Why Obamacare may be flatlining

June 22, 2009

“I need a crash cart, stat!” The political prospects for major U.S. healthcare reform have taken a decided turn for the worse in recent days (at least from the point of view of many Democrats). And you don’t need to be some totally plugged-in Washington insider to understand that.

Just take a look-see at the stock market performance of industry players such as Aetna, Cigna, UnitedHealth Group, and WellPoint. Shares have been trending higher of late. What’s been slowly dawning on Wall Street is that the legislative process in Washington is unlikely to produce a national public health insurance option that could eventually squeeze out the private sector. Indeed, the betting markets give just a 43 percent chance of that happening, despite a Democrat president and Democrat control of Congress.
[See why Obama's big economic gamble is failing.]

Fact is, the prospects for any sort of bill that would produce major changes are in as much doubt as at any time since President Obama took office. Worried that the plan was growing too expensive, the critical Senate Finance Committee appears to have jettisoned any idea of a public plan option and is also cutting back on subsidies to help fully insure the nearly 50 million Americans who don’t have health insurance for one reason or another. On Sunday, Sen. Diane Feinstein, a California Democrat, said she doesn’t think Obama “has the votes right now,” to pass a bill, while Sen. Lindsey Graham, a South Carolina Republican, said spiraling cost estimates were “a death blow” to a public insurance option being included in the final legislation.

So what just happened? How is it possible that Democrats cruised to a huge victory on Election Day in November 2008 and are yet again unable to make good on their top legislative priority? Why are the ghosts of Bill Clinton’s 1994 healthcare reform debacle suddenly flitting about Capitol Hill? What happened was the Great Recession, the political impact of which the Obamacrats completely misunderstood. Oh, they knew the financial and economic crisis helped sweep them to office. That part they got just fine.

But they also assumed that the downturn would create such a sense of economic insecurity that time would be ripe for the sort of expansive, government-led healthcare changes that the party has been dreaming of for two generations. Instead, the Great Recession made healthcare less of a priority for voters than economic recovery — as fast as possible, please — and job creation. A recent spate of polls shows concern about healthcare (and climate change and pretty much everything else) lagging concern about unemployment. Healthcare lags concern about the shocking enlargement of the federal budget deficit, which has grown partly due to government actions — such as the $800 billion Obama stimulus package — to deal with the recession, as well as by the decline in tax revenue caused by the downturn itself.

And then last week, the Congressional Budget Office, the respected arbiter of what new government programs might cost, calculated that the Senate Finance Committee’s health reform bill would cost more than $1.6 trillion over 10 years. That was determined to be a political no-go by Senate Democrats– a smart conclusion given the recent polling — and the committee moved on to a still evolving plan B.

It is also ironic that the Obama administration, so aware of the latest research in behavioral economics, would forget about a phenomenon called “loss aversion”, which suggests people feel the pain of financial losses more acutely than comparable gains. Seems the whole healthcare plan was built up on the theory of losing something now — such as tax-free, employer-provided health benefits — for something later, like lower costs and a more sustainable government fiscal situation. (Polls show Americans reject that and don’t even want $500 in new taxes to pay for universal healthcare.) To recession-shocked voters, that probably doesn’t seem like a more economically secure situation at all.


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Hmm, let’s see……Islamic name. Islamic father. Islamic step-father. Grew up in and around radical anarchists, socialists/communists and muslims.

Seems to have “ambivalent” feelings about our country.

Seems to have sympathies for Islam and socialism.

Says he “doesn’t want to run” the auto companies yet he is.

Says he doesn’t want a single-payer, government run, healthcare system. Yet, that is where he is pushing the nation.

Now when can we throw this “ambivalent” statist out of office?

He should consider retiring to the Middle East, where he would be most comfortable.

Posted by RSG | Report as abusive

>>> RSG:

I am no Obama fan, and I am deeply opposed to this socialist healthcare scheme. But the kind of sleazy character assassination you posted does the image of critics of ‘Obamacare’ no favors at all. Which leads me to wonder…. Whose side are you *really* on?

Posted by Kirk | Report as abusive

I wish we could get away from the 47 or 50 or whatever million uninsured number. That has been discredited time and again because it includes people between jobs (simple solution is between jobs catastrophic care), young people who do not bother with insurance, and illegal immigrants. The true figure is much below half that number.

Posted by gdb in central Texas | Report as abusive

Every day the number of uninsured goes up. Two weeks ago it was 43 million. Today you use 50 million. Does anybody really know what it is? And is insurance more important that medical care? How many bodies have you seen lying outside ER doors? Why is life expectancy increasing? Have you been to retirement areas and seen all the people in their 80s playing golf and tennis? I think this is just another grab at power.

Posted by Sam | Report as abusive

If a subsizied, very inexpensive government plan is offered, it will drive health insurance companies out of business. The biggest market for private insurers is corporate group plans. There is no way private insurers can compete head-to-head with a massive taxpayer subsidy. The subsized government plan will be much cheaper, so all the companies looking to save money on employee benefits will dump their current health insurance companies and flock to the government plan. As the vast majority of their business dries up overnight, health insurance companies will quickly be forced into bankruptcy. Those that are ‘too big to fail’, like Kaiser and Blue Cross, will likely receive a GM-like bailout/buyout package. The result will be most people getting their health insurance either directly from the government, or through a government-controlled health insurance company. Likewise, people who must pay for health insurance out of their own pocket will flock to the cheap government plan. Only the wealthy, who can afford expensive high-end health insurace from the few remaining private companies will be able to escape the government system.

With the Kennedy plan, the government will already be writing the rules on what must be covered. With the above scenario, they will also control most of the cashflow in the entire healthcare system. If you write the rules and control the money, you control the whole system. Healthcare providers will be squeezed even more than they are now under Medicare, and the quality of care will suffer greatly. This is our future if Obamacare passes.

Posted by Kirk | Report as abusive

[...] PETHOKOUKIS: Why ObamaCare may be flatlining. Well, we can [...]

Back in 2002 there was a study done of who the uninsured were…..

Some may be surprised. There were approx. 43 million uninsured, IIRC…

Almost 1/3 of them were ages 0-21….

All 50 states have health care for children…for them not to have coverage…is the parents’ decision, and why should they? They get reduced or free healthcare.

The next gap was the 19-21 y.o., mainly college students…

Make the ins. companies cover up until 21 instead of 19…

Then we have the 65 & older – there is Medicare….

Most of the uninsured were only w/o insurance for a month or 2, and 20/30-somethings making $75K & over….

So, we’re really discussing overthrowing what is really a decent system for about 10% of the population….most of whom have done an internal risk/reward scenario….Would I do it, no…but….

There are ways to do this w/o crashing the economy……and this failed socialistic plan is not it.

Posted by Sandy P | Report as abusive

Democrats yet again run headlong into reality. They must just hate that they actually have to deal with real, thinking people.

Posted by Peg C. | Report as abusive

“So, we’re really discussing overthrowing what is really a decent system for about 10% of the population….most of whom have done an internal risk/reward scenario…”

Let’s not forget that a lrge number of that 10%, perhaps even a majority, are illegal aliens. I’ll be damned if even one nickel of my tax money should go to take care of a wetback who shouldn’t even be here.

Posted by John Skookum | Report as abusive

I would like to see some sort of compromise where I don’t have to fear getting wiped out by a sickness.

What about the tort reform issue. Why not try a compromise there. It won’t have anywhere near the sticker shock.

[...] James Pethokoukis » Blog Archive » Why Obamacare may be flatlining | Blogs | 6:27 pm GMT [permalink] [...]

I’m so disappointed in the nature of some of these comments. There are so many legitimate reasons to be disgusted with ObamaCare without using racist and hate speech. What you are doing is weakening our argument because that is all the left will latch onto when they read this.

To them, we’re racist bigots because we oppose universal healthcare. You’re hurting our cause. Disgusting.

Posted by Christian | Report as abusive

As others have said: why not make Medicare perfect first? It’s government-run health insurance. It helps those in greatest need (well, never mind for a moment that the elderly have most of the wealth). It’s the ideal testbed for this nonsense, er, Urgent Moral Imperative.

So, make Medicare cheap, efficient, and wonderful by 2011, and maybe the Democrats will have some credibility. Good luck with that.

Posted by Jim | Report as abusive

My advice?

Let the Iranians kill each other.

The more the better.

Who cares ?

Posted by Schlomo Tal | Report as abusive

[...] Obamacare may be Flatlining Hooray! So what just happened? How is it possible that Democrats cruised to a huge victory on Election Day [...]

RSG, you’re an embarrassment. Why don’t you shut up and sit down. I think you work for the Obama administration and post idiocy like this to make conservative blogs look bad. Now drink your Kool Aid and go take your nap.

Posted by Dave S | Report as abusive

Why not a low cost catastrophic plan for that 10% between jobs or whatever? Maybe a 6 mo. govt. subsidized one for people out of work.

Posted by Dave S | Report as abusive

Tal, you have to be a friend of RSG. What a dork.

Posted by Dave S | Report as abusive

[...] think it’s too early to say, but Reuters Blogs’ James Pethokoukis thinks so.  He asks and answers his own question: “So what [...]

[...] PETHOKOUKIS: Why ObamaCare may be flatlining. Well, we can [...]

[...] James Pethokoulis looks at health finances and the current landscape. Fact is, the prospects for any sort of bill that would produce major changes are in as much doubt as at any time since President Obama took office. [...]

A datapoint from Larry Kudlow:

“According to a recent ABC News/USA Today/Kaiser Family Foundation survey, 89 percent of Americans are satisfied with their health care.”

More: “According the U.S. Census Bureau, we don’t have 47 million folks who are truly uninsured. When you take college kids plus those earning $75,000 or more who chose not to sign up, that removes roughly 20 million people. Then take out about 10 million more who are not U.S. citizens, and 11 million who are eligible for SCHIP and Medicaid but have not signed up for some reason. … So that really leaves only 10 million to 15 million people who are truly long-term uninsured.

I I’m looking for the original links.

Posted by Texpatriate | Report as abusive

[...] James Pethokoulis looks at health finances and the current landscape. [...]

I am shocked at the number of feather-brained people who have written comments that this piece is racist. Is it that you are stupid or just illiterate?

Posted by ccd2 | Report as abusive

[...] James Pethokoulis looks at health finances and the current landscape. [...]