Cover Story

Healthy debate

A major legislative overhaul of U.S. healthcare seemed to be a sure thing just weeks ago, and some sort of change remains likely. But as details emerge and costs become apparent, industry groups and moderate Democrats are starting to balk

Issue: "Hurtling toward havoc," Aug. 1, 2009

WASHINGTON-When the current congressional healthcare debate began, Senate Finance Committee Chairman Max Baucus gave reporters a bold prediction about the chances of passing a major medical overhaul this year: 100 percent. "It's a given," said the Democratic senator from Montana. "It's inevitable."

That boast was in early June. This is Baucus now: "We're not there yet. I'm trying the best I can to get there soon."

Against all expectations, the healthcare debate seems to be following what's become a summer pattern for major legislation: Heady confidence in June evolves into humility as the weeks progress. In 2007 it was supposed be the summer of immigration reform. In 2008 lawmakers attempted to deal with $4-a-gallon gasoline by tackling energy. But in both cases dramatic floor speeches and numerous made-for-television events wilted rhetoric in the humid Washington summers and resulted in zero significant legislation.

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Now lawmakers are trying to untangle the nation's $2 trillion healthcare system and its nearly 50 million uninsured residents, and it's déjà vu all over again: The outlook for major healthcare legislation gets bleaker with each passing day.

Conservatives see reason for hope in this gradual thwarting of President Barack Obama and company's healthcare ambitions. They don't like the current system, but they like even less the Democrats' dizzying array of plans that add up to more governmental control of healthcare paid for by a deluge of new taxes.

But what's interesting is that they aren't the ones responsible for slowing down healthcare legislation. With Democrats enjoying the largest combined congressional majorities since the Carter administration, Republicans and conservatives are on the outside in this debate. It's Democrats and the industry groups that the White House has spent most of the year courting who are putting up the latest roadblocks to what is President Obama's top legislative priority.

Fissures in the Democratic coalition began to appear in June with the Congressional Budget Office's bombshell estimate that proposed changes came with a $1.6 trillion price tag. The CBO also predicted that one Democratic plan would cut the uninsured rolls by just 16 million, well under half of the total number of uninsured.

Soon even Democrats began asking how they could expand healthcare coverage without breaking the federal bank. The answer of more taxes in the midst of a troubled economy saw long-standing loyalists like the nation's labor unions balk at plans to tax employer-sponsored health benefits.

After Democrats received an earful at home during the July 4 recess, Baucus heard from the top Senate Democrat-Majority Leader Harry Reid-that taxes on health benefits were a nonstarter. Democrats began looking for other funding options and soon rested their eyes on the nation's wealthy-who may now face an income surtax of as much as 5.4 percent to pay for healthcare. This decision has killed the chances of a bipartisan agreement, meaning, if healthcare passes, Democrats will own full authorship. But many Democrats fear the repercussions of voting for higher taxes entering the 2010 mid-term elections.

Not surprisingly, the latest healthcare body blow came from 40 House Democrats in the fiscally conservative "blue-dog" coalition, whose "strong reservations about the process and direction" of the bill sent Democratic leaders scrambling.

This swift decline in the sense of inevitability jolted many in Washington because the Obama team had avoided many of the mistakes made by the Clinton administration during the last big Democratic push for a healthcare overhaul 15 years ago.

Ed Howard, president of the Alliance for Health Reform, recalled that President Clinton alienated many veteran lawmakers when he demanded they pass a 1,300-page healthcare bill largely written by a secretive task force headed by first lady Hillary Clinton. This time around, Obama's instructions to legislators ran 253 words long, allowing lawmakers to do the heavy lifting.

In addition, the large array of stakeholders tied to any healthcare changes has been better coddled by Obama's team. The economic realities behind ballooning healthcare costs have combined with the start of baby-boomer retirements to convince industry and other groups that changes are needed this time.

It was in this climate that a parade of interest groups lined up for their White House "I see the healthcare light" moments. Insurance executives, doctors, pharmaceuticals, labor groups, and hospitals joined in pledging to reduce industry-wide costs by 1.5 percent per year. Then drug manufacturers ($80 billion in discounts for Medicare medicines), hospitals ($155 billion in cuts from Medicare and Medicaid) and Wal-Mart (support for requiring employers to officer insurance) offered to help pay for and propel forward the healthcare initiatives. The bandwagon started getting full.


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