Two days ago senator Max Baucus revealed the Senate Finance committee’s health care bill. Baucus had delayed this bill for months in an attempt to get what he had promised as moderate Republican support. Baucus, who is heavily funded by the health care industry, has strong links with industry lobbyists, many of whom are former staffers in his office. His attempt to get Republican support for a centrist bill have collapsed in his face. In the end, Baucus’ plan has failed to build consensus among the political elites.
This is significant because Obama embraced a strategy that hoped to avoid the mistakes of the Clinton administration’s health care disaster by hitching his ride to Baucus and the finance committee to come up with a centrist plan. This contradicted his earlier positions as both a Senator, when he backed a universal single-payer system, and as a presidential candidate, when he retreated to a commitment to a public option. As support for Obama fades quickly there is no better contrast between the hopes of millions of people who were key to his election victory and the realities his actual politics expose about bourgeois democracy.
But Obama also has a problem with the House Democrats who, along with liberal talking heads, columnists and the “netroots”, pushed back against him at the end of August after he said he was willing to drop support for a public option. House Democrats and the liberal section of the Senate have staked out their own position around the Senate Health, Education, Labor and Pensions (HELP) Committee’s bill that emerged in July. This bill is similar to one in the House.
The main difference between the two Senate bills is the public option. Where the HELP committee’s bill contains it, Baucus has purged it from the Finance committee’s plan. If the public option is apparently a source of tension between centrists and liberal wing of the Democratic Party, then what is the public option composed of?
First conceived as a program similar to Medicare, the plan intended to enroll 130 million people. This was necessary advocates pointed out, to create a large enough market share needed to bargain for reduced costs from health care providers. However, the idea of a public option has been dramatically transformed since its original inception in 2007.
The Congressional Budget Office estimates that the current public option, as represented by the HELP committee plan, will cover only 10-16 million people. The problem here is that for a public plan to be successful it would need much greater numbers to negotiate reduced prices. The HELP public option will not pay significantly less than private insurers to providers, nor will it begin with a pool of enrollees and, thanks to the intervention of the conservative American Medical Association, providers are under no obligation to participate in the plan.
An important component to all of this are the big unions. Obama knows they are important in getting the vote our for him in the next elections and he has addressed union audiences twice in recent weeks on health care. Most unions have either endorsed a single-payer, universal health care policy, or the so-called public option. But Obama froze out groups advocating universal health care shortly after he took power when the initial round of negotiations with insurance companies resulted in a commitment to individual mandates to buy insurance, following roughly the Massachusetts model. The Obama administration was successful in preventing industry opposition to the idea of new health care policy by promising to coerce tens of millions of new customers to their doors.
Health Care for America Now, a coalition which includes AFSCME and the SEIU, have been the most active promoters of the watered down public option as, they claim, a chance for a great “progressive” victory. While some progressives argue, improbably, that this is only the first step towards universal coverage, the union bureaucracy are likely seeing a more opportunist victory here. They need what can be spun as a “win” from Obama to justify their unquestioned backing of him. They need to put more tape and glue on their cracking legitimacy. Therefore liberal Democrats and the political forces representative of Health Care for America Now making a fuss over the gutted public option are looking for a way out of where their politics and interests have led them: in complete contradiction of their rhetoric.
With this elaborate public relations dance, Obama is trying to help them and himself out. As the NYTimes reported, the goal for Obama’s speech last week in the Senate was to set the agenda for scaling back Congressional plans for health care reform and refocus on cutting costs for the government and corporations. The center of Obama’s speech was its “deficit neutrality” and its message about the public option, which was, essentially, to bury it. Obama signaled that he expected less than 5% of people to be signed up for the public option, far less than the HELP version, and a friendly amendment to the Baucus plan. Such a public option, if enacted, would offer minimum coverage with relatively steep fees along the lines of a supplement to medicaid or medicaid-like plan. Even given this, it has to be remembered that medicare and medicaid itself are deeply flawed programs.
So what are the core elements of “Obamacare” as it looks now? While the numbers and details around the edges are rough, the alignment of political forces and the ideology Obama represents make the fundamentals seem certain. Individual mandates are the central part of the “reform”. This means that the uninsured must buy insurance. Since this will be financially difficult for working people there will be subsidies in the form of tax credits. However, these subsidies are not substantial enough to cover the premiums that would be mandated. For example, these mandates will cost somewhere between 10-13% of yearly income for a family of three making approximately 63,000 dollars. This does not include deductibles and co-pays.
In order to partially pay for this plan–roughly 900 billion over ten years–there will be 500 billion in projected cuts to medicare and medicaid that will limit health coverage for the insured. It will further cover costs by imposing fees on employer sponsored health policies that go over a certain limit. These fees will be substantially less than the penalties inflicted on working people who can’t afford mandated insurance. The purpose of this component of any plan is to give political cover to employers to contract cheaper health plans for workers–especially union workers who have won greater benefits. Therefore employers are being incentivized to either further reduce benefits or dump people on “insurance exchanges” from where the existing and newly uninsured will have to buy insurance from.
So why is this consensus over health care “reform” among capitalists and the political elite coming together now?
They recognize they have their own crisis of healthcare. Obama’s relentless focus on cutting costs are meant to pass on the effects of health care inflation–rising approximately four times faster than wages–to workers. Health benefits are eating into corporate profits. Just as wages must continue to fall in the U.S., so must benefits and pensions in order for American capitalists to stay profitable within global capitalism. Yet this is only an expression of a much deeper phenomenon that goes to the heart of the current economic crisis. Capitalists must find ways to compensate for the falling of profit rates on a global scale. This is the reason for the attack on education, health care, unions, pensions etc. the last 30 years. In order to increase the rate of exploitation they must force workers to carry more of the burden of social reproduction. It is for this reason that during the restructuring of GM and Chrysler the government, with UAW approval, forced cuts in benefits and increased premiums and co-pays for autoworkers.
Therefore Obama embraced the mantra of “entitlement reform” early on in his administration by holding a “Fiscal Responsibility Summit”. Many of the players at the summit are part of broader effort to loot Social Security and Medicare. Part of “entitlement reform”, then, is looting Medicare and government coffers in massive giveaways to the insurance companies. This is part of the general pattern of the capitalists taking advantage of the crisis to deepen their attacks, the bank bail out being the most obvious.
However, there are around 60-70 million uninsured and under-insured in the United States. Not only do tens of thousands of people die every year in the U.S. for a lack of health coverage, but the U.S. spends more on health care than any other comparable country in the world, most of whom have some form of universal health care. Obama now represents a wing of the political elite who understand that this situation, which will only grow worse as more employers offer no health care at all, will threaten the legitimacy of the their own power. Therefore they are attempting to rationalize the system by realigning the framework of understanding the social need for health care within neo-liberal social ideology. The realities of a worsening health care system must be reconciled with the need for “change”.
In the latest example of newspeak, the Right have called Obamacare “socialism” and the official media as “progressive”. It is a surreal moment. The reality is very different. Obama’s reform will be remembered similar to Bill Clinton’s “welfare reform”. As part of the same process that “health care reform” can be thought of, welfare was turned into “workfare”–cheap labor for the state and corporations.