David Coates

Chapter 6: The Story in 2009

A lot of water has passed under the health care reform bridge since Answering Back went to press in March 2009.

The spine of developments since then has been Congressional – the long and hard-fought struggle to turn the Obama commitment to health care reform into actual legislation. That struggle was initially anchored in the House of Representatives, tied to a timetable that tried to complete the exercise before the summer recess. Four bills came out of committees in the House by August, and one (the Committee on Health, Education, Labor and Pensions, chaired by Chris Dodd) in the Senate; but the main Senate Bill – from the finance committee chaired by Senator Max Baucus of Montana did not. It became the center of the struggle through September and early October, slowed down by a Democratic Party search for consensus and a Republican Party reluctance to provide it. All that against the background of a well-orchestrated grass roots campaign of protest and verbal intimidation of congressmen men and women as they returned home for the August recess – a series of extremely unpleasant town hall meetings, organized by the Tea Party Patriots and designed to stop the momentum of reform, and which in consequence triggered an unprecedented response from the White House: a special address by the President to a joint session of Congress in September to again make the case for reform. The deal brokered by President Obama in the House, and the reality of Max Baucus’s cautious chairmanship, left final votes in both chambers delayed into the fall and beyond. The House did not bring its bill to a vote until November 7, and as we go to press the Senate has yet to do the same.

The initial hiccup in the Obama post-election campaign for comprehensive health care reform came from the sudden withdrawal of Tom Daschle from the nominated post of White House health care czar and Secretary of Health and Human Services. Replaced by Nancy-Ann deParle as czar and by Governor Kathleen Sebelius from Kansas as Secretary, the Daschle-led campaign had in effect to start again; and it was then weakened further by political losses among key allies: the grave illness of Senator Edward Kennedy and the controversies (about housing finance) swirling around Senator Chris Dodd. From the outset, the Republican leadership signaled its likely opposition to the inclusion of a public option in any final legislation – the public option that the President was on record as preferring if “he were designing a system from scratch”; and as early as the health forum held at the White House on March 5, the President indicated his willingness to be flexible on detail – a flexibility that might extend to alternatives to the public option and to the taxing of existing employee health benefits. That willingness, designed in a spirit of bipartisanship, seemed to inflame Republicans rather than to pacify them. It certainly irritated and troubled the liberal wing of the President’s own party; and it set the stage for a year in which the key players (on whose views so much of the media focused) were conservative Democratic and liberal Republican law-makers (in effect, blue-dog democrats and Olympia Snowe of Maine – liberal Republicans being few and far between, and ever harder to find, as the year progressed)

Yet there were significant alternations in the line-up of supporters and opponents this time round. The coalition that blocked “Hillarycare” in the 1990s did not entirely reproduce itself in 2009. The call for comprehensive reform initially met support from unlikely sources that included the US Chamber of Commerce, health insurance companies and even the AMA. Preferring their own reform proposals to any imposed upon them from outside, and gathered together in a group calling itself the Health Reform Dialogue, the AMA, the National Federation of Independent Businesses, the AARP, the liberal consumer group Families USA and two hospital groups combined to issue a plan in March that would have cut the number of the uninsured by half. Senator Schumer of New York, from the liberal wing of the Democratic Party, moved to meet them halfway: proposing in May that any new government-run insurance program would comply with all the rules and procedures applicable to private health insurance providers. The drug makers and insurance companies struck a deal with the White House that same month to voluntarily cut the growth rate of health expenditure by 1.5% a year from 2010 to 2019, saving at least $2 trillion, with Big Pharma agreeing to provide as much as $80 billion in discounted medicines for Medicare in the form of half-price discounts to Medicare recipients caught in the “doughnut hole” (the Bush administration’s legislation making seniors pay full price for drugs after they had incurred $2200 in annual drug expenses until those expenses reached $5100). The deal they struck made $80 million the most the drug companies would be asked to cut – but that was a deal too for liberal lawmakers noting the collective $800 million profits made by Big Pharma in 2007! Only in October did the insurance companies then break rank coming out against even the Baucus bill with a claim that health reform will add $4000 to the cost of average family coverage by 2016. (It is $12,300 now and without reform will be $18,600 in 2016. The insurance companies claim is that premiums will be $21,300 if the Baucus bill passes as written). The claim was widely ridiculed by the bill’s supporters, and even retreated from by Price Waterhouse, the accounting firm that generated it. The bill was voted out of committee, with Olympia Snowe’s endorsement, on October 13.

Attention then switched back to the House of Representatives, which in November passed by the narrowest of margins (220 to 215) HR 3962, the Affordable Health Care for America Act. , The Act extended coverage to 36 million uninsured Americans by creating a moderate public option, extending Medicaid coverage, mandating individual and employer participation in health insurance, and surcharging wealthy Americans to help pay for the new fiscal commitments. It would create a new insurance exchange, subsidize health insurance for middle class families unable to afford the insurance they would now be mandated to buy, exempt small businesses from paying the surtax levied on companies without health insurance, put new restrictions on the insurance companies ability to deny coverage, institute a review process on their premium increases, and expose health insurance companies for the first time to investigations into price-fixing and other collusion practices. Conservative Democrats joined with Republicans to pass the Stupack-Pitts amendment, enshrining into law the Hyde ban on federal funding for abortion services and additionally banning any private plan participating in the health exchanges from including abortion coverage. As we will see later (in relation to Chapter 8) this was designed by its advocates, and understood by its critics, seriously to curtail a woman’s right to choose.

The equivalent Senate bill was released on November 18th, and the vote to prevent it being discussed at all took place on November 21. Though similar to the House bill in much of its detail, the Senate bill varied in key respects from the bill passed in the House. It extended coverage to slightly fewer Americans (31 million rather than 36 million). It cost slightly less (according to the CBO, $848 billion over its first decade, as against $1.05 trillion for the House bill). The bulk of those savings, in the Senate version of health care reform, were to come from slowing the growth of Medicare costs (half a trillion dollars to be saved over 10 years by reducing payment growth to hospitals and nursing homes, and to Medicare Advantage providers). The Senate bill also proposed a 40% tax on “Cadillac” health plans valued at more than $8,500 a year for individuals and $23,000 a year for families. The Senate bill extended Medicaid coverage up to 133% of federal poverty levels, as against $150% in the House bill; and though it enshrined the Hyde amendment into law, it did not contain the extra abortion restrictions of the Stupack-Pitts amendment. In the Senate bill, states could opt out of the public option if they so chose, and health plans worth more than $23,000, or families earning more than $250,000, would attract new taxation to help finance the overall package. The bulk of the House proposals were due for implementation by 2013, those in the Senate bill by 2014.

Debate on the Senate bill and, if it passes, on the merged legislation, will come mainly after Thanksgiving. The procedural vote to begin the Senate debate passed 60-39 on November 21, with all 58 Democratic Senators and the 2 independent Senators coming together to give Senate Majority Leader Harry Reid the votes he needed to avoid a filibuster. The need to keep that 60 vote majority together gave individual senators huge leverage, and cost the bill much of its initial radical promise. Opposition from Joe Lieberman was muted only by abandoning any idea of a public option. That was replaced by the proposal to place the regulation of the new health care exchanges under the Office of Personnel Management, the office overseeing the health care exchange used by members of Congress. His opposition also removed from the final Senate bill any extension of Medicare availability to those lacking health care coverage and aged 55-64. Senator Ben Nelson’s opposition to abortion was muted only by the inclusion of language in the bill to enshrine the Hyde Amendment into law, and the special perk to Nevada (Nelson’s state) of full federal funding of the additional Medicaid expenditure triggered by the bill. Packaged this way, the bill passed 60-39 at a special 7.00 a.m. vote in the Senate on December 24th – with the Senate majority leader (Harry Reid) so momentarily exhausted by his labors that he inadvertently initially voted against the very bill be had negotiated so hard to create!

The result left many critics unhappy. From the left of the Democratic Party, Howard Dean urged Senators not to vote for it; and from the Republican Party, Senator Mitch McConnell dismissed it as “a monstrosity”. The Senate vote was entirely on party lines; and the fight then moved into committee as the process of producing a final version of the legislation began in earnest.

It began in earnest, but then it stalled. The Massachusetts Democrats were supposed to hold on to the seat vacated by the death of Edward Kennedy, but they did not. The irony of that loss is sharp indeed. The period between the surprise election of Scott Brown and the February 25th White House health summit became something of an interregnum; but it did at least enable progressives to regroup. Their enthusiasm for the introduction of a public option (already in the House bill, and possible to pass in the Senate through the reconciliation procedure) grew, fueled in part by new pieces of evidence on health costs and health insurance excess.

  • The top 5 health insurers (Wellpoint, UnitedHealth, Cigna, Aetna and Humana) posted a 56 percent gain in profits in 2009 over 2008, a year in which 2.7 million Americans lost health care coverage. They made $12.2 billion profits in 2009.
  • Reports surfaced of health insurers raising their premiums by up to 40 percent for 2009, as the number of healthy Americans dropped health care coverage because of loss of income or job. HSS Secretary Kathleen Sibelius was particularly active in condemning these huge increases in proposed fees.
  • Health care costs as a whole continued to rise at a faster rate general inflation. The rate of health care increase – at 4.4% – was the smallest rate of increase in 50 years, but it still took health care spending up to $2.3 trillion (%7,681 per person) or 16.2% of GDP. It had been 15.9% in 2007 (Wall Street Journal, January 5, 2010)
  • Medical problems caused 62% of all personal bankruptcies in the US in 2007, according to new data from Harvard Law School and Ohio University. The bulk of people were solidly middle class: two-thirds owned their own home, three-fifths had gone to college (Source: BusinessWeek, June 4, 2009)
  • 54% of all Americans continue to believe that now is the right time for fundamental health care reform. That figure has not changed since August 2009 (Source: Kaiser Health Tracking Poll, January 2010).

David Coates holds the Worrell Chair in Anglo-American Studies at Wake Forest University. He is the author of Answering Back: Liberal Responses to Conservative Arguments, New York: Continuum Books, 2010.

He writes here in a personal capacity.

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