The Smart Money Is Against Health Care Reform

When I say smart money, I actually just mean me. (I'll let the audience decide just how accurate that statement) That said, I would be stunned if any sort of radical health care reform passed. It's possible that the Congress and the president, to save face, might pass something harmless and scaled down that focused on non profit co ops. On the other hand, there are so many obstacles to radical health care reform that I just hope I remember them all.

The main problem is that the timeline simply doesn't match the sophistication of the legislation. This sort of legislation takes years of hearings, negotiation, along with timing to get done. The president wants this done by the end of the summer. I don't know if this is a matter of hubris or merely opportunity, but the president is working on a timeline that is simply not feasible.

Second, with each passing day, there is a new plan. So far, Ted Kennedy has developed the skeleton of a plan in his committee. That plan has now been rendered useless ever since the CBO came out with the price tag on said plan. Meanwhile, Max Baucas is working on his own plan though the rollout on that plan has been pushed back. Then, there are rumors that moderates from both the Republicans and Democrats are working on their own plan. The Republicans have yet to announce their plan. The House has yet to weigh in and its even possible that the president will then come up with his own plan. By the end, we will have four to six competing plans. We need a majority vote in the House and a super majority in the Senate. That isn't going to happen with all of these plans vying for attention.

Third, the numbers simply don't add up. No matter what, the plan is going to be expensive. It will cost at least $1 trillion over the next ten years. The president has figured out how to raise about one third of the revenues with taxes that aren't going to turn the public against the plan. He still needs to raise at least $700 billion over the next ten years. There is simply no politically viable way to do it. Here's how Dick Morris describes what Obama would do.

Obama faces two practical choices: a value added tax or taxing health insurance benefits.

The political harm either way will be enormous. Not only will Obama be breaking his pledge not to tax the middle class, but he will be doing so in a particularly pernicious way. If Obama opts for the value added tax (VAT), Democrats will hope to cloak the increase in the price of the product. They reason that the consumer won’t know how much the tax is since it will be added on throughout the sale and resale of the product rather than at the cash register at the end, as the sales tax is. But it will work the other way. As inflation sets in, triggered by Obama’s deficit spending, consumers will blame the whole thing on Obama. His VAT will be much magnified in the voters’ minds to include all of the inflation going on. Just as voters blamed Clinton’s gas tax
increase of five cents in 1993 for the entire run-up in gasoline prices at the pump, so they will place all the blame for inflation on Obama’s VAT.

Or Obama could tax healthcare benefits, a direct reversal of his campaign pledge. He would be adopting a policy for which he overtly and loudly criticized McCain. And his popularity will wilt as taxpayers suddenly have to add onto their tax liability the money their employer has always paid for their health insurance. Obama will probably have his own separate line on the 1040 and even on the short form for his new tax. That’s not the way to stay popular.

I don't think it would ever come to either option. President Obama is smart enough to know that if he tried to finance health care with a tax that was broad and reached beyond the 5% he's promised, not only would it be defeated but he'd suffer a blow he would likely not recover from. Cutting Medicare/Medicaid benefits would similarly be a third rail that would ultimate defeat the bill as well. So, ultimately, unless the president is able to do mathematical magic the numbers simply won't add up.

Fourth, there are starting to be far too many opponents to demonize. The CBO came out with its estimates just yesterday. Even before it was released, the Democrats were already trying to lower expectations and claiming they were going to use the numbers of the Office of Management and Budget, which is a part of the White House. The CBO is among the most respected bureaucracies in D.C. Trying to demonize their numbers is dicey to say the least. Then, the American Medical Association came out against the plan. The White House, and the left media, immediately went into attack mode. Of course, the AMA has backed Democratic causes on climate change and other issues. They represent doctors. Doctors are not apolitical but they are vital to any plan. Then, Senators like Ben Nelson and Mary Landrieu expressed doubts about the plan. Liberal media groups like Daily Kos and Media Matters went into full attack mode.

Pretty soon, supporters of the plan will need to start attacking just about everyone. At some point, enough groups that have credibility with the public at large are going to be against this plan. Some folks are easy to demonize, insurance companies for instance. It's probably a political benefit if they are against this plan. Republicans are easy to demonize. Try and demonize members of your own party, the CBO, and the AMA. That's a different issue.

Finally, there's no leader. You could say the president is leading, but that's not really even so. Somedays, Ted Kennedy is taking the lead. Other days it's Max Baucus. Then, the president takes interest. There is no point person to sell the details. The president is out there selling the idea, but he can't sell the details. He hasn't decided what those are. At some point, you have to explain the costs, how they'll be paid, and how this will benefit Americans. No one is doing that. How do you pull off radical legislation if no one knows how it will benefit them?

So, ultimately, President Obama will soon find out why health care reform has swallowed so many.