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Obama Brings the Pain for Health Care's Gain

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By Ceci Connolly
Sunday, June 21, 2009

By tradition in Washington, a president's budget -- especially his first -- has a short shelf life. No sooner does the tome land on Capitol Hill than lawmakers toss it and write their own. President Obama's fiscal blueprint, unveiled on Feb. 26, followed the same well-worn path.

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But buried in that document is a tidy chart that provides a glimpse into the minds of a new president with an ambitious agenda and his battle-tested chief of staff, Rahm Emanuel.

There on Table S-6 of the "Mandatory and Receipt Proposals," the pair revealed how they hope to win over -- or at least neutralize -- the formidable players who have much at stake in the administration's push to overhaul the nation's $2.3 trillion health-care system. Hidden under a bureaucratically bland title, the "Health Reform Reserve Fund," is actually $634 billion worth of carefully calibrated pain. It's basically a list of budget cuts certain to make every lobbyist in town wince a little, but not so horribly as to prompt war. And that's the key to understanding the Obama-Emanuel touch -- sock it to 'em, but don't knock 'em over.

Call it the Goldilocks Strategy. Cut too deep, and the industry will rise up to thwart the hopes of yet another president eager to remake health care. Don't cut enough, and he won't have the money to pay for it. Find just the right amount, and perhaps, just perhaps, despite the recent bickering on Capitol Hill, there's a chance of success.

Under the Goldilocks Strategy, everyone shares the pain. True, the pharmaceutical industry doesn't like the prospect of paying out $19.5 billion more over the next decade in higher rebates for Medicaid, the government program that insures the poor, but that's nothing compared to the industry's $291.5 billion in U.S. sales last year alone. Few retirees, even if they are wealthy, would be happy paying higher Medicare premiums, but the senior citizens' lobby AARP immediately recognized that Obama's plan targeted only a fraction of its 40 million members. And though home health care firms protested recommended cuts in reimbursements, the objections were muted by references to the industry's healthy profit margins.

Even though all sorts of businesses and special-interest groups get pricked, not a single proposal sounds a death knell for anyone. And that's what distinguishes this White House strategy. Other attempts to change America's health system have seemed to place the very existence of some constituencies at risk. But Obama's plan merely asks everyone to take a hit and keep on fighting.

"Obama is approaching this as a homeopathic course of treatment," said Ross Baker, a presidential scholar at Rutgers University. "He injects people with a sub-toxic dose of pain to let them know they're going to have to give up something, but it won't make them really sick."

Every president since Harry Truman has tried to close the wide gaps in coverage in this country. The Obama team, which includes many veterans of the failed Clinton administration effort, has charted a different course, leaving the bill-writing to Congress while it tries to charm an industry that controls nearly one-fifth of the U.S. economy.

Glitches on Capitol Hill last week illustrated that even a savvy plan for dealing with industry does not guarantee a quick run through Congress. Lawmakers stalled over unexpectedly high cost estimates, and Republicans complained that they have been left out of the process.

Still, the Obama political strategy shows promise, in part because it complements the economic realities that drove the industry to the bargaining table in the first place. What was most striking about the reaction to Obama's original batch of health-care cuts was that there was almost no aggrieved response from the targeted groups.

The well-financed pharmaceutical industry and its never-shy chief lobbyist, former Republican congressman W.J. "Billy" Tauzin, said at the time: "This is a great start." Sure, he acknowledged in an interview, "there are things we don't like about it. But there's time to discuss all that." Tauzin, an ebullient Cajun known as a masterful inside player when he served in Congress, said he was just happy to have a seat at the bargaining table.

The tone struck by Obama contrasts with the us-against-them message from the Clintons 16 years ago, said Thomas Scully, a health-care expert who worked in both Bush administrations.


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