In State Of The Union, Specter Of Healthcare Reform Still Looms

Written by admin on November 26th, 2010

As expected, President Barack Obama did not focus primarily on healthcare reform during his first State of the Union address. Rather, he deflected attention towards other aspects of policy that have received less attention by the administration and the media alike. The economy took center stage, with the wars in Afganistan and Iraq playing a supporting role. The main goal of his address appeared to be winning back the independents who voted for him in 2008 but are now skeptical of his policies.

Health insurance reform did not make an appearance in his speech until about the half-hour mark. Obama introduced that portion of his address by jokingly admitting that he clearly didn’t take on the issue because it was good politics. Indeed, it wasn’t. A recent poll by Rasmussen Reports shows that, at this point, 61% of Americans would rather that the issue be dropped altogether. Democrats have been accused of fixating on the regulation of health insurance companies to the detriment of the job market. While the economy has officially inched out of the recession, the American people have not yet seen the impact. The current 10% unemployment rate is more pressing than the possibility of losing their individual health insurance, despite the fact that the former often results in the latter.

It is likely that Obama was not counting on the healthcare reform fight to drag on as long as it has. He acknowledged that he deserves part of the blame for failing to effectively explain how it would help the general public. Millions of people would have health insurance as a result of the legislation, but most provisions would take several years to come fully online. Moreover, those who do have individual or family health insurance fear that their premiums will go up and the quality of health care will go down. The worst case scenario for many is a single-payer health care system, which gives them visions of public dental insurance and stereotypical British teeth. Obama highlighted some everyday Americans who wrote to him about their struggles buying and keeping family health insurance, in hopes that viewers could relate.

Part of the reason for healthcare reform’s unpopularity is its sheer complexity. There are so many players in the game, and each aspect is interconnected. Although a streamlined bill would certainly be more popular politically, the logistics may be hard to manage. For example, Americans generally support enacting regulations that would prevent health insurance providers from denying coverage to people with pre-existing conditions or dumping them as soon as they develop one (rescission). It would take far fewer than 1,000 pages to write a bill focused on that aspect.

However, it is very difficult to convince the health insurance companies–and their powerful lobbyists–to agree to such provisions if nothing is in it for them. Hence, the health insurance mandates, which would bring millions of new customers to the market. Wouldn’t that be unfair to the lower and middle classes, who would be unable to afford a health insurance plan and get fined as a result? The subsidies were created to resolve that inequity. Unfortunately, providing federal subsidies is expensive. That means that the government must either raise taxes (understandably unpopular during a recessionary period) or run up the deficit to pay for it. Most Americans consider deficit reduction to be a top priority, so you see where another part of the conflict lies.

Keneysian economic theory, which Obama and his advisers clearly abide by, would have it that some overspending now would stimulate the economy and lead to yet more income later; you would then be able to pay off the deficit and still end up ahead. This is similar to the idea behind student loans: if a 4-year university graduate significantly increases his or her lifetime income over that of a high school graduate (some estimate the difference is over million), then borrowing some money for a college degree is often a positive mood. It will put the student in the red for the short run, but they will eventually be able to pay back the loans several times over–therefore earning more than the high school graduate who never borrowed that money. The most important part of the equation is that the money must be used on a sound investment likely to pay off. Borrowing 0,000 to major in basket weaving is probably a bad choice, because there is little chance the student will be able to pay it back with interest. 0,000 for an engineering degree at MIT is far more likely to pay off in the long run.

True to that mentality, Obama mentioned a Congressional Budget Office estimate of the eventual cost savings of healthcare reform. Though the price tag of the both the Senate’s and House of Representatives’ version of reform is near to or surpassing trillion (with the House’s version, being more comprehensive, as the more expensive one), the CBO projects that increased competition among health insurance companies would help lower the health care industry’s costs–and therefore the deficit–within 20 years, in a nation where healthcare expenses currently make up over 15% of the GDP. However, the general public is very skeptical of the nonpartisan organization’s claims, and the state of the union address probably won’t change that much. 68% believe it will increase the deficit, while 81% believe it will increase taxes on the middle class.

When it comes to health insurance reform, his talk of specific policy was relatively brief. He spoke more plainly about the potential benefits reform would have for the average American, but gave no specific policy recommendations. Obama reemphasized the necessity of healthcare reform, and urged supporters in Congress not to give up when the effort has come farther than ever before. The speech implied that he supported continued attempts to pass a comprehensive bill, despite the loss of his party’s supermajority. He hit at both parties, daring Republicans to propose better solutions–as opposed to solely opposing those proposed by his administration–and motivating timid Democrats to have more guts.

(Image: Sister72 under CC 2.0)

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