How They Did It

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JONATHAN COHN MAY 21, 2010

How They Did It

When the president and his closest advisers huddled in the Oval Office last August, they had every reason to panic. Their signature piece of legislation, comprehensive health care reform, was mired in the Senate Finance Committee and the public was souring on it. Unemployment was on the march, and all this talk about preexisting conditions and insurance exchanges barely registered above the Fox News pundits screaming, “Death panel!” Suddenly, health care reform was under attack everywhere—even in the West Wing.

All week, the group had debated whether to scale back the reform effort. Now, a decision point had come, according to several people who were in the room. Press Secretary Robert Gibbs said he couldn’t keep telling reporters that there was progress on reform when, in fact, it plainly wasn’t happening. Counselor David Axelrod, who viewed health care as a political graveyard, presented a stark view of the president’s falling poll numbers. Axelrod didn’t argue that it was time to abandon comprehensive reform, but Vice President Joe Biden and chief of staff Rahm Emanuel did. Make a quick deal that would extend insurance coverage to parents and children, they urged, and put off broader action until later. Neither man had substantive qualms with comprehensive reform. They simply saw it sucking the political life out of the new presidency, just like it did to Bill Clinton more than a decade ago.

Their political logic was impeccable. And, at another time, Barack Obama might have heeded it. Universal health care had not been a defining cause for him before his presidential bid. During one of his first policy tutorials on the subject, back in 2006, advisers were dismayed that he spent the session typing away on his BlackBerry—attention they believed that he desperately needed to spend mastering intricacies.

Focus had come with the campaign and, later, the first months of his presidency. By August, Obama could square off against any health care wonk in the country, including the ones who worked for him. Still, the passion he discovered wasn’t ultimately about the substance of health care policy—not entirely, anyway. Obama had come to view this debate as a proxy for the deepest, most systemic crises facing the country. It was a test, really: Could the country still solve its most vexing problems? If he abandoned comprehensive reform, he would be conceding that the United States was, on some level, ungovernable. Besides, several aides recall him saying, “I feel lucky.”

After the meeting broke up, a few of his advisers milled in the hallways outside the Oval Office, pondering the prospect of taking up such a high-risk strategy because the president “felt lucky.” As one of them later told me, “It was like, holy shit.”

Of course, we know how this narrative concludes, with Obama sitting in the East Room, inscribing his signature onto the Patient Protection and Affordable Care Act of 2010—completing a quest that eluded Harry Truman and a trio of his successors. But the question that the president posed in that August meeting still lingers: How did the U.S. system, and its leadership, truly perform in the face of this test?

In the immediate aftermath of his legislative triumph, Barack Obama has barely received credit. Polls show the public doesn’t particularly like the new law. Conservatives are livid over the expansion of government. Liberals are ambivalent, disappointed as much with their leaders as with the legislation. There are, in short, widespread questions about whether the ordeal was worth it—and whether the president and Democratic leaders could have charted a better, alternative course.

These are questions I asked myself constantly over the last two years, as reform legislation first took shape and, then, as it moved through Congress. I believed that legislation was worth passing—that its champions were, by and large, making the best of difficult circumstances—even if I didn’t like all the compromises. But those are complicated judgments to make in real time, based on only the reporting snippets that come through eclectic sources.

What follows is an effort to revisit those judgments, with the benefit of hindsight and fuller information. This is the story of how health care reform came together—and, more than once, nearly fell apart. It’s based on hundreds of hours of conversation over the last two years and a series of interviews with key players conducted in the last few weeks. It is the story of a president with transformational aspirations, a congressional party ill at ease with power, political institutions that have been roundly written off as sclerotic, and an experiment in government action that has only just begun.

Getting Schooled

 

“I happen to be a proponent of a single-payer universal health care plan.” That’s how, according to a video that eventually went viral, Obama described his position on health care. But the grainy clip came from 2003, when Obama first started running for the U.S. Senate. Obama was no stranger to the issue: He’d watched his mother struggle with medical bills as she was dying from cancer. But his policy thinking on the issue was crude and, by the standards of professional politicians, somewhat dated.

“Single-payer” meant government-run health care. And it is what New Deal Democrats had in mind when they first took the idea of national health insurance seriously. Democrats would eventually realize that vision for the elderly in 1965, with the creation of Medicare. But faith in the government dwindled after the 1960s. Government-run insurance would thrive in other countries, like France and Taiwan. But it was a nonstarter here—and Democrats needed alternatives.

They found one in an idea the right had begun championing in the 1970s, when even Republicans began fretting over the cost of care but were desperate for a market-based solution. The idea was to give everybody insurance but to make it private insurance, with consumers shopping around for the best plans. Eventually, Clinton proposed such a scheme, one of his signature blends of conservative means and liberal ends.

But, for the public, the relevant distinction wasn’t so much left versus right as change versus the same. And, under Clinton’s plan, most working-age people had to dump existing insurance to buy one of the new regulated private plans. Yes, Americans craved security—they wanted to know coverage would be there if they lost a job and provided for them if they got sick. But, by and large, they didn’t want government forcing them to change their coverage, even if it was a change for the better.

In the bleak political aftermath of Clintoncare’s defeat in 1994, the Democratic Party’s thinkers and strategists obsessed over how to get the policy and the politics right next time—which was sure to come, since rising costs put medical care increasingly out of reach for even the middle class. Slowly, the wonks gravitated toward an approach that accounted for the public’s anxieties—one that let people with relatively good insurance, the type that large companies routinely provide, keep their coverage. The big changes would be for everybody else—individuals buying on their own, small businesses, and the uninsured. For them, the government would set up a regulated marketplace, where everybody could buy affordable coverage regardless of preexisting conditions. These marketplaces, designed to look like the networks through which federal workers got their plans, would include subsidies so that everybody could afford a policy.

It was an idea that lived exclusively in academia until 2006, when political serendipity thrust it onto the Massachusetts state political agenda. Under a special arrangement the state had previously made with the federal government, it stood to lose billions in aid unless lawmakers found a way to increase the number of people with health insurance. Republican Mitt Romney, the consultant-turned-governor eager to burnish his reputation as a problem-solver, seized on the idea of creating these new regulated marketplaces and partnered with the Democratic legislature to pass it. The Massachusetts reforms eventually brought insurance coverage to 97 percent of the state, the highest such rate in the country. MIT economist Jonathan Gruber, one of the plan’s architects, led a group of center-left intellectuals who hyped the experiment’s success and touted it as a model for national action in articles, speeches, and consultation with prominent Democratic Party politicians.

Liberals, though, continued to eye these schemes skeptically: They simply didn’t trust private insurance, even the highly regulated and subsidized version in Massachusetts. But soon, a new twist emerged, one promoted most visibly by Jacob Hacker, a political scientist then at the University of California, Berkeley. The idea was to throw a government-run insurance plan into the mix, not as the insurer for all, but simply as an option for people or businesses that wanted it. Backed by a prominent liberal think tank (the Economic Policy Institute) and a new, well-funded activist organization (Health Care for America Now), he pitched this “public option” as a way to provide competition with the private sector, while offering peace of mind to those who trusted government more than the anonymous medical reviewers at a behemoth like UnitedHealthcare. The idea became something of a litmus test for liberals; many not-so-secretly hoped the public plan was a big first step toward single-payer.

Conservative voters and most of the business community, naturally, had different priorities. They worried more about what high medical bills were doing to corporations and the federal budget. They feared liberal reforms would address the problem, if at all, through blunt price controls and rationing. But years of research, first developed at Dartmouth, suggested that as much as one-third of medical spending was waste—not paperwork or overhead, but care that simply didn’t make people better. Among those who noticed was Peter Orszag, a former Clinton administration economist who’d become director of the Congressional Budget Office (CBO). Orszag was a fiscal conservative, but he’d come to realize the government’s long-term fiscal problem was largely a health care problem. And the Dartmouth research suggested that it was possible to reduce health care spending without actually reducing care—or, at least, reducing good care. Orszag, a fitness fanatic, became obsessed with this research—and, through his work, helped give it centrist credibility. A new, fragile consensus had emerged.

 

Andy Stern was perplexed. Under his leadership, the members of the Service Employees International Union (SEIU) had been single-minded in the promotion of health care reform. In early 2007, SEIU and the Center for American Progress invited all the Democratic presidential candidates to Las Vegas to discuss health care with a live audience. The two best-known front-runners, Hillary Clinton and John Edwards, gave detailed disquisitions that reflected their deep knowledge. Obama seemed vague and hesitant. One audience member, whom friends would later nickname the Obaminator, said she’d checked his website—and found nothing of substance there. “Keep in mind,” Obama replied, “our campaign right now is a little over eight weeks old.”

Obama had seemed surer of himself when Stern met him at a Washington restaurant months before. Maybe Obama just hadn’t realized, until that moment in Vegas, how demanding a presidential campaign was—and how he’d be competing against politicians of similar intellect. “I just felt like the valedictorian had met the other valedictorians and suddenly realized that he maybe wasn’t the smartest kid in the class anymore,” Stern told me.

But Obama was smart enough to realize he’d blown it in Vegas. He also knew that political pros would be watching the rollout of his plan closely—to see whether he was ready to play in prime time and how he intended to position himself ideologically. Edwards had announced his plan first, back in February, and put on the table an ambitious package to cover all Americans. Not since Clinton in 1992 had a top candidate seriously proposed something like universal coverage. Obama’s plan would call for the same rough mix of ideas as Edwards’s—in keeping with the new consensus, he wanted to leave employer-sponsored coverage in place and create exchanges for everybody else to buy insurance. It would also include extensively documented ideas for reducing the cost of care, which Edwards hadn’t done. But, in a critical move, Obama opted not to require that everybody get insurance.

To most policy wonks, the “individual mandate” was an essential ingredient of Massachusetts-style reform; David Cutler, Obama’s chief health care adviser, had written as much in a recent book. You couldn’t require insurers to cover anybody without requiring everybody to get coverage; otherwise, healthy people would wait until they got sick before buying insurance. But Obama opted not to endorse a mandate, except for children. Insurance purchases would be voluntary, at least in the beginning.

Reform advocates and experts raised their eyebrows: Did this mean Obama wasn’t serious about reform? Was he paying too much attention to polls, which frequently showed that individual mandates were unpopular? Hillary Clinton hadn’t yet published her own plan. But she (along with Edwards) quickly seized on an estimate published in The New Republic, based on a rough calculation by MIT’s Gruber, that Obama’s plan would likely leave 15 million people without coverage because those people would opt not to buy insurance. Over the coming months, Clinton hammered Obama relentlessly on this point; Obama hit back with ads and mailers suggesting she’d make people buy insurance they couldn’t afford. It was a bit awkward: Former Senator Tom Daschle, an Obama confidant, had written his own book on health care and, like Cutler, had called for a mandate. But the gambit worked well—and Obama won the nomination.

As focus turned to the general election, Obama instructed his campaign team to make health care a central part of the party platform, making explicit the commitment to “universal” coverage. He also gave the issue prominent play in his speeches. The countless debates with Clinton had sharpened Obama’s skills, and, his aides say, the countless town-hall meetings had deepened his awareness of the problem. As Anita Dunn, who was a senior adviser, puts it, “When you’ve traveled the country for two years and heard all of these stories, you can’t just leave these people behind.”

John McCain’s decision to introduce a health care plan gave Obama new opportunities to hammer away at the issue, although it also focused attention in a peculiar way: McCain had proposed to eliminate the tax exclusion for employee health-insurance premiums. Pollsters said it was a highly unpopular idea, and Obama attacked him for it mercilessly. This prompted complaints from some Democrats and intellectuals, who believed that such a tax change—in the context of a different reform plan—might be useful. They wondered if maybe Obama wasn’t so committed to health care reform, and, after Obama won, they sought signs to allay their anxieties.

A month after the election, Obama tapped Tom Daschle to run both the Department of Health and Human Services and a new White House Office of Health Reform. He reached out to Orszag about running the Office of Management and Budget (OMB). But doubts about Obama’s intentions persisted, even internally. During the transition and, then, during discussions of the president’s first budget, advisers like Axelrod raised some of the same concerns they had aired during the campaign. It was a political loser with the middle class, most of which had insurance; it could kill the Obama presidency. Daschle—who was spending much of his time in Massachusetts, tending to his ailing brother—heard about these discussions secondhand and put the question to Obama directly, in a face-to-face meeting: How serious was Obama about health care?

Obama reassured Daschle—this was going to be his legacy. Soon, he would settle on a budget that called for universal coverage and, using an idea first developed by the Treasury Department’s Gene Sperling, set aside a reserve fund composed of half new revenue and half savings within the health care system. Obama’s next move was to hold a summit at the White House, with members of Congress and the leaders of interest groups present. He was going forward. Who was going with him?

 

Workhorses

 

It was anintimate gathering at Ted Kennedy’s home in Washington—just the senator, his colleague Max Baucus, and three senior staffers who worked with them on health care. Kennedy, who loved historical artifacts, pulled out an original version of the Federalist Papers that his wife, Vicki, had given him as a gift. He also demonstrated one of the home’s architectural quirks: a hidden bar, accessible through a secret door in the sitting-room bookcase.

But soon, as discussion turned to President Obama’s health care agenda, Kennedy turned serious and wistful. He had waited years for the moment—and spent the previous twelve months preparing for it. But time was now the enemy. The longer it took to get reform through Congress, the less likely Congress would be to pass the legislation—and the less likely Kennedy would be around to witness it. Less than a year before, physicians had diagnosed him with terminal brain cancer. He’d vowed to fight it, but he was coming to grips with political reality and his own mortality. “There was a sense of urgency in Kennedy’s voice,” one of the guests would later recall. “You could sense just how committed he was to getting this done, no matter what happened to him.”

Outwardly, Kennedy and Baucus were different in every conceivable way: Kennedy commanded a room, spoke with a booming New England accent, and had a flair for the dramatic. Baucus seemed uncomfortable in his own skin, mumbled through public statements, and preferred to make his mark by negotiating deals across a table. The ideological differences were starker still: Kennedy was one of the few Democrats who still relished the label of “liberal.” Baucus came from Montana, maintained one of the most conservative voting records in the Democratic caucus, and routinely antagonized his party’s base. During the Bush era, he famously broke with party leadership and cut deals with Republicans over tax cuts and the Medicare drug bill. When he showed up for the final Medicare drug vote with a black eye, he joked that he’d gotten it at a Democratic caucus meeting.

Baucus had the ability to kill legislation. Kennedy’s Health, Education, Labor, and Pensions (HELP) committee has the word “health” in its name, but Baucus’s Finance Committee is the one that oversees government revenue, Medicare, and Medicaid. In 1993 and 1994, Daniel Patrick Moynihan presided at Finance. Moynihan, eager to pursue welfare reform instead of health, basically declared the Clinton plan dead on arrival—and, then, helped make it so. But Baucus wasn’t running away from comprehensive health care reform. He was embracing it. He thought of himself as a senator with a history of passing major legislation—not just the Medicare drug bill, but also the Clean Air Act Amendments of 1990. And he was able to do this, he thought, precisely because he was willing to reach across the aisle in a way Democrats to his left wouldn’t. He had started talking about health care reform right after the Medicare drug fight, and, in 2008, he began preparing for it in earnest. To lead his team, he brought back Liz Fowler, who had left his staff in 2005 to work for WellPoint insurance. To arm his committee with financial information about industry, he later recruited Tony Clapsis, a former Barclays analyst.

The ties Fowler and Clapsis had to business were typical of Finance and a major reason so many reformers distrusted the committee. Sometimes, those appearances were deceiving; after WellPoint had fought efforts to bring Massachusetts-style reforms to California, Fowler told friends she was frustrated with the company’s right-wing politics. But, with the revolving door between the industry and committee staff, not to mention the campaign donations the industry made to the members, trade groups had no problem communicating their feelings—and getting responses.

 

Kennedy was also thinking ahead. He convened a set of confidential meetings among what he called the “workhorse group.” The group included reform advocates and health care trade groups; the idea was to create inside-Washington momentum for reform while developing a proposal that at least some, if not all of the groups could support.

From the start, Kennedy thought Baucus was the key to passing legislation—and not just because of the Finance Committee’s jurisdiction. It would take 60 votes to break a filibuster. There was no way to get there without winning over conservative Democrats and, most likely, a few Republicans—the kind Baucus could bring. Baucus, in turn, would ultimately need Kennedy to validate his work on the left. It helped that what the two men lacked in ideological affinity they made up for in generational identity. “There are very few institutionalists left in the Senate,” says a senior Democratic aide. “Very few members remember the Russell Longs and the way deals were made in the Senate for a long time. Ted Kennedy and Max Baucus are two of those folks.”

The two started meeting regularly and, by summer, the chairmen were aiming to produce one common piece of legislation. That hope subsided with Kennedy’s infirmity, but Baucus didn’t back off—not even when that fall’s financial crisis gave him the perfect excuse to relent. On the contrary, Baucus redoubled his efforts and announced as his goal the production of a white paper sketching out what legislation should look like. He published the 89-page document in November 2008, less than two weeks after Obama’s election. And some of Obama’s advisers used it to press their case for moving ahead: It was proof, they said, that Congress was ready to go.

But, as pleased as Obama’s health team was with the white paper, they also felt trepidation. Baucus’s staff had been briefing Obama’s team through the fall, but more to keep Obama in the loop than to seek his advice. It didn’t matter substantively: The white paper framework had the same architecture as the Obama plan. But Obama aides worried that the point of the paper wasn’t simply to show that Baucus wanted to pass reform. It was to show that Baucus wanted to own it.

Inside Game

 

Barack Obama hadpromised to change the way Washington does business. No more negotiating in the anterooms of Capitol Hill. No more crafting bills to please corporate interests. But Obama also wanted to pass monumental legislation. And it wasn’t long before the tension between the two began to emerge.

Obama’s budget message had signaled his intention to push forward on health reform. But it didn’t actually establish spending guidelines for Congress. The real budget, the one Congress uses as its outline for appropriating money over the course of the year, is strictly a Capitol Hill document. The two houses each pass a version, work out a compromise, and then approve it—all without presidential signature. That meant Obama had to deal with Kent Conrad, a conservative Democratic senator from North Dakota who was in charge of the Budget Committee and who feared health reform would be a sinkhole for taxpayer money. To get his support, a bill couldn’t be too big—and it had to pay for itself.

Conrad, like other conservative Democrats, was also insistent about finding at least some token Republican support. And that shaped his position on a key procedural question. Under what is called the “budget reconciliation process,” the Senate can pass a bill without the threat of filibuster. That means a simple majority of 50 plus one—rather than 60—can pass legislation. When the budget committees write the budget, they get to indicate what legislative measures will fall under these reconciliation guidelines.

Progressive activists and pundits talked openly of using reconciliation to pass an entire health care bill. The Democrats had only 58 seats at that point, since Arlen Specter was still a Republican and Al Franken’s victory remained in dispute. And support from conservative Democrats like Ben Nelson was far from certain. But parliamentary guidelines meant that passing the bill through reconciliation would be difficult, and moderate Democrats complained that the move seemed too partisan. Conrad was among the loudest critics, all but precluding the possibility.

Obama still hoped for a bipartisan win. But he and Majority Leader Harry Reid wanted the option of reconciliation, just in case 60 votes proved elusive. Obama appealed to Conrad on substance—dispatching Peter Orszag as emissary and then telling Conrad of his commitment to reform that paid for itself. He also showered presents on Conrad’s dog, a white bichon frise named “Dakota,” which Conrad sometimes totes to his office. The doggie gifts even came with a personal note—“Rahm idea, Obama execution,” says one administration official.

But, in a sobering lesson about the realities of Congress, Conrad brought up a local issue. Even as he was demanding Medicare spend less money overall, according to multiple administration and congressional sources, Conrad sought assurances that Medicare would start paying more money to some of North Dakota’s hospitals. Specifically, Conrad wanted the government to pay the hospitals as much as it paid hospitals in Minneapolis, the nearest big city. The sources say Conrad came away thinking he had a deal, while the White House didn’t. (Neither party would comment officially on their negotiations.) Conrad, who has long claimed his states’ hospitals are underpaid, eventually got his payments anyway: The final Senate health care reform bill raised reimbursements for hospitals in five “frontier” states with low population density. North Dakota is one of them. Liberals who knew about Conrad’s demand were furious: He loved to lecture about fiscal responsibility, except when federal money happened to serve his own parochial interests.

One of Obama’sfavorite tropes on the campaign trail was the story of Billy Tauzin, a Louisiana congressman who became head of the Pharmaceutical Research and Manufacturers of America (PhRMA) before the ink was dry on the Medicare drug bill he’d helped write. “That’s an example of the same old game playing in Washington,” Obama had said during the campaign. “I want to put an end to the game playing.”

But, weeks after the 2008 election, one of the first people to approach the new administration was, sure enough, Billy Tauzin. In 1994, the drug industry had helped bankroll the campaign to kill Clintoncare. But, like the rest of the health care industry, it seemed to be adopting a different posture this time. PhRMA and other trade groups had been meeting regularly with pro-reform counterparts, in a series of private sessions convened by Ron Pollack, an earnest universal health care proponent who led the group Families USA. They’d also been part of Kennedy’s workhorse group. They weren’t committing to anything; they could always turn around and oppose reform, as many initially enthusiastic groups had done in 1994. But even some drug company CEOs thought that they were better off shaping legislation than fighting it.

Obama’s advisers encouraged that view. Although wary of how the industry wanted to shape legislation, they thought they couldn’t win if most major trade groups lined up against them. During the transition, Tom Daschle agreed to meet with Tauzin and PhRMA’s chief lobbyist, Bryant Hall—who, conveniently enough, had offices in the same building as Daschle’s law firm. PhRMA had worked with Democrats on expanding the state Children’s Health Insurance Program (CHIP), and, the two lobbyists explained, the group could help with comprehensive reform, too. But PhRMA’s tolerance for pain was limited. The drug industry didn’t want to oppose reform, they implied, but it was prepared to do it if the terms seemed too harsh.

Daschle understood. Although he offered no specifics, he made clear Obama was willing to talk if the industry was willing to be constructive—a message Obama himself had made at the March White House summit. “We met with virtually every stakeholder during the transition,” Daschle says. “Our message was similar: ‘Join us. Don’t oppose us.’ Details would come later.”

Daschle, though, wouldn’t be able to see the negotiation through. Obama had tapped him to run health care reform partly because of his Washington savvy. But, in recent years, Daschle had parlayed that knowledge into a lucrative career of advising corporate clients. When investigators on Baucus’s Finance Committee turned up evidence that he’d received more than $100,000 in free transportation and owed considerable back taxes, Daschle had to withdraw his nomination—effectively freezing the conversation while Obama searched for a replacement.

But PhRMA was engaged in other negotiations, as well. In January, SEIU’s Dennis Rivera and Karen Ignagni of America’s Health Insurance Plans (AHIP) started talking about a joint industry effort to pledge savings, as part of reform. They met in Washington hotel conference rooms, rather than one of their respective headquarters, in order to avoid attracting attention; as the discussions moved forward, they invited other groups, including PhRMA. They also reached out to the White House, where Daschle’s successor, Nancy-Ann DeParle, encouraged them to take the effort public with a letter and appearance at the White House. The administration thought it would legitimize one of their main arguments: If even the health care industry thought reform could save money, how crazy could the idea be? It’d also make it harder for these groups to fight reform as specifics emerged.

After painstaking, line-by-line negotiations over a joint letter, the groups agreed on a figure—$2 trillion over ten years. But confidentiality was essential, because the parties to the agreement faced very complex internal politics. Some hadn’t taken the idea to their full organizations yet; the idea was to inform them over the weekend, right before the Monday event. But the story got out early, apparently because a White House official leaked it. It generated a day of positive, if slightly confusing headlines about the progress of reform and potential to save money. But it also sparked a near-revolt within the American Hospital Association (AHA), whose president, Rich Umbdenstock, hadn’t even told his full leadership the event was forthcoming.

Member hospital executives started screaming that the cuts were too steep. Umbdenstock, in turn, said the letter misrepresented what the groups had pledged. “We thought they might just oust the president of AHA,” one participant in the negotiations says, “because he seemed to be in such a difficult place. ... They thought he was negotiating away the store.”

PhRMA didn’t recoil in the same way—in part because the group had begun talks with the Finance Committee. This was the kind of deal-making Baucus relished, so he was direct about his position. Armed with estimates from Tony Clapsis suggesting that the drug industry stood to make up to $100 billion over ten years if reform expanded coverage, Baucus asked the industry to reduce its revenues by about the same amount. PhRMA’s lobbyists said that was high, but they were willing to talk.

The serious negotiations began after the White House event, in a handful of lengthy meetings in Baucus’s office. DeParle was there to represent the administration, along with deputy chief of staff Jim Messina, who had been Baucus’s chief of staff and whom the Montana senator once called a second son. Tauzin and Hall led the PhRMA team and worked with five, then six, drug company CEOs. The CEOs represented the diversity of PhRMA members—perhaps making any final deal more acceptable to the organization’s whole membership.

The CEOs came in with serious questions about whether a deal would hold on the Senate floor and in conference committee. The White House, for its part, was pushing for more than PhRMA wanted to give. In a new book, Landmark, the Washington Post's Ceci Connolly describes one key moment--when Rahm Emanuel called DeParle, just as it appeared the two sides were near agreement. After taking the call outside, DeParle announced that PhRMA had to offer drug rebates to more seniors; Emanuel, it seems, was nervous about reform's poll numbers among the elderly. But the White House was also anxious to close the deal. The perception of progress and inevitability was crucial to the administration’s strategy: It would help persuade wavering groups and members of Congress to support the bill, or at least dissuade them from opposing it. Reformers frequently used the saying, “Get on the bus or get run over by it.” But that only made sense if the bus kept moving.

Eventually, the two sides agreed on $80 billion, some of which represented reduced government spending on public insurance programs. (The rest represented money individuals would save, through cheaper drug purchases.) PhRMA also pledged to support reform openly, by financing pro-reform ads. The ads might not be that helpful, but dollars spent advocating for reform were dollars not spent opposing it—and that, aides would later say, is was what mattered the most. In return, the White House and Finance agreed not to write health care reform in a way that would further cut into drug industry revenues—a promise that implicitly took off the table such ideas as allowing the reimportation of drugs from Canada.

Obama announced the deal’s broad outlines from the White House, this time bringing out an official from AARP, not PhRMA, to stand at his side—and divulging very few details, even privately. A few weeks later, a House committee tried to limit the exclusive selling period for biological drugs to five years. Industry lobbyists defeated the measure easily. But the mere attempt spooked some PhRMA members, enough that Tauzin decided to give an interview to The New York Times revealing for the first time some of the deal’s outlines. Messina confirmed to the Times that the deal was valid, and, in a private meeting, Rahm Emanuel reassured the drugmakers that the White House would push for it. As Connolly reported, Emanuel said, “We are in.”

Some subsequent Wall Street analyses suggested drugmakers, overall, will profit from reform. But many PhRMA executives continue to believe they gave up too much—and that the industry will end up worse off for it: “Go back to the CEOs who helped broker this thing, and there’s still a lot of grimaces,” says one industry lobbyist. The lobbyist also notes that PhRMA had the power—and connections—to make its view stick. “If [we] turned against this deal, there was no way to pass this bill,” the lobbyist says. “Until the very end, we could have blocked sixty votes in the Senate.”

House Money

 

It was Henry Waxman, chairman of the House Energy and Commerce Committee, who had tried to get tough with the manufacturers of biological drugs. He was thrilled to be pursuing health care reform, a lifelong crusade, and he was an unabashed fan of the president. But few people in Washington were more upset about the deal Obama and Baucus had cut with the pharmaceutical industry—and the way it seemed to undercut the progress Waxman and colleagues were making.

Such progress had not been foreordained. While Speaker Nancy Pelosi committed herself to health reform early, her lieutenants had reservations. After the presidential election, Jim Clyburn, the majority whip, told CNN he thought it better to concentrate on incremental reforms. Charles Rangel, who was then chairman of the Ways and Means Committee, asked Baucus during their weekly lunch why on earth he was spending so much time on health care—there was no room for tackling comprehensive reform, he said.

The House, no less than the Senate, had its own warring chieftains. Three committees laid claim to jurisdiction over health care: Rangel’s Ways and Means, Waxman’s Energy and Commerce, and George Miller’s Education and Labor. But, more than any recent Democratic leader, Pelosi had asserted her control over the institution, easing out unfriendly chairmen (John Dingell) and replacing them with loyal allies (Waxman). She also believed in deadlines. When she made clear her ambitious timetable, the three chairmen realized they’d have to divide the work of health care legislation. They’d collaborated like this on the Recovery Act—proof that once-contentious relationships, particularly at the staff level, were improving. They started calling themselves “Tri-Com” and, eventually, got their own tote bags, complete with a Tri-Com logo.

Of course, cooperating was one thing. Complying with Obama’s imperative to cut costs and make reform pay for itself was quite another, particularly given the way calculating cost works on Capitol Hill. Experts had identified ways to save money in medical care—like creating electronic medical records or punishing inefficient hospitals with lower Medicare payments. But the official arbiter of costs in Washington is the CBO, whose skeptical economists were unwilling to certify that such changes would significantly reduce medical spending.

Obama’s advisers had their own ideas about cost control, chief among them an independent commission that would help calibrate what Medicare pays for treatments. The idea was to take those decisions out of Congress—which, naturally, didn’t sit well with many members. The administration also seemed intent on keeping the price tag of reform in the neighborhood of $1 trillion. It had identified about that much in new revenue and spending cuts to offset the amount, which was nice, but many House members felt it was still not enough to finance an appropriately protective insurance system.

Eventually, the House chieftans decided the best strategy was to follow their instincts, keeping within hailing distance of the administration’s guidelines but not strictly hewing to them. That meant, among other things, extracting more money from the drugmakers. “I expressed my unhappiness with those deals,” Waxman says, “and I made clear I didn’t feel bound by them.” And, by June, the Tri-Com had released their bill. But, while the Obama administration said only good things in public, the CBO was less sanguine when it issued its estimate in July. It projected that the bill would run a deficit of more than $200 billion. One reason was that the House had gotten cute with the numbers: In the final year of the ten-year window, money going out was higher than the money coming in. That meant deficits might be even bigger in future years.

Members of the Blue Dog coalition and other more conservative House Democrats grew restless. They cared less about expanding and strengthening insurance coverage—which, by all accounts, the TriCom bill did well. They were also angry about a climate-change bill that Pelosi and Waxman had brought to a vote in early summer, exposing them to political blowback. “All of the members who had voted for that bill from marginal districts were getting the shit kicked out of them and getting no backup from environmental groups,” says one senior Democratic House aide. “There was a guy at a caucus who stood up and said, ‘Nancy, there’s an ad in my district, and it’s with you and me, which would be nice, but we’re both being struck by lightning.’”

The tension finally blew up in Waxman’s committee—in which Southern, rural, and more conservative Democrats had more representation and in which Waxman, for all of his smarts and savvy, had less crossover credibility than Dingell once did. The flash point was the public insurance option. Leadership and House liberals wanted a “robust” version of the public plan, one that paid for medical care at or near the rates that Medicare did. An early CBO estimate suggested that a public plan with (slightly modified) Medicare rates could save the government around $150 billion. But that money would come out of the health care industry, which prevailed upon ideologically sympathetic (and campaign-donation-dependent) lawmakers to intervene. They blocked a bill until Waxman fell back to a plan that would negotiate payments with the providers of care just like private insurers did.

With that concession, Waxman got his bill out of committee, just as Miller and Rangel had done days before. It would have been an occasion for celebration among reformers, if they weren’t so worried about the Senate.

Baucus Agonistes

 

Max Baucus wasin a familiar situation: Getting lectured by angry members of his own party. But, this time, it wasn’t just Senate liberals. It was the majority leader. And the speaker of the House. And the president. They were meeting in the Oval Office, and the subject was Baucus’s halting progress.

Pelosi thought Baucus’s pursuit of Republicans was pointless; they wanted to kill the bill, period, and, by dragging out the negotiations, they might just succeed. Reid, though generally inclined to give his committee chairmen room, was coming around to the same conclusion. Obama was, too. Winning over Olympia Snowe was one thing; the administration had zeroed in on the Maine Republican as its best hope for Republican support. But Chuck Grassley, the senator on whom Baucus was spending the most energy? Everybody but Baucus was giving up on him.

Baucus and Grassley were kindred souls. Like Baucus, Grassley had a penchant for awkward public expression. After he started his own Twitter account, his impulsive, frequently incomprehensible missives fast became the stuff of political legend. In June, during a presidential visit to Europe, Obama made statements urging the Senate Finance Committee to quicken its pace. Grassley tweeted back: “Pres Obama while u sightseeing in Paris u said ‘time to delivr on healthcare’ When you are a ‘hammer’ u think everything is NAIL I’m no NAIL.”

Grassley also had an uneasy relationship with his own caucus, because, like Baucus, he sometimes crossed party lines. In 2007, Grassley had worked with Baucus on a bill expanding CHIP, the children’s health insurance program, which Congress had created in 1997 and which was due for reauthorization. The new Congress in 2009 wanted to make expansion, which Bush had vetoed, a first order of business. But Democrats wanted to include coverage for the children of legal immigrants. Grassley voted no—and seethed. According to Chris Jennings, the highly regarded Democratic health care strategist, “Fairly or not, he thought the Democrats overreached and reneged on his agreement with them on the policy, making him look bad with his Republican colleagues. The Republican caucus said, ‘See, they burn you every time. You’re so naïve, Chuck.’”

Grassley didn’t blame Baucus personally—and told his friend that he wanted to keep working on reform. But now, he wanted some assurance that, on the major issues, the deal he cut in Finance would withstand pressures from the left on the Senate floor and in conference negotiations with the House. And he didn’t want to be alone. He needed to be one of several Republicans voting for the bill—and Snowe, whom many Republicans regarded as too liberal, didn’t count.

Reaching across party lines was Baucus’s specialty—and, early on, he had Obama’s enthusiastic support. For Obama, bipartisanship was partly a matter of principle. He had pledged to work with Republicans, and, at least early in the term, he believed that a handful of Republicans would be willing to join him on legislation vital to the country’s future. Obama also understood the math—and that the surest path to 60 votes went through Finance. But, with the Republican leadership making clear it wanted no piece of meaningful health care reform, few Republicans were interested in negotiating seriously. The logical target would have been Ted Kennedy’s old friend, Orrin Hatch, who had also collaborated on CHIP. But Hatch was openly blasting Kennedy’s HELP staff for pushing for a “partisan” bill, in a way their ailing boss supposedly would not have, so Baucus turned to Mike Enzi of Wyoming. The thinking was that Enzi, like Hatch, sat on both Finance and HELP—and was a Kennedy friend, too.

Enzi told Baucus he was willing to talk, and, based on that agreement, Baucus convened what eventually became known as the “Gang of Six”—Enzi, Grassley, and Snowe for the Republicans, Baucus, Jeff Bingaman, and Kent Conrad for the Democrats. But Enzi proved early he was an unlikely target. (“Enzi and Kennedy are friends, great, they both drank,” quips one senior administration official. “That doesn’t mean he’s going to make a deal.”) Baucus himself learned this the hard way in late July. Baucus asked the Gang of Six if, in lieu of an elusive agreement on legislation, they’d sign a letter attesting to progress and promising official hearings by September 15. Enzi refused.

That left Grassley, whose behavior was becoming erratic. Grassley stood his ground during heated Republican caucus meetings, senior congressional aides say. As Enzi’s interest waned, Grassley’s staff even joined Baucus’s on a quixotic hunt for Republicans willing to support reform on the floor. But it wasn’t just Republicans in Washington going after Grassley. It was Republicans back home, too. As the Gang of Six negotiated, Iowa conservatives began threatening to back a primary challenge if Grassley ever voted for health reform. By August, Grassley was parroting Sarah Palin’s agitprop about death panels. “You have every right to fear,” he told some constituents. “We should not have a government program that determines if you’re going to pull the plug on grandma.”

Reset

 

Barack Obama, thelaw professor, was acting like a prosecutor. He’d invited Grassley to the Oval Office, to talk about the senator’s concerns. But he was using the occasion to confront Grassley about his latest statements. “Tell me what amendment you want, tell me what language you want,” one administration official recalls the president saying. And then, when Grassley couldn’t point to anything, the official says the president reminded Grassley that the amendment on end-of-life counseling had come from a Republican, Johnny Isakson of Georgia, and simply paid for professional advice when people wanted it. But Obama’s mind was already wandering to the new strategy he’d have to adopt. The first seven months of his presidency had been a test of his belief in civility and bipartisan cooperation. Now, he had the results. They were not encouraging.

Perhaps nothing epitomized the unmooring of the debate from reality better than the treatment of Ezekiel Emanuel, a prolific bioethicist and oncologist (and Rahm’s brother) who was advising Orszag at OMB. Right-wingers pulled out some stray quotes, mashed them together with the end-of-life counseling controversy, and decided that Emanuel was “Dr. Death,” intent upon forcing doctor-assisted suicide on the sick. In fact, the highly respected Emanuel had written a famous article for The Atlantic arguing against euthanasia. More respectable conservative intellectuals, like former McCain adviser Gail Wilensky, vouched for Emanuel and decried the distortions. Nobody could hear her above the screams of Fox News pundits.

Worse still, the White House seemed powerless to change the conversation. Some administration officials would later blame Congress, because of its glacial pace. “We didn’t actually have a product to sell or defend,” according to one senior official. Some would acknowledge internal disorganization. There was no official media “war room” for most of the summer, while rivalries between policy advisers (particularly DeParle and Orszag) diverted aides’ attention.

It didn’t help, many critics said, that the pitch had become so bloodless. In a press conference designed to boost momentum during July, Obama offered detailed disquisitions on the need for more comparative effectiveness studies—but saved his emotion for a swipe at the Cambridge cops who arrested his friend Henry Louis “Skip” Gates Jr. Inside the Oval Office, though, aides saw a different side of the president. David Axelrod remembers briefing Obama on some grim poll numbers in June, warning that “these numbers are pretty discouraging—there’s a political cost to this.” Obama agreed. Then he described a 36-year-old woman with cancer he’d just met during a trip to Wisconsin: “She’s married, has insurance, and she’s still going broke. She’s absolutely beside herself because she feels like she may not make it and that she’ll leave her family with this huge debt.” With that, Obama patted Axelrod on the shoulder and showed him to the door. “Let’s keep fighting.”

And that, to Obama, meant becoming a lot more aggressive—starting with a nationally televised address in September, one that would help correct the distortions, remind Americans of the bill’s real contents, and stiffen the spines of nervous Democrats. That last part was important given what many Democrats had heard and seen during the August recess. Conservative activists had flooded town meetings, in a combustible mix of media hype and genuine grassroots energy. The Chamber of Commerce and several insurance companies started pouring money into anti-reform advertising. But, in the wake of Kennedy’s death on August 25, at least some Democrats were also thinking about the party’s historic principles.

Fox opted against carrying Obama’s speech live. The rest of the networks showed it—and polls suggested it was a hit. “I am not the first president to take up this cause,” Obama announced, “but I am determined to be the last.” One by one, he dispensed with the “bogus claims spread by those whose only agenda is to kill reform at any cost.” The death panel charge, he said, “would be laughable if it weren’t so cynical and irresponsible.” As for the idea that his reform would subsidize coverage for illegal immigrants, Obama said, “this, too, is false.” When Joe Wilson, a South Carolina Republican, interrupted that line to shout, “You lie!” it reminded Democrats of the town-hall bullying—and, according to insiders, emboldened them to press ahead. “It was so over the top,” says Chris Jennings. “The ultimate irony is that the opponents’ assaults succeeded in unifying Democrats as much as it unified Republican opposition.”

An even more important development happened before the speech. The administration told reporters that, along with the speech, it would unveil its own proposal, just to make clear what provisions it supported. Quietly, it was doing more than just drawing up a memo; it was writing an entire bill, in legislative language, in case Baucus wouldn’t move. Reid, meanwhile, delivered his own message to Baucus: If you don’t get a bill out of your committee soon, I’ll go around you and simply introduce a bill on the floor. Feeling the pressure, Baucus held the second of two conference calls with the Gang of Six: If he didn’t move now, he explained, Finance might end up out of the picture altogether. Baucus announced he was starting hearings in mid-September—and the White House decided to leave its bill where it was, on a policy wonk’s hard drive.

Moving ahead on legislation didn’t mean that legislation would pass, particularly given the debate about dollars. Baucus had been looking at some proposals in the range of $700 to $800 billion—too little, in the opinion of most experts, to pay for providing most people with a decent benefits package. One reason was that he was struggling to come up with money to pay for it. He’d wanted to finance his package by curbing the tax preference for health insurance, which CBO director Doug Elmendorf had said was the surest way to reduce the overall cost of care. But, in early summer, Reid had told Baucus that Senate Democrats would not support such a move. Reid seemed to be conveying a message from the White House—and that had set back progress, since Baucus didn’t have an alternative funding source that he could sell to his committee.

In the September speech, Obama sent two key signals about how to solve these problems. His first was to specify a figure for the overall cost of the health care plan. Reform, he said, should cost somewhere in the neighborhood of $900 billion over ten years—enough, by administration and CBO estimates, to cover 30 to 35 million people or something resembling comprehensive reform. Then, Obama endorsed an idea, first floated by Senator John Kerry, to tax insurers for the provision of expensive plans. Economists believed it would have the same effect as curbing the tax break on insurance, but, because the tax ostensibly fell on insurers, it was more palatable politically.

Baucus still had other problems—particularly on his left, where two Democrats with legitimate claims on the health care issue, Jay Rockefeller and Ron Wyden, wanted a chance to introduce their ideas. (Rockefeller wanted a more generous package; Wyden wanted amendments to offer workers more choice of insurance.) Then, two days before the vote, the insurance industry released a study purporting to show that reform would hike premiums. The study, from PricewaterhouseCoopers, was full of loaded assumptions—and even Democrats normally friendly to the industry blasted it. “I think what solidified the Democrats was the publication of the AHIP report,” says one senior aide who was involved with the Finance Committee negotiations. “It was the single dumbest move that I think the insurance industry did.” Every Democrat on the committee ended up voting for the bill. So did Olympia Snowe, although she made clear her vote on a final bill remained in doubt.

Floor Exercises

 

Obama’s announcement, during the September speech, that reform should cost around $900 billion had helped break the Finance Committee logjam. But it also undercut the House, whose coverage expansion provided stronger guarantees against financial risk and, as a result, was well over $1 trillion. During the spring and summer, the House committees had heeded Obama’s instruction to stay fiscally responsible—trimming back their ambitions and raising more money to cover the new outlays. Now, Obama was forcing them to scale back even more. The administration hadn’t even warned the House that the figure was in the speech. Senior Democratic staffers say that Pelosi found out about it the way the rest of her chamber did: On the floor, when the president spoke. She betrayed no anger in public but expressed plenty to the White House in private—and won some room to maneuver when administration officials clarified that $900 billion was the net figure, not gross.

Soon, though, it became clear Pelosi wouldn’t get 218 votes without some kind of compromise on abortion. The committee bills called on insurance companies to separate out funds used to pay for abortion services. Opponents of abortion rights, led by the U.S. Conference of Catholic Bishops, said the distinction was meaningless and wanted an outright ban on abortion procedures in the new insurance exchanges. Bart Stupak, a Michigan Democrat and opponent of abortion rights, was leading a group of Democrats who agreed.

In the spring, the committee chairs and leadership were more confident they had the votes to pass reform without Stupak’s assent. But reform’s popularity had slipped, and, a day before the vote, Pelosi still didn’t have 218. As the Post’s Ceci Connolly has reported, Pelosi held a series of conferences with the Stupak group and the women of the Democratic caucus. Eventually, she confronted the women with the grim reality: She had to make the deal with Stupak or reform would fail. Pelosi teared up at the meeting, and, that night, Rules Committee Chair Louise Slaughter skipped her own committee hearing rather than be present for the insertion of the Stupak language.

With the abortion deal in place, the daylong House debate played out as ritual—with members giving short, canned speeches. Late into the evening, the House passed the reform bill with 220 yes votes, including Republican Ahn “Joseph” Cao, who’d switched to yes after the Stupak compromise. Staff would later say Pelosi had a handful of extra votes in her pocket if she needed them.

 

Over in the Senate, liberals were just as angry—and they focused their efforts on the public option. All year long, the administration had sent mixed signals: Obama would say he supported the idea, but he stopped short of calling it a make-or-break issue. Privately, aides readily conceded the idea had little chance of passing—and many figured that Reid would simply drop the public option on his own, when he blended the Finance and HELP bills. But, in late October, Reid made clear during a White House meeting that he had no such intention. Liberals were already seething over sops to the right Baucus had made; if Reid compounded the problem by eliminating the public plan, they might bolt.

According to sources familiar with the conversation, the president merely listened and asked pointed questions. As Jonathan Alter recounts in his new book, The Promise, Obama was skeptical: “Obama was on record favoring a public option, but his first priority was a bill. And he still thought the best way was to win over Snowe.” But Reid said he knew his caucus: His was the best way to 60.

Snowe was unhappy—as much with the process as the outcome, according to people familiar with her thinking. Baucus had courted the famously deliberative Maine senator carefully, talking with her for hours about every last item on her long list of concerns. The administration had also blanketed her with attention. Obama hosted her in the Oval Office multiple times. Peter Orszag even had dinner with her while traveling in Maine. But patient, casual conversation is not Reid’s style. He likes to get down to business, and, when he’s through, he moves on quickly. He’s been known to hang up the phone abruptly when he finishes a conversation, without bothering to say goodbye. When Reid prepared to release the merged bill, Snowe felt like she was no longer part of the process. But even those within the administration who had defended the pursuit of Snowe had grown weary of negotiating with her. During the Finance markup, Baucus had addressed nearly every one of her concerns, but he didn’t learn until the day of the vote that she would support the bill. Obama and Reid had gone through her latest list—and were amenable to most of it. But, again, Snowe wouldn’t commit. Had Reid waited, many say, he’d still be waiting now.

Instead, Reid focused on the centrists in his own caucus—picking them off one at a time until he got to Joe Lieberman, who had made clear he wouldn’t support a public option. After a maddening back-and-forth in search of a compromise, during which Reid felt double-crossed by Lieberman, Reid finally shelved the public option once and for all—but only after Lieberman promised to vote yes. That left Nelson, with whom negotiations were far more straightforward. Nelson gave Reid a list of “concerns.” Reid, working with the White House, quickly approved several of them, including higher Medicaid payments for Nebraska. No other state would get such treatment, but, Reid figured, that’s how bills get through Congress.

After Republicans abandoned a plan to stall during the voting process, Reid called the final vote around 7 a.m., the morning before Christmas. Reid, exhausted from his marathon negotiating sessions, accidentally voted no before voting yes and collapsing into his chair. The ailing Robert Byrd of West Virginia, wheeled in for the occasion, announced he was voting yes “for his friend Ted Kennedy”—while Kennedy’s widow Vicki watched from the gallery.

Around Washington, Democrats celebrated—and made plans to cut short long-scheduled vacations, so that they could start the final negotiations between the House and Senate. Rahm Emanuel checked in with the president, assuming he would sign off on that timeline. No, Obama said. Everybody is exhausted and that’s not conducive to negotiation. Wait until after New Year’s.

Mass. Panic

 

Nancy Pelosi was in the Old Executive Office Building when one of her advisers gave her a message: Obama wanted her next door, in the White House. Martha Coakley was about to lose the election for Ted Kennedy’s old seat and, with it, the Democrats’ filibuster-proof majority. Obama had summoned Harry Reid, too, and together they discussed options. Exactly who said what depends on who’s telling the story, but a few things seem clear: They all wanted to keep pursuing comprehensive reform, but they couldn’t agree on how. And they were all frustrated—with the political situation and, increasingly, with each other.

It didn’t help that the original negotiations over merging the House and Senate bills had left nerves frayed. From afar, the bills looked similar: They had the same basic structure, the same basic scope, and the same kind of regulations. But, up close, their differences, starting with the choices for raising money, looked a lot bigger—and Pelosi, speaking for a caucus that already felt bloodied, hated giving every inch. Obama had personally taken charge of the negotiations, hauling everybody into the West Wing: “The president understood the issues better than many if not most House and Senate members,” said an impressed Henry Waxman. But, at one point, he got so exasperated he got up and left the room, leaving Rahm to knock some heads.

The House and Senate were close to agreement when the Massachusetts special election interceded. By the time Obama was on his way to Boston in a last-ditch effort to change the outcome, his advisers had started talking about contingencies. But the election was more devastating than they had feared, the reaction among Capitol Hill Democrats even more panicked. On the night of the election, prominent House Democrats Barney Frank and Anthony Weiner told MSNBC they thought health care reform was effectively dead. According to senior Democratic aides, Pelosi figured that Massachusetts left her with a core of only about 180 Democrats sure to vote with her. She’d have to pick up the rest from a group that was divided among themselves.

One of Pelosi’s first moves was an appeal for calm. Take a breath, she told her members, and don’t say anything publicly that might set off a stampede. In caucus meetings, she listened—and then, ever so slowly, she started to push. “After Massachusetts, there was a big Democratic caucus, everybody was trashing health care, and you left the room thinking, ‘This is just never going to happen,’” one senior Democratic aide recalls. “And then, the next caucus, she’s talking about how we’re going to do it. ... I thought there was no way in hell.”

But, if Pelosi projected confidence, she had a major worry: Back at the White House, a debate over whether to proceed with comprehensive reform was playing out one more time. Rahm Emanuel was, once again, proposing to find a quick deal on a smaller bill that would insure just kids. And he wasn’t just talking it up internally. He’d discussed the idea with members of Congress, and, in February, The Wall Street Journal published a story about it. Whether Rahm was merely exploring the option or actively shopping it, Pelosi thought all the talk of an “eensy weensy bill,” as she called it, was undermining her efforts. She told the administration she needed Rahm to cease and desist.

 

The internal debate was no secret at the White House, and, particularly in the first two weeks after Massachusetts, many administration officials assumed that health reform really was “Dead, DEAD DEAD,” as one put it to me in an e-mail. Officials also had their own frustrations with Pelosi: Once the smoke had cleared, all sides realized the only way forward was to have the House pass the Senate bill, and then amend the Senate bill using the reconciliation process. But Pelosi kept insisting the Senate go first, something administration officials thought unworkable as politics and policy. Pelosi had asked Obama and Reid not to pressure her publicly, lest they alienate more members; they were complying. But, privately, many administration officials feared Pelosi wouldn’t budge because she couldn’t—that votes in the House would never materialize.

But, every time this debate reached the Oval Office, the president came down in the same place: He was elected to do the big things, and he wasn’t ready to give up. He told his cabinet, apparently referring to a Tom Toles cartoon in The Washington Post, that they were on the two-yard line—and he didn’t want to settle for a field goal. At a town-hall meeting, he gave an unscripted, 20-minute soliloquy on the importance of reform; at a House Republican retreat in Baltimore, he showcased Republican obstructionism and demonstrated the deep, intricate knowledge of policy that he memorably lacked three years before, at that Las Vegas SEIU forum.

The Baltimore session went so well he called for another, more formal summit—with Democrats and Republicans. At that event, which took place at Blair House in late February, the Republicans acquitted themselves far better. But the summit itself was less important than the time it bought. “It just froze the game,” says John Podesta, president of the Center for American Progress. “Everybody just decided, ‘OK, let’s see what happens a month from now [at the summit].’ It stopped people from jumping ship.” (It also gave reformers a chance to publicize news about huge premium hikes by California’s WellPoint insurance.) Pelosi used the time to work on her members, while House staff—coordinating with their White House and Senate counterparts—quietly figured out how to write a bill that would fix the Senate package within the intricate rules of reconciliation. Reid worked his caucus, urging them to give Pelosi time and making sure 51 members would be ready to approve the reconciliation bill when the time came. 

There were familiar political hurdles, like the tax on benefits, which had become the critical piece for winning CBO validation of cost control. Obama agreed to scale it back, and then told the unions they'd have to take it. In the end, once again, it came down to abortion, because the Senate’s language was less restrictive than what Stupak had won. John Dingell reminded Stupak, to whom he’d been a mentor, how important reform was. Stupak relented, accepting an executive order that merely affirmed existing bans on taxpayer-funded abortions. By this time, House leadership and the White House were working as a team. Insiders from both camps observed that Obama and Pelosi seemed to be reinforcing one another—and, together, conjuring up a political miracle. 

The final weekend played out like a microcosm of the debate: Conservative protesters descended upon Capitol Hill, marching on the lawn and through the House office buildings, hurling racial and homophobic epithets, and—in one case—saliva at Democrats. But the Democrats responded by closing ranks. When Pelosi gave her closing speech, the entire caucus rose in ovation. “We will be joining those who established Social Security, Medicare, and now, tonight, health care for all Americans,” she proclaimed. As Kathleen Sebelius, secretary of health and human services, watched from the speaker’s box and, nearby, Nancy-Ann DeParle hoisted her son onto her lap, electronic scoreboards tracked the vote—214, 215, and, finally, 216. A spontaneous cheer erupted from the House floor: “Yes we can! Yes we can!”

What Change Looks Like

 

Back at theWhite House, Obama watched the results with staff, exchanging hugs and high fives when it was all over. In a press conference just before midnight, he announced, “This is what change looks like.”

To plenty of Americans, that was precisely the problem. The process of passing the law seemed ugly—there was plenty of “business as usual”—and the final product has flaws, too. The new law will not cover everybody, and, in the near future, neither the government nor the country will be spending less money on medical care. But it will mean insurance coverage for an additional 32 million people, as well as more reliable coverage for people who already have it. The extra spending it will require is a rounding error, and, within a few years, health care costs will be rising more slowly than they would have otherwise. History shows that, over time, we tend to make these laws better—by amending them with new legislation and strengthening them with regulation, something the Obama administration has already begun. As Senator Tom Harkin memorably put it in December, health care reform isn’t a mansion. It’s a starter home, with a solid foundation, a strong roof, and room for expansion.

The basis for the law is the idea that everybody should be able to get the medical care they need without enduring financial calamity—and that government must act, aggressively, to make that happen. Conservative opposition to this says more about the right than it does about health reform. The Affordable Care Act’s intellectual lineage includes strong conservative influences; its coverage scheme is virtually identical to the one in Massachusetts,which, at the time, a Republican governor and conservative intellectuals supported. Liberals, of course, wish health care reform were more liberal—that, if it couldn’t be single-payer, then at least it could be bigger, stronger, and have a public option. As the argument goes, if only Obama, Pelosi, and Reid had pushed harder—if only they hadn’t made so many compromises—the bill would be better. But, as sympathetic as I am to that argument on substance, I’m skeptical that, with a different set of decisions, the Democrats could have produced a substantially better law.

Some of this is because of things I learned, or at least came to appreciate, only recently. Take the role of Max Baucus. Of the key players in this debate, Baucus is probably the one most singularly responsible for pushing legislation to the right. But insiders, even those critical of him, will tell you that his early commitment to comprehensive reform—and his subsequent refusal to back off, even after setbacks—made enactment possible. It’s frustrating that conservatives hold so much sway over legislation, particularly when they deploy hypocrisy, demagoguery, and dishonesty. But the institutional constraints on legislation—the technical challenges of reconciliation, the accounting standards of the CBO, the nature of campaign finance—make the enactment of sweeping legislation nightmarishly difficult. Liberals frustrated with the Affordable Care Act’s final shape ought to concentrate on changing those facts of political life, by reforming institutions of government, starting with the filibuster, and building the kind of grassroots movement that can dilute the awesome power of money in politics.

None of which is to say Democratic leaders didn’t make mistakes—or approve trade-offs many of us will question for years to come. But that’s a lot easier to say in hindsight. “People like to second-guess,” says Neera Tanden, who was an adviser to Sebelius, “but, at the time, with the information we had, almost every controversial decision was a series of hard calls—fifty-five percent to forty-five percent at best.”

What’s most important to remember about the Democratic leaders is that they took on health care reform when the conventional wisdom said it was too politically risky—and then stuck with it when the conventional wisdom said it was time to give up. Particularly at the end, after Scott Brown, Reid could have said the Senate Democrats were through voting on health care, because that’s what much of his caucus was saying. Pelosi could have said the votes in the House just weren’t there, because, by all accounts, they weren’t. Obama could have said the country and most of the party just wanted to move on, because that’s what the country and most of the party was saying.

But Obama, Reid, and Pelosi didn’t say any of those things. They pushed ahead. And, whether it was because of idealism, ego, a political hunch, or some combination, they got the job done. They inherited a crusade that liberals launched in the early twentieth century and carried it to completion—transforming life for tens of millions of Americans, reorganizing the most dysfunctional part of the U.S. economy, and proving that the United States can at least make a serious effort to solve its biggest problems. They were lucky, yes. They were also good.

Jonathan Cohn is a senior editor of The New Republic.  

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