Presidential Leadership is Critical

by Bret Kincaid

Last week President Obama presided over The White House Forum on Healthcare Reform.  Some 150 or so stakeholders in healthcare reform were invited, including business leaders, policy experts, and members of Congress.  Unfortunately, Obama's new Health and Human Services Secretary Appointee, Governor Kathleen Sebelius of Kansas, could not attend due to state responsibilities to which she had to attend.  One could view this absence—and the misstep of first appointing former Senator Tom Daschle who had to withdraw because of tax problems—as inauspicious, but the forum and Obama's leadership are grounds for hope.

When then-First Lady Hillary Clinton launched then-President Bill Clinton's health reform project, much of the policy formulation work was done behind closed doors, and the final legislative proposal that emerged died in Congress the same year.  Last week's presidential forum strikes a very different legislative strategy.  Inviting opposing factions to the table to announce two of the President Obama's critical healthcare reform goals—cost containment and universal coverage—and then sending them on their way to hammer out a reform respects the policymakers and the legislative process.  To be fair to Clinton, it appears more factions in the early 1990s had more to gain from the status quo than from the White House proposal.  Today, 15 years later, key stakeholders have a lot at stake, and it seems the status quo may be a more costly option for most of them.  (Still, there are those who argue for the status quo.  Click here [http://economix.blogs.nytimes.com/2009/02/27/health-cares-status-quo/] for a reasonable rebuttal.)

Obama's strategy has serious risks.  Giving the task to Congress to work out a reform that accomplishes both goals (among others) could easily result in achieving one over the other or neither.  There are some very powerful stakeholders and strong ideological differences among legislators.  The Democrats may try to wrest control of the process and force a government approach to cover all Americans.  But the Republicans may use the threat of the filibuster to make cost containment the only game in town.  Either way Americans get a half-measure with huge lingering problems that will need to be addressed eventually.

The cost of healthcare in the US is higher than in any other country, no matter how one measures it—total dollars spent, share of GDP, cost per person.  And costs increase about 7% annually, way ahead of the inflation rate. There are many causes, (http://www.nytimes.com/2007/11/25/opinion/25sun1.html?pagewanted=1) and most solutions are either economically or politically difficult to enact.  Without cost controls, more and more of the US economy will be devoted to healthcare, crowding out expenditures for education, energy, environment, and [name your favorite policy issue here].

One of the causes is the rising number of uninsured.  But more important than the cost of the uninsured to the nation is the fact that a bourgeoning number of people, many of them children, are unable to receive reliable and affordable healthcare.  (Thankfully, expansion of the SCHIP last month helps considerably.)  All Americans should receive reliable and affordable healthcare.  And given that covering the uninsured would cost only about 1/20th of what Americans now spend on healthcare, it doesn't seem to be much of a financial challenge.  It would cost about $120 billion dollars a year to cover the uninsured.  The US spends over $2 trillion on the insured.  The controversy that will surely threaten policy to insure the 46 million uninsured is not most fundamentally about money; it is the method to pay for it.  Obama promised a down payment of $634 billion over 10 years with transparent ways to pay for it.  But this will not sustain a universal coverage policy.  In order to pay to insure the uninsured, healthcare funding policy will have to change, (http://www.brookings.edu/opinions/2008/0825_uninsured_aaron.aspx?rssid=aaronh)  and there will be winners and losers.

For Obama to achieve his two primary healthcare reform goals, and to do it this year, he will need to exercise extraordinary presidential leadership.  He and his congressional liaison staff and his appointee, Governor Sebelius (if confirmed), will have to intervene substantially in the legislative process.  In addition, Obama will have to persuade the public to make it easier for Congress to make his vision of healthcare reform the law of the land.

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