2010-02-23

Until the Democrats’ stunning electoral setback in Massachusetts, Barack Obama held what seemed an unbeatable hand in his healthcare poker game. Having put too many political chips on the table to be ready to fold, he is instead going all-in ahead of Thursday’s televised healthcare summit.

Taking the reins, Mr Obama yesterday laid out what a spokesman called an “opening bid” to craft a deal. A take-it-or-leave-it approach sank Hillarycare 15 years ago, but this administration has actual legislation to work with. Republicans know Mr Obama could make the existing Senate bill law by promising House Democrats to amend it later in “reconciliation” only requiring a simple Senate majority. Mr Obama’s proposal represents this compromise, giving every state the subsidy on Medicaid costs used to win one Nebraska senator’s vote, and temporarily softening the blow from the excise tax on pricey healthcare schemes, extending a deal previously offered only to union members.

The only new element to the plan, and a controversial one, is creating a body to control insurance premiums. The president seized on a proposed 39 per cent increase for some of insurer Wellpoint’s California customers last week to introduce this angle. It will be dangerous for Republicans to oppose the populist proposal, but Mr Obama’s outrage is disingenuous. As the insurer has explained in a letter to the Obama administration, it has to cover an ever less attractive risk pool in California. Existing law does too little to eliminate this actuarial anomaly, and ignores most factors that make healthcare costs so high.

But the looming battle concerns politics, not economics. Mr Obama’s position is strong, though no longer strong enough to outsource Obamacare to congressional allies. He is placing the bets now and Republicans must be very careful about calling his bluff.

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