Healthcare deadlock shows difficulty of defining the government’s role

WASHINGTON —  When the year began, the expectation was that the new Democratic-led Congress and President Bush would make some headway on the problem many voters placed at the top of the nation’s domestic agenda -- healthcare for the uninsured and rising medical costs that are squeezing the middle class.

Instead, lawmakers fell back into the old pattern of harsh partisan rhetoric and stalemate. Congress and the president could not even agree on expanding a popular health insurance program for children that was up for renewal.

The failure to act underscores how hard the healthcare problem is to deal with, and it puts the issue squarely in the laps of the presidential candidates in both parties.

The debate over expanding the children’s program uncovered the main fault line in the discussion of broader reforms: how far government should go to help middle-class families struggling to afford healthcare. It also reaffirmed a key political lesson: Major changes can’t get accomplished in a divided government without support from all the key players.

“A lot of people will say, ‘If Congress couldn’t pass legislation with respect to children, how could we possibly go on to a broader effort to fix healthcare?’ ” said Sen. Ron Wyden (D-Ore.). “But I am a contrarian on this issue. I am still confident there is the capacity to deal with healthcare on a broader basis, and both sides can secure what they want most: Democrats making sure everybody gets covered -- because that’s how you rein in costs -- and Republicans being able to say, ‘Look, the government is not running healthcare.’ ”

Though many Americans may not realize it, government is already the dominant player in healthcare, with federal and state expenditures accounting for 47% of the projected $2.3 trillion the nation will spend this year. Indeed, many private insurers follow the lead of the biggest government program, Medicare, in setting coverage policies.

Even if nothing changes, government will pick up more than half the nation’s healthcare tab by 2017. Universal coverage proposals from the leading Democratic presidential candidates would advance that tipping point to 2011, according to a recent analysis by the consulting firm PricewaterhouseCoopers.

Leading Republican healthcare experts acknowledge the trend toward a greater role for government -- indeed, Bush himself accelerated it when he signed the Medicare prescription drug benefit. But some of the GOP experts say the goal now should be to find a balance that preserves private insurance for most Americans workers and their families.

“If we are going to get to broad-based reform, it’s not going to be the model of government paying for most of it,” said health economist Mark McClellan, who served as Bush’s Medicare administrator. “Rather, it’s coverage that would provide help from the government but expect real contributions from individuals, with partial subsidies at higher income levels.”

In the deadlock over the State Children’s Health Insurance Program -- known in California as Healthy Families -- the administration wanted to focus on children in families making about $41,000 for a family of four, or about twice the federal poverty level. Congressional Democrats and some Republicans wanted to allow states to cover kids in families making up to $62,000, or three times the national poverty level.

Raising tobacco taxes to pay for the expansion had widespread support in Congress, although Bush was opposed to it. In its present form, the program covers some 6 million children whose parents earn too much to qualify for Medicaid, but too little to afford private coverage.

Back in the summer, some senior Republicans said they thought a deal was within reach.

Sens. Orrin Hatch of Utah and Charles E. Grassley of Iowa had helped write the Senate version of the bill, a political compromise that won a veto-proof majority in that chamber. Hatch suggested the dispute could be resolved as such things are routinely handled: by splitting the difference. And Grassley calculated that enough House Republicans could be persuaded to support the Senate version to overcome the president’s opposition.

But the politics of the debate became too polarized, with Bush suggesting that one relatively small program for children could put the nation on a slippery slope toward government-run healthcare, and a parade of Democrats lining up to condemn the president as heartless.

Some Republicans blamed House Democratic leaders, who, unlike their Senate counterparts, decided to write a bill without consulting their GOP colleagues. Later, despite last-minute overtures, House Democrats were unable to secure enough Republican backing to override Bush’s veto.

“I think it was an unfortunate lesson for the new leadership, that when you play politics with an important issue it might fall apart in the end,” said Rep. Mary Bono (R-Palm Springs), who broke ranks with her party to vote for the legislation Bush vetoed.

But other observers -- noting the strong support for the children’s program among Senate Republicans -- said the real political problem was division within the GOP.

They suggested the healthcare deadlock parallels the impasse earlier in the year over immigration reform.

“The debacle is not a partisan war between Democrats and Republicans over how to cover children, it’s a civil war within the Republican Party over the role of government and health policy in general,” said economist Len Nichols, director of the healthcare program at the New America Foundation.

“The right of the GOP carried the day because it had just enough votes in the House to sustain a veto. It may reflect the majority position among Republican primary voters, but it’s hard to believe it’s a majority position among the American people.”

This week, unable to override a second Bush veto, Democrats pulled back, announcing they would go for a temporary extension of the program.

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ricardo.alonso-zaldivar@ latimes.com