Saturday, April 3, 2010

Healthcare Reform - More Thoughts

It was disappointing, but not surprising, that no Republicans voted for the historic bill President Obama signed into law last week. The Republican leadership, headed by House Minority Leader John Boehner of Ohio and Senate Minority Leader Mitch McConnell of Kentucky, put a lot of pressure on their more moderate and, in some cases, possibly wavering members to withhold support for ideological, pragmatic, as well as political reasons.

While Boehner was greatly overstating the impact of the bill when he repeatedly said it was a "government takeover of healthcare," there is no question its approval into law and implementation would significantly increase the federal government's role. There is also no question that at $940 billion over ten years its cost is very high, and one can certainly question whether the country can afford it, given our weak and recovering economy, large budget deficits and high national debt. It's also not at all certain that this law will contribute to the sizable level of deficit reduction claimed by Obama.

Politically, of course, Boehner and his colleagues saw defeat of this bill as a major means to seriously damage President Obama and enhance the prospects for big gains by Republicans in the November mid-term elections for both congressional and various state governor races including in California. The Democrats, led aggressively by Obama, took a big political risk by pushing such a controversial, complex and expensive bill through Congress on a highly partisan basis. They are betting on the majority of Americans agreeing by November that the healthcare law, despite its high cost and limitations, is nevertheless the right course for the country.

At its core the political debate was between cost and coverage. The Republicans were primarily seeking much lower costs and cost containment measures, where the bill was relatively weak, while Obama and the majority of Democrats in Congress were prioritizing greater coverage for uninsured Americans and more security for those who are already insured. The expectation is that the new law will provide for some level of healthcare insurance coverage for 32 million Americans who currently are uninsured. That, as I understand it, is where most of the law's cost comes from.

I would have liked to see a more credible rough breakdown of the 32 million uninsured people in terms of their general circumstances. How many of them could probably have afforded to purchase coverage, but chose not to, perhaps because they are reasonably healthy and decided to wait until they were older and more liable to need care. How many, if any, are illegal immigrants? However, given the large number of unemployed, the high volume of home foreclosures and under water mortgages, my assumption is that the great majority were legal resident Americans who genuinely felt they could not afford to purchase any coverage.

Furthermore, I may be wrong, but my strong suspicion is that it has been difficult for many Americans to find a simple, basic healthcare insurance policy they would be eligible for having relatively limited but acceptable coverage at a very affordable cost. How many of the 32 million fall into this category?

Conclusions? Much more attention to cost containment measures will be needed over the next several years as the law's implementation proceeds. There's a lot of noise from Republicans about repeal of the law and gaining exemption for states pushing for that. But several legal scholars believe their chances for success are poor. We'll have to wait and see what happens in the November elections, but there's a great deal at stake and no doubt the campaign fervor will be very high on both sides. This was a big, badly needed victory for Obama and the Democrats. If the economy continues to improve and the current official 9.7% unemployment rate is able to fall to 9.4% or 9.5% by early November, which is no sure thing, the Democrats will probably hold their own in the coming elections.

However, it's also likely that if the healthcare reform law is poorly implemented and if the economic recovery falters, and the unemployment rate remains where it is or gets worse, then Democrats will most probably face a very tough time in November, possibly even losing control in the House, worsening Obama's prospects for any bipartisan support on new legislation for the last two years of his elected term in office. Stay tuned.

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