The following is my history on the healthcare debate. It is item 26 of my Obama Scandals List and focuses on Obama’s role in the debate.

The great American healthcare debate began on March 5, 2009 with a one day White House forum. In his opening remarks, Obama laid out three goals:

to determine how we lower costs for everyone, improve quality for everyone, and expand coverage to all Americans

He also stated that

we need a process that is as transparent and inclusive as possible

It is a maxim of the Obama style that he gives a good speech but that what he says is wildly at variance from what he, in fact, does. So it was with this second statement and how it impacted the possibility of delivering on the first. From the start, Obama was not transparent. There was one group that was not invited to the White House forum and would be frozen out of all future discussions. These were single payer advocates. It was a significant, and telling, omission. The US is alone among industrial countries in not having comprehensive healthcare for all its citizens. Some like Canada and the UK accomplish this with a socialized system. Others like the Netherlands and Switzerland use private insurers but regulate them so heavily that function essentially as agents of the government. The highest rated system is the French, as well as the highly rated Australian plan, which use single payer. In rough terms, single payer works like Medicare. The government is the payer but the care is private. By keeping its system of private insurers with little government oversight, the US has managed to create a system which costs twice as much as these other types, leaves 45-50 million without any coverage, denies tens of millions who are covered the treatments they need, and overall delivers worse health outcomes as measured by infant mortality rates and longevity.

Or as Obama said it at a March 26, 2009 townhall,

And so I don’t think the best way to fix our health care system is to suddenly completely scrap what everybody is accustomed to and the vast majority of people already have. Rather, what I think we should do is to build on the system that we have and fill some of these gaps.

Or on June 24, 2009:

The problem is, is that we have a employer-based system that has grown up over decades. For us to completely change our system, root and branch, would be hugely disruptive and I think would end up resulting in people having to completely change their doctors, their health care providers, in a way that I’m not prepared to go.

This by the way is completely untrue since the only thing that would change would be the payer, not the providers. And again on August 14, 2009 at a townhall in Belgrade, Montana, Max Baucus’ home state:

Every one of us, what we’ve said is, let’s find a uniquely American solution because historically here in the United States the majority of people get their health insurance on the job. So let’s build on that system that already exists — because for us to completely change that, it would be too disruptive.

In keeping with Obama’s approach to everything, rather than going with a different, but tried, tested, lower cost, and more successful healthcare system, of which he had at least 3 main types to choose from, he went instead with a continuation of the present system and entrusted the legislative process to write up his “reform” to the most status quo members of Congress. In practice this meant in the House the conservative Blue Dogs and the House leadership. In the Senate, it focused on the Senate Finance Committee (with no expertise in healthcare) chaired by Max Baucus (D-MT) and whose ranking minority member was Chuck Grassley (R-IA) and of course the bipartisan group of Senators from small unrepresentative states known as the Gang of Six. It also meant giving over the process to corporate lobbyists spending millions of dollars a day to make sure no serious reform occurred.

The essential of Obamacare was to keep Americans with private employer based insurance in those plans. For small employers and for the uninsured, insurance exchanges would be set up at the state level offering a selection of plans. There was an individual mandate (which candidate opposed). Anyone not buying insurance would be penalized. There was also to be a public option which was to compete with private plans, “keep them honest”, and control costs. As even this brief synopsis shows, the great healthcare debate was never about healthcare. It was about insurance and how to make a sizable percentage of the US population a captive market for insurers.

In the selling of this plan, the public option was meant as a sop to liberals in lieu of the single payer option. It was successful in leveraging liberal organizations like HCAN and Moveon into support for Obamacare. In theory, at least, it was an important part of the reform debate, but it also became a metaphor for the interests of ordinary Americans which were ignored elsewhere in the process.

At the same March 5, 2009 healthcare forum, the shape of the debate with regard to the public option was already clear. Senator Chuck Grassley (R-IA) said,

there’s a lot of us that feel that the public option that the government is an unfair competitor

To which, Obama gave a lukewarm passive voice response, citing competition, but then went on to say somewhat incoherently,

I recognize, though, the fear that if a public option is run through Washington, and there are incentives to try to tamp down costs and — or at least what shows up on the books, and you’ve got the ability in Washington, apparently, to print money — that private insurance plans might end up feeling overwhelmed.

In succeeding months, Obama would repeat these contradictory messages, that the public option would provide competition although not, apparently, serious competition. Even for Obama, it was not the poor service and sky-rocketing costs of the private insurers, but only the government “printing money” that made the public option a threat to the private companies.

The public option was a concept of Jacob Hacker, a political scientist. He envisioned it as covering 129 million Americans or half of the non-Medicare population. It was to be available on Day One to all and use Medicare rates. His version of the public option did not come close to making it into any of the bills in the House or Senate. Indeed the public option throughout the debate remained nebulous. It became a kind of Rohrschach test reflecting the hopes and fears of supporters and detractors. In keeping with the debate’s focus on money, the content of the public option was left deliberately undefined.

Who could sign up for the public option was unclear for much of the summer as well. At a July 28, 2009, AARP tele-townhall, Obama seemed to imply that registration in the public option would be open:

So you could still choose a private insurer, but we’d also have a public plan that you could choose from

and on August 20, 2009 in remarks before the Organizing for America national health care forum:

Now, one of the options will be a public option because we think that potentially could be a better deal for consumers. But nobody is going to force you into that option. It will, however, help keep the private insurers honest because if they’re charging a lot more — higher profits, higher overhead, worst deal in terms of insurance — then a lot of people will say, well, I might as well take advantage of the public option. But it will be the choice of the individual.

This changed rather radically in Obama’s September 9, 2009 speech to a joint session of Congress:

But an additional step we can take to keep insurance companies honest is by making a not-for-profit public option available in the insurance exchange. (Applause.) Now, let me be clear. Let me be clear. It would only be an option for those who don’t have insurance.

And as Obama continued, it would cover only about a tenth of those in the original Hacker public plan:

In fact, based on Congressional Budget Office estimates, we believe that less than 5 percent of Americans would sign up.

This raised questions not only about how such a small plan split among 50 state exchanges could keep the larger privates honest but also about whether it would have sufficient market share to negotiate lower prices with health providers. In a word, would such a public option even be viable? These concerns were heightened by moves in both the Congress and the White House. The public option was divorced from the Medicare rating structure meaning that it became even less competitive. It would have to pay more for services and therefore charge higher premiums to its customers. Its startup costs would have to be paid back, again resulting in higher premiums. On top of this, its rollout would be delayed until 2013, ostensibly to make the 10 year cost projections for the overall healthcare plan come in on budget. Any possible expansion of its availability would not come before 2015.

It was all a recipe for failure, but that was rather the point. As I said, even at the beginning of the debate Obama’s support of the public plan was less than wholehearted. At a June 23, 2009 press conference, when asked if the public option was non-negotiable, Obama replied,

we are still early in this process, so we have not drawn lines in the sand

He again downplayed it on August 15, 2009 at a townhall in Grand Junction, Colorado,

All I’m saying is, though, that the public option, whether we have it or we don’t have it, is not the entirety of health care reform. This is just one sliver of it, one aspect of it.

This remark created quite a storm and Obama backed off of it. On August 20, 2009, he was more positive:

I continue to support a public option, I think it is important…
The only thing that we have said — and this continues to be the truth — and I mean, sometimes you can fault me maybe for being honest to a fault — is that the public option is just one component of a broader plan.

However this did not prevent the White House from supporting various efforts, such as co-ops and triggers, to kill the public option entirely.

The whole debate within a debate on the public option was a distraction, much like death panels and teabaggers, but one which both conservatives and the Obama Administration used to paint a completely misleading portrait of how healthcare was paid for in the US. Their thesis was that we had a largely private system, the character of which would be threatened and “disrupted” by government intrusion. Here again we see the confusion, likely deliberate, between the healthcare providers who are mostly private and healthcare payers where the government already plays a leading role. As this Kaiser study found:

Public health expenditures made up about 46% of the health care dollar in 2007, with the remainder split between private and out-of-pocket spending (42% and 12%, respectively).

Nor is it clear that the currently uninsured would benefit from acquiring insurance, except in catastrophic instances. High premiums, deductibles, and copays could leave them with “junk” insurance that they could not use or with higher expenses, for less than catastrophic occurrences, than if they had had no insurance at all. This raises the question of cui bono? to whom the good? The repeal of Glass-Steagall in 2000 allowed insurance companies to gamble with their reserves with the same lack of fiduciary responsibility as their banking cousins, and probably with the same disastrous results. The current debate may be simply a way for insurance companies to repair gutted balance sheets.

Of course, the insurance companies are not the only ones who were concerned about the money more than actual delivery of healthcare. So was the Obama Administration. As he said in his September 9, 2009 speech to Congress,

First, I will not sign a plan that adds one dime to our deficits — either now or in the future. (Applause.) I will not sign it if it adds one dime to the deficit, now or in the future, period. And to prove that I’m serious, there will be a provision in this plan that requires us to come forward with more spending cuts if the savings we promised don’t materialize.

Because the CBO projects such deficits, this guarantees cuts in subsidies and higher costs to those who can least afford it. The Obama approach to cost containment was to strike a series of “deals” with the triad of insurance, drug, and medical companies rather than letting entities like Medicare with its large market share and knowledge of the market negotiate lower prices. Obama announced the first of these deals on May 11, 2009 after meeting with healthcare stakeholders:

And that’s why these groups are voluntarily coming together to make an unprecedented commitment. Over the next 10 years — from 2010 to 2019 — they are pledging to cut the rate of growth of national health care spending by 1.5 percentage points each year — an amount that’s equal to over $2 trillion. Two trillion dollars.

The second was with Big Pharma. As Obama said on June 22, 2009 talking about reducing but not eliminating the infamous doughnut hole in Medicare’s prescription program:

Medicare beneficiaries whose spending falls within this gap will now receive a discount on prescription drugs of at least 50 percent from the negotiated price their plan pays.

To that end, the pharmaceutical industry has committed to reduce its draw on the health care system by $80 billion over the next 10 years as part of overall health care reform.

The third with hospitals was announced by Joe Biden on July 8, 2009:

As part of this agreement, hospitals are committing to contributing $155 billion — $155 billion — in Medicare and Medicaid savings over the 10 years to cover health care cost reform — over the next 10 years.

On the government side, Obama fixed his sights on Medicare and Medicaid. As he said on June 24, 2009,

Medicare and Medicaid are the single biggest drivers of the federal deficit and the federal debt — by a huge margin.

The first of these assertions is disputable. Tax cuts for the wealthy, unnecessary wars, an oversized military, and bailouts for bankers certainly have all made major contributions to budget deficits. With regard to the national debt, Obama is simply wrong. The government owes a lot of money to Social Security for the surpluses which it borrowed and spent.

And in his September 9, 2009 speech to Congress,

Reducing the waste and inefficiency in Medicare and Medicaid will pay for most of this plan.

This too is not quite accurate. Obama projects savings of $948 billion over 10 years. $309 billion would come directly from Medicare and Medicaid. $326 billion comes from raising taxes, principally on those making more than $250,000 a year. The remaining $313 billion comes from cuts in Medicare payments, expected savings to hospitals from “covering” the uninsured, and the Big Pharma giveback mentioned above.

At the beginning of this debate, Obama said he wanted to “lower costs for everyone, improve quality for everyone, and expand coverage to all Americans.” Yet it is far from clear that the industries with whom Obama made his deals will honor them or that costs will actually go down. Rescission and denial of coverage for a prior condition may be banned, but quality of care was scarcely touched upon in the debate and where it was it was generally in terms of cost efficiencies, not healthier and better outcomes. Finally, Obamacare will decrease the number of uninsured although estimates vary by how much. A third of those uninsured could be left without coverage. Worsening economic conditions or “deficits” in healthcare budgeting would increase this number.

As of October 2009, Obama’s healthcare reforms look to accomplish none of his objectives but will result in cuts in Medicare and Medicaid and transfers of wealth from the uninsured and from the government through subsidies to the insurance companies. It was a worthy goal but poorly pursued and executed.