Political Hay

Time to Get Out the Iron

President Obama's health care speech papered over the details that have plagued his health care effort for months.

By 9.10.09

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At one point during his health care speech to a joint session of Congress, President Obama drew cackles for remarking that “there remain some significant details to be ironed out.”

In a much-hyped speech aimed at rejuvenating his health care push, Obama delivered a message that was strikingly similar to the one that has failed to resonate with the American people thus far. The reason is that while Obama can paper over political and policy realities by speaking in broad strokes, it’s always the specifics that have caused him problems.

As he has done before, Obama pledged to veto any bill that added to the deficit. But despite that commitment, the Congressional Budget Office has ruled that the House Democrats' health care legislation would create $230 billion in deficits over ten years.

Obama again touted the cost-saving potential of preventive care and an independent Medicare commission, but the CBO has determined that preventive measures would actually increase health care costs and that a commission would have a negligible impact on government spending.

Back in May, President Obama went before the American Medical Association and declared, “no matter how we reform health care, we will keep this promise to the American people: If you like your doctor, you will be able to keep your doctor, period. If you like your health care plan, you'll be able to keep your health care plan, period. No one will take it away, no matter what.” Last night, Obama offered a more nuanced pledge that “nothing in this plan will require you or your employer to change the coverage or the doctor you have.” While his revised statement may be more accurate, it is no less disingenuous.

Regardless of whether legislation specifically requires that Americans give up their coverage, there are still many changes to the system that could cause some people to lose it anyway. For instance, one provision Obama backed last night -- to tax expensive health plans -- is explicitly aimed at encouraging employers to drop benefit-rich policies in hopes that it would help rein in medical spending.

At one point last night, Obama said that, “The middle-class will realize greater security, not higher taxes.” But at another point of his speech, Obama gave an unwavering endorsement of a requirement that individuals either purchase health insurance, or pay a tax.

Under the version of the mandate proposed by Senate Finance Committee Chairman Max Baucus, individuals would face a tax of at least $750 if they do not purchase health coverage. And while his proposal would provide subsidies to lower-income Americans, those subsidies would stop at 300 percent of the federal poverty level. What that means is that a family of four with a household income above $66,150 would face a tax of $3,800 if they do not obtain health insurance, while an individual with income above $32,490 would face a tax of $950.

This is a problem that Obama himself noted when he was campaigning against Hillary Clinton back when he opposed mandates. “In some cases, there are people who are paying fines and still can't afford it, so now they're worse off than they were,” candidate Obama said during a February 2008 debate, referring to conditions under a similar mandate in Massachusetts. “They don't have health insurance and they're paying a fine.”

During his speech, Obama advocated the creation of a plan to be offered on a government-run insurance exchange that would be “administered by the government just like Medicaid or Medicare.”  He said that the reason we need such an option is that, “by avoiding some of the overhead that gets eaten up at private companies by profits, excessive administrative costs and executive salaries, it could provide a good deal for consumers.”

Yet later in the same speech, he argued that he could pay for most of his proposal with cuts to Medicare that would not have any impact on benefits to seniors. The reason, he explained, is that we could save money by reducing “the hundreds of billions of dollars in waste and fraud…” in Medicare -- the very government-run program he touts as a model for the creation of a new government-run program.

While acknowledging that the new plan would be run by the government, Obama tried to argue that it wouldn’t be subsidized by taxpayers, but only funded by the premiums it collects. However, any new government plan would require taxpayer money to fund start-up costs, and should it run into financial trouble, it’s hard to believe that the lawmakers would allow it to fail without pumping taxpayer money into it, just as they did in the cases of Fannie Mae and Freddie Mac (and those were allegedly private companies).

Though he made the case for the government plan, he also laid the groundwork for an eventual retreat. “It is only one part of my plan," Obama said of the government option. "To my progressive friends, I would remind you that for decades, the driving idea behind reform has been to end insurance company abuses and make coverage affordable for those without it. The public option is only a means to that end -- and we should remain open to other ideas that accomplish our ultimate goal.” He thus began the task of selling liberals on the idea of accepting alternatives such as the creation of nonprofit co-ops, but to this point the left has been firmly opposed to such compromises. The success of Obama’s health care effort will likely hinge on his ability to convince his ideological allies to accept less.

While last night’s address may earn Obama a few days of positive media coverage and boost the spirits of Democrats on Capitol Hill in the short-term, these pesky details will continue to weigh on his chances of passing major health care legislation.

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Philip Klein is The American Spectator's Washington correspondent. You can follow him on Twitter at: http://twitter.com/Philipaklein