Why Healthcare Reform Is Hard

You might think that, if Democrats weren’t facing oppositionist Republicans,healthcare reform would be easy. Or you might think that, if it weren’t for the foolish bipartisanship being urged on the Congressional leadership by Blue Dog Democrats, a bill would have passed long ago.

You’d be wrong. Peter Suderman outlines the conflicts within the Democratic Congressional caucus, conflicts much more complex than just Progressives vs. Blue Dogs:

Cranky Congress critters. Inter-industry feuding. What’s left? Oh right: Voters. As Robert Goldberg of the Center for Medicine in the Public Interest says, Democrats “forgot about the fact that health reform affects people, not just interest groups.” On that front, Obama’s prime-time speech before Congress was supposed to give health reform a bump. It did, but just for a few days. Heading into the weekend, the bump had vanished. And pollster Scott Rasmussen’s survey of likely voters indicated that “just 42% now support the plan, matching the low first reached in August.”

His list of troublemakers in the Congress includes some of the most powerful figures there including Nancy Pelosi and Jay Rockefeller. He doesn’t mention Max Baucus, without whose support no bill could have emerged from the Senate Finance Committee and whose bill will probably provide the framework for whatever bill eventually is enacted into law.

In the Washington Post Charles Lane points out that important Democratic constituencies are fundamentally opposed to reforms that would remove some distortions from the present system:

Practically every serious analyst of U.S. health care says the tax exclusion for employer-provided health benefits distorts the system. Valued at $250 billion per year, this break encourages more consumption of costly care by those with employer-provided plans while denying the government money to insure the uninsured.

Wall Street executives and other rich Americans benefit disproportionately — but so do union workers, who extract tax-free health benefits from their employers in lieu of wages. This is especially true for politically influential public employee unions, such as McEntee’s American Federation of State, County and Municipal Employees (AFSCME).

In New Hampshire, state employees contribute just $720 a year for coverage that costs $20,400 per family, according to the Boston Globe. They get free MRIs, free prenatal care and $450 a year for a gym membership. All told, it’s more than twice as much coverage as the average family receives through work. And it cost New Hampshire’s taxpayers $234 million last year.

At General Motors — now taxpayer-owned — active United Auto Workers members make no monthly contribution and pay no deductible for their health insurance coverage. They face no co-insurance costs for in-network physician services and an annual out-of-pocket maximum of just $500 per family for out-of-network doctors, according to the company. No wonder they call them “Cadillac” plans.

The opposition makes perfect sense. Just look at the numbers.

The average autoworker has wages of about $60,000 per year. Remove taxes and so on from this and you get a net income of about 25% less or $45,000 per year. If family coverage for an autoworkers healthcare insurance costs something like $20,000, that’s a third of net income. They won’t be eager to give that up or pay taxes on it, either. Single payer has little attraction for autoworkers.

That’s why healthcare reform is hard. Too many people—not just doctors or insurance executives or stockholders in pharmaceutical companies but autoworkers and state employees, too—have enormous stakes in the system just as it is.

But the system just as it is is not sustainable and, consequently, will not be sustained.