The Sunday Take

Health-Care Reform Will Test Obama's Resolve

By Dan Balz
Sunday, June 21, 2009

As the legislative debate over health care intensifies on Capitol Hill, there is growing clamor for President Obama to step in. White House officials believe it's wiser to wait, but at some point the president will have to make clear what he'll accept and what he won't.

For Obama, a handful of big decisions awaits. They include cost and coverage, revenue and savings, a public option or not, and the cost vs. the desirability of bipartisan agreement. Those decisions, all inextricably linked, probably will determine whether he succeeds where other presidents have failed.

Cost and coverage suddenly became a more central issue after the Congressional Budget Office issued new estimates last week. The goal of reform advocates long has been a plan that moves the country to universal coverage. Earlier assumptions put the price tag in the neighborhood of $1 trillion over 10 years. The CBO shattered those assumptions, though their numbers were based on incomplete plans.

A preliminary estimate of the Senate Finance Committee's draft bill put the price tag of universal coverage at $1.6 trillion over 10 years. That was considerably more than anyone anticipated and forced the committee to delay work on the bill. The cost of the incomplete plan drafted by the Senate Health, Education, Labor and Pensions Committee was pegged at about $1 trillion over 10 years, but the CBO said that would still leave 30 million (rather than the current 46 million) people without coverage. Three House committees put forward their plan for universal coverage on Friday but, tellingly, without an estimate of its cost.

The new numbers make the choices more difficult. Will Obama insist on a plan that achieves the goal of universal coverage? If he doesn't, can he hold liberal Democrats and constituencies to support a measure that falls short? If he does, how will he pay for it?

Andy Stern, president of the Service Employees International Union, argued that every step in the direction of holding down the overall budgetary cost of a reform plan means additional costs to individual workers. "The president's going to have to come down between the cost to our country as well as the cost to people who go to work every day," he said.

Obama is committed to accomplishing health-care reform without increasing the deficit. Even at a cost of $1 trillion, that means cutting costs and raising revenue. One challenge will be finding real savings, but taxes present Obama with even more difficult choices. His biggest political call will be whether to accept proposals to tax a portion of health-care benefits for workers with high-end, employer-sponsored health insurance. As a candidate, Obama spent millions of dollars attacking Sen. John McCain (R-Ariz.) for proposing such taxes. Now, as president, Obama is being encouraged to accept some version of McCain's idea.

Breaking the campaign promise would come at a potentially significant cost. Organized labor opposes those taxes, which they say would hit many of their workers hard. But the Senate Finance Committee has been moving in that direction. Giving in on that provision may be the price that Obama and the Democrats pay for maintaining the support of Sen. Charles E. Grassley (R-Iowa), the ranking Republican on the Finance Committee.

There are other smaller tax increases possible, but whether they would amount to enough overall revenue is questionable. Obama proposed limiting the tax deduction on charitable contributions for the wealthiest Americans. That has little support in Congress, though the administration still pushes it.

Another choice will be whether Obama supports a mandate requiring individuals to buy insurance. As a candidate he opposed the idea, arguing that he could achieve near-universal coverage with subsidies for low-income families to buy insurance. But proponents of universal coverage disagree. Another factor is that, by requiring everyone to buy insurance, the private insurers have more incentive to support a reform package because they will have the potential for tens of millions more customers. Reversing his earlier opposition to the individual mandate may be an easy call.

The issue that has drawn most attention recently is whether a health-care package should include a public insurance option. Obama strongly favors one, and liberal groups favor it even more strongly. But Republicans are unalterably opposed. To gain anything approaching bipartisan agreement, Obama may have to accept a diluted version of a public plan. Sen. Kent Conrad (D-N.D.) has proposed using cooperatives rather than putting the federal government in charge, and his idea has attracted sympathetic attention.

But White House officials see a public option not only as critical to holding onto liberal support but as an essential weapon in holding down the cost of private insurance plans. Without the competitive pressure of a public plan, they fear that private insurers will be less likely to constrain costs. No one knows how far Obama is prepared to go on this controversial issue.

Finally, there's the question of bipartisanship. Most Republicans appear dug in, unwilling to compromise on much at this point. But Grassley continues to work with Senate Finance Committee Chairman Max Baucus (D-Mont.), and his support is potentially very valuable. Without Grassley, Obama might also lose a few moderate Democrats, although the more intransigent the Republicans, the more likely even moderate Democrats may be to support their president.

Obama was critical of President George W. Bush for trying to enact major legislation with a bare Republican majority. Is he prepared to sign a bill that would restructure a sizable portion of the economy with a slender Democrats-only majority?

Obama and White House officials say they are not alarmed by the talk that the prospects for enactment of health-care reform have been set back. They also know they face six or eight weeks of legislative sausage-making that will keep the outcome in doubt. For now, the administration is giving Congress time and space to find consensus. Ultimately, the president will have to make his choices clear.

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