On HealthBeat I have talked about social solidarity as the key to meaningful healthcare reform.
Last night, President-elect Obama sounded that theme repeatedly throughout his victory speech, reminding his audience that he had been elected “by young and old, rich and poor, Democrat and Republican, black, white, Hispanic, Asian, Native American, gay, straight, disabled and not disabled—Americans who sent a message to the world that we have never been just a collection of individuals…”
In the recent past, some progressives have warned that liberals made a mistake when they reached out to minorities, new immigrants, and gays, “ignoring” the mainstream middle class. But in fact, “mainstream” America is no longer one recognizable culture. It is fast becoming a “magnificent mosaic,” the phrase Mario Cuomo used when he ran to become mayor of New York City in 1977.
Barack Obama won, not because he managed to win over the white middle-class, or the white working class, but because he managed to put together a coalition from so many groups—including white voters. Many thanks to Ezra Klein for breaking down the vote: 31.82 percent of voters who chose Obama were white, just as 31.57 percent of the voters who stood for John Kerry in 2004 were white. But Obama won. What was the difference?
“Obama increased the share of the black vote from 11 percent to 13
percent,” Klein explains, “increased the share of the ‘other’ vote from
2 percent to 3 percent, grew his share of the black vote by seven
percentage points, grew his share of the Hispanic vote by 13 (!) percentage points,
grew his share of the Asian vote by five percentage points, and grew
his share of the ‘other’ vote by 11 percentage points. Consequently,
while just 16.12 percent of 2004 voters” who chose Kerry “were
non-white, fully 20.15 percent of 2008 voters” who plumped for Obama
were non-white. “That 4.03 percentage point increase was the difference
maker.”
Drawing from such a diverse population, President-elect Obama is now
asking us to come together, and to think about our country, not as
individuals, but collectively: “Let us summon a new spirit of
patriotism; of service and responsibility where each of us resolves to
pitch in and work harder and look after not only ourselves, but each
other…”
He is asking that we focus, not on ourselves, our families, or even our
favorite causes, but rather on the challenges that we must face as a
nation: “two wars, a planet in peril, the worst financial crisis in a
century. Even as we stand here tonight, we know there are brave
Americans waking up in the deserts of Iraq and the mountains of
Afghanistan to risk their lives for us. There are mothers and fathers
who will lie awake after their children fall asleep and wonder how
they’ll make the mortgage, or pay their doctor’s bills, or save enough
for college. There is new energy to harness and new jobs to be created;
new schools to build and threats to meet and alliances to repair.”
But where, on that list, is healthcare?
It’s not there. Here, I will say, as I have said before, that
collectively, we have other priorities that may have to come first.
Some months ago, a solider told me about a friend, also in the army,
who volunteered to learn how to help Iraqi soldiers detect buried
land-mines. His first day of training, he saw his instructor vaporize,
before his eyes. This solider then had to stay in Iraq for another six
months, disabling land-mines, despite the fact that his hands shook.
He is a priority. The poor, who are more likely to die prematurely,
whether or not they have access to healthcare– they are a priority.
The soon-to-be-unemployed, they are a priority. Reforming healthcare
will not create jobs. Building schools and exploring new forms of
energy will. (While we need more primary care doctors and nurses, very,
very few people are interested in filling these jobs. Rational health
care reform would lead us to close some hospitals, eliminating
redundancies in the system, while opening community health centers.
Net, net we would lose jobs.)
It is worth remembering that, even before the economic melt-down, Obama talked
about trying to provide health care coverage for all Americans only
“by the end of my first term.” He never planned to rush ahead,
understanding that if health care reform was to be done in a way that
contains costs and lifts quality, it would take time and serious seed
money. Keep in mind: one reason we elected Obama is because he projects
a sense of calm and maturity. He moves thoughtfully and deliberately.
I, of course, continue to think that healthcare reform—and particularly
Medicare reform, Medicaid reform and expanding SCHIP—are extremely
important. Moreover, I believe that there are steps we can take in
2009 to contain health care inflation and pave the way for national
health reform.
As I wrote
earlier this week, I also agree with Congressional Budget Director
Peter Orszag: spiraling health care costs are a major force behind the
nation’s fiscal crisis. So the economic crisis cannot be divorced from
our healthcare crisis.
But Orszag recognizes that healthcare may have to wait: “Many observers
have noted that addressing the problems in financial markets and the
risks to the economy may displace health care reform on the policy
agenda — and that may well be the case for some period of time.” Over
time, he argues, “it will be crucial to address the nation’s looming fiscal gap — which is driven primarily by rising health care costs — as the economy eventually recovers from this current downturn.”
Some see healthcare reform as a political opportunity, a chance to
“score” early in Obama’s administration. I would argue that what we
euphemistically call our health care “system” needs deeps structural
reform. This is an enormous task that will require more than one piece
of legislation as we move toward evidence-based, patient-centered
medicine.
We should do our best to address the needs of children (SCHIP), and the
poorest among us (Medicaid patients) now. But simply pouring billions
into the black hole of a broken, greedy, and wasteful system that puts
the needs of those who profit from it first would be a terrible
mistake.
I also think that we each need to take our blinkers off and, rather
than focusing on our favorite issue, see the country whole. As a
nation, we face a world of trouble, more trouble than we have seen
since 1930. The Bush administration dug a very deep hole.
Wisely, Obama does not pretend that he can dig us out in one year—or
even in four years. “The road ahead will be long. Our climb will be
steep. We may not get there in one year or even one term,” he
acknowledged, “but America – I have never been more hopeful than I am
tonight that we will get there.”
Obama’s achievement, thus far, has been to draw out Americans who had
never voted before—bringing them together with citizens who, in the
past, were not at all certain they wanted all of their neighbors to
vote.
This brings me to what we can do to help President Obama. We can join
together behind him—and let him lead. We gave him a solid majority; now
let him set priorities. If I have one wish today it is that the pundits
will take a vow of silence. I don’t care to know who Chris Matthews
thinks should become Secretary of State. Or what Fox News thinks that
Obama should do next. This too-long election has left me weary of all
of those who would second-guess and criticize each and every move that
a politician makes.
I am not suggesting that we shouldn’t disagree with this president. But
I am suggesting that if we can all make an effort to look above and
beyond the speck of self—and try to understand where the president is
leading us and why—it will be much easier for him to move forward. This
is a time for leadership and solidarity, not a time for division and
self-serving debate.
The political landscape suffers from what I call the lighthouse syndrome. As the light swings around it can only illuminate one issue at a time.
Bush’s whitehouse staff has 1000 people. Surely with this number there are a few that can work on health care reform under Obama while the other issues are more in the public’s mind.
If this isn’t done and Obama runs into trouble as Clinton did after a few years then the opportunity will be lost (again). A bold administration should work on all important issues at once, there is plenty of research, coalition building, etc. that can go on before the full propaganda and congressional push takes place.
From the Health Affairs Blog there is this:
http://healthaffairs.org/blog/2008/11/05/obamas-health-policy-options-3-scenarios/#more-460
“Finish the New Deal. Sen. Ted Kennedy will probably not survive long into the new Congressional term. His staff are drafting health reform legislation on the premise that Congress will wish to memorialize Kennedy’s passing by implementing what is, in effect, the dying wish of the godfather of congressional health policy. Kennedy actually voted to enact Medicare in 1965, as part of a wave of legislation in the wake of the assassination of his brother, which legislation came to be called the Great Society.”
———-
You just have to wonder if this potential extra incentive to cooperate and get it done is not real! Let’s hope so for all our sakes.
I think there are probably several bold initiatives Obama will want to undertake. Several months ago it looked like he could hit the ground running on some of them, including health care and how we pay for and deliver it.
But I think the events of the last two months mean that many of the things he wanted to do — possibly including the tax increases on the wealthy and perhaps on some investment income — probably need to be put on hold until the economy is on stronger footing.
In a weak economy, cutting spending and raising taxes are two of the worst things you can do, and if you can’t (or shouldn’t) raise taxes in a recession (Hoover tried it) you won’t have the revenue stream for many new initiatives.
Once the economy is back on solid footing and has begun to grow anew — be that a year, two years or more — then some serious work can be done. In the meantime work can be done “behind the scenes” to begin crafting proposals to be trotted out in the future.
But at the moment, I think the economy and the financial markets need the assurance that there will be no significant, new permanent programs or tax increases until the economy recovers; there is a crisis of confidence and rampant uncertainty about the future, both of which undermine market and economic recovery. As a result, any near-term efforts in the health care front are going to be rather limited in scope.
Tim,
Tim, NG, Robert —
Thanks for your comment.
Tim- Yes, I agree we’re not going to see huge spending on health care reform anytime soon.
But Obama still plans to do away with Bush’s tax cut for the rich, while cutting taxes for everyone else.
Recently he has said he will raise taxes for those earning over $200,000– previously it was for those earning over $250,000. I think he realizes that now, he’ll need to raise more money.
This will not hurt the economy.And the situation is completely different from when Hoover was presdent in about a dozen ways. (Amity Shlaes and other ideologues were trying to peddle the Obama/Hoover parallel during the election. It’s just not true. This is the sort of distortion that got her fired from the Financial Times.)
Right now, the top tax rate is well below historic norms. Excessive concentrations of wealth (at the top) tend to remove money from the economy, like interest on foreign debt.
We also need higher taxes on capital gains (as Robert Rubin realized when he was Secretary of the Treasury) to discourage the
type of speculation that leads to bubbles.
We don’t want to “reassure” the stock market. The market didn’t fall due to a “crisis of confidence.”
By any measure, stocks were hugely over-priced– as many people have been warning since last spring. Unfortunately, to wring out the excesses, the stock market has to do what it didn’t do in 2000–revert to the mean, which means that the pendulum first has to swing below the mean.
Professional investors who I respect predict that it will take 2 years for the stock market to hit bottom. Though probably we’ll see a “false bottom” before then–when the bear sets a trap to lure investors back in.
This is a time when we need government investment in social goods–things that will add to the long-term wealth of the nation. This is why Obama is talking about schools, infrastructure, alternative energy.
NG–
I have the greatest sympathy for Ted Kennedy–and have been a supporter for many years.
But this is not the way to make social policy–or to decide how to spend billions in the middle of an economic crisis.
And a rushed attempt to reform healthcare will only set the project back another ten years.
There will be other ways to honor Kennedy.
Robert–
Of course there will be people in the White House working on health care policy.
But they will be working on containing costs, weeding out waste, moving us toward evidence-based medicine (as opposed to profit-driven medicine which allows the for-profit industry to decide our prioritites.)
I have written repeatedly about the things that we can do to save money– Medicare reform, comparative effectiveness insitute, redistributing dollars paid to physicians in a budget-neutral way (paying less for treatments that provide minimal benefit for patients.)
What Obama won’t do is pour billions into a broken system and call it “universal coverage.”
Maggie, in response to where you write: “We don’t want to “reassure” the stock market. The market didn’t fall due to a “crisis of confidence.”
With all due respect I disagree here, and rather strongly — at least with the first part of your premise. Much of the consumer confidence problem is directly tied to the tanking of Wall Street.
Keep in mind that this is a day and age where more “ordinary people” than ever are in the stock market, perhaps to significant degrees, because their pensions have been replaced with 401K plans.
Consider the 1973-74 bear market. The Dow and the S&P 500 lost a similar amount to what we have lost off the year-ago highs on those indices. Yet the average person wasn’t as heavily affected because many “average” middle class folks owned no stocks — with good pensions and job security, why bother? My dad had a good retirement without stock investing, because he lived in the “good pension” era. The 1973-74 bear market was almost a non-event where his retirement security was concerned.
(By the way, the people least worried about the economy, at least among those I talked to? Long-time government employees with nice grandfathered pensions coming their way. The market meltdown is more of a non-issue to them, too. Not meaning to bash government workers, just pointing out that it’s easier to “tune out” the stock market when you have a nice pension waiting for you, which fewer and fewer people have.)
That’s why I think market performance is more important to consumer confidence than ever. And if consumers are skittish, the economy doesn’t recover.
More than ever — again, given the rise of 401K plans — the stock market and the everyday economy are intertwined. Most ordinary people I know are more uneasy about their retirement plans than any near-term economic event — but it still impacts how they participate in the economy.
I agree that there is room for “investment in social goods,” and I believe public infrastructure projects should be near the top of the list.
I don’t think the administration, the Fed or anyone else should “talk the market up” (or down, for that matter; it does what it does). But at the same time I think it’s a mistake to completely decouple Wall Street from Main Street, so to speak, given how many middle-class fortunes and futures are tied to their IRAs and 401Ks.
Tim–
I’m not decoupling Wall Street and Main Street.
Yes, about half of all Americans own stocks (though the majority have very small accounts).
But while the fall of the market hurt consumer confidence, it as not
a lack of consumer confidence that CAUSED the the market to fall.
Markets go down for a very simple reason: they went up.
And eventually, they go up too far, and are over-priced. Price-earnings ratios, compared to historic norms, give you a pretty good idea if markets are overpriced. But what you never know is how long they will stay over-priced.
What you do know is that, the longer they stay over-priced, the longer and deeper the bear market that follows.
As James Grant, one of the very best writers on Wall Street puts it: “The stock market is not the kind of game in which some people lose while others win. It is the kind of game in which, over certain periods of time, nearly everyone may win, or nearly everyone may lose.”
I’ve written a book about this–a history of the stock market titled “Bull!”
Warren Buffett recommended it in Berkshire Hathaway’s annual report,the Financial Times reviewed it favorable, Paul Krugman reviewed it favorably in the NYT Book Review– So this is a subject I know well.
You mention the crash of the early 70s. That crash followed the go-go market of the 1960s, which was called “The People’s Market”–because so many individual investors were involved.
It actually peaked in 1966–much as the bull market of 1982-1999 peaked in 2000.
Then it became very volatile–it rallied and plunged, rallied and plunged–without getting anywhere, from 1966 to 1973 (much as the market rallied and plunged, rallied and plunged-without ultimately getting anywhere from 1999 to November 2008.)
Then, finally, the market rallied and set a new record–in 1973.
Investors saw light at the end of the tunnel and got back in.
It was a sucker’s rally.
By the end of 1974 the S&P was down by 50% and the public was shorn.
Between December of 1968 and October of 1974, the average stock had lost 80 percent of its value.
I could see that happening again this time around–another sucker’s rally before this market finally bottoms– say sometime in 2010. (Obviously, that’s a complete guess. You just never know how long these things will last. Just that they will be very nasty)
It would be many, many years before investors got their money back.
Overall, from 1967 until 1982 (15 years later) the market lost an average of nearly 4 percent a year–year after year.
By the late 1970s, the public had given up on stocks. Business Week wrote a cover story saying “stocks are for geezers.” No one was buying.
The bear market that followed the 1960s would last until 1982.
Then came the bull market of 1982-2000.
But in 2000, while it came to an end, it never completely crashed. Greenspan (as he now admits) kept interest rates low–low enough to create “easy money” to fuel a real estate bubble, and to revive a bull market. Meanwhile, both personal and national debt climbed.
Meanwhile, in the 21st century, gold soared–a sure sign that world financial markets were heading for trouble. (Professional investors and some central banks begin to accumulate gold when they see the world heading for a financial crisis.)
Keep in mind that the “crash” that followed the go-go market of the 1960s was a two-part crash: first, in fell in the late sixties, then became volatile, then fell a second time in the awful carnage of 1973-1974.
I’m afraid what we are experiencing now is the second part of the crash that was bound to follow the excesses of 1982-1999.
The causes are multiple and long term. The stock market bubble of the 1980s; a real estate bubble built on top of tha; too much easy money–a huge pool of money- chasing too few assets. (This is one reason why we don’t want so much wealth concentrated at the top–it tends to create asset bubbles.)
And now, we pay the piper.
The government’s job is to try to protect the people who are hurt most: those who lose their jobs, the poor, children, etc.
We’ll need a new version of Roosevelt’s “new deal.”
A 10% drop in two days is hardly a ringing endorsement for Obama’s economic policies.
jenga–
The thing about drops and rises in the stock market is that the short-term moves just aren’t rational.
For instance, I follow the price of oil.
One day, oil will be up because someone predicted that the next week will be cold. Then oil is down because someone predicts next week will be warm.
The market is a casino that includes many short-term players–and very psychological
In other words, short-term fears, hopes and largely unreliable predictions about what is going to happen over the short-term to drive short-term prices.
Those predictions are very much like what your local news tells you about the weather 7 days from now.
That said, I expect the market to continue to drop because we are facing a fiscal crisis. . .
Before I began writing about healthcare, I was a financial reporter, writing about markets and social policy in Wsshington (which is how I began learning about healthcare.
So based on emotion those with stocks at present think we are screwed.
If the market is psychological why was there the biggest selloff after an election in history? Wouldn’t someone that is “calm” instead of “erratic” assauge those fears?
Jenga–
The wealthiet 10 percent of the country owns the lion’s share of the stocks.
Many voted against Obama. As a friend in Westchester County (upper-class town) told me, her
neighbors didn’t want Obama becuase “he is going to take our money” (Bush’s tax cuts for the rich) and
give it to the poor.”
Many also didn’t want a black man in the White house. (Racist jokes are acceptable on Wall Street in many, many quarters.)
Many of these people were surprised that Obama actually won. They assumed that, one way or the other, the Republicsn would “take” the election.
I was not at all surprised by their knee-jerk reaction–a sell-off.
This was psychological because it had nothing to do with the actual value of the stocks they were selling. Thesse stocks were not suddenly worth less.
But the stock market is, as Treasury Secretary Robert Rubin once said to me, “very emotional”
(Rubin was arguing against investing social security funds in the stock market.)
Warren Buffett often quotes is mentor, Ben Graham, who once said that in the short term, the stock market is a voting machine (psychology and emotion drive stock prices) while, over the long term, it’s a weighing machine (prices reflect the underlying economic fundamentals of the business). Right now, a lot of hedge fund and mutual fund managers have to sell stocks to meet investors’ redemption requests while numerous other investors need to sell to meet margin calls. Many of those seeking to get their money out of hedge funds and mutual funds are just plain scared which is not surprising given that the current economic situation, especially as it relates to the credit markets, is outside the range of experience of most current market participants.
Barry–
This is entirely true.
Though, given the fact hat the market is a voting machine for the short temr–and a weighing machine only after the very long term– you have to have very deep pockets, and be a very good long-term market timer, as Buffett is, to do well.
As you no doubt know Buffett got out of the market in the late 1960s–and stayed out until it bottomed in the crash of 1973-74.
He also got out in the mid- to late 1990s (and began buying only insurance companies, which is to say that he was buying bonds (which is what insurance companies own)
and has largely stayed out of U.S. stocks most of the time since hten.
In 2004, he said he couldn’t find anything to buy in the U.S.–stocks were overpriced. And he bought very little afer that, even as the market went up.
Maggie:
I hear what you are saying about addressing the economic crisis before we really tackle comprehensive health care reform. But I feel the need to keep reminding Obama and others now in power that we will never really be economically strong until we figure this out. It seems to me we should be able to have a shadow within the administration working on, as you say, containing costs, particularly in Medicare to prepare the ground for reform, because as you say throwing money at it won’t work. I am not sure that this is really a priority for Obama and so I think we need to stay on top of him and he needs to listen to people like you.
There is a lot of talk about repairing the infrastructure. How much of the cost of that is indirect payment for health care for workers? How much of the cost of everything, education, transportation, is a consequence of health care costs? Energy costs add to everything too, of course. I don’t want to take my eye off the ball, partly because I am hit so hard personally by health care inflation, but also because it is so difficult and the learning curve is going to be so steep.
By the way, the “gorgeous mosaic” phrase actually belongs to David Dinkins, New York City’s first black mayor. I believe he used it in 1989, as an alternative to the “melting pot” metaphor that many of us already knew. He was celebrating the fact that immigrants do not lose their cultural identity; rather they add it to the “mosaic.”
Martha–
Thanks for the comment.
I agree entirely about the
need to begin work on structural reform–particuarly of Medicare–
now.
So do people like CBO director Peter Orszag.
I think that definitely will be happening. There is already much talk about
revising Medicare’s physcian fee schedule–paying primary docs more, paying less for certain services of marginal value.
Obama has said he’ll allow drugs to come in from Canada.
And there is already legislation to create a “Comparative Effeciveness Institute” that will draw together the reserach we need to figure out which treatments work adn which treatments don’t.
Often, the less expensive treatmet is just s good–and less risky.
Cuomo ran for mayor in the 70s, long before Dinkins.
I was here for Dinkins–profiled him, and if memory serves, he borrowed the phrase from Cuomo. (This is also what Google tells me) (Cuomo was always the eloquent phrase-maker.)
Maggie:
I looked in Google too. It seems that the phrase is credited to both of them about half the time. Certainly in the city now it is more often credited to Dinkins by the local papers. I was not here in ’77 so I cannot really know. Maybe Dinkins was the one that said “gorgeous?”
Maggie:
Re: Obama and health care: I think we really need to keep the pressure on. He has so much political capital behind him now, and this never seemed like a huge priority in his campaign — I think his hand was forced during the primaries by Edwards and Clinton. I hope that he doesn’t think that now that he has carried the day that this means we don’t still care about it. I don’t want to wait another decade and a half.
Martha–
Thanks for responding.
No one is talking about waiting 15 years. People
around Obama are talking about doing structural reforms in the first term–and getting to full universal coverage in the second term.
This seems reasonable. It will all take many pieces of legislation–and ulimately, some fierce fights with the lobbyists and the conservatives.
Doing one enorous bill is what Hillary tried to do, and as much as I admire here, it failed, in part because the bill was so long and so complex that only people as intelligent and hard-working as Hillary could understand it.
Obama has already made it clear that he plans to expand SCHIP and raise funding for Medicaid next year.
He also has indicated that he will allow drugs to come in from Canada– which will put pressure on drug prices.
Legilsation for a Comparative Effectiveness Institute is moving along in Congress..
That will help us figure out which treatments should be covered and which just aren’t as effective.
You’re right– during the campaing, Hillary put healthcare higher on her list. For Edwards, poverty was the big issue (which is all tied up with healthcare.)
But since she was defeated, the economy has fallen apart. That has changed many thing.
I don’t think most people realize that we’re facing a recesion/depression that
could be much like the 1930s At best, it will be
like the early 1970s–which I lived through.
(Before I started writing about healthcare I wrote about the stock market, the economy and economic history for many years. Unfortunately, the pattern that is unfolding is pretty clear. Things will get much worse before they get better. How long it will take, no one knows.
There are limits to what Obama can do. Bush dug a very deep hole.
Already, it’s pretty clear to many economists that we are heading toward 10% unemployment.
That means we’ll have to extend unemployment insurance and Cobra (so people who have insurance can extend it) and create jobs. This will be very very expensive. At the same time we’ll have to put more money into healthcare for the poor and working poor. (Expanding SCHIP will help).
And we will need money to cover the Vets returning from Iraq. The VA is seriously underfunded. And of all Americans, the Vets, who have been sent back to the Middle East again again, deserve the healthcare (and mental health care) that they so deperately need.
If we tried to cover everyone, all at once, that would raise national health care spending by 13% to 15%
In a recession, can you or your family afford a steep tax hike to pay for that? (We couldn’t raise enough money just by taxing the very rich.)
This is why we have to figure out how to contain health care spending–while simultaneously moving twoard coverage by expanding coverage at the bottom (Mediciad and SCHIP)
Finally, I’m actually old enough to remember Cuomo saying “mosaic”! Gorgeous, I don’t know. . . .
Maggie:
Wow, do you really think it will be a depression? I read a column by Paul Krugman, he thinks that the danger for Obama coming in is that he will low ball on public spending and that FDR did. Did you see that column? What do you think? I’m not an economist — I have no idea.
Do you think the VA, once it is funded could be a model for reforming Medicare? In your book you seemed to think it was well run, at least some aspects of it are.
I’m probably older than you 😉 — certainly old enough to remember ’77, but I was not living here at the time. I am originally from Ohio and I was still in college then. I did not even know Cuomo ran for mayor — when I got here it was all Koch all the time.
If this isn’t done and Obama runs into trouble as Clinton did after a few years then the opportunity will be lost (again). A bold administration should work on all important issues at once, there is plenty of research, coalition building, etc. that can go on before the full propaganda and congressional push takes place.