Obama: Right Substance, Risky Politics

Obama: Right Substance, Risky Politics

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Capital Exchange is a new blog featuring debate among some of Washington’s smartest budget and policy experts. –Eric Pianin, Washington Editor and Moderator

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President Obama’s health care reform strategy at the moment makes sense, even though nobody should be sure how it will work out.

Let's begin with the substance. His current proposal is a plausible compromise between the Senate and House bills. People should disagree about the bill if they disagree with the values it seeks to serve; but most of the conservative attacks on it are fact-free.

The goal of the bills is to preserve the insurance most Americans have now, but fill in the gaps. The major effect would be to fix the horribly broken and inefficient market for individual and small-group insurance. It would make adequate insurance far more affordable for most people in those markets, particularly helping small businesses and their employees.

I am among those who conclude the compromise will not do as much as we’d like to help large employers and their employees control costs. I have argued that the administration’s economists overstate possible savings from the boatload of cost control initiatives in the plan. But that is a different question from whether the bill will pay for itself. The Congressional Budget Office has been properly conservative in estimating savings, and if CBO scores the bill as paying for itself, it is highly likely to do so.

The main effect of the bill on most Americans will be to give them a safety net: a decent backup in case they lose their jobs or their employers slash benefits. It will guarantee decent insurance for tens of millions of other citizens. It is not a threat to what people have now, is not a budget buster, and it is structured in ways that would have looked conservative in the 1970s. It is in no way a "government takeover" of health care.

Next, consider the legislative situation. The short term is very simple. Republicans are against anything that would insure more than a few million people, and have no incentive to agree with the Democrats even on that. They will filibuster anything they can. Therefore the advocates of health care reform have only one option. They have to pass the Senate bill in the House, and then pass a reconciliation "fix" in order to compromise between the two bills. This is by no means standard procedure, but the Republican criticisms are hypocritical in the extreme. Their routine use of the filibuster on hundreds of occasions is also not standard procedure. Moreover, as many people have pointed out, the Republicans used reconciliation for many major laws, some of which made the budget situation much worse.

The two-stage process of enacting the Senate bill and an accompanying reconciliation limits the set of changes that can be made. The Byrd Rule precedents about extraneous matter might, for example, prohibit strengthening of the new insurance exchanges that are supposed to improve the individual and small-group markets. Nevertheless, this tactic is the only way to pass anything serious this year. Since this reconciliation is based on the fiscal year 2010 budget process, it also only makes sense to do it before the next budget resolution is passed. So both the tactic and moving quickly are the only plausible options.

There is another dimension of the legislative situation that may be obvious but bears repeating. The long-term is as simple as the short-term. The Democrats will lose seats in November. The in-party almost always loses seats in the midterms, and that is especially likely if it had a big gain in the presidential election. Redistricting after 2010 is unlikely to add seats to Democratic-leaning parts of the country. Anything the Democrats do to improve the long-term budget situation will hurt them further (see: Bush, George H. W. in 1990; Clinton, William J. in 1993). Obama could be a one-term president and the Democrats are highly unlikely to see majorities as large as they have now any time in the next decade. It took 15 years to get major health insurance reform back on the legislative agenda after the defeat in 1994, and it could be as long before it comes up again if it fails this time.

On the other hand, if the current legislation passes, it becomes the status quo. A Republican government will try to repeal major provisions before they go into effect in 2014. Advocates of reform would have much preferred a plan that would go into effect sooner. Yet it is always better, in this political system, to be playing defense, trying to prevent changes in existing law. There is no guarantee that any law which is passed now will go into effect as planned. Yet it is far better to pass a law and then play defense, than to fail now and wait another decade or more. There is also a reasonable chance that passing the bills now will improve the Democrats’ political prospects.