Why Was the Health Reform Endgame So Difficult? Ask Ken Arrow.
Certainly now that health reform has been signed into law, most of us are looking toward the future, focusing on the daunting task of implementing this major piece of legislation—perhaps the most significant and wide-reaching piece of social legislation to pass in the last several decades. But before we entirely move on from the brutal legislative debate, it may be worth looking back at the bill’s path to passage to learn what it can teach us about legislative theory and highly polarizing legislation.
We know it took about 100 years to pass universal health coverage in the U.S. despite attempts by eight presidents to pass such legislation. We also know that the legislation barely passed this time after being on life support for many months. When it did finally pass, it did so by a thin margin, despite the fact that the president’s party controlled Congress by comfortable margins in both chambers. Why was it not easy to pass the legislation this time?
This week’s post is the third in our five-part series “Viewpoints: Health Economics.” This series of posts from invited authors will examine issues in health economics and health policy following the passage of health reform. Watch for the final two pieces in the coming weeks.
The literature on health policy posits that major health reform, especially universal coverage, has historically been difficult if not impossible to pass because of intractable special-interest opposition. An alternative explanation is that our country is very polarized ideologically and this has made it impossible to find a consensus. It is my contention that ideological polarization explains why health policy is so hard to alter in the U.S. and why health reform has been derailed in the past—and would have been derailed this time were it not for brilliant political maneuvering by the president, the speaker of the House, and the Senate majority leader.
To understand how this bill became law, we should begin by considering how President Barack Obama approached the debate. Early in his presidency, and even before the Congress started working on the legislation, Obama had gone to most of the major interest groups that had derailed health reform in the past and made political deals with them, ensuring their support of health reform, or at least their promise to stand on the sidelines and not oppose it. For example, the insurance companies agreed to a deal to accept major regulation of their business and, in turn, were given a major increase in their business (through the private health insurance exchanges). Major physician’s interest groups (especially the American Medical Association) agreed to support the legislation with the hope that they would be relieved of uncompensated care but also have a “doctor fix” for the Medicare payment problem. Hospitals agreed to accept Medicare payment reductions, knowing that the decrease in the uninsured would reduce their uncompensated care.
All of this suggests that interest group opposition was minimal in the debate; indeed, there was very little organized opposition from the groups that have stood in the path of health reform in the past. Yet even with the decks cleared of traditional opposition groups, health reform only narrowly passed. Why? Clearly, ideological opposition to the legislation was intense, almost immediately. The Republicans were largely completely opposed initially, and the few who were negotiating for a compromise gave up on the negotiations by mid-summer 2009. This alone cannot explain the difficulty in passing health reform, because the Democrats had a filibuster-proof majority in the Senate with 60 votes and a large majority in the House: 256 to 178. They simply did not need any Republican support (and indeed, really did not get any).
To understand why reform still proved so difficult, we can turn to the “median voter” model, made famous by economists and political scientists. Also, to understand why it had been impossible until 2010 to pass health reform legislation, we should look to Ken Arrow’s famous impossibility theorem.
The median voter model suggests that if we align voters along some ideological spectrum and then align policy proposals across the same spectrum, it will be the median voter who will decide whether the legislation passes. For example, if we aligned the members of Congress from most liberal to most conservative on health policy, it would be the 218th member who would decide whether a piece of health legislation passed or not.
So, if we aligned the House of Representatives from left to right, how would this work? For simplicity and illustrative purposes, we might conclude that Dennis Kucinich (D-Ohio), who favored a single-payer system, is the most left-wing member of the House and, for sake of argument, Paul Ryan (R-Wis.), who favored a very market-based solution to health reform, represents the far right on health care policy. Who, then, lies in the middle as the mythical “median” voter?
Looking at one set of voting rankings for illustrative purposes—the Americans for Democratic Action—we find that the following Democratic members make up the median voters from 211 to 223: Allan Mollohan (D-W.V.), Nick Rahall (D-W.V.), Suzanne Kosmas (D-Fla.), Bill Foster (D-Ill.), Ben Chandler (D-Ky.), Erik Massa (D-N.Y.), Charlie Wilson (D-Ohio), Zack Space (D-Ohio), Kurt Schrader (D-Ore.), Allen Boyd (D-Fla.), John Barrow (D-Ga.), Baron Hill (D-Ga.), and Bart Stupak (D-Mich.). Note that Stupak was the leader of a conservative, anti-abortion group that held out until the last minute. Of the House members ranked more liberal than Stupak, eight in this group ended up voting “no” on the legislation, meaning that obtaining all votes up to Stupak still would not obtain a majority of 218 votes, requiring the Democrats to reach beyond Stupak for more votes.
Although this simple majority voting model seems to have suggested one path to victory, the problems facing health reform are much more complicated than this, into which Arrow provided insights in his groundbreaking work many years ago. To put it simply, the problem occurs if voters do not have “single-peaked preferences.” Consider the case where we’d introduce a very liberal piece of legislation, such as a proposal for a single-payer health care system. This might garner the support of the most liberal 100 members of the House or so, being those with the 100 percent ADA voting record, but this legislation would have little support and would fail 100 to 335.
To gain passage, we start moving this legislation to the right politically with factors that will help attract a more conservative voter, such as requiring individuals to buy insurance from private insurers. At the same time, we keep the liberals on board with a sweetener like President Obama’s “public option.” This effort might deliver 100 more votes, but that still leaves us without a majority. Now we strip out the public option to attract more conservative voters. This causes some liberals to vote “no,” since they no longer think the legislation is worth supporting. Here we see in action the classic case of “double-peaked preferences” as described by Arrow, which result in no equilibrium of the voting process.
Coming back to the real world, it’s easy to see where such dilemmas left health care reform’s prospects for passage. Without the public option, and with the draft bill then on the table in March, liberals led by Kucinich refused to support the legislation until the last minute. On the right wing of the Democratic Party, fiscal conservatives would not support legislation with a public option or legislation with a perception that it might provide public funding for abortion. Strip out the public option and adopt the Stupak language on abortion, and the Democrats would lose the liberal votes needed for passage. Don’t do these things, and the legislation would still lose.
This very scenario is what hampered the prospect for passage of health reform legislation for years. Brady and Buckley (1995) argue that this is why the Clinton plan failed in 1993¬–1994. When Clinton moved his legislation to the right to gain moderate Republican votes, he then lost some of his liberal support.
Despite a similar situation, Obama was able to overcome these hurdles and achieve final passage largely due to some last-minute deals and the quirks of fate. It is clear from the contemporary stories of the debate that a key event was Kucinich’s trip on Air Force One with Obama, after which he declared his support for the bill and signaled to his liberal colleagues that they should support the legislation, too. In the last minutes of the debate, the president cut a deal with Stupak on abortion, bringing with him a few more votes from conservative Democratic holdouts.
It would appear that it was these two deals that broke the decades-long logjam on the road to health reform. Why is it that voters like Kucinich and Stupak decided at the last minute to change their minds and support the legislation, reversing the problem predicted by the double-peaked preferences that Arrow described in his famous article? It is difficult to know, but contemporary press accounts suggest that Democrats made these decisions because they perceived that the failure of health reform was worse for their party than the legislation itself. Ultimately, however, it will be left to historians to explain why Kucinich and Stupak reversed course and agreed to support the legislations.
A similar story could be told about how the president, with the help of Senate Majority Leader Harry Reid, broke the logjam in the Senate by securing the last few moderate votes to obtain his 60th vote needed for passage. The deals made there to obtain the votes of Senator Ben Nelson (D-Neb.) and others became legendary—and very controversial—but it is clear that without them, Reid would not have been able to pass the legislation in the Senate.
In the few months since the passage of the health reform legislation, much attention has been paid to how complicated and confusing the legislation is, how controversial it remains, and how the public still has not warmed to it. But in this heavily polarized environment, it is all the more remarkable that President Obama and the Democratic leaders in Congress were able to break the centuries-old block on health policy that has made it impossible to pass health reform. When history is written, it will be shown that these leaders succeeded because they found a way to get around historical interest group opposition as well as a nearly intractable ideological logjam.
Americans for Democratic Action. (2010, spring). 2009 congressional voting record inside. ADA Today, 65(1).
2009 Congressional Voting Record Inside
Arrow, K.J. (1950). A difficulty in the concept of social welfare. Journal of Political Economy, 58(4), 328-346.
Brady, D., & Buckley, K. (1995). Health reform in the 103rd Congress: A predictable failure. Journal of Health Politics, Policy, and Law, 20(2), 447-454.
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