Thursday, March 29, 2012

Obamacare and Obama's Legacy

According to multiple reports, President Obama came to the White House determined to leave a major legacy. This is not surprising. He was already being compared to Lincoln and FDR. He had openly compared himself to Reagan. The newly-minted president also had a high opinion of himself and his abilities. In the space of four years he had gone from being an obscure Illinois Senator to President of the United States. Someone who could accomplish that could do anything.

But frustration awaited the President. The economy had crashed the year before and was still in a delicate state. This also cut tax revenues and boosted the deficit. After trillions in bail-outs, the populous was shell-shocked and not in a receptive state to new spending initiatives.

It was suggested to Obama that his legacy should be saving the country from a second Great Depression. No, Obama said. That was too small. He wanted something big. He wanted Health Care.

But where to go from there? Several proposals had been floated during the campaign. Obama's own plan was fairly modest compared to Hillary Clinton's which included an individual mandate to buy insurance. Obama ran ads rejecting that as too intrusive.

A couple of options were off the table. One was a massive plan written by the White House. Hillary had tried that during her husband's administration and it had flopped. Obama would make sure that Congress was deeply involved.

Another option that was never considered was the plan that Republican challenger John McCain had advanced. This called for severing the relationship between insurance and the employer. This would make insurance portable which was one of the top concerns. Doing this would weaken the unions which made it untouchable.

Obama had some ideas of his own. A study on medical effectiveness had impressed him and he wanted to expand this and use it as a basis for all medicine in the country. Everything would be evaluated and only the best and most cost-effective treatments would be allowed. This ran into complaints about "death panels" and was scaled back to a small pilot program that would offer voluntary guidelines. Even this turned out to cost billions.

Next came a round of horse-trading. What started as a general overhaul of health care was cut back repeatedly. Trial lawyers are as important to the Democrats as unions so there would be no reform of malpractice suits. Cost controls on prescription drugs was dropped in exchange for support from the major drug companies. A similar deal was cut with medical professional organizations to keep doctors' independence in exchange for their support.

The big stumbling block was preconditions. The government wanted the insurance companies to cover everyone regardless of preconditions. The insurance companies complained that they could not afford to cover this without an individual mandate.

That sounded good to Obama. He could accomplish two goals at once. He could eliminate anxiety about preexisting conditions and he could expand coverage to 30 million people who were currently uninsured.

So health care reform became health insurance reform.

From there on, the White House took a hands-off approach to the contents of the legislation. Obama indicated that he would like a public option (a competing insurance program run by the government) but he would not fight for it.

The Republicans made it clear that they did not like the way things were going so all of the negotiations were between Democrats. It got messy. With every vote needed, deals were struck to essentially buy votes. Many of these deals were later dropped.

Public resistance grew. A series of town hall meetings to sell the legislation turned ugly.

Senator Kennedy died and was replaced with a Republican who promised to stop Obamacare. Obama and the Congressional leaders refused to let the legislation die. Eventually it was passed using some legislative maneuvering and without a single Republican vote.

All of this took 18 months. During that period the polls showed that unemployment and the economy were the public's top concern. Preexisting conditions were low on the list and insuring the uninsured didn't even make the top ten.

The public wanted to know that the government was doing everything it could to help them. Instead, the Democrats were stuck on health care.

Even though Obamacare was unpopular, the President was convinced that once the legislation passed it would become popular. He told the Democrats that they only way they could maintain their majority was to pass the legislation. If it failed then the voters would punish them the way they had punished the Clinton administration in 1994.

It worked the other way. The slaughter in 2008 made the 1994 election look mild. The Democrats still controlled the Senate but they lost the House and a record number of state and local offices. Without their the House and a Senate supermajority, there would be no second chance on Obamacare.

In the scramble to get something passed, Congress ignored warnings about the constitutionality of the law. The CBO pointed out that this would be a major expansion of the government's power. It didn't matter. The whole thing fell apart without the individual mandate so it had to include it.

Two years after passage, the Supreme Court heard arguments against the individual mandate. From the questions asked, at least five justices do not agree with this expansion of power. It is likely to be struck down when the Court rules in June. The only question is if they will strike out the entire law or only portions of it. One justice likened having to go through 2,600 pages of legislation to cruel and inhuman punishment.

In the meantime, the economy continues to lag. The Obama administration assumed that such a steep decline would be followed by a quick recovery giving a "V-shaped" recovery. That would allow them to take credit for the inevitable robust recovery in time for reelection.

Obama's economic policies have mainly centered on Wall Street in what seems like a modern variation of Trickle Down economics. House values continue to decline and people continue to lose their homes without much notice from the White House.

Obamacare itself contributes to economic uncertainty. Small and medium businesses are unsure what it will cost them to add new employees so they are putting off hiring.

With the presidential election looming, Obama's legacy looks like it is in tatters. Some or all of Obamacare is likely to be struck down meaning that the time and effort that went into passing it were wasted effort. This also contributes to the impression that Obama mismanaged the recovery.

Even if Obama wins reelection he is unlikely to have the supermajority in Congress that was needed to pass the original Obamacare so the idea that he can pass a more radical version is a fantasy.

This almost plays out like a Greek tragedy. By obsessing on his legacy, Obama squandered his presidency.

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