No Pain, No Gain ;O): Health reform: What if Obama hadn’t tried it?

???initialComments:true! pubdate:06/07/2012 10:55 EDT! commentPeriod:3! commentEndDate:6/10/12 10:55 EDT! currentDate:6/7/12 8:0 EDT! allowComments:true! displayComments:true!Posted by Ezra Klein at 10:55 AM ET, 06/07/2012 TheWashingtonPost

When you see these conversations about whether Obama should have pursued health care reform rather than continuing to “focus on the economy,” it’s worth keeping a couple of things in mind.

Obama signs the health reform bill into law. But what if he hadn’t? (Marvin Joseph - The Washington Post)

1) The calendar: The stimulus bill passed in February 2009. Most of its spending was scheduled for 2010 and 2011. Health care reform passed in March 2010. That is to say, the bulk of the health care debate took place in 2009 — before the stimulus had really begun its work. If Obama hadn’t done health care, he would have needed to be doing something else between February 2009 and March 2010. Some people seem to think that “something else” could have been passing more stimulus bills. I find it very hard to believe that Congress would have greenlighted further stimulus before the $800 billion stimulus bill they’d just passed began spending out.

Remember, too, that the idea was to have health care passed not by March 2010, but August 2009. That didn’t happen, in large part due to Max Baucus and other centrist Democrats who said they wanted more time to negotiate with Republicans. But if it had worked out, it would have left seven more months in which Obama could have been seen “focusing on the economy,” whatever that means. So in some ways, the question might be whether the Obama administration should have abandoned health reform once it blew past the August deadline. I don’t see much of a case for that.

2) The recovery: The economy was in freefall through much of 2009. But as the year wore on, the job losses fell from 800,000 a month in January to 170,000 in December. And, in the beginning of 2010, the economy began growing again. We added 189,000 jobs in March — the very month the health care bill passed. We added 239,000 jobs in April. It appeared that the stimulus was working. Perhaps it had been enough. Then, later in 2010, we began shedding jobs again. In my reporting, that’s when a number of Obama’s economist staffers began seriously thinking we needed a second stimulus. But by that time, health care had passed.

3) The deficit: Another popular idea is Obama should have taken the moment to focus on long-term deficit reduction. Of course, as far as Obama is concerned, that’s exactly what he did.

Everyone agrees the crux of the long-term deficit problem is health care spending. It’s also one of the reasons wages for workers are rising so slowly. The key argument that convinced Obama to pursue a health care bill during the economic crisis was Peter Orszag’s belief that health reform was entitlement reform. In March 2009, Obama said health reform is “a fiscal imperative. If we want to create jobs, rebuild our economy, and get our federal budget under control, then we must address the crushing cost of health care this year.”

Obama and his team believe that the Affordable Care Act is the single largest legislative effort ever to reduce health care spending both in Medicare and in the rest of the system (here are five of the bill’s key cost controls). Republicans don’t believe that, which is fine. But that’s an argument over whether the Affordable Care Act will work. It’s not an argument over whether the Obama administration attempted to address the long-term drivers of the deficit.

If you think Obama shouldn’t have done the health care bill, you need to say what he should have been doing between February 2009 and March 2010 instead. He did, after all, have huge majorities in Congress, and a nation hungry for action. Further stimulus seems, for the reasons I outlined above, unlikely. David Brooks has suggested energy reform, but I see little reason to believe that would have proven more popular. Financial regulation makes more sense, but if you talk to people inside the White House, they say that the Treasury Department was understaffed and imposing massive regulatory uncertainty at the exact moment banks were weakest would have made it harder for the credit markets to recover. Tax reform and deficit reduction would both have involved tax increases, creating a similar Republican countermobilization. Housing has been a mess, but the Obama administration has actually had considerable power in that sector — it’s just that their policies haven’t worked very well.

That’s not to say health care couldn’t have been handled more adroitly, nor that one of these other options wouldn’t have been politically superior. But everything — health care included — looks better before you try and send it through Congress. And all this has to be balanced against the fact that health reform was, legislatively, a success, and the nation is certainly closer than it’s ever been in its history to extending insurance to every American. If the bill survives the next few years and goes into effect in 2014, my hunch is it will be remembered as the signal triumph of Obama’s presidency, not a key mistake. If it’s repealed or overturned, then, of course, history’s judgment will be different. And the irony of this is that far from anything Obama did in 2009 deciding the future of his health care bill and the legacy of his presidency, it’s the actions of German Chancellor Angela Merkel and European Central Bank head Mario Draghi that could end up making the difference.

For more on this subject, read Jon Alter.

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Blog Contributors

Ezra Klein is the editor of Wonkblog and a columnist at the Washington Post, as well as a contributor to MSNBC and Bloomberg. His work focuses on domestic and economic policymaking, as well as the political system that’s constantly screwing it up. He really likes graphs, and is on Twitter, Google+ and Facebook. E-mail him here.

Suzy Khimm covers the budget, economic policy, and financial regulatory reform. Before coming to Washington, she was based in Brazil and Southeast Asia, where she wrote for the Economist, Slate, and the Wall Street Journal Asia. Follow her on Twitter here, and email her here.

Sarah Kliff covers health policy, focusing on Medicare, Medicaid and the health reform law. She tries to fit in some reproductive health and education policy coverage, too, alongside an occasional hockey reference. Her work has appeared in Newsweek, Politico, and the BBC. She is on Twitter and Facebook.

Brad Plumer is a reporter focusing on energy and environmental issues. He was previously an associate editor at The New Republic. Follow him on Twitter. Email him here.

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