Charles Krauthammer argues in today’s column that even though President Obama’s health care push is in trouble, he’ll likely settle for a more modest set of insurance reforms, which Democrats will give him because they’ll suffer if he completely fails on this issue. While Krauthammer makes a good case for the “he’ll at least sign something” school of thought and I would by no means discount that possibility, there’s also the argument for the “all or nothing” outcome. By that I mean either  Obama will sign a very liberal comprehensive health care bill, or come away with nothing at all. There are both political and policy reasons behind my reasoning.

Politically, Obama deciding to scale back his ambitions is one thing, but getting liberals in Congress to agree to that is another story entirely. Just this week, Lynn Woosley, a leader of the House Progressive Caucus, denounced a deal that was struck with Blue Dog Democrats even though it included a government plan, because of a disagreement over reimbursement rates. I can’t imagine how her group of 80 House members would react if Obama tried to argue that they’d have to settle for bill that merely stepped up regulation of private insurers. And even though, broadly speaking, it would make sense for Democrats to give Obama some sort of victory, it doesn’t mean that in reality any single lawmaker or group of lawmakers will be willing to sacrifice what they want. As Jim Antle has noted on a number of occasions, the liberal members of the House are from safe districts and are virtually assured reelection no matter what happens. So they very well may be willing to go the distance to fight for what they want, and reject any sort of watered down legislation.

As for policy, Krauthammer argues that, “the president will in the end simply impose heavy regulations on the insurance companies that will make what you already have secure, portable and imperishable: no policy cancellations, no preexisting condition requirements, perhaps even a cap on out-of-pocket expenses.” He acknowledges that imposing these new regulations will create the need for a mandate requiring individuals to purchase health insurance. But the problem is that once you adopt the liberal mindset for health care reform, you can’t stop at these changes, because more government begets more government. Obama won’t be able to mandate that individuals buy insurance if they can’t afford it, so that will create the need to expand Medicaid and/or offer sliding scale subsidies for people to purchase coverage. But given the problems with the way the individual insurance market is currently set up, they’ll want to create some sort of exchange on which people can purchase insurance. Then we’re back where we are now, debating whether that exchange should include a new government run plan. The point is that to adopt any aspect of the liberal changes, you end up having to adopt them all. 

So my view is that either moderate Democrats will fold and vote for a very liberal bill, or the whole effort will go down in flames.

UPDATE: David Hogberg has a piece exploring whether the House liberals will actually risk killing health care legislation to fight for a “robust public option.”