With opposition mounting, Dems need health-care alternative

Kaiser Health NewsAugust 20, 2009 

WASHINGTON — Relentless attacks on President Barack Obama's health care overhaul effort, coupled with continued questions about how to pay for it, are prompting analysts to suggest that Democrats will have to scale back the cost and scope of the legislation to get anything through Congress this year.

Analysts say it would be disastrous politically for Obama and his party to emerge emptyhanded 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 in congressional elections that fall.

"I absolutely think they'll have to have a fallback position," said Ross K. Baker, a political science professor and expert on Congress 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."

Sen. Charles Grassley, R-Iowa, a key participant in Senate Finance Committee negotiations, told The Washington Post on Wednesday that the outpouring of anger at town hall meetings with members of Congress this month has convinced him that the public has rejected the Democrats' far-ranging proposals for health care overhaul. He said that lawmakers should consider sharply curtailing 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 . . . don't spend so much money," he said. 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."

Democrats probably will have to "scale back" the package this fall if the bipartisan negotiations involving six Finance Committee members fall apart, one senior Senate Democratic aide acknowledged this week. The aide spoke only on the condition of anonymity because of the political sensitivity of the situation.

Henry J. Aaron, an economist with the Brookings Institution, a center-left research center, said the administration should identify elements that could be financed at a "politically digestible price."

"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," Aaron said.

Many backers of an overhaul, however, say that Democratic leaders remain committed to comprehensive legislation and that lowering their sights would be a mistake. In particular, liberal Democrats in Congress who advocate a government-run health insurance plan to compete with private insurers reject any suggestion that they scale back their goal.

"The fact is, we've got 60 people, and maybe more, who say there will be no health care, we will not vote for a plan, without a public option," Rep. Keith Ellison, D-Minn., a member of the Congressional Progressive Caucus, said on a conference call Thursday. "These people against the public option, they're standing against reform ... and we're not simply going to stand for it. ... We've got 60 people, and we're not going to back down."

Some outside experts agree.

"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."

Administration officials say that they prefer including a public plan in the bill rather than an alternative system of regional or state health care cooperatives. Still, in an effort to gain traction, the administration repeatedly has signaled a willingness to compromise.

In addition, congressional Democrats have ratcheted back their ambitions from the initial 10-year, $1.6 trillion proposal that called for a big Medicaid expansion and generous subsidies to help the uninsured buy coverage. When that bill's price tag set off a furor, Democrats promised to reduce the cost to no more than $1 trillion over 10 years, and Senate Finance Committee members say they're working on a bill that would cost $900 billion.

Some experts point out that shrinking the legislation would create its own problems. Liberals would see it as a betrayal. There also are practical issues. The final legislation is likely to require most people to have insurance. That would be hard to do, however, if the measure doesn't provide sufficient subsidies for lower-income Americans.

If there's 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 probably would end up with a disproportionate number of sick, costly customers.

Besides expanding Medicaid, the plans that are under consideration in the House of Representatives and the 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 to 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 said, 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 less over 10 years.

The August tracking poll by the Kaiser Family Foundation underscores a partisan divide, with 71 percent of Democrats supporting passage of legislation now and 67 percent of Republicans saying that 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. In July, 42 percent of independents were against an overhaul now and 54 percent had favored it.

Overall, a majority — 53 percent — of the public says that now is the right time to pass legislation, compared with 42 percent who say the U.S. can't afford to take on a health care overhaul now.

Kaiser Health News is part of the Kaiser Family Foundation.

(Julie Appleby of Kaiser Health News and William Douglas of McClatchy contributed to this story.)

(Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy-research organization that isn't affiliated with Kaiser Permanente.)

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