13th annual Municipal Finance Conference


13th annual Municipal Finance Conference



Health Reform: The Need To Move Forward

Henry J. Aaron
Henry J. Aaron The Bruce and Virginia MacLaury Chair, Senior Fellow Emeritus - Economic Studies

February 1, 2010

Last Wednesday night, President Obama answered the question raised by the ‘Massachusetts surprise’ – the startling election of a Republican to replace health reform stalwart, Edward M. Kennedy. That question was simple: did that election require the abandonment of efforts to reform U.S. health care?

Conflicting recommendations abounded. Some said yes, the process should stop. Others suggested that reform should proceed, but only incrementally or where bi-partisan agreement could be found.

I believe that the only viable strategy is to move ahead despite the loss of a filibuster-proof majority in the U.S. Senate to enact the Senate bill with modifications.

In his State of the Union address, the president did not explicitly embrace this strategy, but his words point in that direction. Without doubt, the president made clear that he supports continued Congressional efforts to enact his health reform agenda. This clarity came after some confused remarks released immediately after the Massachusetts election by the White House and Congressional leaders. The president seemed in those early hours to support efforts to enact reform legislation on a piece-by-piece basis. Speaker Pelosi declared that she lacked votes in the House to simply pass the Senate’s bill.

The State of the Union speech, coming eight days after the Bay-State electoral shock, reflected a sober and considered reaction. Although he was not explicit, the president indicated that he would press for enactment of legislation like that passed by both houses of Congress. I believe that there is only one strategy for achieving this goal that has any realistic chance of success. It requires negotiations between the House Representatives and the Senate on changes in the Senate bill that both houses of Congress could enact by simple majorities under so-called ‘reconciliation’ procedures. Actual passage of the modifications would follow House approval of the bill already passed by the Senate. Speaker Pelosi indicated earlier this week that she, after all, she believed that she is close to having a majority to implement this strategy.

This strategy will not be wholly to the liking of members of either house of Congress. Not all provisions of the Senate bill that are objectionable to the health reform supporters in the House can be fixed through reconciliation. Not all of the changes on which House members will insist are to the liking of some Senators who supported initial passage. But, as noted later, no other option for moving ahead offers any plausible chance for success.

Using Reconciliation Is In Accord With Congressional Rules And Precedents

This course also carries non-trivial risks. The first is that Republicans will try to persuade the public that use of reconciliation to pass a bill is somehow contrary to agreed Congressional procedures. I believe that this criticism is without merit. Under Congressional rules, reconciliation exists to deal with exactly this sort of situation – the failure of Congress to implement provisions of the prior budget resolution. The 2009 budget resolution called for action on health reform. Congress has not yet acted. Using reconciliation to effect the intended outcome is just what reconciliation is intended to do. And enactment by a simple majority in the House of a bill previously passed by a super-majority in the Senate follows established Congressional procedure.

Furthermore, Republicans are poorly positioned to object to the use of reconciliation to pass important and controversial legislation. It was a Republican president and a Republican Congress that in 2001 used reconciliation procedures to enact tax cuts that could not have passed had supporters been forced to amass 60 Senate votes. Furthermore, reconciliation could be used at that time only because tax cut advocates framed as temporary tax cuts that everyone with more than a room temperature IQ understood were intended to be permanent. But permanent tax cuts would have required 60 votes.  And, so, in that battle, truth, as in other wars, became a casualty.

The Polls And What They Mean

The more serious risk of using the strategy I have outlined comes from the fact that public opinion polls now indicate that more respondents oppose what they think is in the health reform bill than support it. Polls indicate that support for health reform has been waning for some time, but the shift to ‘more against than for’ occurred comparatively recently. At the same time, focus groups indicate that when people are exposed to the provisions the bills actually contain, views shift from negative to positive.

I believe that the polling results carry a dual message. The first is that public querulousness is real. People care about their health coverage. Most are insured and most are more or less satisfied with the coverage they have. They don’t want to lose it. They understand that millions are uninsured. But they are afraid that large scale reform – and the House and Senate bills are both unquestionably large-scale reforms – threatens to upset their current arrangements in some fashion.  Hence the worry.

The second message is that Democrats, in general, and the administration, in particular, have done an execrable job of communicating with the public about health reform. Democrats have spent the past year arguing with each other, rather than combating allegations and misrepresentations of opponents about what the proposed legislation would do. They debated endlessly among themselves on whether to include a public option in the reform legislation, without realizing that the debate was a waste of time: There was never any chance that Congress would include a public option strong enough to enroll tens of millions of enrollees, and without large numbers of enrollees a public option would have little consequence for insurance competition.

Democrats fought over whether to have a single national insurance exchange or separate state exchanges.  They hashed out aid formulas, penalties on non-compliant employers, and how to make sure that an individual mandate really worked. The worked hard on scores of other technical provisions, many of which were important, but all of which were dull and utterly bewildering to anyone other than the few specialists interested in them.

Meanwhile, reform opponents talked to the public. They successfully framed the proposed health reforms. In my view, they did so through a distorting lens. In a feat of rhetorical legerdemain, they cast plans that would cause tens of millions of people to buy private insurance coverage as a ‘government takeover.’ It surpasses understanding why advocates of health reform did not promptly and forcefully label this allegation as the fantasy and distortion that it is.

Opponents of health reform told people that a plan scored as reducing deficits was a budget-buster. Some reform opponents actively abetted the mendacious mischaracterization of end-of-life counseling as ‘death panels’ (labeled ‘the lie of the year’ by Politifact). Opponents of reform succeeded in persuading Americans that their insurance arrangements were in jeopardy, when, in fact, the plans covering most would not be touched by the proposed legislation. These largely unaffected groups included most people covered through employment-based coverage, current Medicaid beneficiaries, and most Medicare beneficiaries. And, of course, millions more would have had their insurance costs reduced by newly-available subsidies to make insurance affordable.

Reform Advocates Must Make Their Case To The Public

The challenge for health reform supporters in the administration and in Congress is to resume talking to American voters. They have a very good case to make. The legislation has many genuinely appealing features. Americans are rightly angry that insurance companies now can charge high premiums or deny coverage altogether to those with serious illnesses. Advocates of reform should make sure that every American understands that reform will prevent insurance companies from cancelling coverage or jacking up premiums for the sick.

Advocates should remind the public that the reform legislation will not only bring insurance coverage to tens of millions who are currently uninsured, but will also relieve scores of millions of others from the fear that they will lose coverage in the future. Reform advocates should strive to make understandable to all the legitimate promise of cost control and the tangible steps to improve quality of care that will result from health reform.

There Are No Other Workable Options

Other strategies hold out no prospect of success. Abandoning the reform effort is the most dangerous strategy of all. Reform advocates have taken the hard votes. Voters opposed to reform will not forget those votes come November. And supporters of reform will find little reason to support members who refused to use the leverage of a large political majority to implement their principles.

The start-over, do-it-in-pieces strategy is an invitation to time-wasting failure. Sixty-vote majorities would have to be assembled for each component of reform. To be sure, it is technically possible to craft a bill that extends coverage to fewer people than the Senate or House bills do. But it is not possible to institute serious insurance market reforms without assuring a balanced pool of enrollees. It is not possible to assure balanced pooling without mandating coverage. It is not politically or ethically possible to mandate coverage without providing subsidies to make insurance affordable to low- and moderate income people. And it is not possible to prevent subsidies from boosting deficits unless one is prepared to boost taxes or cut other spending, which reform opponents have consistently refused to do and which would certainly require sixty Senate votes.

At best, the call for starting anew is naïve. At worst it is a dishonest siren-call, summoning health reformers into a political swamp.

So, the best option for health reformers is to take democracy seriously and set out to persuade voters that the reform is in the national interest. Reformers have ten months before the mid-term elections to do the job. It will be a hard slog, It will be far harder to dislodge misconceptions now than it would have been to have prevented them from being implanted six months ago.

An effective campaign to sell health reform will take patience, money, and energy. It will demand the involvement of the president of and members of Congress. The reasons why health reform is in the national interest will not explain themselves. Opponents of the Senate and House bills will certainly not do the job for them.

If health reform supporters cower before current public opinion polls, they will surely lose heavily come November – and, arguably, they will deserve to lose. If they stand up for the genuinely constructive legislation they have crafted, they can prevail and they will deserve to win.