A glimpse into the abyss of health reform's (unlikely) defeat.

Who's winning, who's losing, and why.
Dec. 15 2009 7:52 PM

What If It Fails?

A glimpse into the abyss of health reform's (unlikely) defeat.

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Rahm Emanuel. Click image to expand.
White House Chief of Staff Rahm Emanuel

The White House is so determined to pass anything—and I mean anything—it can call health reform that I'm not yet prepared to believe that Senate Majority Leader Harry Reid's sweat-drenched labors will fail. But the bill as currently configured is in sufficient peril that President Obama called a meeting of the entire 60-person Democratic caucus (including two independents, Sen. Bernie Sanders of Vermont and the much-loathed Sen. Joe Lieberman of Connecticut). The public option is dead, and so is its understudy, the Medicare buy-in. The abortion issue remains unresolved. A self-imposed Christmas deadline almost certainly won't be met. Public support for health reform is dropping in the polls. Though still unlikely, failure is becoming easier to imagine.

What would it look like?

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Politically, it would be an obvious setback for Democrats and a triumph for Republicans, for whom stonewalling is now official policy. The antecedent weighing on everybody's mind is the death of Hillarycare, which in 1994 helped the GOP recapture the House of Representative for the first time in 42 years. Gary C. Jacobson, a political scientist at the University of California San Diego, argued in a 1996 paper that the GOP's 52-seat House gain (it also picked up eight votes in the Senate, winning a majority there, too) owed much to a sense of frustration on voters' part with "the kind of partisan posturing, haggling, delay, and confusion" characteristic of government when one party lacks sufficient votes to get legislation passed.

Sound familiar?

Democrats controlled 56 votes in the Senate, leaving them four votes shy of a filibuster-proof majority; then, as now, there was also some resistance to health reform among Democrats (most notably New York Sen. Pat Moynihan, who, inconveniently, happened to be chairman of the finance committee). Democratic control of the House, Senate, and White House created an "illusion of unified government" but not its reality. That illusion, Jacobson wrote, "put the onus of failure on the Democrats."

The irony is that in venting their rage against what they failed to recognize as de facto divided government, voters ended up with the real thing, diluting the Democrats' power to such an extent that at one press conference President Clinton felt obliged to bleat, "The president is still relevant here." Clinton went on to win re-election in 1996, but much of the rest of his presidency was spent furiously "triangulating" to find some patch of common ground with Republicans, with sometimes-ghastly results. (The homophobic Defense of Marriage Act is the most vivid example.) If health reform were to fail today, it's very easy to imagine a comparable shift rightward for Obama and the Democrats in 2010.

Granted, there are significant differences between 1994 and 2009. Clinton had raised taxes, something Obama hasn't yet done. (Restoration of the top marginal tax rate to the Clinton-era 36 percent from the Bush-era 33 percent is unlikely to occur before November.) Violent crime and teenage birth rates, two problems conservatives often blame on "permissive" liberal social policies favored by Democrats, were significantly higher in 1994 than they are today, and the Christian right was a much greater force in electoral politics. The president's party typically loses ground in midterm congressional elections, and House Democrats are reportedly a bit jumpythat already four Democrats representing swing districts have announced their intention not to run in 2010. That's well short of the 28 Democrats who created open seats in 1994.

But in some respects, the peril of potential failure is greater today for members of Congress than it was in 1994. The House has already voted on health reform, leaving legislators more vulnerable to identification with a stillborn policy than their counterparts were fifteen years ago, when Hillarycare never got out of committee. Today, as in 1994, the economy is experiencing a very weak recovery from recession. But unemployment is much higher now than it was then, and it easily could remain so through the 2010 midterms.

After the Democrats' electoral debacle in 1994, more than a decade passed before Washington was willing to take up any ambitious reform effort. Jacob Hacker, a Yale political scientist who was principal author of the public option, says that if health reform goes down now, "I don't think there's going to be any stomach for going back to fight this battle. …The administration is not going to want to come back to this."

What would a failure to pass health reform mean for ordinary people?

If, like me, you're one of the 59 percentof Americans who get health care through your employer, it wouldn't mean much, because almost nothing in the bill would affect this market. The main exception is a 40 percent tax in the Senate bill on "Cadillac" health plans valued at $23,000 or more for families. According tothe Congressional Budget Office, about 19 percent of employer-covered workers have these high-end health plans. The tax is sufficiently high that it's assumed insurers would avoid it by lowering the value of these plans, lowering premiums by 9 to 12 percent. Should health reform not pass, participants in Cadillac plans wouldn't enjoy this premium reduction. But neither would they suffer the corresponding drop in the value of their health plans.

CBO estimates that, apart from the Cadillac tax, the Senate bill's impact on premiums in the employer-based market would be essentially nonexistent. That means, health reform or no health reform, premiums for employer-based plans will continue to rise faster than inflation or wages. Since 1999, premiums for employer-sponsored family health plans have risen 131 percent, compared to a 28 percent increase in inflation and a 38 percent increase in wages.

If, on the other hand, you don't get health insurance through your job, but instead are buying your own insurance on the nongroup market, then a failure on Congress' part to pass health reform could cost you dearly—not because health reform would drive the cost of nongroup policies down (in fact, CBO says the Senate bill would drive the average per-person cost of nongroup premiums up by 10 to 13 percent), but because the majority of those purchasing such policies in the newly-established exchanges would receive government subsidies sufficient to drive out-of-pocket costs 56 percent to 59 percent below current levels. People who didn't qualify for the subsidies would have to pay more for these nongroup policies than they do now, but they'd also get better coverage. If they wanted to pay less, they could instead purchase a cheapo policy comparable to cheapo policies available on the market now and save 14 to 20 percent.

Failure to pass health insurance would also mean that insurers could continue to deny coverage to people with pre-existing conditions, and charge people in certain demographic groups astronomical premiums, and cancel the policies of very sick people over trivial fine-print flaws in their paperwork. Such abuses, outlawed under health reform, are largely confined to the nongroup market.

Failure to pass health insurance would be good news for many Medicare recipients who get their coverage through the private Medicare Advantage program. Currently they receive more benefits than other Medicare recipients. This isn't particularly fair. Health reform would put their benefits back in line with those of the others. The House-passed bill would eliminate a gap in drug coverage above $2,700 and below $6,154, popularly known as the "donut hole." Reid is now promising  to accept this change in House-Senate conference. If health reform doesn't pass, senior citizens will continue to run up huge drug bills.

A reasonable summary would be: health reform would make life easier for just about every person who needs to buy his or her own health insurance. It would also reassure those of us in the lucky 59 percent who didn't have this problem but could easily imagine acquiring it, especially amid the current economic turmoil. That's just about everybody. Health reform lends, says Hacker, the "security of knowing there's somewhere to get insurance outside of employment." Should it fail to pass, you would not have that security.

Most important, the Senate bill would allow 31 million of the 45 million people in the U.S. who can't afford health insurance now to acquire some, either through subsidies on the exchange or through the expansion of Medicaid. Without health reform, these folks would not acquire health insurance. Their "uncompensated care" would continue to cost the rest of us $56 billionto $73 billionannually, through higher taxes, higher premiums, and charitable contributions. Their lack of financial means (or Medicaid eligibility) would make it sufficiently difficult to receive medical treatment outside a hospital emergency room that an estimated 22,000to 45,000of them would continue to die every year.

The threat of electoral defeat in 2010 probably weighs more heavily on the minds of legislators than the prospect of further lives lost. The good news is that fear of such defeat will likely be enough to get the bill passed.

E-mail Timothy Noah at chatterbox@slate.com.

Timothy Noah is a former Slate staffer. His  book about income inequality is The Great Divergence.

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