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Klein: How Special Interests Could Block Health Reform
..By JOE KLEIN Joe Klein – Fri Jul 31, 4:35 am ET
"Sometimes I get a little frustrated," Barack Obama admitted to AARP in late July, "because this is one of those situations where it's so obvious that the system we have isn't working well for too many people, and that we could just be doing better." He was talking about health care, of course. As Washington collapsed toward its August recess, the President's reform efforts were looking distinctly iffy, even though he is absolutely right about the need for change. The system is a fiscal mess, the king of all budget busters. It is also a moral mess, leaving far too many Americans with far too little protection. But the President is wrong when he says, "The system we have isn't working well for too many people." The vast majority - more than 80% in the latest TIME poll - are satisfied with their health care. They may be worried about losing their coverage, and angry as their premiums rise, but the health-care "crisis" is theoretical to most Americans. That's the immediate source of Obama's frustration, but there is a larger, structural issue blocking his path. (See the five biggest hurdles to health-care reform.)
One of the most difficult things to do in a democracy is react to a problem that is real, but not immediately threatening. Obama is trying to do this in two monster areas, health care and climate change. "He's killing me," says Senator Debbie Stabenow of Michigan, referring to the hordes of special-interest groups that have camped on her doorstep and clogged her phone lines. Stabenow is smiling as she says it. She supports the broad thrust of Obama's initiatives. "But you can't believe all the groups that want to make their case. There are the doctors, the nurses, the cancer society," she continues, raising the specter of a conga line of disease groups bending her ear. "All of them have legitimate concerns. And that's just health care."
As long ago as 1982, the economist Mancur Olson made the argument, in The Rise and Decline of Nations, that as a democracy matures, special interests grow more entrenched. Their intense dedication to their own specific needs, Olson wrote, often trumps the broader, but less focused, interests of society. And that was before the rise of cable news and talk radio. It was before the utterly corrupting effect of televised advertising on politicians really kicked in - the need to raise money (from interest groups, mostly) and to exercise extreme caution lest one of your votes be used to decapitate you in a 20-second ad. It was before the Democrats and Republicans transformed themselves into more strictly ideological parties. Put all these factors in the cauldron and you create a poisonous atmosphere that makes legislative action on big issues almost impossible. It is also a prescription for conservative governance of the sort that has thrived since Ronald Reagan. Doing nothing is the easiest thing. (Read TIME's exclusive health-care interview with Obama.)
"We've gotten rusty at legislating," says Representative Jim Cooper, a Tennessee Democrat. He is being kind. There are only two sorts of legislation that seem to pass these days: things that have to pass, like budgets - and cotton-candy giveaways, like tax cuts or the wildly irresponsible, unfunded Medicare drug bill that George W. Bush enacted. Occasionally, responsible actions take place in the budget process. Bill Clinton spent most of his political capital on deficit reduction, which helped fuel the economic boom of the 1990s. Obama has just managed to kill the F-22, an anachronistic fighter jet. Very, very occasionally a special interest will take it on the chin - as the teachers' unions did when Bush passed the No Child Left Behind Act, which mandated a testing regimen the teachers didn't like. But the passage of landmark legislation like the health-industry reforms that Obama is seeking has become about as common as politicians who refuse to run television ads. It just doesn't seem to happen anymore.
Download TIME's new BlackBerry app.
See who's who in Obama's White House.
These constrictions account for some of the strange decisions that Obama has made in shaping the health-care debate. Since most people like the health care they have, the President has been forced to say, "If you like the health care you have, you can keep it." But it is difficult to enact substantive reforms when 80% of the system stays the same. The need for simplicity has also forced Obama to stick with - indeed, to double down on - the current practice of having employers provide health insurance. This is the weakest, most illogical part of the system. It is difficult to sustain in a global economy where American corporations have overseas competitors that aren't saddled with providing health care for their employees.
The pressures of partisanship have forced other contortions. It seems obvious that the cost of malpractice insurance cripples doctors - and drives up the number of tests and procedures they perform in order to bulletproof themselves against lawsuits. Obama has said he is open to malpractice reform, but congressional Democrats haven't included it in their bills because trial lawyers are a major Democratic special-interest group. Another Democratic interest group, organized labor, has blocked the most logical and progressive way to fund a universal health-care system - eliminating the tax exclusion on health benefits and replacing it with a progressive tax credit. The health-care exclusion is, at approximately $250 billion, the single biggest tax break in the federal code. The problem is that unions have negotiated generous health packages over the years. According to Senator Stabenow, autoworkers get a package worth about $15,000 per year - and public employees get more, about $19,000. "The police and firefighters get even more," she says. "But they need it, and do you really want to tax them for putting their lives on the line?" (Advocates like Representative Cooper insist that exceptions for some unions can be made.) (See the results of TIME's health-care poll.)
The best-constructed health-care bill, developed by Senator Ron Wyden of Oregon, would eliminate the health-care tax exclusion the unions want. "But we also offer a tax credit of $17,000 per year, which is more than most people are getting in health-care benefits now," he says. Wyden's bill addresses most of the other major health-care issues. It has 14 bipartisan co-sponsors in the Senate, it covers everyone and offers more choices, it reforms the health-insurance business, it alleviates the responsibility of employers, it has a robust cost-control mechanism, and it has been scored as revenue-neutral over 10 years by the Congressional Budget Office. "It's got everything," says Stabenow, one of the co-sponsors, "except interest groups to back it."
At the end of his presidency, Clinton told me that the biggest mistake he made in trying to reform health care was pulling a pen out of his pocket during the 1994 State of the Union address and threatening to veto any health-care legislation that didn't achieve universal coverage. He had come to believe that the only way to get something big like health-care reform was to do it incrementally. Obama has been wise not to make any take-it-or-leave-it offers. He is still fighting for a comprehensive bill - and he still may get one. But he may have to settle for less. (Watch TIME's video "Uninsured Again.")
"Something called health-reform legislation will pass," a prominent Democrat told me. "The political consequences of not passing anything would be too great." A bare-bones bill that reforms the health-insurance industry - insurers would have to accept all comers, including those with pre-existing conditions, at the same rates - is a distinct possibility. Expanded coverage, perhaps including the parents of children eligible for the State Children's Health Insurance Program (SCHIP), is also probable. Most important for long-term reform, a system of health-care superstores - the wonks call them "exchanges" or "co-ops" - where individuals and small businesses can go to buy a plan, could be included.
"Look, we've already passed three major pieces of health-care legislation," says Henry Aaron of the Brookings Institution, who is skeptical about the chances for a comprehensive bill. He was referring to the expansion of SCHIP and the funds for electronic records and studies to monitor which treatments are most effective that were included in the stimulus bill. "If we can pass health-care exchanges, which could be expanded in the future and are the seeds of real change, this will be the most successful year of health-care reform in decades." The President wants much more; the media expect much more - but given the constraints of our middle-aged democracy, perhaps we should be happy to achieve any sort of progress at all.
..By JOE KLEIN Joe Klein – Fri Jul 31, 4:35 am ET
"Sometimes I get a little frustrated," Barack Obama admitted to AARP in late July, "because this is one of those situations where it's so obvious that the system we have isn't working well for too many people, and that we could just be doing better." He was talking about health care, of course. As Washington collapsed toward its August recess, the President's reform efforts were looking distinctly iffy, even though he is absolutely right about the need for change. The system is a fiscal mess, the king of all budget busters. It is also a moral mess, leaving far too many Americans with far too little protection. But the President is wrong when he says, "The system we have isn't working well for too many people." The vast majority - more than 80% in the latest TIME poll - are satisfied with their health care. They may be worried about losing their coverage, and angry as their premiums rise, but the health-care "crisis" is theoretical to most Americans. That's the immediate source of Obama's frustration, but there is a larger, structural issue blocking his path. (See the five biggest hurdles to health-care reform.)
One of the most difficult things to do in a democracy is react to a problem that is real, but not immediately threatening. Obama is trying to do this in two monster areas, health care and climate change. "He's killing me," says Senator Debbie Stabenow of Michigan, referring to the hordes of special-interest groups that have camped on her doorstep and clogged her phone lines. Stabenow is smiling as she says it. She supports the broad thrust of Obama's initiatives. "But you can't believe all the groups that want to make their case. There are the doctors, the nurses, the cancer society," she continues, raising the specter of a conga line of disease groups bending her ear. "All of them have legitimate concerns. And that's just health care."
As long ago as 1982, the economist Mancur Olson made the argument, in The Rise and Decline of Nations, that as a democracy matures, special interests grow more entrenched. Their intense dedication to their own specific needs, Olson wrote, often trumps the broader, but less focused, interests of society. And that was before the rise of cable news and talk radio. It was before the utterly corrupting effect of televised advertising on politicians really kicked in - the need to raise money (from interest groups, mostly) and to exercise extreme caution lest one of your votes be used to decapitate you in a 20-second ad. It was before the Democrats and Republicans transformed themselves into more strictly ideological parties. Put all these factors in the cauldron and you create a poisonous atmosphere that makes legislative action on big issues almost impossible. It is also a prescription for conservative governance of the sort that has thrived since Ronald Reagan. Doing nothing is the easiest thing. (Read TIME's exclusive health-care interview with Obama.)
"We've gotten rusty at legislating," says Representative Jim Cooper, a Tennessee Democrat. He is being kind. There are only two sorts of legislation that seem to pass these days: things that have to pass, like budgets - and cotton-candy giveaways, like tax cuts or the wildly irresponsible, unfunded Medicare drug bill that George W. Bush enacted. Occasionally, responsible actions take place in the budget process. Bill Clinton spent most of his political capital on deficit reduction, which helped fuel the economic boom of the 1990s. Obama has just managed to kill the F-22, an anachronistic fighter jet. Very, very occasionally a special interest will take it on the chin - as the teachers' unions did when Bush passed the No Child Left Behind Act, which mandated a testing regimen the teachers didn't like. But the passage of landmark legislation like the health-industry reforms that Obama is seeking has become about as common as politicians who refuse to run television ads. It just doesn't seem to happen anymore.
Download TIME's new BlackBerry app.
See who's who in Obama's White House.
These constrictions account for some of the strange decisions that Obama has made in shaping the health-care debate. Since most people like the health care they have, the President has been forced to say, "If you like the health care you have, you can keep it." But it is difficult to enact substantive reforms when 80% of the system stays the same. The need for simplicity has also forced Obama to stick with - indeed, to double down on - the current practice of having employers provide health insurance. This is the weakest, most illogical part of the system. It is difficult to sustain in a global economy where American corporations have overseas competitors that aren't saddled with providing health care for their employees.
The pressures of partisanship have forced other contortions. It seems obvious that the cost of malpractice insurance cripples doctors - and drives up the number of tests and procedures they perform in order to bulletproof themselves against lawsuits. Obama has said he is open to malpractice reform, but congressional Democrats haven't included it in their bills because trial lawyers are a major Democratic special-interest group. Another Democratic interest group, organized labor, has blocked the most logical and progressive way to fund a universal health-care system - eliminating the tax exclusion on health benefits and replacing it with a progressive tax credit. The health-care exclusion is, at approximately $250 billion, the single biggest tax break in the federal code. The problem is that unions have negotiated generous health packages over the years. According to Senator Stabenow, autoworkers get a package worth about $15,000 per year - and public employees get more, about $19,000. "The police and firefighters get even more," she says. "But they need it, and do you really want to tax them for putting their lives on the line?" (Advocates like Representative Cooper insist that exceptions for some unions can be made.) (See the results of TIME's health-care poll.)
The best-constructed health-care bill, developed by Senator Ron Wyden of Oregon, would eliminate the health-care tax exclusion the unions want. "But we also offer a tax credit of $17,000 per year, which is more than most people are getting in health-care benefits now," he says. Wyden's bill addresses most of the other major health-care issues. It has 14 bipartisan co-sponsors in the Senate, it covers everyone and offers more choices, it reforms the health-insurance business, it alleviates the responsibility of employers, it has a robust cost-control mechanism, and it has been scored as revenue-neutral over 10 years by the Congressional Budget Office. "It's got everything," says Stabenow, one of the co-sponsors, "except interest groups to back it."
At the end of his presidency, Clinton told me that the biggest mistake he made in trying to reform health care was pulling a pen out of his pocket during the 1994 State of the Union address and threatening to veto any health-care legislation that didn't achieve universal coverage. He had come to believe that the only way to get something big like health-care reform was to do it incrementally. Obama has been wise not to make any take-it-or-leave-it offers. He is still fighting for a comprehensive bill - and he still may get one. But he may have to settle for less. (Watch TIME's video "Uninsured Again.")
"Something called health-reform legislation will pass," a prominent Democrat told me. "The political consequences of not passing anything would be too great." A bare-bones bill that reforms the health-insurance industry - insurers would have to accept all comers, including those with pre-existing conditions, at the same rates - is a distinct possibility. Expanded coverage, perhaps including the parents of children eligible for the State Children's Health Insurance Program (SCHIP), is also probable. Most important for long-term reform, a system of health-care superstores - the wonks call them "exchanges" or "co-ops" - where individuals and small businesses can go to buy a plan, could be included.
"Look, we've already passed three major pieces of health-care legislation," says Henry Aaron of the Brookings Institution, who is skeptical about the chances for a comprehensive bill. He was referring to the expansion of SCHIP and the funds for electronic records and studies to monitor which treatments are most effective that were included in the stimulus bill. "If we can pass health-care exchanges, which could be expanded in the future and are the seeds of real change, this will be the most successful year of health-care reform in decades." The President wants much more; the media expect much more - but given the constraints of our middle-aged democracy, perhaps we should be happy to achieve any sort of progress at all.