by Ron Suskind
But, the year one review goes on to state:
The economic team dominated by Larry has too much “rolling dialogue” with POTUS on various economic policy matters, which strengthens Larry’s power to shape policy. Larry on the other hand believes we have not lived up to our representations to him or established his primacy on the economic team. He dismisses the criticism that he doesn’t run “an honest policy process” but rather feels our empowerment of Christie, Peter, Nancy-Ann, Volcker and Carol have complicated his job. To him any deficiency in the economic team is not solved by the addition of new personnel but rather by the establishment of “new rules of the road” that empower him to run the economic team as he sees fit.
Summers, having built capabilities since childhood for never, under any circumstances, admitting error, was once again embracing a writ of infallibility.
Meanwhile, his partner in shaping the administration’s policy/politics calculus, Rahm Emanuel, was everywhere discussing error. Not his own—Emanuel was almost Summers’s peer in never acknowledging a mistake he himself had made. No, it was the president’s error in holding tight to the ideal of comprehensive health care reform, even after the Scott Brown surprise. Brown, after all, gained plenty of support billing himself as the “41st vote against health care reform,” and this in the one state that had a program much like the plans that had been working their ways through Congress.
In a host of stories, Emanuel was cited, often through surrogates or not for attribution, as suggesting—as he had the previous summer—a scaled-back version of health care. Pelosi was vocal in her opposition to this, disparaging the chief of staff as an “incrementalist” while vowing that she would only support sweeping reform and calling his version “kiddie care.”
The coup de grâce was a column by Dana Milbank in the Washington Post on Sunday, February 21, headlined “Why Obama Needs Rahm at the Top.” The column was almost a point-by-point rebuttal to criticisms of Emanuel that had been building inside the White House for a year but were only now—in the past month—starting to sprout up in news reports.
Emanuel later said he didn’t cooperate with the story—a line seconded by Milbank—but Rahm could have hardly written the column better himself, laying out his case that, in Milbank’s words, “Obama’s first year fell apart in large part because he didn’t follow his chief of staff’s advice on crucial matters.” And that “Emanuel is the only person keeping Obama from becoming Jimmy Carter.” Noting that the “earthy and calculating” Rahm was the ideal counterpoint to an “airy and idealistic” Obama, the column listed a host of instances—including the proposal to close the Guantánamo Bay prison and the trial of 9/11 hijacker Khalid Sheikh Mohammed—where Obama erred because he ignored Emanuel’s advice, culminating in “Obama’s greatest mistake” of “failing to listen to Emanuel on health care.” Then Rahm’s “health care lite” position from the previous summer, of going to “a smaller bill with popular items,” like widening coverage for young adults and children, was laid out, including the endgame of how “a politically-popular health care bill would have passed long ago, leaving time for other attractive priorities.” Instead, Milbank noted, “the president disregarded that strategy and sided with Capitol Hill liberals who hoped to ram a larger, less popular bill through Congress with Democratic votes only. The result was, as the world now knows, disastrous.”
Obama, struggling to publicly clarify his own position on health care—and having been just treated, days before, to Rouse’s latest incisive memo—was livid.
He summarily called Emanuel into his office and “really laid him out,” according to one source close to the president who was familiar with the meeting. “The president laced into him along the lines of ‘so tell me again how you’re right and I’m wrong.’ ”
Emanuel was contrite. The president had had words with him before, said a senior official familiar with the matter, “but, always, a few weeks later, it was like they’d never talked. Emanuel was back in his usual form. The president’s view, in general, was, ‘Well, that’s Rahm; he can’t help himself.’ ”
Both men, after all, were under a great deal of pressure—something the president saw as born of extenuating circumstances. Just a few months before, in December, as issues both foreign and domestic crowded in on the White House, and no constituency or interest seemed capable of being satisfied, Obama and Emanuel joked that their fantasy was to someday open a T-shirt stand in Hawaii. And the key to their success, and psychic well-being, would be in limiting choices to only one size and one color. Morning meetings would start with Emanuel saying “white” and Obama, with a smile, responding “medium.” The next day, they’d switch.
But the blow-up in February changed things.
The combination of Emanuel’s public antics and Rouse’s incisive memos seemed to have dislodged Obama, to have bumped him forward into uncharted territory, even if it was just a few steps. Save Rouse and a few others, he was beginning to leave his staff behind.
Emanuel, when asked later about the Milbank column and the follow-up meeting in the Oval Office, didn’t dispute the basic play of events, before noting simply, “I’m not let go.”
“When this history is written, this will be seen as the start of the change,” said a senior aide to Obama. “I think the president realized he needed a new senior staff—that he needed to start taking back ownership of his White House—and, for starters, he’d have to figure something out on health care on his own.”
In a meeting in the Oval Office, Phil Schiliro suggested options for regaining primacy in the health care debate, one of which was a “meet the enemy” strategy. Obama immediately liked the idea. Just as he’d tried to reach back to the campaign for lessons and ways of engaging that might be useful for him as president, he was now reaching back to the early months of his presidency, when so much was possible. He felt that the summits from year one had gone well. Fine, Obama said, let’s try it again, but this time the summit will be a debate. He’d be civil and welcoming as he met the Republicans under hot lights to hash it all out. There was plenty that the two parties agreed about—after all, health care largely comprised what had once been Republican proposals, such as the health exchanges. The areas of differences would be highlighted. It was a way to take control of the debate. A long discussion/debate, like the ones he’d mastered in seminar rooms at law school or community centers on the South Side, was his forte, something he was very good at. His advisers, virtually to a one, were nervous: this could backfire in all sorts of ways.
But desperation had created the seeds for growth. Consensus among his advisers, though desirable, was no longer a prerequisite for action.
On February 22, Obama led the Democratic leaders of both the Senate and the House to Blair House, across from the White House, to meet their opposite numbers in the Republican minority. It went well. Representative Paul Ryan, the rising Wisconsin Republican, and Tennessee’s veteran senator Lamar Alexander made strong efforts for the Republicans, fencing with the president. But Obama was in rare form. When McCain offered an arch comment with a partisan edge, Obama dispatched him: “The campaign’s over, John,” leaving McCain to murmur, “I know it is.” It was, however, a glimpse of Obama as the kind of confident public actor many had not seen since the campaign, this time engaging directly with the Republicans on the substance of the health care debate.
Obama was buoyed coming out of the meeting—his confidence up—and he felt the strength to turn to someone who he knew would be mercilessly honest with him: Nancy Pelosi.
She was. From this point, with so much of the original bill gone, they just had to ram home whatever they could preserve. Giving up, or going back to the drawing board, as Rahm’s plan would have required, could be politically disastrous. If she and Obama just went for it, without reservation, progressives would support them for their ideological clarity, and moderates would join in, simply having nowhere else to go. It would be messy, but politics is messy—by design. You can’t pr
eplay the game, Pelosi urged. Let’s just get on the field and start playing.
“You go through the gate. If the gate’s closed, you go over the fence,” Pelosi said to a group of supporters in San Francisco in late January. “If the fence is too high, we’ll pole-vault in. If that doesn’t work, we’ll parachute in. But we’re going to get health care reform passed for the American people.”
In the ensuing month, that riff had gone viral. Now Obama and Pelosi were working in concert. “I think [Pelosi] is the one who has kept the steel in the president’s back—and I think she represents that to Harry Reid, too,” said Pelosi’s friend, Representative Anna Eshoo.
Shucking off his White House handlers, Obama lunged forward to see what he could salvage. A bloodbath ensued. The only way forward was through the loophole known as reconciliation, a parliamentary mechanism to force matters when budgets need to be passed to stop a government shutdown. The unpalatable Senate bill, which included a slew of infamous backroom deals (the “Cornhusker Kickback,” the “Louisiana Purchase”), would have to be used. With no Republican votes in the Senate, reconciliation allowed Democrats to pass the bill without needing a supermajority. In exchange for safe passage by the House, the Senate adopted amendments to the financing of the bill that required only a simple 51-vote majority.
But there were small skirmishes to be navigated. Bart Stupak led a team of pro-life Democrats in threatening to vote against the bill if it included certain language regarding insurance coverage for abortions.
Pelosi intended to win, at all costs, and began relentlessly culling together votes. On March 12 she dispatched a memo to members of the House caucus saying, “We have to just rip the Band-Aid off and have a vote.”
In the last week, Pelosi needed to wrangle together 68 votes. With a March 21 vote scheduled, she got members, one by one, to make private commitments. Obama started politicking harder. He canceled trips, and called or spoke with each of the 68 undecideds, one phone call after another. Perhaps the most dramatic reversal was Dennis Kucinich, the feisty Ohio progressive who had opposed the bill due to its not including a public option. On March 17, with four days to go, he flew with Obama on Air Force One. After the flight, he announced he would vote for the bill.
It was a watershed moment.
Health care had already been stripped to the bone, a shadow of the once-sweeping comprehensive plans in which reductions on health care costs would pay for the moral might of universal coverage.
After all the madness, it was, in fact, just as Daschle had warned in April of 2009, when he said, “You don’t want to be doing this a year from now.” With no Republicans—as Daschle had also predicted—a stripped-down bill passed the Senate under reconciliation.
After passing the filibuster-proof Senate in December by a margin of 60–39, the bill passed the House on March 21 at midnight, with a vote of 219 to 212. Republicans opposed the legislation in lockstep, denouncing it as socialism, and 34 Democrats joined in voting against it.
Obama called a press conference in the East Room of the White House and delivered his culminating remarks. “After nearly a hundred years of talk and frustration,” he said, referring to the first signature attempt to reform health care by Teddy Roosevelt, “we proved we are still a people capable of doing big things.”
But by the time it passed, almost no one could feel great about it. The process had been so ugly—and the end product so convoluted—that even its fiercest apologists would acknowledge that it was a bill that was only a start.
In Obama’s mind, it didn’t matter. The bill had passed, and not only had he saved face but the bill “would lead,” he’d later say, “to a better system.”
Two days later, on March 23, Obama raised a pen to accomplish something that had flummoxed presidents for generations.
By signing into law the Patient Protection and Affordable Care Act, comprehensive health care reform, he guaranteed access to coverage for millions of uninsured Americans.
The bill promised to expand coverage to thirty million uninsured by providing subsidies to lower- and middle-class Americans while expanding Medicare.
Perhaps the most important aspect of the reform was the “individual mandate,” a component of reform that Obama had vociferously opposed in the primary against Hillary, but had replaced the failed “public option” as the cornerstone of the legislation.
That “mandate” required all Americans to buy insurance—some of whom had voluntarily opted not to—or pay a fine. That stipulation would prove legally problematic down the road, but with the law on the books, Obama had accomplished his goal.
The legislation would be more accurately defined as “insurance” reform than “health care” reform, since the centerpiece was mainly an expansion of the private insurance industry.
The grand ideals of cutting costs while improving care—a promise carried in the Dartmouth data and examples of signature hospitals that had managed this feat by embracing concepts of “comparative effectiveness” and “evidence-based” practice—was left to pilot programs and some new powers accorded to Centers for Medicare & Medicaid Services. CMS, which administered the huge government health programs, had limited authority to use its payments to reward or penalize based on these principles. A prime target of this financial encouragement would be doctors and hospitals that banded together into Accountability Care Organizations, or ACOs, where they could keep the savings resulting from an embrace of “best practices” and related efficiencies in providing care. Of course, it was just a start: the ACOs, in several years, were expected to comprise only 1 percent of overall care.
And so with dignitaries looking on, Obama signed the bill with twenty-two separate pens. He had sacrificed a great deal—some would say too much—but his dream, his “legacy,” was carved onto a hard partisan landscape.
With health care done, Peter Orszag began to think of “when” rather than “if.” When would he leave—how soon and under what terms.
The battle over health care reform, as much as any legislative battle in recent history, had bludgeoned the public discourse so thoroughly that many politicians on both sides of the aisle, as well as everyone in the administration, were simply relieved to have it over.
Orszag would be in that category, even if he was having trouble mustering the enthusiasm that was gushing forth from colleagues in the White House and from many press accounts full of Rooseveltian parallels.
Maybe Orszag was just too close to it. He had come to work for Obama with an almost messianic hope that, finally, comparative effectiveness and efficiencies would bring better health care to America at lower cost, savings that would make universal coverage affordable. Along the way, his beloved federal budget would be saved from its so-called unsustainable future.
The law, at day’s end, relied on projections—and no one knew better than Orszag how hard it was to project a year or two into the future, much less ten or twenty. If thirty-two million of the uninsured, out of nearly forty-six million, ended up with insurance after the law’s full implementation kicked in in 2014, the power of diversified and distributed risk—the miracle, always, of insurance—would help measurably, if modestly, with overall costs.
The law’s newly formed Center for Medicare & Medicaid Innovation, within CMS, would become a vehicle for rewarding best practices in the funding and reimbursement choices made by government for Medicare, Medicaid, and the Children’s Health Insurance Program. If so, there was a chance that some of the efficiencies would take hold. The same was true of the accountability care organizations (ACOs), a rather clumsy term for a network of hospitals and doctors and related health care providers that shared the responsibility in caring for a group—with a minimum set at five thousand Medicare beneficiaries across three years. The key incentive is that those ACOs that saved money, while meeting “quality targets,” got to keep a part of the savings; the idea was that they’d do this by relying more on the overall wellness of their population and focusing on preventative c
are, and less on the expensive and exhaustive testing and procedures that defined the fee-for-service model.
At least that was the concept. But the start would be small. The Department of Health and Human Services estimated that, in the first three years, ACOs could save Medicare as much as $960 million. That would amount to less than 1 percent of Medicare spending.
As for Orszag’s beloved “safe harbors”—where providers who embraced evidence-based, best practices would qualify for lowered insurance rates—and a related provision for the creation of special medical courts? Pilot programs.
Meanwhile, the law’s expansion of coverage was, some critics were already contending, an inverted version of the “starve the beast” concept that far-right Republicans had long embraced: namely, cut taxes, starving the government of revenue, and the ensuing budgetary crisis will force government to make deep cuts and shrink dramatically. Health care reform’s version: the widened government mandate to cover everyone—especially as baby boomers aged, by the thousands per day, into Medicare—would soon enough turn the lack of serious cost controls into an existential budgetary crisis for America. Then something drastic would have to be done. The key: it would be government’s problem to solve. Somehow finding a way to make universal coverage affordable was now on their ledger, an entitlement.
After nearly twenty years in government, and though only forty-one years old, Orszag had lost his appetite for that battle, or for the American government’s ongoing and, it would seem, deepening bouts with budget crises.
And a big one was coming. Since the transition days, he’d warned that if health care reform didn’t dramatically bend the “cost curve,” rising Medicare and Medicaid costs would combine with deficits from the ongoing recession to make the 2010–2011 fiscal year budget a backbreaker.
