14.04.2010

Obama's healthcare triumph is a con

Jim Creegan looks at the devious manoeuvring carried out by Obama and the Democratic leadership

The healthcare bill signed into law by Barack Obama on March 23 was more than just another piece of legislation. For the right, it was the first step in a government conspiracy to take over the medical industry and much else besides. But it was of more than ordinary significance for the left as well. Over the past several decades, what small measure of inspiration and prestige revolutionary Marxism once commanded among those fighting for social equality has passed almost entirely to the reformist camp. The apocalyptic dreams of our youth, so went the refrain, had proved a will o’ the wisp: far more sensible to devote our energies to reforms that are actually within our grasp.

During the past two years or so, those ‘more realistic’ hopes centred on the figure of a youthful, crowd-inspiring candidate-president, who, with solid Democratic majorities behind him in both houses of Congress, staked his reputation as a reformer upon a promise to tackle this country’s abject failure to care for the health of tens of millions of its inhabitants, and its crass profiteering from the medical needs of tens of millions more. The final result of this drawn-out legislative saga is therefore an important test of just how realistic the reformist alternative has actually turned out to be.

Even before it began, the push for healthcare reform was a tale of progressive retreat. Most of Obama’s left-liberal supporters saw his nomination as a chance to achieve their long-cherished dream of a ‘single-payer’ system: ie, free, universal, government healthcare like that provided in nearly all other advanced countries. But, bowing to candidate Obama’s concerns that such an idea might be too radical, most agreed to begin the legislative reform process with what they originally considered their fallback position - a public option: ie, a cheaper, government-run healthcare scheme to compete with private insurers in the market and hold insurance costs down. The ‘progressive caucuses’ of the House and Senate, together with innumerable left-liberal media pundits and bloggers, loudly proclaimed the public option as the bottom line of any healthcare reform worthy of the name, or of their support. Fifty-eight members of Congress signed an open letter to the leadership of the House of Representatives declaring in advance their refusal to vote for any bill that did not contain it.

In the event, their resolve proved to be about as firm as the levees of New Orleans. No sooner had the legislative process begun than congressional corridors began to buzz with talk of weaker alternatives: a ‘trigger’ mechanism that would activate the public option only in states where there was ‘insufficient competition’; an ‘opt-out’ provision that would allow individual states to exempt themselves from the public option altogether; non-profit healthcare co-ops as a substitute for a government plan. A timid public option was finally included in the version of the legislation initially adopted by the House, the more democratic of the two congressional chambers.

On Christmas eve, however, a unanimous Democratic majority in the Senate cast its far more influential vote for a bill from which the public option was pointedly excluded. Although hope lingered for months in the House and in the liberal media, the White House and the Democratic leadership made clear through a series of unmistakable signals that they had no intention of fighting for a public option as part of the final bill.

The pressure was now on the House to ratify the Senate measure. There, ‘progressives’ were driven to their fallback: the Medicare buy-in. This was a plan under which those who had attained the age of 55 would be permitted to enrol, for a price, in the government’s current old-age medical cover (Medicare), now available for free only to those 65 and older. But, also lacking the support of the Democrats who count, this last-ditch effort to salvage the notion of broadened government healthcare soon went the way of the public option.

After even a few face-saving measures - including a proposed government commission to oversee insurance prices - also bit the dust, ‘progressive’ congressional Democrats, followed by nearly all their media acolytes, finally announced what nearly everyone knew had been their real position all along: unconditional surrender. They ended up voting for the measure ultimately endorsed by the president - a bill that closely resembled the Senate version, containing no public option. In doing so, they confirmed the scornful prediction of Obama’s chief of staff, Rahm Emanuel, that the left of the party did not have to be reckoned with at all in healthcare negotiations because they would ultimately swallow their misgivings and accept whatever the White House put in front of them.

One of the last holdouts, a congressman from Ohio named Dennis Kucinich, perhaps the leftmost of all the elected Democrats, threw in the towel on television with an air of resignation reminiscent of defendants at the Moscow trials; Kucinich did not even try to defend the final bill - in effect simply admitting, after a conversation with Obama on board the presidential jet, that a ‘no’ vote would have meant an end to his career as a Democratic politician.

Marginal gains for megaprofits

What did the ‘progressive’ Democrats get in exchange for hoisting the white flag before the first shot was fired? A bill that, according to former Clinton cabinet member Robert Reich, was drawn up along lines suggested by Richard Nixon in the 70s; it was also similar to legislation supported in Massachusetts by the Republican governor, Mitt Romney, in 2006, and voted into state law by, among others, the latest tea-party favourite, senator Scott Brown, when he was a state assemblyman.

It is essentially a quid pro quo whereby the health insurance giants agree to drop some of their more egregious gouging practices in exchange for the premiums of 32 million new government-supplied customers, some of them subsidised with taxpayer money.

Under the legislation, the insurers will be forbidden to continue their widespread current practice of covering only the people who do not require medical attention, and dropping them from the rolls when they do. A ‘pre-existing condition’ (any health problem) can no longer be grounds for denying applicants; ‘rescissions’ (ending the cover when a client becomes ill and actually needs insurance) will no longer be permitted. Insurers are, however, still free to charge higher premiums to clients with a history of illness, and charge an older client up to three times as much as a younger one. For the rest, they are at liberty to set insurance fees as high as they please. Death panels will also remain in permanent session - not the non-existent government panels conjured up by the teabaggers, but ones composed of actual insurance company examiners, who review client reimbursement claims with the aim of denying as many as they can.

For the majority of Americans who continue to receive healthcare from employers, from Medicare (the old-age scheme) or from Medicaid (free cover for those at or below the official poverty level of $18,310 per year for a family of three) things will change little.

Those just above the poverty line will see the greatest gain. The threshold for Medicaid eligibility will be raised from 100% of poverty level to 130%, making an additional 16 million eligible for government medical care that is free, but reimbursing doctors and hospitals at rates so low that many refuse to accept patients carrying it.

The biggest change (if not the biggest benefit) will occur for the approximately 45 million not covered by employers, Medicare or Medicaid. It is from this group that most of the insurance industry’s projected 32 million new paying customers will come. They will be required on pain of tax penalties to purchase insurance from private companies. For this purpose, each state will establish an insurance exchange in which available plans will be listed and prices can be compared. Families with incomes up to 400% of poverty level ($73,240 for a family of three) will, depending upon income, be required to spend only a certain percentage of their earnings on medical insurance, with the government picking up the rest of the bill. Thus a family in the median range of $54,000 will be forced to pay no more than 10% of its earnings on insurance premiums. The insurance they purchase with these premiums, however, often provides only a bare-bones cover; it will contain deductibles (a yearly amount clients must pay before the insurance kicks in) and exclusions (drugs and procedures not covered) amounting on average to 30% of the family’s medical expenses. So, when all is said and done, the typical family will still wind up spending an estimated 15% to 18% of its yearly income on medical bills.

The legislation is expected to leave about 20 million still uninsured - about a third of them illegal aliens excluded under the bill, the rest consisting of people who decline to buy insurance despite tax penalties. And, in a bow to congressional ‘right-to-lifers’, abortions will be excluded from government subsidies by means of an elaborate arrangement by which insurers must keep money that might be used to terminate pregnancies in a separate account.

The bill, most of whose provisions will not take effect until 2014, is estimated to cost about $940 billion over the next 10 years. The original House version of the bill proposed to supply the needed funds through an additional tax on households in the top income brackets. A milder version of that provision remains in the final measure: households earning over $250,000 per year will pay an additional 3.8% on their investment earnings. The Senate, however, was determined that part of the cost should be borne by union members. Thus the bill slaps a 40% excise tax on so-called Cadillac (ie, better reimbursed) plans, the beneficiaries of which are mostly higher-paid unionised workers. Although the employers who purchase the insurance will be required to pay the tax, many of these contractually stipulated benefits were wrested from the bosses at the negotiating table and on the picket line, and additional pressure will inevitably be put on workers to give them up, in whole or in part. The labour-federation bureaucrats were so incensed at this provision that they pressured Obama to postpone its implementation until 2018 - all that they demanded in exchange for total support.

Thus the bill Obama signed does expand free cover for the poor and make insurance somewhat more affordable for those in the middle-income range. These improvements, however, come at the price of handing over billions to the healthcare profiteers. It is perhaps the only piece of legislation in US history that compels citizens to purchase the products of private companies. All government subsidies to individual insurance purchasers will also wind up on the companies’ profit ledgers. Part of this subsidy money will come out of the pockets of the working class. With these windfalls, the power of the private insurers will be doubly entrenched. Like any group of capitalists feeling its oats, the industry will inevitably invent multiple means to circumvent the new restrictions. And, most important, the universal, government-sponsored healthcare on which left-liberals had pinned their hopes is now dead and buried.

The vultures could already smell their prey. The insurance industry, whose 2009 profits were a record 56% greater than in 2008, saw its stock prices soar with each stroke of the 22 pens Obama used during the signing ceremony.

Rationale at the ready

Long before Obama had officially betrayed his campaign promise to support the public option, and Congressional Democrats had backed off their solemn vow not to vote for any bill without it, their rationale for surrender was making its way through the press and over the airwaves.

According to this now dominant narrative, Obama and the Democratic leadership sincerely preferred the public option, but simply could not muster the votes to get it through Congress. In the teeth of unanimous opposition from Republicans, intense lobbying by the healthcare industry, lack of commitment from conservative ‘blue dog’ Democrats, and sinking support in the opinion polls, Obama had no alternative but to settle for the most he could get, which was, after all, better than nothing, and ‘progressive’ Democrats had little choice but to follow suit.

This narrative is satirised by the left-liberal journalist, Glenn Greenwald, in the form of an imaginary dialogue between Obama and his chief of staff, Rahm Emanuel:

“President: I really want a public option and Medicare buy-in. What can we do to get it?

Emanuel: Unfortunately, nothing. We can just sit by and hope, but you’re not in Congress any more and you don’t have a vote. They’re a separate branch of government and we have to respect that.

President: So we have no role to play in what the Democratic Congress does?

Emanuel: No. Members of Congress make up their own minds and there’s just nothing we can do to influence or pressure them.

President: Gosh, that’s too bad. Let’s just keep our fingers crossed and see what happens then” (Salon.com December 16 2009).

The real drama was enacted behind the scenes, and according to a different script.

The deals are done

“The House has largely been a sideshow,” Representative Jim Cooper of Tennessee told The New York Times last summer, when media attention was focussed on debates taking place on the floor of that chamber. And, indeed, from the spring onward the scene of the real action was the Senate finance committee, one of Congress’s most powerful subgroups. Its members have been the recipients of nearly $50 million in campaign contributions by the medical industry over the past 20 years, $1.5 million of it bestowed upon its chairman, Max Baucus, a blue dog Democrat of Montana.

An investigative report in The New York Times gave the lie to Obama’s assiduously cultivated appearance of having only provided the broad outlines of healthcare legislation, leaving Congress to work out the details. He in fact spoke to Baucus over the phone several times a week throughout the negotiations, while the White House budget director, Peter Orszag, “spent so much time in the senator’s office that he [helped] himself to Coke Zeros tucked away in Mr Baucus’s personal refrigerator” (August 13 2009). The finance committee served as the principal liaison between the medical industry and the White House.

Two crucial deals were done early in the game. The first, also reported by The New York Times, was brokered by the committee with the lobbying arm of the pharmaceutical industry in June 2009. The White House guaranteed that the legislation would not violate the Bush administration’s pledge not to use government power to negotiate lower drug prices with the pharmaceutical companies, and not to import cheaper drugs from abroad. In exchange, big pharma pledged voluntarily (ie, without any mechanism for enforcement) to lower drug costs, and to support Obama’s bill, even to the point of running a series of television adverts urging its passage.

The second deal, with the association representing most of the country’s commercial hospitals, was sealed the following month. The hospitals pledged political support for the healthcare overhaul, in exchange for which the White House agreed to limit hospital liability for the reforms to $150 billion. And, most tellingly, Obama and Baucus gave their word that the final version of the bill would not include a strong public option. Thus during all of the following months in which Obama professed to support the public option, he did so knowing he had in effect already bargained it away.

At this point, the health insurers were the only major arm of the medical industry whose direct input was missing. This gap was filled by Liz Fowler, a top assistant to Max Baucus. She was the author of a healthcare white paper that would serve as a guideline for the finance committee’s deliberations. Fowler had just returned to Baucus’s office after a two-year stint in the private sector. Wellpoint, the country’s biggest health insurer, was the particular part of the private sector she had worked in, as the company’s vice-president for public policy. During her absence at Baucus’s office, she was replaced by Michelle Easton, who, upon Fowler’s return, also left public service for the private sector - as a lobbyist for Wellpoint. Fowler and Easton are part of the army of insurance industry lobbyists - there are six for every senator - who pass back and forth between government and the industry. Fowler’s white paper, needless to say, also omitted the public option.

Of the three medical industry pillars - pharma, hospitals, and insurers - only the insurers lobbied against Obama’s bill, apparently as a safety precaution (or insurance policy) against the receding possibility that the public option might stay in.

But, although the essential fix was in by the end of last summer, there were still choppy political waters to be navigated. Polls showed that the public, while highly sceptical of Obama’s healthcare effort as a whole, favoured a public option by a margin of nearly 60%. As the self-proclaimed party of reform, the Democrats would come out looking pretty shabby if it became widely known that not only leading party politicians, but the change-agent-in-chief himself, had presided at the early execution of the public option. The situation called for the skilful application of the bourgeois politician’s supreme art: disguising class aims behind a ‘democratic’ facade. And it must be admitted that in this case the Democratic leadership rose splendidly to their obfuscatory task.

Smoke and mirrors

Between the summer of 2009 and the day Obama signed the bill, there transpired a legislative minuet so drawn-out and convoluted that even the most ardent news junkies (including this one) had a hard time keeping up. Public weariness with this whole issue was itself useful in diverting attention from what actually happened.

One major theme during these months was Obama’s insistence on a bipartisan approach. This involved an elaborate courtship of the Republicans, from presidential meetings with their leaders, to a personal appearance by Obama at a Republican conference, to a day-long televised negotiation at the White House. Why, commentators wondered, was Obama going to these lengths when it had been clear from the outset that the Republicans did not intend to give an inch in their opposition to any Democratic bill, no matter what it said? The conventional answer was that Obama was attempting to position the Democrats before the public as the more reasonable of the two parties. But bipartisanship had another function: it put the spotlight on Republican intransigence, making just about anything the Democrats supported appear radical by comparison.

Another constant refrain from the Democratic leadership was that they simply did not have the votes to pass the public option. This led to some truly bizarre moments, as when Max Baucus, in voting the bill out of the finance committee onto the Senate floor for recommended passage, said he personally favoured the public option, but was voting against it because he did not think it could get enough votes in the Senate as a whole. He failed to add that it was precisely blue-dog Democrats, including himself, who had been withholding the necessary votes all along.

When some Democrats threatened to put the public option to a vote in the Senate anyway, the leadership claimed it did not have the 60 votes needed to break the Republican filibuster. But, when it became clear that the Republicans would filibuster even to block a bill that did not contain the option, Democratic strategists decided to employ a parliamentary tactic called reconciliation, which would allow them to pass the bill with a simple majority of 51 out of 100 Senators. Did they not command enough votes for the public option even now? The leadership said it did not. Then, when some Senators started to sign a letter pledging support for the public option, the focus shifted to the House, where the Democratic speaker, Nancy Pelosi, suddenly claimed that she could not marshal the votes, although it was the original House version of the bill that introduced the option in the first place.

This tossing back and forth of the hot potato reflected more than just fear of White House disapproval. Many senators and representatives, having gone on record supporting the public option to gain favour with their constituents, were only too happy to avoid taking a stand that would have put them in bad odour with their corporate campaign donors.

Where in all this confusion, some wondered, was Barack Obama? Did not the office of president wield a weighty influence, one that he had not hesitated to deploy in June when some congressional Democrats were threatening to vote against his appropriations bill for the wars in Iraq and Afghanistan? Then, according to representative Lynne Woolsey of California, the White House said that if certain Democrats stood in the way, “We’re not going to help you” get re-elected. “You’ll never hear from us again” (CommonDreams.org, December 16 2009). Could not Obama have twisted a few blue-dog arms to get the public option through?

He twisted arms, alright - just not those of legislators who were opposing the public option: rather of those who were threatening to hold out for it. Over the summer Rahm Emanuel personally appeared before a meeting of ‘progressive’ Democrats in Washington, some of whom had been running television attack adverts in the home states of blue dog democrats who opposed the public option. Emanuel told them to pull the adverts immediately, and called the progressives “fucking stupid” (CommonDreams.org, August 19 2009).

The arm-twisting worked, perhaps with a pinch of bribery thrown in. The final result was a bill that will probably be a model for all of Obama’s subsequent reform efforts, making only those marginal adjustments to the status quo that corporate capital feels it can live with comfortably - at a time when capital’s comfort zone regarding anything that encroaches in the slightest on its profits and power is narrower than ever. This, then, is the meaning of the ‘realism’ urged upon us by reformists as an alternative to revolution, or at least of any ‘realism’ that involves working within the Democratic Party. It has shown itself to be synonymous with begging small favours from the bourgeoisie.

Witting accomplices

The spite and fury of the Republicans against Obama’s healthcare bill was not invented by the Democrats, but it has been of immeasurable value to them in covering up the single most salient fact of this whole story: that the Republicans had nothing whatsoever to do either with excluding the possibility of ‘single payer’ from the start, or of ensuring the absence of the public option. Republicans declared their opposition to any healthcare legislation in advance, and would not have voted for Obama’s bill in any case. The final outcome was the exclusive handiwork of the Democratic Party and its leader in the White House.

Nor were the backroom deals to kill the public option shrouded in secrecy, requiring some diligent investigative journalist to bring them to light. They were, in fact, reported in the mainstream press months before the final bill was passed. Their existence was confirmed by a hospital industry lobbyist and the White House deputy chief of staff. According Miles Mogulesescu, who had been reporting on these tractations all along, they “should have been big news” (Huffington Post March 18 2010).

Yet the true back story is not, in fact, widely known. And a large measure of the responsibility for this truth gap must be laid at the door of the television commentators and bloggers (Keith Olbermann and Rachel Maddow of MSNBC; Markos Moulitsas of the Daily Kos), to whom the wider left-liberal public would normally look to expose such a deceit. With a few honourable exceptions, however, most left-of-centre politicians and commentators chose to downplay what happened behind the scenes in favour of the official narrative of a reaction-beleaguered Obama snatching a major liberal victory - some called it “historic”; others were more measured - from the jaws of defeat. This episode demonstrates once again the complicity of the left wing of the Democratic party. No matter how impassioned or far to the left they may appear on many issues, they can always be counted upon to supply the necessary alibis for betrayal when the need arises.

Obama’s healthcare bill is, however, an impressive achievement of political legerdemain, if not of social legislation. It has probably allowed the Democrats, for the time being, simultaneously to burnish their ‘progressive’ credentials enough to keep their liberal base on board, and demonstrate enough political savvy to impress their corporate paymasters - no mean trick in an increasingly class-polarised country now suffering an economic crisis. The bill will also help give Obama the political cover he needs to pursue two major items on the class-attack agenda he inherited from George W Bush: cutting the government old-age pension (social security) and savaging public education.