Healthcare Reform Kicks Into High Gear

Just one month ago, the conventional wisdom in Washington — here personified by inside-the-Beltway health guru Bob Laszewski — was that the economic crisis and a vast federal bailout package had effectively killed any chance for an overhaul of the nation’s creaky healthcare system.

Don’t count on it. Democrats plan to use their control of Congress and the presidency to make a full-scale push for major changes in the healthcare system. They’re doing so at a time when the faltering economy makes large-scale federal spending more palatable as stimulus and in a political environment far more conducive to change than what Bill Clinton faced in 1993. What’s more, it’s already clear that reform plans will be hashed out in Congress from the beginning, helping to build coalitions for passage, instead of the unpopular closed-door (but leak-prone) policy shop that Hillary Clinton headed up 15 years ago.

Today, for instance, Democratic Sen. Max Baucus, chairman of the Senate Finance Committee, released a sweeping healthcare reform proposal that would set up a government-run alternative to private health insurance, offer subsidies for coverage and ban discrimination based on pre-existing conditions. In many respects, the Baucus plan is similar to what President-elect Barack Obama proposed during his campaign, except that Baucus would mandate insurance coverage for all individuals.

Obama himself kick-started this process by pushing healthcare reform particularly hard in his campaign — far harder than Clinton did in the 1992 election. As of late October, Obama had spent $133 million on healthcare-related TV advertising, and in the final full month of the campaign devoted 86 percent of his ad budget to healthcare reform. Obama also touted his plan at length in each of his three debates with John McCain.

Meanwhile, congressional Democrats have been laying groundwork of their own. As The New Republic’s Jonathan Cohn reported recently, staff members of three Senate committees — Budget, Finance and Health, Education, Labor and Pensions — have been meeting since June, bringing various interest groups on board and mapping out a legislative strategy for moving healthcare reform through Congress next year. The Baucus plan is just the first marker; Sen. Ted Kennedy is crafting a similar proposal, as are members of the House. The Senate plan is to introduce a unified bill early next year — potentially not long after Obama’s inauguration.

Legislative plans are one thing, of course; broad political support is another. But many of the interest groups that fought hardest against the Clinton plan are much more equivocal this time around. Health-insurance companies like WellPoint and UnitedHealth Group are sucking wind as their old business model collapses. What’s more, many have convinced themselves that reform is in their interest, as the plans taking shape would likely boost demand for insurance. (I think they’re wrong about that, but this is a subject for another post.) Doctors and hospitals have major problems of their own that are likely to sap their resistance to a larger government role in the healthcare system.

Cost, of course, remains a major issue. The Obama plan is estimated to cost $100 billion a year at the start, although it also envisions cost savings through improving the productivity of medical care via evidence-based models that could end up saving much, if not all of that. Whatever emerges from Congress could easily cost more than that, given the vagaries of legislative horse trading.

Still, the price tag might not be the obstacle it once was. A growing number of economists support huge increases in federal spending in order to stimulate the sagging economy — some on the order of $600 billion or more. A clever political strategy might package healthcare reform both as stimulus and as a necessary safety net for the millions of Americans likely to lose their jobs — and their employer-provided healthcare — if the economy does slide into the major recession many forecasters predict.

Finally, of course, there’s the matter of partisan politics. As Laszewski noted just last week, Senate Republicans managed to stop the Clinton plan while holding just 41 seats — roughly the size of the minority they’re likely to retain once several outstanding Senate races are settled. That said, the Republicans are in disarray, and potentially vulnerable moderates might well peel off from their caucus to support a bipartisan bill.

Even if that doesn’t happen, the Democrats have another ace in the hole. According to Cohn — the author, by the way, of the terrific book Sick –Baucus and other senators are prepared to push the bill through via the so-called budget-reconciliation process. Although something of a last resort, this process limits debate, restricts amendments, and — perhaps most significantly — bars filibusters, which otherwise would allow 41 senators to block any measure they oppose.

As Baucus told Cohn:

My first preference is always to work together with my [Republican] colleagues to get legislation done…. When that’s not possible, I’ll find another way.

It’s still a high-stakes game, and there will undoubtedly be unexpected challenges, wrong assumptions and many details to work out, any of which could derail the effort. But it’s unquestionably going to be a wild ride, and anyone who eager to write the obituary for healthcare reform this time around might want to start hedging their bets.

Update: Check out the Baucus outline for healthcare reform (PDF).