Cover Story

Healthy debate

"Healthy debate" Continued...

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

"If you are not at the table, then you will be on the menu," said Peter Nelson with the Center of the American Experiment, describing the stakeholder mindset as groups fought for pieces of a re-baked healthcare pie that accounts for nearly one-fifth of the nation's economy.

But then the momentum-killing details came out.

History is starting to repeat itself, according to University of Iowa professor Colin Gordon, author of Dead on Arrival: The Politics of Health in Twentieth Century America, who says the same sense of inevitability prevailed in the early stages of Clinton's healthcare efforts: "When you first talk about reform everyone is on board because it's a blank slate and anything is possible."

Adds Regina E. Herzlinger, a Harvard University healthcare expert: "It was the same with Hillary-care. Once people looked at the details they said, 'Stop the show.'"

The stakeholders' public smiles wane as each detail emerges and as congressional leaders say they are not bound by agreements between industry and the White House. On the same day House leaders last week unveiled their legislation, 31 business groups signed a letter to Congress warning that the proposed new taxes and mandates would cripple the economy.

The biggest battle lines: the insistence of Democrats to create a government-run insurance plan and the imposing of penalties on individuals who fail to buy and employers who refuse to offer health insurance.

The U.S. Chamber of Commerce and the National Federation of Independent Business oppose employer insurance mandates with tax penalties that could force businesses to shutter their doors-and at a time when the nation needs to be creating more jobs.

Meanwhile, the insurance industry supports such mandates-and the more than 40 million new customers it could bring-but balks at competing against a government-run insurance option.

Indeed, conservatives argue that such a public plan threatens the existence of private insurers by creating an unlevel playing field where the government acts as both competitor and industry regulator. Studies show as many as two-thirds of customers may lose their private insurance as companies try to compete with the government. "You can't beat an opposing team's quarterback and the referee at the same time," argues Jessica Waltman with the National Association of Health Underwriters.

In the end, this well-cultivated sense of healthcare industry togetherness is turning out to be only TV camera deep. "Now you have a bunch of people with one foot on the bandwagon and one foot off, and they are doing this little dance," says Iowa's Gordon.

While mired in legislative outsider status, Republicans, with an eye toward remaking Congress in the 2010 elections, are offering their own healthcare alternatives. The most-praised GOP plan is the Patients' Choice Act headlined by Rep. Paul Ryan, R-Wis.

This act tries to restructure the tax code and remove healthcare's current link to employment. It empowers individuals to shop for their own insurance at state health exchanges using tax credits of $2,300 per individual and $5,700 per family. Insurance companies would compete with one another for individual customers, who can carry their insurance from job to job.

"The primary decisionmakers in our system are the patients and doctors while, under Obama, it would be the government bureaucrats," Ryan told me.

But such bills will die in the current Congress. And, despite recent roadblocks, Dean Rosen, a former Republican healthcare advisor, believes that the chances of Democrats passing some type of healthcare legislation are still good. "Failure is not an option given how far out the president and congressional leaders have gone," he said.

This ultimately may mean passage of a watered-down version that allows Democrats to declare victory. Gordon predicts Democrats will give up on a public plan, impose light insurance regulations, and create soft insurance mandates. But there are no guarantees in the difficult calculus of healthcare reform where punting on the public option may win back conservative Democrats but alienate the more liberal wing of the party.

Democrats last week renewed their pledge to pass something before August. Former House Speaker Newt Gingrich says that Speaker Nancy Pelosi is more likely to muscle a bill through the House, where Democrats vowed to start voting on the bill in committee just two days after its unveiling. This $1.2 trillion House plan expands government programs like Medicaid and provides insurance subsidies to individuals making as much as $43,000 a year. But Democrats admit that by its driving the top federal tax rate to above 52 percent-higher than total tax rates in France, Canada and Italy-the plan will be a tougher sale in the Senate.

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