In 1974, Richard Nixon got behind a quite ambitious reform effort, but it stalled out when Democrats and the unions thought they could get something better with a Democrat in the White House after Watergate. They were sorely mistaken—Jimmy Carter would prove to be the most conservative Democratic presidential nominee since John W. Davis in 1924, and one reason Ted Kennedy ran against him in the Democratic primary in 1980 was Carter’s refusal to support an ambitious national plan.

Health care remained a dead issue in both parties until 1993, when Bill Clinton tried once again, but this time with a more conservative plan, one that represented the newly enshrined neoliberal consensus that private markets should be the cornerstone of a universal healthcare program. It too died, for a number of reasons, including a dishonest propaganda campaign against it and quarrels with members of Congress—especially Senator Daniel Patrick Moynihan, then chair of the Senate Finance Committee, who allowed Republicans to filibuster the bill and who personally detested the Clintons, in part because they would not cut welfare benefits for poor mothers before attempting health care reform.

Ten Year War offers a concise history of these five efforts to provide health care to some or all of the American people, but its main focus, as its title and subtitle suggest, is the political negotiations around the passage of Obamacare in 2009-10 and the ensuing conservative attempts to destroy the program. When it comes to Obamacare, Cohn details how congressional Democrats designed their effort around the lessons they had learned from all the previous failures and partial successes. Private insurance would be left mostly untouched, so vested medical interests would not do to Obama what they had done to Truman. Congress would take the lead rather than the president imposing his own plan, to avoid the backlash seen in the Clinton years. The design for Obamacare was not Democratic in origin; in fact, it was based on a plan that Mitt Romney implemented as the Republican governor of Massachusetts, which was centered around protecting private insurance and market competition while also insuring those who had fallen through the cracks. As Cohn notes, the Obama administration picked this Republican model partly because it hoped to coax some support from the GOP, which both Obama and anxious Democratic moderates badly wanted as cover. Republican votes were also desired because Senate Democrats were unwilling to kill the filibuster, meaning they would need 60 votes for Obamacare to pass. Moderate Democratic Senator Max Baucus of Montana, the chairman of the Senate Finance Committee, started the outreach to Republicans by bringing his old friend Senator Chuck Grassley of Iowa into the design process.

Despite all the careful planning, the political strategy almost didn’t work. All of the efforts by Democrats to get Republicans on board by cadging from Romney and doing whatever they could to appease Grassley achieved nothing. On the contrary, the GOP screamed that the plan was rank socialism, and after months of stringing Baucus along, Grassley (under heavy pressure from fanatics in the Republican base) openly opposed the bill and even repeated the smear that it would lead to the creation of “death panels,” implying that under Obamacare, health care bureaucrats could decide to euthanize Grandma. To make matters worse, when Ted Kennedy died in August 2009, the special election to fill his seat was whiffed by the Democratic candidate, Martha Coakley, thereby erasing the 60-vote Senate majority that Democrats had had for a few months. White House chief of staff Rahm Emanuel, with his typical brand of cringe-making timidity masquerading as foul-mouthed bluster, kept shouting that the Democrats should just give up.

To Obama’s credit, he didn’t. With Speaker of the House Nancy Pelosi and Senate majority leader Harry Reid, he helped rally the party to get the Affordable Care Act through. They abandoned any attempt at bipartisanship and passed a plan using the budget reconciliation process in the Senate, which allowed them to bypass the filibuster. The House then passed the Senate plan, even though it was markedly worse than the House’s own version—especially given that it lacked a public insurance option—and Obama signed it into law on March 23, 2010. “Looking back, it’s remarkable they passed anything at all,” Cohn writes.

Cohn is refreshingly open about his biases. He is unabashedly in favor of universal health care and is also firmly in the camp that believes Obamacare was a solid improvement over the status quo. Yet he is also clear-eyed about the policy’s substantial shortcomings. At bottom, it was a moderate, half-hearted reform—and unlike Romney’s plan in Massachusetts, it was passed without bipartisan buy-in, and so hastily that many large problems were overlooked. “The Affordable Care Act, like the Clinton plan before it, was an attempt to achieve the liberal end of universal coverage through a more conservative scheme that relied heavily on competition among private insurers. But the intellectual foundation for that calculation seems increasingly shaky,” Cohn writes.

The rollout of the Obamacare exchanges was delayed for years simply to game the 10-year budget window and make the policy seem less expensive than it really was. The opening of proved to be a humiliating tech disaster, and even when the website was working, the exchanges quickly developed a deserved reputation for narrow coverage networks, high deductibles, and—for people outside the quite small subsidy zone—very high premiums. That was particularly painful for those who made just over 400 percent of the poverty line (about $51,000 for an individual), where the subsidies suddenly vanished, and especially for those just short of Medicare eligibility. A 60-year-old man who accidentally fell off that subsidy cliff, for instance, would see his monthly premiums for a silver plan jump from $417 to $870.

The expansion of Medicaid under the act was comparatively successful, with far more enrollees than anticipated. But even that improvement was dented when conservative Supreme Court justices rewrote the law to make it optional for states—just one of dozens of attempts to destroy Obamacare through judicial rule by decree—which left out more than 2 million people in the conservative states that refused to participate (though efforts to get the expansion through at the state level in some of these places have seen some success).

Most critically in terms of overall policy, Obamacare ended up covering less than half of the uninsured population, and its labyrinthine regulations failed to stem the ongoing rise in health care costs, which despite a modest slowdown in the years immediately after its passage have continued to shoot into the stratosphere.

Ultimately, Cohn concludes correctly that the Obamacare political strategy could not help but lead to a policy cul-de-sac that would never produce genuine universal health care at a reasonable cost. On the merits, it is just not very good policy, and on the politics, buying off all interested parties created a policy that was so complicated and penny-pinching that relatively few people experienced an obvious concrete benefit. Democrats worked themselves to the bone trying to get something passed that would help people without infuriating any of the vested interests that the party had taught itself to fear over the preceding decades, and they ended up losing anyway—on net, passing the law probably worsened the 2010 midterms defeat the Democrats’ strategy was designed to avoid.

The shortcomings of Obamacare, however, also taught some valuable lessons. The only realistic way forward I see is ripping off the political band-aid—rather than standing on their hands and trying to please everyone at once, the Democrats ought to pass a very aggressive policy that ignores vested interests but provides a really good benefit that voters will appreciate. As Cohn observes, the American health care system is still so broken that there is basically no other choice, whether the policy framework is single-payer or something else: “The reality is that any system that covers everybody with low out-of-pocket costs and some kind of government control over spending is going to look a lot more like Medicare for All than what the U.S. has now.”

Conversely, even a heavily compromised policy like Obamacare has proved to be quite popular with voters. In the House of Representatives, Republicans passed dozens of bills repealing the law after they took control of that chamber in 2011. But as Cohn points out, when Trump took office six years later with the GOP in control of both the House and the Senate, their attempt to finish the job failed, thanks to the defection of three Republican senators—no doubt largely because the repeal bill was hideously unpopular, with its favorability polling about 25 points underwater. The GOP never even attempted to touch Medicare; surely a policy that was even more generous would be that much more untouchable.

Biden and congressional Democrats did follow something like this suggested strategy in the passage of the pandemic rescue package. The $1.9 trillion bill contains a sweeping overhaul of Obamacare that is almost as ambitious as the original policy. The subsidy cliff was eliminated (though only temporarily, at least for the present), and for the first time the exchange premiums should be affordable to everyone, costing no more than 8.5 percent of a person’s income. The government will also cover the entire cost of COBRA coverage (again temporarily), so people who lose their jobs can stay on their current private plans for free. And all this was passed on a party-line vote, again through reconciliation, with much smaller majorities than the party enjoyed in 2010. Burned by Grassley’s duplicity, the Democrats barely bothered to even pretend they cared about trying to get Republican votes and just rammed it through.

Unfortunately, most of those choices are still designed to prop up the broken private system. The COBRA expansion in particular is staggeringly wasteful—$35 billion to cover perhaps 2 million people, which is about three times as costly as putting the same number of people on Medicaid. So far, Biden’s campaign promise to put a public option on the exchanges is nowhere to be seen.

Throwing trainloads of money at the extant hideous semi-private health care mess might, someday, get almost everyone in the United States technically insured. But the coverage will probably not be very good, and it will not stop the cost bloat that is devouring the American economy from the inside. If we want true universal health care, where anyone who is sick can go to the doctor without the terror of being slammed with an unpayable bill, and we want the price of that care not to eat up nearly a fifth of the economy, a lot of powerful corporate interests are going to have to take a major hit. Time is short: Democrats may not keep their current razor-thin congressional majorities for long, so it’s up to them to take the initiative—and for the rest of us to keep up the pressure.

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