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Underneath The Democratic Health Bills Are Republican Roots



September 23rd, 2009

In recent days, Republican leaders on Capitol Hill have taken up the argument that the Democratic health reform bills represent a “government takeover” of the health care system.  These claims misrepresent the substantive content of the bills, since the approach of the main committee bills is to extend employer-sponsored, private insurance.  But this rhetorical exaggeration also reveals how far today’s Republicans have moved from the policy ideas of the previous generation of Republican officials. 

Indeed, a careful reading of today’s main Democratic bills reveals, to a surprising degree, a set of policy approaches that were at the core of mainstream Republican proposals a few decades ago, which focused on employer-provided health insurance, private sector insurers, and market competition as an alternative to a national health insurance program run by the federal government. 

So, rather than a large, new government insurance program or an expansion of an existing government insurance program such as Medicare to cover everyone, we see in the current Democratic bills an extension of the employer-sponsored, private health insurance system.  Under the plans, most of the non-elderly who currently have insurance through work will continue to get their insurance through their employers.  Most of the uninsured who have jobs will gain access to employer-provided coverage.  And employers will continue to contract with private insurance companies and managed care plans for coverage.  All of these ideas were central to the Nixon administration’s proposals in the 1970s.

In fact, today’s bills in Congress are so strongly committed to preserving the private employment connection for health insurance that they add generous tax credits for small businesses, despite the fact that employers have been dropping health insurance and restricting coverage in recent years.  Employers have been getting out of this market; Congress now proposes to bribe them to stay. 

There is to be some modest expansion of government programs, with Medicaid to cover more of those with low-incomes, and individual-level premium subsidies for the purchase of private insurance.  But these are also in line with conservative values and an approach to the American welfare state long associated with Republicans:  a) residual welfare state programs that provide a “safety net” for those with low incomes or other types of vulnerability, generally implemented through means testing, and b) the purchase of private insurance, subsidized using tax credits and deductions.

The Democratic plans do propose to strengthen the regulation of private insurance, but this also follows the tradition of regulating when private markets are not working well.  Insurance companies try to avoid people who need medical care, and so the bills will regulate insurance practices that make it difficult to obtain insurance, especially for those who have had a prior illness.  Even the insurance industry, hardly a Democratic party bastion, agrees with the need for these regulations.  And the proposed “insurance exchange” is the very definition of a marketplace, with insurance plans in competition with each other, and with consumers choosing among the plans.

Political liberals are disappointed with the bills precisely because the proposals are actually conservative in their approaches:  private insurance, with employment as the primary route to obtaining it, and market competition among health insurance plans.  The “public option” or the “non-profit cooperatives” that are being talked about are not following the Medicare and Medicaid models of governmental insurance covering large population groups like the elderly or the poor.  Rather, even in the bills that include the “public option,” there is a much narrower vision:  the public plan would be simply another product in the consumer marketplace, competing alongside private insurance plans through the insurance exchanges.  The supporters of this do not describe this in terms of the government providing benefits through a system of social insurance.  Instead, the public option is there to keep the private insurance companies honest.

Health Insurance Cooperatives: Another Page From The Nixon Administration’s Playbook

Senate Finance Committee Chair Max Baucus’s “chairman’s mark” now replaces this public option with nonprofit insurance cooperatives.  Of course, it is not clear at this point how well these might function in today’s insurance market, especially in the face of managed care plans that have emerged over the last two decades.  But again, this is a page from the Nixon administration playbook.  The 1973 HMO act provided for federal loans and loan guarantees to support the creation of health maintenance organizations, which were intended to stimulate competitive forces in health care.  Today, it’s federal loans and grants to support the creation of nonprofit insurance plans designed — you guessed it — to compete against existing insurance companies.

Thirty or forty years ago, the ideas of using employer provided insurance, preserving a role for private insurance companies, and offering tax credits to improve affordability were the central approaches in Republican health plans.  The bills on Capitol Hill today use exactly these approaches, and have largely been framed under the mantle of competition and the marketplace. 

Back in 1965, on the crucial House floor vote to send the Medicare bill back to committee, the bill received few Republican votes.  But on the votes for final passage, 70 House Republicans and 13 Republican Senators actually did join with liberal and moderate Democrats to enact the new programs.   Since then, the Republican party itself has shifted to the right:  away from social insurance and towards a vision of free-market approaches that are consistent with the new conservative ideology, even if they don’t always work well in practice.

At this point, all eyes are turning to Olympia Snowe, the moderate Republican Senator from Maine, who may wind up becoming the crucial “60th vote” to avoid a Senate filibuster.  She herself is conscious of the ideological and policy shifts over time, telling the New York Times’ John Harwood: “I haven’t changed as a Republican.” Instead, she said, “I think more that my party has changed.” The fact that she may be the only Republican in the Senate supporting a bill with historically Republican roots reveals how far the Republican party has shifted away from their predecessors who supported social insurance, and who even voted for full-fledged governmental health insurance programs in 1965.

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3 Trackbacks for “Underneath The Democratic Health Bills Are Republican Roots”

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