Economics, Adjudication, and (Above all,) Politics: Health Care Reform and the Public Good

By Max J. Skidmore
Curators’ Professor of Political Science
University of Missouri-Kansas City

Before passage of health care reform in 2010, the “Patient Protection and Affordable Care Act” (the infamous “Obamacare” to its opponents), a joke making the rounds involved a recently deceased advocate of universal health care, who, upon being admitted into heaven, was permitted to ask a question of the Almighty. “Will the United States ever have universal health care?” he asked. “Oh Yes,” God replied, “but not in my lifetime.”

If the ACA does not survive the current Court challenges, the joke again may become current. Certainly, it would be better to have a single-payer system. Certainly, Medicare for all would have been superior to the ACA. Regardless of the Court’s ruling though, neither is likely to happen for a generation, or probably much longer. Given the political dynamics of contemporary America it is unlikely that anything better could have passed Congress, in view of the unanimous determination of Republicans to obstruct, and of the rather recent practice of the Senate to permit even a tiny minority to retain the absolute power to block majority action. “Sixty votes are required to pass anything,” commentators note. This should not be true, and until quite recently has not been true, but sad to say that is now the case, at least for anything significant.

Therefore, for some time to come it likely is the ACA or nothing. The only way this would not be true is if there were a huge wave election in November that sent huge majorities of Democrats to both Houses of Congress, especially to the Senate.

At this writing, the U.S. Supreme Court has just completed an uncommonly long period of oral argument, three full days, regarding the constitutionality of the ACA. This does not mean that the Court will strike down the ACA, although some justices appear to have sent signals that they may rule against it. Oral arguments are only a small part of the Court’s deliberations, and frequently give no indication of the Court’s ultimate decision. What is astonishing, though, is not the length of the arguments, not the complaints from liberals that support for the Act should have been presented more skillfully, and not even the incorporation of Republican talking points into his questions by Justice Antonin Scalia, but rather that the Court should be hearing such a case at all.

Decades of case law, a century of broad recognition that reform is essential, the obvious fact that the ACA represents the most conservative possible way in which to move toward universal health coverage, and the very principles of the ACA itself (nearly all of which initially came from conservatives, specifically Republicans) would seem to have rendered effective challenge to the act impossible. Yet no sooner was the Act under consideration than the vilification began. Time after time, “pundits” pronounced its death, but President Obama remained a constant force, steadily seeking compromise (much of which is reflected in the resulting legislation), but refusing to accept defeat. To the astonishment of the entire Washington establishment (of course with powerful assistance from Harry Reid in the Senate and, especially, from the extraordinarily effective speaker, Nancy Pelosi, in the House), the president prevailed.

Opponents immediately condemned the legislation because it was too long (during the oral arguments, Justice Scalia even snidely—in his defense, it may have been an attempt, however weak or inappropriate, at humor—suggested that he might declare the statute unconstitutional because it was too long for him to read). Some critics argued that it was inappropriate, regardless of majorities, to have passed such far-reaching legislation without support from the minority—an especially bizarre assertion that would grant an extremist minority absolute veto on any policy that the majority favors. Not since John C. Calhoun sought irrevocable assurance that slavery would always be protected has there been such a suggestion in American politics (in fact, quite the reverse: Republican Speaker Dennis Hastert notoriously refused to consider legislation unless he could get it passed in the House with Republican votes only; passage that is by “a majority of the majority”).

Opponents also charged that everything was done in secret, behind closed doors, and that the legislation was rushed through without time for members to read it, and without consulting Republicans. This is nonsense. The entire bill incorporates one compromise after another, each adopted in futile attempts to obtain Republican support—and sometimes conservative Democratic support as well. Every incarnation was posted on line where members—and even the general public—could read it as desired. Moreover, a process that takes a year and a half, and is subject to every parliamentary delay known to Senator McConnell and the Senate Republicans, is hardly “rushed,” nor is complicated legislation unacceptable because of its length (long bills are commonplace for such issues).

Then came the barrage of absurdities, such as a claim that the Independent Payment Advisory Board, which the ACA set up to study procedures to determine their effectiveness, but which would not deal with individual cases, was a “death panel.” Perhaps Michelle Bachmann, who lives in a disturbed and disturbing world of her own, may be excused for her hyperbole. Sarah Palin and Rick Perry, too, may not have known better. Others, however, assuredly did, on this and related questions. One would assume that such figures as Rick Santorum and Newt Gingrich, however extreme their views, would have enough understanding of “socialism” to recognize that the moderate Obama policies are not even similar. The search for political advantage, though, seemed to have eliminated all vestiges of good sense. Even the normally sober Senator Charles Grassley descended into demagoguery by charging the Democrats with “pulling the plug on granny.”

Part of the trouble here, of course, is that the process was so open. Policy making is notorious for its similarities to sausage making—one shouldn’t watch either. In this case, though, the ravenous 24/7 news cycle magnified every compromise—and compromise is a prerequisite for any complex legislation—into Corruption. There was the notorious “Louisiana Purchase,” to placate Democratic conservative Senator Mary Landrieu from Louisiana, and the equally notorious “Cornhusker Compromise,” to placate the even more conservative Democratic Senator Ben Nelson from Nebraska. These would have given extra consideration to the two states, and they caused a furor, although such bargaining is customary in the legislative process. With constant haranguing from television news, these two agreements gave the public the impression that passage of the Affordable Care Act came only through a uniquely corrupt process. The fact that neither provision made it in to the final legislation was irrelevant, because hardly anyone knew it. It was the offending bargains that made news; removing them aroused little interest, and did not fit into the narrative. Justice Scalia, in fact, hardly fostered the appearance of a wise judiciary when he inadvertently proclaimed his ignorance of the Act’s provisions—thereby verifying his refusal to read it—by referring to the “Cornhusker” provision as though it were part of the ACA as passed and signed into law.

Even before the Act’s passage, Republicans succeeded in branding it “Obamacare,” as though this would be the kiss of death. The New York Times on 26 March 2012 (p. A18) published a valuable timeline describing the term’s history. In May of 2007, Mitt Romney condemned “the path of Europe,” and said that the United States must shun “socialized medicine,” which he then described as “Hillarycare. Obamacare.” The next year a spokesman for “FreedomWorks,” Dick Armey’s organization designed to foster the “Tea Party,” charged that “Obamacare” was the president’s version of “Hillarycare.” In July of 2009, Missouri’s Roy Blunt, then in the House, and Arizona Senator John Kyl quoted a Wall Street Journal editorial to enter the term into the Congressional Record. From that time forward, Republicans repeated the word countless times, and Democrats repeatedly objected to it. Recently, though, Democrats began to embrace it as the Obama campaign began to build the ACA into its re-election themes.

Perhaps Republicans may come to rue the day that they applied the term to health reform. If the ACA does survive this Supreme Court, surely within a decade or so health reform will be so popular with the public that Republicans will try to claim it as their own. This will be difficult for them, because even though they originated nearly all of its principles, they will find it awkward to claim ownership of anything the public thinks of as “Obamacare.”

The notion of health care reform was introduced into America’s political discussion by former Republican President Theodore Roosevelt in his famous Osawatomie, Kansas speech in 1910, and became part of his Bull Moose platform in 1912. The process over the next century that culminated ultimately in what became probably the most vilified and misrepresented piece of legislation in American history, is fascinating. In the twentieth century’s second decade, there was considerable discussion of the topic. Even the American Medical Association for a time seemed to receive the idea favorably, but the AMA quickly closed ranks and became an implacable foe of any government assistance in paying health expenses. Democratic President Franklin D. Roosevelt had hoped to include health care in his Social Security Act of 1935, the crown jewel of the New Deal, but the AMA signaled that if he did so, organized medicine would marshal its considerable political force to defeat Social Security; without such a provision, the AMA would stay out of the fight and take no position on the legislation. FDR wisely concluded that it would be better to have a Social Security program without health care than to have nothing. His successor, Democratic President Harry Truman, sought in vain to secure a national health service. Although Truman’s Republican successor, Dwight Eisenhower, was far more conservative, and gave no support to general health care legislation, he did accept the Social Security Act fully, and even signed into law an ambitious new addition to the system of benefits for disability.

Because of this history of failure, Democrats at the time gave up hope for universal health care, and concentrated on health care for the elderly. Democratic President John F. Kennedy worked diligently for such a program, “Medicare,” but made little progress before his tragic assassination. The AMA had embarked upon a massive propaganda campaign against the plan just as it had done against President Truman’s proposals in the 1940s. Part of the AMA effort was a phonograph recording that former film actor Ronald Reagan made for the association in its stealth campaign, “Operation Coffeecup,” to encourage letters opposing the Medicare proposal to all senators and representatives. Reagan called Medicare, “socialized medicine,” and assured listeners that its passage would bring an immediate totalitarian dictatorship. He also condemned Social Security, saying that it was bankrupt (in 1961!), and also would lead to dictatorship. His solution was privatization.

Nevertheless, when Democratic President Lyndon B. Johnson succeeded Kennedy, he succeeded in securing passage of Medicare. In the meantime, Reagan had been working, usually somewhat quietly, to encourage sentiment against Social Security and Medicare. Despite Reagan, LBJ’s successor, Republican President Richard Nixon, proposed a health care plan to make it easier to obtain health insurance. Democrats opposed the Nixon plan as inadequate (Senator Edward Kennedy, the Democratic lion, later regretted his opposition as having contributed to a missed opportunity).

Health care reform then stagnated until the Democratic presidency of Bill Clinton. He sought a huge health program that was in many respects similar to the Affordable Care Act. For example, it would have been based on policies from private companies provided through employers, with assistance to the employers, to the unemployed, and to all who could not afford the insurance. Many Republicans had worked toward such a reform, and most at the time assumed that because of the great need something would be done, and in fact would have to be done. The public good required it. That was notable as being one of the last expressions of Republican willingness to cooperate with Democrats for the good of the public.

The situation changed abruptly, when a prominent Republican, former aide to Dan Quayle during the latter’s vice presidency, wrote a memo to all congressional Republicans. This “Memorandum to Republican Leaders,” (2 December 1993), is still available on line. In essence, he urged them for political reasons to oppose any reform that President Clinton might favor. Any reform, if it were to come, should come from Republicans. Otherwise, the Democrats would secure their position of power as FDR had done. Jacob Weisberg, of Slate (17 April 2010), has even written that Kristol’s action “Killed the Responsible Republican.” Although this takes away much of the credit due to such luminaries as Newt Gingrich and Tom DeLay, Weisberg has a point.

When Republicans took over Congress following the elections of 1994, intense opposition and reluctance to compromise became the order of the day, as did revulsion toward “entitlements.” The way had been well paved. First, Reagan had introduced doubts about government financing into the political lexicon. Impending “Bankruptcy,” a nonsense term when applied to the U S. government, became common. Then, Peter G. Peterson (an investment banker who briefly had been secretary of commerce under Nixon) began his long campaign to undercut confidence in, and ultimately to dismantle, “entitlements.” His first efforts were books and articles condemning Social Security and Medicare. Far more effective was his creation of the Concord Coalition, which reflected Peterson’s genius in working with mainstream elements to lend respectability to, and to disguise the nature of, his extremist agenda. He also brought forth the film “IOUSA,” that some commercial movie theaters screened as though it were a legitimate documentary. The thrust of the film was that deficits would be the death of the Republic, and that massive programs of austerity were the only way to prevent a disastrous future. Most recently, Peterson has created the Peter G. Peterson Foundation, with an endowment of $One Billion (!), overtly to undercut support for Social Security and Medicare.

What all this obscures is that the national debt was considerably greater following the Second World War than it is today. Instead of austerity, the Truman administration followed FDR’s lead, and acted to achieve full employment. In the decade and a half following the War, instead of budget cutting, America paid for the full expenses of college education for millions of returning veterans. Rather than attacking “entitlements,” the Truman administration expanded Social Security, making it virtually universal, and increased benefits. The Republican Eisenhower administration, similarly, as noted above, added disability benefits to the system while at the same time creating the greatest public works program in world history, the Interstate Highway System. While all this was going on, the United States was pouring astronomical amounts of financial aid to countries abroad to assist them in recovering from wartime devastation. The result, far from “bankruptcy” (an impossibility, in any case), was great prosperity. So pervasive is the pro-austerity propaganda, though, that few Americans remember the postwar experience, or make the connection if they do.

Another great part of the mix were the persistent efforts by the billionaire Koch brothers from Wichita to fund anti-“entitlement” organizations. These were, and are, numerous, but the most prominent is perhaps the Cato Institute, a libertarian (read quasi-anarchist) think tank.

Cato in the fall of 1983, in fact, published an article that became the bible of the opponents of Social Security and Medicare. Two representatives of the conservative Heritage Foundation published for Cato’s journal (vol. 3, no. 2, still easily available on line), a piece with an astonishingly candid title: “Achieving a ‘Leninist’ Strategy.” The authors, Stuart Butler and Peter Germanis, outlined a revolutionary’s plan to defeat Social Security and Medicare. A brief acquaintance with today’s discourse regarding the “unsustainability” of these two most valuable programs is sufficient to demonstrate just how policy makers today have been influenced by ideologues; they are taken directly from Butler and Germainis.

The “Leninist Strategy” involved recognizing that the elderly are influential, politically active, and quite fond of Social Security and Medicare. It thus warned not to attack older people directly, but rather to reassure them that their benefits will be safe—in other words, to buy them off, so that they may separate their interests from those of their descendants. Although this has been spectacularly unsuccessful, it is noteworthy that every proposal for privatization, for benefit reduction, or for general austerity from George W. Bush to Paul Ryan has sought to reassure those already receiving benefits, or soon to receive them (generally, those who are 55 or older) that their benefits will not be affected.

All Republicans seeking their party’s 2012 presidential nomination accepted this, with one exception. That was the candidate, candid to the point of being suicidal, Rick Santorum. He urged that Social Security benefits be reduced immediately, for everyone.

The Leninist Strategy urged the creation of financial instruments that could be presented to the public as preferable to Social Security. Since then, such products have proliferated. Individual Retirement Accounts and 401Ks have become so common that they have entered into popular discourse. A related development was the Medicare Advantage Program that sought to encourage beneficiaries to receive their benefits through private HMOs, made attractive by subsidizing the HMOs so that their benefits could enhance those of Medicare—at public expense, of course.

Another key point of the Leninist Strategy was to convince the public that Social Security and Medicare were “unsustainable.” Virtually every commentator now, for those on the right to mainstream elements who generally do not know enough to analyze the situation for themselves, now assumes that Social Security must be “reformed” (read, cut back) in order to continue. This is absurd. There is no question that the American economy can sustain even a far more generous Social Security system than exists today, should it choose to do so. It is not a question of economics; it is one of political will. For that will to continue to exist, though, requires public understanding; it requires a public that has not been completely misled. As for Medicare, that, too, is not the problem. The trouble is health costs in general. Those drive Medicare costs just as they drive the escalating general budget. The ACA does help to bring down those costs, but there is definite need to reform America’s entire health care delivery system.

The old cliché that social programs must bring high taxes (a political swear word in today’s America), because “the money must come from somewhere,” is superficially logical, but not true. Much of America’s spending, in fact, is financed not by taxes, but by borrowing. Even to say that the money must come either from taxes or from borrowing, however, is wrong. The United States can create the money it needs, as it needs it. That happens regularly, also. According to the conventional wisdom, that brings inevitable inflation—even when there is no inflation in the system.

That makes as much sense as the notion that social welfare programs, such as health care or Social Security, must lead to totalitarianism. What is puzzling about this, is that there is no example anywhere in history that social insurance and similar programs have ever caused authoritarian government. It is all the more astonishing that such an idea, with absolutely no foundation, could become a mainstay of the “conservative” ideology that motivates one of America’s two major political parties. Oddly, the kinds of legislation that have led to dictatorship in other countries seem not to be of concern to most conservatives. These are such things as the “War” on drugs, the Patriot Act, harsh restrictions on immigration with frequent deportations, surveillance of citizens, and increasing obstacles to voting.

Reagan, of course, did much to popularize the mistaken notion regarding the effects of welfare programs, but he did emerge from a vacuum. He was preceded by the Austrian economist Friedrich A. von Hayek, and by former President Herbert Hoover, each of whom asserted as a matter of principle that such programs brought dictatorship (although to Hayek’s credit, he did allow for social welfare programs that met an “insurable risk,” rather than trying to “equalize” all). A related notion that Reagan also promoted was that deficit spending would lead to national “bankruptcy.” Peter Peterson is the most vocal adherent of this view, and blames “entitlements” for America’s ills. The recent incarnation of this is the oft-repeated assertion that the United States is in danger of “becoming Greece.” This is literally an impossibility. Greece functions within the Euro zone, and has no control over its currency, The United States issues, and controls, its own currency, and pays its bills in dollars. Under no circumstance, therefore, could America ever “run out of dollars,” as the Petersons, Ryans, and Republicans in general would have it.

The Patient Protection and Affordable Care Act in no way brings about despotism, as its critics allege. It actually enhances freedom. Assuming that it survives, no longer will employees be tied to a job they dislike because to move elsewhere would leave them without health coverage for pre-existing conditions. No longer will the uninsured be unable to find affordable health care. No longer will insurance companies be able to raise rates as they desire without scrutiny from the federal government, nor will they be able to refuse payment for covered services. No longer will insurance companies be able to divert huge amounts of their resources to administrative costs, advertising, and executive salaries without restriction. Now they will have to demonstrate that 80% to 85% of their revenues is be paid out in benefits—this is what the industry quaintly terms their “medical loss ratio,” a term that should speak volumes.

Finally, the ACA is the only game in town. If it does not survive, the country will be far worse off. If it prevails, it will not usher in utopia, but it will make the United States of America a far better place than it was before its passage.