Bob Reich on the What-It-All Means Question

No paw prints of the Great Society here

In a column yesterday on Talking Points Memo, former Secretary of Labor Bob Reich got to an issue that has been strikingly absent from the miles and piles of health coverage up to now. The reform law-to-be, although historic and monumental, is actually a very tame animal. It tweaks the system, but doesn’t radically change it. Reich put it this way:

It’s not nearly as momentous as the passage of Medicare in 1965 and won’t fundamentally alter how Americans think about social safety nets. But the likely passage of Obama’s health care reform bill is the biggest thing Congress has done in decades, and has enormous political significance for the future.

Most Americans won’t be affected by the health care legislation, Reich wrote. Most will continue to receive coverage from their employers, and a small minority will have to buy coverage even if they don’t want it, or get subsidies to afford it. A few companies that currently don’t provide coverage for their workers will have to do so.

Reich explained that the pedigree for this legislation is neither FDR’s New Deal nor LBJ’s Great Society. It comes from a different tradition—that of the private market, with a mix of private insurers and employers engaging in marketplace forces. In the Eisenhower administration, Reich said, that meant tax breaks for employee benefits. (Under the new legislation, the excise tax on high benefit plans may eventually lead to the end of the tax break.) In the Nixon years, the private health care market meant prepaid, competing HMOs. We know how the HMO movement morphed into a cluster of gigantic health plans blamed for the public’s health care angst. (The new law seeks to tighten the regulatory noose around those biggies.)

Reich concluded: “Obama’s health bill is a very conservative piece of legislation building on a Republican rather than a New Deal foundation.” Perhaps this explains why Obama was lukewarm and equivocal about a public option—much too close to single payer and the Great Society-New Deal paradigm. Key elements of the law are right out of the conservative playbook.

Years ago, conservatives and their think tanks latched onto the individual mandate as the way to get health insurance to Americans. It was ideologically more acceptable than requiring all employers to provide coverage for their workers, and vastly more palatable than a single payer system. Tax credits, too, surfaced years ago, and gained some traction during the 2004 presidential race, when both John Kerry and George W. Bush embraced tax subsidies for families with lower incomes.

At the time, Michael Chernew, then a health policy expert at the University of Michigan and now at Harvard, told The Nation that “the evidence suggests that subsidizing insurance premiums will be a relatively expensive way to encourage coverage, and relatively few people would respond.” This year’s version is still expensive, but Congress addressed the second part of Chernew’s critique; the individual mandate with penalties will require people to respond.

High-deductible insurance is now an integral part of the American health care model. Policies sold in the small group market, for example, will carry deductibles of $4000 for families and $2000 for individuals. As in Massachusetts, policies sold in the Exchanges will also carry high deductibles. The conservative think tank National Center for Policy Analysis—along with Patrick Rooney, then CEO of Golden Rule Insurance, which is now part of the giant UnitedHealth Care—pushed Congress to allow high-deductible health plans. They are quickly moving into mainstream insurance acceptability.

A look at the history of the Massachusetts reform law, the model for national legislation, shows that the Commonwealth Health Insurance Connector—the state’s name for its shopping exchange—was born at the conservative Heritage Foundation. A document circulated by the staff of Gov. Mitt Romney at the time called for a law reflecting “a culture of insurance” and “personal responsibility”—the latter a keystone of conservative ideology.

The embrace of conservative ideas also helps explain why real cost containment didn’t make it into the final product. Curbs on prices are anathema to American business, and perhaps that’s why the president made a deal with the drug companies early on not to fight for negotiated prices in the Medicare program, a pledge he had made during his campaign.

All this explains why the usual right-wing think tanks weren’t especially vocal during the final stretches of the bill’s path to enactment. Their ideas were going to become law—which makes it all the more puzzling that the Republicans have fought so hard against the legislation.

“The significance of Obama’s health legislation is more political than substantive,” Reich wrote in his TMP column. “For the first time since Ronald Reagan told America government is the problem, Obama’s health bill reasserts that government can provide a major solution”—albeit a solution that relies on the private market to deliver the goods. The question is whether health care is a commodity that the marketplace can manage with government help. Or will something else be needed in the distant future?

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman.