Obama's Tough Sell

by John M. Curtis
(310) 204-8700

Copyright March 8, 2010
All Rights Reserved.                                

             Unable to make the sale on health care reform, Barack shifted gears after his Feb. 25 White House summit, telling a partisan crowd in Glenside, Pa. that insurance companies put profits over people.  After failing to convince the GOP at the summit, the president appealed to middle class voters affected by rate hikes, breaking the budgets of working class citizens.  Calling Obama’s plan a “government takeover,” the GOP has done a good job of defining the debate.  Obama missed a golden opportunity at his health care summit of calling out GOP elected officials for readily using their “government takeover” Medicare benefits, while frightening off middle class workers from reforming the system.  While rejected out-of-hand because of costs, assigning Medicare-for-all makes the most sense, since Medicare, unlike many private insurers, saves costs by scheduling fees to doctors.

               When WellPoint’s wholly-owned California subsidiary Anthem Blue Cross announced Feb. 24 a whopping 39% increase to individual suscribers, Barack found his best selling-point:  Profits above struggling working people.  “How much higher do premiums have to rise before we do something about it?” asked Obama, finally hitting on his best talking point.  Without going into the gory details of the differences between individual and group plans, Anthem Blue Cross blamed the price hikes on added medical costs.  While Blue Cross has its own reimbursement schedules for various medical procedures, they’re far more generous than Medicare or Medicaid, whose reimbursements are a fraction of usual-and-customary fees.  Medicare realized long ago that’s usual-and-customary fees were breaking the system, requiring urgent reductions for long-term survival.

             Obama’s national health plan incorporates Medicare-like fee schedules to reduce the exposure of insurance companies, like Anthem Blue Cross, that plead poverty when physicians charge full-fee for medical procedures.  “You had 10 years.  What happened?  What were you doing?” Barack said to cheers at Arcadia University.  He wants the House to vote on his revised bill and then move quickly to a Senate vote.  Republicans appeared equally dug in, resisting Barack’s call for an up-or-down vote on the current bill.  “The American people have heard all this rhetoric from the president before, and they continue to say loudly and clearly that they do not want a massive government takeover of health care,” said House Minority Leader Rep. John Boehner (R-Ohio), reciting the same old GOP talking points.  Boehner and Sen. Majority Leader Mitch McConnell (R-Ky.) need to deal with whopping rate hikes.

            Obama shifted the debate to an undeniable reality:  That health insurers enjoy an antitrust exemption that prevents them from their current monopoly.  As long as companies, like Anthem Blue Cross,.arbitrarily hike rates to maintain profit margins, middle class consumers will tighten their belts and not spend into the economy.  Barack has contended that health care reform stimulates the economy by controlling costs and leaving consumers with more discretionary income.  Barack faces a tough sell because the GOP beat him to the punch on current arguments.  Middle class workers were too worried about losing their employee-based health insurance to support the Democrats’ version of health reform.  Barack needed, but failed, to reassure middle class consumers that their employer-based health coverage would be preserved with lower premiums and better benefits.

            Barack faces daunting questions answering how publicly-traded insurance companies can make up the earnings if the government cuts into their profits margins.  Banning restrictions or rate hikes on preexisting conditions would automatically lower margins, quarterly earnings and erode share prices.  If Barack wants insurers onboard, he needs to stop bashing the industry and find a way to make it work.  GOP members of Congress are more consumed with the political implications of health care reform than whether a new bill helps consumers or harms publicly-traded health insurers.  As long as Wall Streets runs the show, Obmaa must find a way of preserving publicly-traded insurance companies willing to sacrifice profits for the good of cash-strapped consumers.  If insurance companies cooperate, they’re entitled to some kind of government subsidies to make up the difference.

            Barack found a powerful selling point talking about insurers interest in profits over consumer welfare.  Making insurance companies more charitable requires the government, like they do in agriculture, to pony up, assuring better margins for insurance companies offering more affordable health insurance.  Most of today’s insurers don’t have the proper kinds of fee structures to protect their bottom line.  Like Medicare or Medicaid fee structures, any national health plan must limit the amounts of reimbursements to physicians.  Anthem Blue Cross’s latest warning about rate hikes directly relates to its inability to, like Medicare and Medicaid, schedule reimbursements to doctors.  Barack’s right that insurers are worried about the bottom line.  As long as Wall Street calls the shots, the government will have to figure out a way of preserving insurers’ profits and share prices.

About the Author

John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He's editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.