On Health Care, Has Obama Picked the Wrong Punching Bag?

Over the past couple of weeks the Obama administration has subtly but noticeably shifted its rhetoric on health-care reform. As poll numbers slid, Obama began to pepper his statements with references to health insurance reform. Moving away from the focus on containing costs and extending insurance coverage, which characterized his early sales pitch, now Obama is speaking more prominently about obstructive health insurers that deny or rescind coverage. Obama is making the insurance industry the enemy─a populist strategy designed to counter populist attacks on his plans. But has he backed the wrong horse?

Yesterday, The Atlantic's Marc Ambinder posted an interview with Karen Ignagni, president of America's Health Insurance Plans (AHIP), the same industry group (under a slightly different name) that fielded the devastatingly effective "Harry and Louise" ads during the 1993-94 health-care debate. Ignagni essentially says her organization is not planning to fight the bills currently on the table. She says proposals her group submitted are "the essential building block of the reform bills." Ignagni even ruefully acknowledges the political usefulness of demonizing the insurance industry. "We understand that this has been a political strategy, and we think that it's been an unfortunate decision because the American people need to understand that if we are going to pass legislation in the fall, there is strong consensus around insurance-industry reform," she told Ambinder.  

So, if the insurers aren't the bad guys here, who are? Politico reported yesterday on rabble-rousers who have invaded town-hall meetings to protest reform:

"Screaming constituents, protesters dragged out by the cops, congressmen fearful for their safety─welcome to the new town-hall-style meeting, the once-staid forum that is rapidly turning into a house of horrors for members of Congress. On the eve of the August recess, members are reporting meetings that have gone terribly awry, marked by angry, sign-carrying mobs and disruptive behavior. In at least one case, a congressman has stopped holding town-hall events because the situation has spiraled so far out of control."

According to Think Progress, these folks have been organized by groups like Americans for Prosperity and FreedomWorks. Think Progress has a copy of a memo that instructs protesters to harass members of Congress in public forums by being disruptive and loud: "The objective is to put the Rep on the defensive with your questions and follow-up ... Watch for an opportunity to yell out and challenge the Rep's statements early ... The goal is to rattle him, get him off his prepared script and agenda. If he says something outrageous, stand up and shout out and sit right back down. Look for these opportunities before he even takes questions."

The protests are mostly targeting vulnerable members─moderates in both parties who appear to be hedging on reform─while they are away from D.C. over recess. Clearly the resistance fostered by these groups is a challenge for Obama, particularly as legislation stalls in August. But politically, criticizing protesting constituents would be costly. For one thing, their opposition is too amorphous and claims too disparate (and, at times, entirely baseless) to make them a strategic target. Moreover, it could easily be construed as attacking everyday folks or even democratic process. And the last thing Obama needs is more people calling him a socialist dictator.   

So, if the White House needs an enemy, who's left? If they're is feeling self-destructive, they might consider taking on a group that has provided them with significant political and financial support in the campaign: unions. Freelance journalist J. Lester Feder (who has written for NEWSWEEK) is a former union steward, but he argued on Big Money a couple of weeks back that organized labor has become an impediment to reform by opposing a cap on the health-care tax exemption. Policymakers from both sides of the aisle agree that taxing so-called "Cadillac" insurance policies─that is, very expensive plans that provide premium coverage─is one surefire way to help pay for reform. Few are arguing for rolling back the tax exemption entirely. Rather, a new tax would likely only apply to higher-income families with insurance plans that cost more than the national average. A much-cited study by MIT's Jonathan Gruber estimates this sort of arrangement could raise $340 billion over the next 10 years. Removing the tax exemption appeals to economists who view it as a distortion of the price signal to the end consumer of health care: the individual. In other words, most people don't have an accurate sense of the real cost of their insurance because they're paying for it in their pretax income. An unobstructed, direct-price signal could help control spiraling health costs as consumers make choices based on real, not distorted, prices and move toward lower-cost plans.

Unions oppose these measures because their members tend to have better-than-average health insurance. They're understandably protective of these hard-won benefits. But by pressuring the White House and congressional Democrats to oppose an otherwise politically viable measure to pay for reform, they are helping jeopardize the entire project, which, as Feder argues, subverts the solidarity principle that traditionally underpins unions. The White House could consider focusing more attention on persuading unions to drop their objections, but the likelihood of that is extremely low.   

So the insurance industry isn't the bogeyman, conservative protesters are too nebulous and thorny to tackle, and attacking labor is a risk the White House is unwilling to take. They could try an outright assault on Republicans, but then they'd never get the bipartisan bill they need. Perhaps the lesson here is that if an offensive strategy is producing limited results, why not try defense? And not just a defense of principles, but a defense of a detailed system. Unleash the communicator in chief to rally for a particular plan. As I wrote last week, when members of the public hear details of health reform, they tend to become more supportive of it. But publicly throwing its support behind a specific proposal seems like another thing the White House appears reluctant to do.