Bart Mongoven is an analyst with Austin-based Stratfor.com and the author of the Stratfor Public Policy Intelligence Report. In this piece he examines the obstacles facing the Schwarzenegger health care plan on the national and local levels and reaches a contrarian conclusion — the proposal is likely to succeed after a major fight with special interests. Mongroven predicts “a victory within the year” for Schwarzenegger, a bold claim that if true will clearly have major national implications. If you’re unfamiliar with their work, Stratfor is the private corporate intelligence firm founded by political scientist Dr. George Friedman. While most of the firm’s work focuses on national security and foreign policy issues, its analysts also track domestic policy issues — as in this case. You may not agree with Mongoven’s conclusions, but his analysis is insightful and his arguments well worth noting. The piece remains copyright Stratfor.com of course. — John Irvine
California Gov. Arnold Schwarzenegger outlined a proposal Jan. 8 for a massive overhaul of California’s healthcare system. In his State of the State speech, the Republican governor only lightly touched on the core elements of the ambitious plan. But as even a few details of his proposal have become known, controversy has begun to roil.
At present, just about no one in California seems happy with the proposal. The California Chamber of Commerce has called it a tax on employers. The California Nurses Association condemned it as a gift to big business. Conservatives call it socialized medicine. Liberals say the pro-health-insurer GOP has co-opted the proposal.
National interest groups, meanwhile, have been silent. The voices of business — the U.S. Chamber of Commerce and the National Federation of Independent Businesses — have not issued press releases either supporting or criticizing the proposal. National labor organizations are not issuing press releases, and neither are healthcare advocacy organizations, like the AARP or Families USA. On the surface, a number of reasons explain why the national organizations have left this battle to state lobbyists in Sacramento.
Most observers in Sacramento agree that the proposal, in some form, will pass through the legislature in 2007. The current state of the healthcare issue in the United States strongly suggests that what is happening in California will emerge as the basis for national policy. With this being likely, it soon will become untenable for national-level players to allow the California debate to remain isolated. Some of the major national special interests therefore will find an advantage in establishing the California debate as the foundation for a national discussion.
Schwarzenegger’s Proposal
In his address, Schwarzenegger described a plan that would guarantee every Californian — legal resident or not — a baseline of medical coverage in many ways similar to the measure Massachusetts passed in 2006.
The governor’s plan would require uninsured citizens to purchase healthcare coverage, the cost of which would be shared between individuals, employers, the government and the healthcare industry. Companies with 10 or more employees would be required to provide health coverage or to pay 4 percent of their payroll to a government health coverage fund. The plan would represent significant progress on covering the nearly 20 percent of Californians who are uninsured and who currently tend to receive some emergency treatment, the costs of which are not well accounted for. The plan also includes “Healthy Actions” benefits to promote healthy behaviors.
Schwarzenegger’s plan does not represent a significant step toward restructuring the ways in which medical services are priced or the extent to which customers share in the burden of that pricing. This leaves employers with several large areas still requiring creative solutions at the state or federal level.
The governor’s proposal raises the question of what will get modified and how these changes will play out. Opposition to the current proposal runs quite deep. The state Republican Party has opposed the introduction of such measures for almost a decade; it now finds itself fighting a popular Republican governor on the issue. The California Chamber of Commerce has argued the proposal is essentially an additional employment tax that will harm business and employment in the state. Physicians oppose the long range of controls that the proposal will place upon them. The California Nurses Association, for its part, has argued that the bill is a gift to the health insurance industry and still does not reflect patients’ best interests. The state Democratic Party has expressed concern that the proposal will not provide adequate coverage across the board. And because the proposed law would affect any business with more than 10 employees, the small-business lobby is adamantly opposed.
That a proposal can anger so many groups for so many reasons and still be considered very likely to pass shows the stark divide between the public and special interests, and also the degree to which healthcare needs a big fix. All of the special interests with a sizeable stake in the healthcare debate know that the system is no longer effective for any of the participants — patients, insurers, government or businesses — and needs to be changed soon.
None of them, however, wants to be the first to champion a particular plan. And every special interest’s solution to the healthcare system’s problems threatens many or most of the other interests involved. As a result, whoever lays out a comprehensive plan is pilloried, while those doing the attacking need not advocate their own plan. The political debate has devolved to a level where none of the major players is willing to offer anything positive of any substance. Instead, they would rather sit back and defend their interests when others threaten them.
Despite the defensive posture of the special interests, according to observers in Sacramento, Schwarzenegger’s proposal will in all likelihood lead to a plan passed within a year. That the interests are sniping and protecting their own turf while the political machinery creates change around them shows the degree to which playing defense is no longer tenable for the special interests.
An Absence of National Attention
The general strategy in debates like this is for the national lobbies — be it the U.S. Chamber or the AFL-CIO — to invest as much national money as possible, but to stay out of a state battle publicly and allow state affiliates to lead the fight. Keeping out of view is generally a sound strategy. First, it keeps the issue local. The organization avoids the perception of having brought a bunch of hired guns to interfere in a state issue. Staying away also provides the national lobby with wiggle room, meaning it does not have to go on record nationally due to the efforts of one state. Finally, it keeps the national lobbies from having to reveal all their strategies and tactics in one state battle.
This battle is different, however.
It is a political cliche that what happens is California is a preview of what is coming to the country. In many ways, the cliche developed for good reason, since California is a large dynamic state that is also prone to experiment with policy — even though many of its experiments have failed miserably. These failures give the lie to assertions that California moves always provide a preview of federal policymaking, but they do bolster the notion that the states are laboratories for the federal government (and California is clearly among the country’s busiest laboratories).
In the case of healthcare, however, California’s debate is indeed a preview of what will happen at the federal level. Massachusetts debated the issue in 2006, and passed a significant piece of legislation, but the country was not in its present mood and Congress was unlikely to address the issue at the time. Since then, Congress has come into Democratic hands at a time when the public is actively seeking politicians who will tackle healthcare issues.
Most important, however, is the sense that issues relating to healthcare are now on the political front burner. Despite the national lobbying stalemate over healthcare reform, even at the federal level, the question is not whether something will get done in the next three years, but what. The risk at the federal level is of being on the wrong side of the issue completely, which is to say being in a position where the politics are working squarely against your particular interest.
This is where California comes in. In addition to being a policy laboratory, in the case of healthcare California will be a political laboratory. By making everyone angry, Schwarzenegger has shown that his healthcare remedy will not gang up on one villain, placing that single interest at a significant policy disadvantage (like the health insurance industry, which saw former President Bill Clinton’s much-anticipated 1994 healthcare proposal as a strategic threat to its business, fighting it with all its might).
Schwarzenegger, by contrast, has asked everyone to share the pain of making a new system. As far as this approach goes, the key is to make sure the system is sustainable. Thus, in return for the short-term pain associated with adjusting to the new system, the companies, consumers, unions and professionals will find a new economic equilibrium that will not present one interest with continual challenges or the threat of being placed out of business.
If California can develop a system that assuages the worst fears of insurers, employers, hospitals, physicians, unions, moderate Republicans and most Democrats, it will have created a model that can work nationwide. Californians know this. Accordingly, they are astounded that the national political parties and special-interest groups not only have failed to descend upon Sacramento to stake their national position, but in fact are not even talking about it.
Seizing the Initiative
Soon, however, one of the major national players will recognize the stakes, and the opportunity to be on record nationally regarding certain elements of California law. It is only a matter of time before other players begin to view the proposal as, at the very least, setting the stage for action by other states or the federal government. This alone would spur a race among some actors, such as corporations or healthcare providers, to push for a federal version of the plan if it appears that other states are interested in pursuing something that will work against their interests.
While risks certainly exist in taking an early stand in the debate, a lobbying group — be it a trade union, labor union, or consumer association — that does so will set itself apart as dedicated to solving the problems and willing to make sacrifices. It is highly unlikely that any of the interests involved in the healthcare debate will be hurt in the long term by acknowledging what everyone knows — namely, that resolving the U.S. healthcare morass will take sacrifices by many. In return for the risk, the early advocate of a plan will win national attention and a national stage — in the process becoming the good guy.
The most likely candidate for this role is the Service Employees International Union, or the larger Change to Win umbrella of unions. The Change to Win leadership actually crossed a picket line established by AFL-CIO-affiliated unions by taking part in a roundtable discussion with Schwarzenegger on the issue during his 2006 re-election campaign. The California Nurses Association saw the governor’s roundtable as a political ploy to appear concerned about the issue and an attempt to co-opt liberal groups. The Change to Win leadership argued that it did not care whether a Republican or Democrat enacted a strong universal healthcare proposal and that, regardless of who created such a plan, workers would win.
Change to Win has situated itself perfectly to take a stand in this debate. It is within the political fray — it was a major donor to Democratic candidates in 2006 (and strongly endorsed Schwarzenegger’s opponent, Phil Angelides) — but in an attempt to distinguish itself from the AFL-CIO, it also has shown it would rather be clearly effective outside of partisanship.viagra online, levitra online, cialis online, Pharma shop online
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