Attacks May Force Democrats To Scale Back Health Reform Ambitions

Relentless attacks on President Barack Obama’s health care overhaul effort, coupled with continued questions on how to pay for it, are prompting some political and health care experts to suggest that Democrats will have to scale back the cost and scope of the legislation to get something through Congress this year.

Democratic strategists and other analysts agree it would be politically disastrous for Obama and his party to emerge empty handed from this year’s heated battle over health care legislation. In 1994, the Clinton administration’s high-profile failure to pass a national health care program set the stage for a Republican revival.

“I absolutely think they’ll have to have a fallback position,” said Ross K. Baker, a political science professor at Rutgers University. “They’ll have to accept something considerably less comprehensive, less federal government-centered and simply use it as a place holder . . . for something to come along later.”

Indeed, a senior Senate Democratic aide acknowledged earlier this week that Democrats likely will have to “scale back” the package this fall if the ongoing bipartisan negotiations involving six Finance Committee members fall apart. “If we don’t get something by mid-September, there will be a great deal of interest in reconsidering whether we need to go down a different path,” the aide said in an interview. “There are legions of ways you could go.”

Sen. Charles Grassley, a key Republican negotiator, told the Washington Post on Wednesday that the outpouring of anger at town hall meetings this month has fundamentally altered the nature of the debate and convinced him that the public has rejected the Democrats’ far-ranging proposals for health care overhaul. He said that lawmakers should consider drastically scaling back the scope of the effort.

“Not just on health care, but on a lot of other things Congress has done this year, people are signaling that we ought to slow up and find out where we are and don’t spend so much money and don’t get us so far into debt,” he said in a telephone interview between stops in Iowa Falls and Ames. The Finance Committee group is still discussing a “comprehensive” plan for extending coverage to millions of uninsured families, he said, but revisiting that approach would be “a natural outcome of what people may be getting from the town hall meetings.”

But many backers of an overhaul say that Democratic leaders remain committed to comprehensive legislation and that lowering their sights would be a mistake. Just in the past few days, liberals complained vociferously when the Obama administration indicated it might not be wedded to creating a government-run insurance plan to compete with private insurers. Administration officials insist that they prefer including a public plan in the bill.

“I don’t think people have given up on the big thing,” said Len Nichols, an economist at the centrist New America Foundation, adding that Democratic leaders and health-industry officials “understand profoundly that our system is unsustainable. . . . If we fail and wait a decade, it will be that much harder.”

And some suggest that if the Democrats, who hold majorities in both the House and Senate, decide to move ahead on their own, without Republican support, they should go for the most sweeping legislation they can get. Such a strategy could be difficult, considering that they would still need votes of moderate Democrats who share some Republicans’ concerns about cost and about government involvement in the health care market.

Democrats Have Already Scaled Back

To try to gain traction, the administration repeatedly has signaled a willingness to compromise on the legislation. In addition, congressional Democrats have ratcheted back their ambitions from the initial sweeping proposal by the Senate Health, Education, Labor and Pensions Committee, which called for a big Medicaid expansion and generous subsidies to help the uninsured buy insurance. When the bill’s price tag, estimated at $1.6 trillion over 10 years by the Congressional Budget Office, set off a furor, Democrats promised to bring the cost of overhaul legislation down to no more than $1 trillion, and Senate Finance Committee members say they are working on a bill that would cost $900 billion.

Now some analysts are wondering — given the criticism of the legislation at town hall meetings held by members of Congress during the August recess — whether Democrats will have to make additional concessions, including stepping back from the goal of near-universal health care coverage and other initiatives.

Henry J. Aaron, an economist with the Brookings Institution, said that the challenge of finding politically acceptable ways to pay for near-universal coverage may prove insurmountable this year in the face of mounting budget deficits. He said the administration should identify elements that could be financed at a “politically digestible price.”

“I think what we’re looking at if the whole thing does not pass . . . is a long, difficult legislative and political road, one that will stretch on well beyond the Obama administration,” Aaron said. “One has to ask what can we do now to change incentives and improve the prospects of an evolution into a new health care system.”

But others point out that shrinking the legislation would create its own problems. Liberals would be incensed, seeing it as a betrayal. And there are practical issues. The final legislation is likely to require most people to have insurance. But that would be hard to do if the legislation doesn’t provide sufficient subsidies for lower-income Americans.

And if there is no requirement that everyone buy insurance, it would be hard to compel the insurance industry to cover all applicants, even those in bad health. The reason: Insurers would likely end up with a disproportionate number of sick, costly customers.

The Senate health committee and three committees of the House have approved major health care measures, while the six Democrats and Republicans on the Senate Finance panel are working over the August recess to try to complete work on a plan that is being viewed as a bellwether of bipartisan compromise.

Besides expanding Medicaid, the plans under consideration in the House and Senate would create a new insurance exchange, or marketplace, for people to buy affordable insurance. Many employers would be required either to offer coverage or finance its cost, while most uninsured individuals would be required to purchase coverage, many with help from the government.

To reduce the size of the bill, political and health care experts say, the Medicaid expansion could be phased in more slowly or have tighter income-eligibility limits. In addition, the availability of premium subsidies could be reduced and key provisions, such as the health insurance exchanges, also could be implemented on a slower timetable. Some say that the final legislation could be cut to $800 billion or lower over 10 years.

A system of regional or state health care cooperatives, with strong federal guidelines to assure some uniformity nationwide, may win more political support than the public plan backed by many Democrats, especially in the House.

Balancing Promises and Complexities of Reform

While Obama and Democrats were elected last November in part on their promises to make sweeping changes to the nation’s health care system, the complexity of how health care is delivered and financed and its role in the nation’s economy – it accounts for 16 percent of the gross domestic product and the U.S. spends $2.5 trillion on health care yearly – have complicated efforts to make major changes.

“I don’t see how they get anything even close to what Obama originally proposed,” said Larry J. Sabato, a University of Virginia political science professor. “Most people think he’ll end up with half of what he wants: Some requirement for insurance affordability, maybe that co-op proposal. But no one understands what that proposal is.”

Many health care veterans disagree with that assessment. “I would be astonished if (the Democrats) weren’t able to pass a big health care bill,” said David Nexon, a former top aide to Sen. Edward M. Kennedy, D-Mass., and now senior executive vice president at the Advanced Medical Technology Association. “This is the best shot to get most people covered in a generation.”

But congressional Republicans, including Senate Minority Whip Jon Kyl, R-Ariz., have largely written off the Democratic plans, including the emerging Finance proposal, charging that they are too costly and complicated and that they represent a step toward a government takeover of the health care industry. Senate and House GOP leaders are calling on Obama and the Democrats to jettison the current proposals and start over.

“The American people have spoken loudly and clearly: they want the Democrats to scrap their government takeover, start over, and work with Republicans on real, bipartisan health care reform. I hope that is our first priority in September,” said House Minority Leader John Boehner, R-Ohio.

The August tracking poll by the Kaiser Family Foundation underscores the partisan divide over health care, with 71 percent of Democrats supporting passage of legislation now, and 67 percent of Republicans saying the country can’t afford it at this point. Independents are more divided than before, with 49 percent opposed to legislation now and 46 percent in favor of it.

Overall, a majority (53 percent) of the public says now is the right time to pass legislation, compared to 42 percent who says the U.S. can’t afford to take on a health care overhaul right now. On the key indicator of whether Americans think they or their families would be better off under reform, 36% says their family would be better off, a proportion that has held steady all year, the poll showed. But the proportion who believes their family would be worse off jumped 10 percentage points since July and now stands at 31%. (KHN is a part of the foundation.)

Obama, Senate Finance Committee Chairman Max Baucus, D-Mont., and other key congressional leaders closely involved in the talks insist there is still time to pass major health care legislation this year that meets many of the president’s goals for expanding health care coverage, reforming the health care industry and “bending the curve” of rapidly increasing health care costs. Just yesterday, Baucus said that the Finance panel is “on track to reach a bipartisan agreement on comprehensive health care reform.”

Others, however, say that Obama is being overly ambitious in trying to pass major health care legislation the same year Congress approved billions for financial bailout and economic stimulus programs. “In this country, social policy changes incrementally,” Baker said. “It’s almost never done in a single stroke.”

Julie Appleby contributed to this story.