Wednesday, February 10, 2021

Obama's inside-out view of the public option

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I have been slowly working my way through Obama's memoir with a kind of wariness of being emotionally sucked in. Like all political memoirists, Obama presents himself as having made the best decisions he could given what he knew at the time. True, in the sense that his motives were good, his process was good, and his intellect is good. But still self-serving, and sometimes disingenuous.  

For all Obama's solicitation of a wide range of views, his narrative presents the predominance of certain views and voices as a given.  For example, regarding the size of the stimulus, Obama recounts this mid-December exchange:

Immediately after the election, examining the worsening data, we had raised the number to $500 billion. The team now recommended something even bigger. Christy mentioned a trillion dollars, causing Rahm to sputter like a cartoon character spitting out a bad meal. “There’s no fucking way,” Rahm said. Given the public’s anger over the hundreds of billions of dollars already spent on the bank bailout, he said, any number that began “with a t” would be a nonstarter with lots of Democrats, not to mention Republicans. I turned to Joe, who nodded in assent.

And that's it: political reality foreclosed, while Larry Summers foreclosed on the economic argument for more stimulus-- and Christine Romer's input is reduced to a "mention."  In Obama's telling, the stimulus his administration proposed was audaciously gargantuan by any current standard. 

But that's not true. Christine Romer was no outlier. For us lay folk, Paul Krugman was explaining from the start that the stimulus was too small, e.g., on Jan. 6, 2009

Bit by bit we’re getting information on the Obama stimulus plan, enough to start making back-of-the-envelope estimates of impact. The bottom line is this: we’re probably looking at a plan that will shave less than 2 percentage points off the average unemployment rate for the next two years, and possibly quite a lot less. This raises real concerns about whether the incoming administration is lowballing its plans in an attempt to get bipartisan consensus...

This really does look like a plan that falls well short of what advocates of strong stimulus were hoping for — and it seems as if that was done in order to win Republican votes. Yet even if the plan gets the hoped-for 80 votes in the Senate, which seems doubtful, responsibility for the plan’s perceived failure, if it’s spun that way, will be placed on Democrats.

Cassandra had it right -- not only on the economics but the politics.

There's a similar dynamic in Obama's account of the ACA battles. His description of the public option partly undermines his explanation for why it was doomed:

From the very start of the healthcare debate, policy wonks on the left had pushed us to modify the Massachusetts model by giving consumers the choice to buy coverage on the online “exchange,” not just from the likes of Aetna and Blue Cross Blue Shield but also from a newly formed insurer owned and operated by the government. Unsurprisingly, insurance companies had balked at the idea of a public option, arguing that they would not be able to compete against a government insurance plan that could operate without the pressures of making a profit. Of course, for public-option proponents, that was exactly the point: By highlighting the cost-effectiveness of government insurance and exposing the bloated waste and immorality of the private insurance market, they hoped the public option would pave the way for a single-payer system. It was a clever idea...

Obama gets the genesis of the "clever idea" backwards here. In its earliest iterations, beginning circa 2003  -- e.g., Helen Halpin's CHOICE program (2003), Rep Peter Stark's Americare bill (2006), and Jacob Hacker's Health Care for America plan (2007) -- the public option was essentially Medicare for all who want it - a public program, paying Medicare rates or something comparable, accepted by all providers that accepted Medicare, and available on a subsidized basis to anyone who opted in. Private insurers would be privileged to compete -- if they could.  

Romneycare, passed in Massachusetts in 2006, flipped the script -- and cut out the public option. Its success -- the subsidy structure, preserved after the ACA marketplace launched, remains far superior to the ACA's -- galvanized Democrats, and seemed to offer a model that some Republicans would buy into. The public option then shrank by degrees: to a plan competing on equal terms in a private plan marketplace, then to a plan that had to negotiate payment rates with providers (House bill), then to a plan that had to pay commercial rates (late Senate bill addition), then to nothing.

The public option was never going to get 60 senate votes, Obama asserts:

I found the whole brouhaha exasperating. “What is it about sixty votes these folks don’t understand?” I groused to my staff. “Should I tell the thirty million people who can’t get covered that they’re going to have to wait another ten years because we can’t get them a public option?”

This may be true, and was certainly true at the point in time Obama is narrating: in late-stage Senate negotiations, a public option was not going to get 60 votes. What it leaves out is the fact that from the beginning, Obama damned the public option with faint support. He never regarded it as central, as his account of its origins and place in progressive policy thinking betrays. 

If Obama had made the public option his own centerpiece from the beginning, it may have passed in weakened form -- perhaps required to negotiate payment rates, a concession even Henry Waxman, the supreme litigator who chaired the House Energy and Commerce Committee, had to make to blue dog Democrats. It may have paid rates somewhat lower than those paid by most commercial insurers on the exchange -- though perhaps not lower than those paid by the insurers with extensive business as Medicaid MCOs that have been dominant players in many ACA markets. It may have had the clout to command broader provider networks than the cut-rate MCOs. It would have served as a backstop in rural counties -- and some whole states -- that have come close to being left "bare," with no commercial insurers participating (that has never happened, but monopoly counties and states have not been unusual).  Obama writes that his team considered floating a "fallback" public option to be deployed in low-participation counties -- and years later, he proposed such a fallback in Health Affairs (at which point it was politically impossible).

In fairness to Obama, it's basically impossible alternative history to project back into the 2008 presidential race a viable candidate with so clear a sense of the potential of a strong public option to control costs and offer affordable, reliable insurance to all potential enrollees that he (or she -- Hillary Clinton could well have won in 2008) was willing to do everything necessary to put it across. "Everything necessary" would have included passing legislation through reconciliation -- which was truly outside the pale for Congressional Democrats in 2009.  And even with reconciliation, recall that Henry Waxman determined that a strong public option, paying Medicare rates, could not pass the House.   

Obama's signature mistake in the ACA's drafting process was not failing to fight for a public option, but calling, in his September address to a joint session of Congress, for a total price tag, $900 billion, that progressive activists immediately recognized as too low to subsidize coverage adequately -- a core defect that the current barely-Democratic Congress seems poised to remedy, at least temporarily (Covid relief legislation calls for two years of strongly enhanced subsidies). Too-high premiums for too-skimpy coverage is the chief reason enrollment is less than half the level projected by CBO in 2009. A strong public option would have made more generous subsidies more affordable to the federal government -- and put downward pressure on rates paid by employer-sponsored plans -- while a Medicare-like public option would have offered enrollees a wide choice of providers, forestalling the market's drive toward the narrow networks that predominate today.

To Obama's everlasting credit, he insisted on pushing for healthcare reform legislation in 2009 and on pushing the ACA through to passage at several points where he was under intense pressure to let it fail. There is much to his argument that given the Congress we had at the time, the enacted bill was the best that could be achieved. But he shared the limitations of perspective -- hope of working with bad-faith Republicans, willingness to contort the legislation to make it deficit-neutral according to CBO or to minimize tax increases, lack of commitment to the public option, a blinkered view of what constituted affordability -- of the Congress that created the legislation.

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1 comment:

  1. Well, I will tell you one thing that should have been done across the board........which is the fixation on quoting all federal programs in ten-year spending. The effect is to make the programs sound impossibly expensive, when they are not.