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Surgical Prep

If you believe what the pundits are saying, enacting universal health insurance in the next year won't be difficult: It will be impossible. As the argument goes, it would cost too much money, antagonize too many interest groups, and--given the difficulty of finding 60 votes in the Senate--require too much raw political muscle. Even before Barack Obama won the election, allies were advising him to stay far away from major health care legislation, lest he fail as miserably as Bill Clinton did when he famously tried for universal coverage back in 1994. As one anonymous Democratic senator recently told New York magazine, "Health care is a quagmire."

But not everybody thinks 2009 has to be a repeat of 1994. Since June, staff members from three key Senate committees--Budget, Finance, and Health, Education, Labor, and Pensions--have been meeting regularly to map out a health care strategy for the coming year. They've formed three working groups: one focused on expanding insurance coverage, one focused on improving the system's functioning, and one focused on financing a new initiative. They've also been meeting with officials representing almost every key stakeholder involved in the health care debate, from doctors to insurers to consumer advocates to employers. The goal of these meetings has been to develop a common vision among Senate Democrats for what universal health care should look like--and how to pass it. Although the discussions still have a ways to go, a rough consensus is starting to take shape.

According to multiple participants in the process, the final proposal will probably resemble the initiative Obama touted on the campaign trail. People who like their insurance could keep it; others could buy coverage through a cooperative, like the one federal employees use, in which insurers couldn't exclude people with pre-existing conditions. There would be subsidies, so that everybody could afford a plan, plus serious efforts to restrain future growth in health spending so that the actual price of insurance would start to come down.

Agreement is also emerging over a roll-out strategy. It would kick off as early as this month, when Max Baucus--whose reputation for bipartisan compromise makes him an unlikely vessel for liberal ambition--introduces a white paper outlining reform options for universal coverage. Afterward, if all goes well, he and Ted Kennedy--who helped drive the process from Massachusetts, where he is receiving treatment for brain cancer--will craft a full-fledged bill. The idea, according to a senior staffer, would be to introduce the measure early next year, after the inauguration: "We intend to push for health care out of the box," the staffer says.

Of course, drafting a proposal is relatively easy. Passing one--well, that's another story. But Baucus himself confirms what staffers have been saying for months: Assuming Senate Democrats can find some common ground on reform, they would consider using the budget reconciliation process to enact it.

This is a crucial development. The rules of reconciliation limit debate, restrict amendments, and prohibit filibusters. It's the one time a simple majority of 50-plus-one votes--rather than the 60 it takes to break a filibuster--can definitively pass legislation. It's a brass-knuckles way to move legislation and, as such, nobody's first choice. But, if the Republicans won't negotiate, Baucus has told me, the Democrats might have to use it. "My first preference is always to work together with my [Republican] colleagues to get legislation done," Baucus says. "When that's not possible, I'll find another way."

None of this makes universal coverage a done deal. The emerging consensus over principles and strategy could still break down over details, such as how to pay for the subsidies or whether to create a new public insurance program, modeled on Medicare, into which anybody could enroll. Baucus and Kennedy would also have to find common ground with colleagues who are supporting an alternative, bipartisan bill Oregon Democrat Ron Wyden has spent the last two years promoting. And that's just in the Senate. Over in the House, discussions are more embryonic and scattered; although traditional champions of reform like John Dingell, Pete Stark, and Henry Waxman are ready to go, Nancy Pelosi and her leadership team may not be.

But Obama can push them, and he would be well advised to do so. Notwithstanding all the knee-jerk pessimism, the environment for health care reform is a lot more favorable than it was in 1994. And, while taking on health reform in the first year would still pose political risks for the Obama administration, so would delaying it.

One reason the specter of 1994 looms so large is the memory of all the trouble Clinton had trying to make his health care proposal pay for itself--a challenge that Obama and his allies must also overcome. But what those who fear reform forget is the key role the Congressional Budget Office (CBO) played in that drama--and the fact that it's not likely to play the same role this time.

CBO is Washington's official scorekeeper for legislation. Using economic models, CBO predicts the cost or savings that any new proposal will generate. Congress then uses those figures as the baseline for debate. In 1994, CBO was run by an economist named Robert Reischauer. Although smart and well-respected, Reischauer had little faith in claims that the Clinton plan could generate savings--and little patience for working out better alternatives. "[Reischauer] was like your law professor," says one staffer. "You gave him your homework and sat there biting your nails, waiting for the grade to come back."

Today, CBO is under the management of Peter Orszag, an economist whose obsession with health care is the stuff of wonkish legend. Convinced that skyrocketing medical expenses will eventually drag down the country's living standards, he's called for comprehensive reform and consulted with lawmakers as they try to craft workable packages. He's no pushover. But, when Wyden submitted his bill earlier this year, CBO concluded that the proposal would eventually pay for itself--a pretty clear signal that Orszag won't be reprising Reischauer's role if he gets the chance to weigh in on comprehensive reform this year.

CBO isn't the only player in the debate likely to be more constructive than it was in 1994. Groups like the National Federation of Independent Businesses, which played a key role in undermining the Clinton initiative, have been talking up reform this time around, introducing their own schemes and approaching lawmakers with an open mind. (Representatives of another lobbying group recently told me, "If we're not at the table, we'll be on the menu.") Perhaps more significant, during this year's campaign they didn't spend heavily to defeat pro-reform Democrats. In fact, health care industry groups gave more money to Democrats this cycle than to Republicans--a sign that, for now, they want to exert influence from the inside.

To be sure, industry's influence is a mixed blessing at best; drug-makers and insurers could very easily undermine reform from within. But, to do that, they'll have to fight reform's allies, who are off to a conspicuously early start. During the Clintoncare fight, labor and other would-be allies didn't engage until very late in the game, after the measure's defeat was all but certain. (Labor had spent most of 1993 fighting Clinton over the North American Free Trade Agreement.) This time, the allies didn't even wait for the election. Over the past year, both the Service Employees International Union and Health Care for America Now, a newly formed advocacy group, have been running campaigns that, together, will pour tens of millions of dollars into advertising, education, and grassroots organizing. These groups aren't fighting for just any old form of universal coverage. They're after something similar to what Democrats have in mind. Reinforcing these efforts are campaigns by such groups as the American Medical Association, aarp, and American Cancer Society. These campaigns have raised the visibility of health care while endorsing the principle of universal coverage, if not any specific variety of it.

But it's more than new money these groups are bringing to the table. It's also a new attitude. It's easy to forget now, but in the run-up to the Clinton fight most of Washington--indeed, most of the United States--thought health care reform was inevitable. Pro-reform interest groups approached the debate in the same way, focusing relentlessly on their narrow interests. This time around, nobody takes reform for granted. "Groups are coming in with less of an attitude that it's our way or no way," says one staffer who's been present for some of the discussions. "What we're getting from these stakeholders is, we want something to happen, we know you won't do it just the way we recommend, but we want to be positive and we to be there with you."

Not coincidentally, the same attitude seems to be prevailing among members of Congress. In 1994, reformers were fervent but seemed unable to agree on what reform should be. A sizable block wanted to create a single-payer, government- run system; another group favored a system based on private insurance, like the Clintons were proposing; a third group didn't even want to pursue universal coverage. This time around, many traditional single-payer proponents have indicated they could get behind a proposal like Obama's because it would at least offer people the option of a government-run plan and, perhaps, evolve into a single-payer system someday. Meanwhile, the bill attracting centrist interest, Wyden's, is far more ambitious than its 1994 counterparts. Among other things, it would cover virtually everybody right away, something even Obama's own proposal wouldn't accomplish.

It's easy to see how the emerging consensus could break down as the congressional Democrats settle on details. Asking businesses to contribute more money toward the cost of their workers' insurance or changing the regulations that allow large employers to set benefits however they choose would antagonize many industry groups. Reducing the tax subsidy for generous insurance plans would alienate some unions. Creating a public plan would be a deal-breaker for insurers, who think it could drive them out of business. Subjecting new treatments to strict tests for cost-effectiveness would rankle drug and device makers. And so on. Including most or all of these provisions in reform could stir up opposition or disappoint supporters, producing a dynamic similar to the one that ultimately undid the Clinton plan.

But that's no reason for Obama to think small. More expansive bills give sponsors more opportunities to trade component pieces as part of the negotiation process. (Rahm Emanuel, the shrewd House member who may become Obama's chief of staff, has been known to make this very argument.) Bigger proposals also tend to generate more enthusiasm, an essential prerequisite for passage. As one veteran health care strategist notes, "With incremental measures, nobody cares enough to push it, and it's easier to kill things people don't want."

Obama and his allies also need to realize that delaying action on health care is a gamble of its own. People tend to forget that Clinton didn't talk about health care that much during his first presidential campaign. He didn't even sketch out his vision for reform until less than two months before Election Day (and even then it was vague). Obama, by contrast, laid out his reform proposal more than 17 months ago, when the Democratic primary campaign was just getting started. As a result, he's talked about health care a great deal--and in explicit terms. He's vowed to deliver universal coverage, or something approximating it, by the end of his first term. And, in recent weeks, he's indicated very clearly that health care was among his top three priorities. If he fails to deliver on that promise, voters will notice--and judge him harshly for it.

The good news is that all the talk about health care has put Obama in a perfect position to push it. He can legitimately claim his election is a mandate for that change. No, health care reform didn't work in 1994. That doesn't mean it can't work this time around.

This article originally ran in the November 19, 2008 issue of the magazine.