[Posted by Karl]
House Democrats are planning to unveil their version of ObamaCare this morning, without a “robust” government-run insurance plan, which would slash reimbursement rates to some variation on Medicare rates. This has bloggers like OpenLeft’s Chris Bowers wondering whether the House can pass any ObamaCare bill:
This is going to anger quite a few members of the Congressional Progressive Caucus. Some of them might not vote for passage now, because they consider the public option too weak.
This matters because there are around 18-25 Democrats who will vote against the bill from the right, pretty much no matter what at this point. With every Republican likely to vote against the bill, this means that opposition from 15-22 Progressives would sink the entire bill.
And maybe pigs would fly out of my butt. The House proggs will cave in the end, having to settle for a bill that requires insurers to accept all customers and charge all the same price, regulates all aspects of their marketing to make sure they aren’t discriminating, and then redistributes the profits to make sure that no company gets penalized unfairly.
On the flip side, Megan McArdle explains why the “robust” public option would be an economic and political disaster:
[T]he thing about patients whose insurance doesn’t cover the average cost of treating them is that they cannot be 100% of your patient pool. Someone has to cover the cost of that MRI machine. If the public option does manage to crowd out other insurance–as it might well do, with the ability to dictate price controls–then suddenly, the public option won’t be cheap any more. Hello, fiscal crisis.
That’s the financial problem. Here’s the political problem: if you insert a strong public option, the providers will revolt.
You’ve already lost the insurers. Try to reimburse hospitals and doctors at Medicare + 5% for any large segment of the market, and you’ll lose them too. Health care reform is likely to survive the defection of the much-hated health insurance industry. I doubt there is any way at all that it survives negative ads from coalitions of doctors, hospitals, and other assorted healthcare workers. I don’t see Obama having much success getting on the radio one Saturday morning to complain that doctors are all a bunch of lying obstructionists.
McArdle wonders why the fixation with a “robust” public option has persisted. Her commenters correctly note that it makes a nice bargaining chip and distraction from the mandate-driven government takeover of the US healthcare system. And the cheap shot answer is that the nutroots generally lack a nuanced understanding of economics or practical interest group politics.
However, all of that is only a partial answer. The Obama administration has long seen this issue as another in the long tradition of corporatism, a staple feature of what Jonah Goldberg calls liberal fascism since the days when Big Meat co-opted the Teddy Roosevelt adminstration. One of the adminsitration’s main strategies on ObamaCare has been to pay off the “stakeholders”, i.e., the special interests most affected by the bill. Big health insurers, Big Pharma, AARP, doctors, etc. — have all been promised goodies under this approach. The point of friction with the “stakeholders” has been the public option, which is opposed by the insurers and the Business Roundtable (a major player which is otherwise with the SEIU and AARP on ObamaCare). This is implicit in McArdle’s analysis (though it is not entirely clear that the Dems have lost insurers, provided the Dems can fool AHIP into believing the mandates and penalties will be stiffened and enforced).
The history of the 20th century shows that progressives have generally been content to pursue corporatism clothed as “reform.” So why are liberals not content to let health insurance companies become the premium collectors for the welfare state?
Two possible answers leap immediately to mind. The first possibility is that healthcare is different. Socialized medicine has been the Holy Grail for the Left for the better part of a century because they see it as the cornerstone of a proper, Euro-style welfare state. Control over the healthcare system gives the government influence and control over many life-and-death decisions (except abortion, though that issue may be a monkey wrench in the House yet). In this context, corporatism leaves open the possibility that non-state actors would remain dominant, which is simply unacceptable to the true believers of the Left. This is why the Left freely admits they view the public option as a Trojan Horse for socialized medicine when talking among themselves.
The second possibility is that the 21st century Left is different. It may be that last year’s meltdown on Wall Street has actually convinced them that capitalism is a failure. They look at the bailouts, TARP, etc. and see most of the same flaws the Right sees — but concludes that the financial sector should have been nationalized instead. In this view, a version of ObamaCare that is merely corporatist simply does not take enough steps down the road to serfdom.
Of course, those possibilities are not mutually exclusive. I’ll be interested to hear if there are other possibilities I missed. In the meantime, a couple more ObamaCare tidbits. Yuval Levin notes that it looks like Pelosi may again be forcing her vulnerable Dem colleagues to vote before the Senate, which may be bad strategy in the short- and long-term. Sen. Evan Bayh may not be able to support a motion to proceed with the health care debate on the Senate floor, and he is practically daring his Dem colleagues to try getting the public option through budget reconciliation. (A reminder: Bayh’s wife is a director at Indianapolis-based health insurer WellPoint Inc.).