Health Care's Political Fractures

By Steven Pearlstein
Wednesday, May 10, 2006

Here they go again.

Congress is in the throes of its biannual attempts to fix a broken health insurance system, a top-priority concern for just about everyone. But rather than actually get something done, legislators have opted again for stalemate and partisan acrimony.

Republicans are engaged in a largely cynical exercise to blame government regulation for everything that's wrong with the insurance market while offering to reward their friends in the small-business lobby with a lucrative new health insurance franchise. The proposal they back requires them to ignore everything they've ever said about federalism and states' rights.

Democrats, meanwhile, are up to their old tricks, pandering to special interests -- this time, the "disease" groups -- and relying on scare tactics meant to convince us we'll all end up with higher premiums for health insurance that covers nothing. And after a century of arguing for a strong federal government, liberal Democrats are suddenly horrified at the idea that the federal government might preempt state regulation.

We'll get to the details in a moment. But the tragedy is that there's actually a deal to be had, if only both sides would accept the idea that half a loaf is better than nothing. There is also a golden opportunity here for George Bush, who -- if he chose to broker such a deal -- could put some life back into his dying presidency.

The legislation, being debated this week in the Senate, is ostensibly designed to allow small-business groups to market nationally what presumably would be lower-cost health plans to member firms. It would override state laws that mandate which services must be covered and how rates must be set. The idea is to give small businesses -- too many of which don't offer employee health insurance because of the high cost -- some of the same advantages big businesses have.

The National Federation of Independent Businesses has been pushing this for years, in part because it sees an opportunity to make money selling insurance to an expanded membership base. The idea has attracted a number of strident opponents:

· State insurance regulators and legislators, whose power would be curtailed;

· Other insurers, who think it unfair that they would have to continue to abide by state mandates while competitors would not;

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