Obamacare Is At War With Itself Over Future Costs

Right now, Obamacare is at war with itself. Political efforts to buy off Big Pharma, private insurers, and the AMA are all pushing up long-term costs — one reason why Douglas Elmendorf, head of the Congressional Budget Office, told Congress late last week that “the cost curve is being raised.” But this is setting off alarms among Blue Dog Democrats worried about future deficits — and their votes are critical.

Big Pharma, for example, is in line to get just what it wants. The Senate health panel’s bill protects biotech companies from generic competition for 12 years after their drugs go to market, which is guaranteed to keep prices sky high. Meanwhile, legislation expected from the Senate Finance committee won’t allow cheaper drugs to be imported from Canada and won’t give the federal government the right to negotiate Medicare drug prices directly with pharmaceutical companies. Last month Big Pharma agreed to what the White House touted as $80 billion in givebacks to help pay for expanded health insurance, but so far there’s been no mechanism to force the industry to keep its promise. No wonder Big Pharma is now running “Harry and Louise” ads — the same couple who fifteen years ago scared Americans into thinking the Clinton plan would take away their choice of doctor — now supportive of Obamacare.

Private insurers, for their part, have become convinced they’ll make more money with a universal mandate accompanied by generous subsidies for families with earnings up to 400 percent of poverty (in excess of $80,000 of income) than they might stand to lose. Although still strongly opposed to a public option, the insurance industry is lining up behind much of the legislation. The biggest surprise is the AMA, which has also now come out in favor — but only after being assurred that Medicare reimbursements won’t be cut nearly as much as doctors first feared.

But all these industry giveaways are obviously causing the healthcare tab to grow. And as these long-term costs rise, the locus of opposition to universal health care is shifting away from industry and toward Blue Dog and moderate Democrats who are increasingly worried about future deficits. My sources on the Hill tell me there aren’t enough votes in the House to get either major bill through, even with a provision that would pay for it with a surcharge on the richest 1 percent of taxpayers. House members don’t want to vote for a tax increase before their Senate counterparts commit to one. Yet the Senate continues to be in suspended animation because Max Baucus and his Senate Finance Committee still haven’t come up with a credible way of paying for health care. In his testimony last week, Elmendorf favored limiting tax-free employer-provided health benefits, but organized labor remains strongly opposed.

Obama has less than three weeks before August recess. Chances are dimming that he can get some form of universal health care passed in both Houses before the clock runs out. The Democratic National Committee is running ads favoring passage in Blue Dog states and districts, but that won’t be enough. Now is the time for the President to begin twisting arms and knocking heads. To control long-term costs, he’ll also have to take away some of the goodies that have been promised to the health-industrial complex, and maybe even cross Big Labor. He also needs to come out clearly and forcefully in favor of a way to pay for the whole thing — ideally, in my view, a surtax on the top.


Originally published at Robert Reich’s Blog and reproduced here with the author’s permission.

59 Responses to "Obamacare Is At War With Itself Over Future Costs"

  1. bahmi   July 24, 2009 at 7:17 am

    Sounds great, Robert. Perhaps your line of reasoning can pay for more F-22’s on the backs of the rich. The rich are obviously the answer. Close foreign bank accounts, crack down on those illegal accounts. Soak, soak, soak the rich..spend them down to around 1 million bucks per individual. Plenty of money for them. Oops, you think this would end capitalism? Oh, I didn’t think of that.

  2. Fred   July 24, 2009 at 8:35 pm

    Better yet, we’ll have free health care for all, raise the minimum wage to $100/hour and ban all fossil fuels. That’ll teach the evil rich to lord it over the peasants.

  3. Guest   July 27, 2009 at 12:37 am

    to the previous posters:i don’t make money by anything “trickling down” from rich people, nor does anybody i know. like most members of the middle class i know, i make my salary from some big corporation that makes its money peddling stuff to middle class people like me. (healthcare “insurance”, ironically) and if every millionaire or richer in america was transported to planet Mongo by aliens, it wouldn’t put a dent in my company’s business or my future security, in contrast to the wave of layoffs and downsizings rebounding through America like resonant waves in a basin.maybe you guys should read about Henry Ford’s ideas of how to make money in America. seemed to buoy his company up. no worries about him being a pinko.