The Next Round on Health Care

Politics is a never-ending war by peaceful means, to paraphrase Clausewitz, and thus, like war and sporting events, induces violent emotional swings in its participants. A single battle, goal, or touchdown can plunge participants and viewers from the heights of joy to the depths of despair, and in each of these spheres the most effective players are the ones who can keep their heads when all around are losing theirs and focus upon long-term trends rather than short-term fluctuations. (One of the more important points in my post last week, I think, was how difficult it has become for major players in today's economy to do anything but give in to short-term emotional binges, even when they know they are doomed to end badly.) Three weeks ago the Massachusetts senatorial election dealt a devastating blow to Democratic morale and convinced Republicans that they are on the way to a return to power. In the last few days, however, there are signs that the White House may have regrouped, drawn appropriate conclusions, and prepared a dramatic move forward of its own.

The White House has indicated that the President will present a new health care bill of its own before the projected bipartisan summit with Republican leaders--a summit which they may well decide to boycott. But they have coupled that announcement with leaks that the new bill may proceed through the reconciliation process, that is, that it may circumvent the filibuster rule in the Senate and pass by a simple majority. That, it seems to me, will surely be necessary now to get any bill at all. But 8 Democratic Senators have now gone further, and suggested that this bill include the public option--the opportunity for citizens to buy into medicare--that the House passed but the Senate never even voted on, because it could not command 60 votes. Returning to my war metaphor, this amounts to escalation--and with the Republicans obviously determined, as Jim DeMint put it almost a year ago, to "break" the President by defeating any health care plan, that is entirely appropriate. More to the point, it means that the health care reform bill might actually accomplish something, and that it might squarely put the issue of public vs. private interests back on the table. And there is no question that where health care is concerned, public and private interests are in conflict.

As most readers probably know already, health care costs are increasing again, dramatically. This, given our system, is inevitable. With millions more people out of work--most of them relatively young and healthy--millions fewer are receiving employer-based health care. That means the insurance companies are taking in less, and to keep their balance sheets healthy, they have to charge continuing customers more. That in turn will encourage more healthy people to do without health insurance, making it more expensive for those who keep it. This is the "death spiral" that Paul Krugman wrote about on Friday. In a European country, as Krugman has pointed out, health care for all has the kind of first claim on the national budget that social security and medicare have here, and an economic downturn would not make it more expensive, except insofar as it makes more people sick.

If the Democrats and the Administration really want to take a more populist tack, they might point out that the "health care crisis" is not a crisis at all for either the insurance companies or the drug companies. Because they can fix their prices and, in the case of the drug companies, do so well off of medicare, they are not suffering significantly, if at all, from the economic crisis (although they have laid off personnel.) Here are some findings from a recent government of the situation in the insurance industry: "Profits for the 10 largest insurance companies rose 250 percent from 2000 to 2009, 10 times faster than inflation. . . .The top five for profit insurers -- WellPoint, UnitedHealth Group Inc., Cigna Corp., Aetna Inc. ad Humana Inc. took combined profits of $12.2 billion, up 56 percent from 2008, the report found. The chief executives of the top five insurers received $24 million on average in 2008, the report said." (For a full story on the report, go here.

The drug companies are rebounding handsomely as well. In the last ten years they have managed both to increase sales and to substantially increase the percentage of their revenue distributed as profits--and several have shown an extroardinary rebound during 2009. Merck in 2009 had sales of $27.4 billion and profits of $12.9 billion--a significant decrease in sales from $40 billion in 2000, but an increase in profits from only $8 billion in that year. Pfizer, which spends much more money on marketing than Merck, has increased its sales by about 60% since 2000, to $50 billion, and more than doubled its profits, to $8 billion. Bristol Myers sales are about the same now as in 2000, at $18 billion, but profits have more than doubled, to $10.6 billion. (All the recent figures are from earnings reports that I found summarized on the web.) The chief executives of both the insurance companies and the drug companies are of course drawing salaries and bonuses in the tens of millions. These are all expenses which the citizenry of Canada, Britain, France and Germany do not have to pay, and that's a big reason why they pay so much less for health care than we do. And as the President has repeated again and again, we can't afford this any longer.

Now this brief look at the health care situation, like the somewhat longer look I took last week at the big banks, suggests two things. First of all, both our financial system and our health care system are severely dysfunctional for the average American and society as a whole. Secondly, both dispose of enormous resources and owe their profits, indeed, to continuous, massive, highly effective lobbying in Washington. (Susan Bayh, wife of Evan Bayh, the "centrist" Democrat who just decided to retire from the Senate and salt away the $13 million in his campaign chest, is on the board of Wellpoint Insurance, by the way.) They are not going to surrender their privileges and their enormous share of national income without a fight. And in the hyperpartisan political atmosphere of crisis in which we live today, at least one party--in the case of health care, the Republicans--was very likely to wind up in their corner. The Democrats, up until now, have been trying to pass a major reform without upsetting the insurance and drug industries too much. It didn't work.

Barack Obama belongs to Generation X, a Nomad generation. Previous Nomad generations have only come into the White House after the end of a great national crisis--Washington and Adams from 1789 to 1800, Grant and his Gilded Age successors beginning in 1869, and Truman and Eisenhower from 1946 to 1960. With the major exception of John Adams, these men successfully pursued the kind of bipartisan, consensus government that Obama as sought himself. They could do so because the great, violent political struggles of their era were over, and had hammered out a new consensus--particularly in the cases of Eisenhower and Truman. We are at least a decade and probably more from reaching that point. Meanwhile we need a leader who understands that getting us pointed in the right direction, by any means necessary, is more important than bipartisan consensus--and that he must indeed choose between the two.