There’s No Such Thing as “Health Care Lite”

Why a stripped-down “consensus” bill probably won’t happen.

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President Obama

Have you ever seen a cat chase its tail? Watching Democrats try to save health care reform since Republican Scott Brown won Ted Kennedy’s Massachusetts Senate seat is a bit like that.

The House can pass the Senate bill as written! Whoops, no it can’t.

How about passing the Senate bill in the House and then improving it in a reconciliation bill that requires only 51 votes? The House’s liberal Democrats might go for that. But its pro-life Democrats won’t buck the U.S. Conference of Catholic Bishops to support the Senate abortion compromise, and unfortunately abortion coverage is one issue everyone agrees can’t be handled in a reconciliation bill. (That’s because, pace Rep. Bart Stupak, D-Mich., his church-approved House abortion provision doesn’t involve the spending of federal dollars—which under existing law may not fund abortions—and reconciliation is allowed only for issues affecting the federal budget.)

What about ramming a House-Senate conference bill through the Senate during the 10 to 15 days before pro-reform Sen. Paul Kirk, the Democrat named to replace Kennedy, must vacate his seat? Majority Leader Harry Reid says no, possibly because it would violate Senate precedent. (Ted Kennedy himself, who like Brown first came to the Senate via a special election, was seated two weeks before the commonwealth of Massachusetts formally certified him the winner!)

OK, then. How about sucking up to swing-voting Sen. Olympia Snowe, R-Maine? Sorry, she won’t play, maybe because she’s irritated that Reid blabbed to the New York Times Magazine that, last time around, Snowe negotiated in bad faith (“It was a waste of time dealing with her”). Or maybe she’s just proving his point.

The latest notion to seize Democrats’ imagination is to scuttle the current bill and instead pass “health reform lite.” In a Jan. 20 interview with George Stephanopoulos of ABC News (to whom this episode must seem an acid flashback to the 1994 elections, when Stephanopoulos, then a top aide to President Clinton, saw his ambitions go up in smoke) President Obama said:

I would advise that we try to move quickly to coalesce around those elements of the package that people agree on. We know that we need insurance reform, that the health insurance companies are taking advantage of people. We know that we have to have some form of cost containment because if we don’t, then our budgets are going to blow up and we know that small businesses are going to need help so that they can provide health insurance to their families. Those are the core, some of the core elements of, to this bill.

That was enough to make health reform lite the lead story in the nation’s papers. But no sooner were these words out of Obama’s mouth than he started explaining why health reform lite is probably unachievable. He started with politics:

I think it’s important to remind everybody that part of this process was having conversations with Republicans for months and asking them what exactly they wanted to do and what their solutions were to these problems. … I thought that the urgency of the moment would allow us to join together and make common cause. That hasn’t happened. Some of it, frankly, is I think a strategic decision that was made on the side of the opposition that … some of it had to do with a sense that the best political strategy was to simply say no.

That’s an understatement. Sen. Chuck Grassley, R-Iowa, was perhaps the most extreme example. As the bill progressed through the Senate, Grassley went from praising the individual mandate (the bill’s requirement that all Americans purchase health insurance) as a matter of “individual responsibility” (Aug. 4) to denouncing it as an “intrusion into private lives” (Sept. 22) to speculating that it violated the Constitution (Dec. 23). The bill cleared the Senate the following day.

In the Stephanopoulos interview, Obama unbandaged the mummy of health reform lite a bit further as he delved into policy:

If you ask the American people about health care, one of the things that drives them crazy is insurance companies denying people coverage because of preexisting conditions. Well, it turns out that if you don’t—if you don’t make sure that everybody has health insurance, then you can’t eliminate insurance companies—you can’t stop insurance companies from discriminating against people because of preexisting conditions. Well, if you’re going to give everybody health insurance, you’ve got to make sure it’s affordable. So it turns out that a lot of these things are interconnected.

This is the “free rider” problem: Insurance companies, the reasoning goes, will go broke if they’re no longer permitted to turn away customers who avoid purchasing health insurance until they get sick. Hence the individual mandate. But people who lack health insurance often lack the money to purchase it; if you require them to do so, many of them will go broke without some sort of subsidy. Princeton economist Uwe Reinhardt has written that this makes health reform a “three legged stool that is useless without all three legs.” Include all three legs, however, and health reform isn’t so lite anymore.

A minority view holds that the free rider problem isn’t as urgent as it’s cracked up to be. Obama himself took this position during his primary campaign. (Grassley changed his spots on the individual mandate to oppose health reform; Obama changed them to support it.) Darshak Sanghavi offered a version of this argument yesterday in Slate. Yale political scientist Jacob Hacker made a somewhat different version of the argument in 2008 while Obama and Hillary Clinton were quarrelling over the individual mandate. But both of these arguments rely on the assumption that health reform would entail a very large role for government—either by establishing a public option (Hacker) or by extending government subsidies to lower-income people to a far greater extent than a stripped-down health reform bill ever would (Sanghavi).

Finally, Obama told Stephanopoulos:

Now, I could have said, well, we’ll just do what’s safe. We’ll just take on those things that are completely noncontroversial. The problem is the things that are noncontroversial end up being the things that don’t solve the problem.

This is why, one day later, the White House announced it was going to let “the dust settle” before settling on a plan. I can’t improve on the conclusion to what I wrote in August on this topic: You want simple? Enact single-payer.

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