As I watch the health care debate, it seems pretty clear to me that the progressive side missed a huge opportunity in its tactics – although the word implies that there was something purposeful going on. Progressives for ideological reasons drove a stake in the ground around the issue of a public option, a publicly financed and provided health insurance/health care alternative that is at the core of the progressive sense of what an acceptable health care reform should be. I think this was (1) a failure to see reality; (2) a bad argument; and (3) missed a much larger issue about involvement of the public sector in far more crucial roles.
The public option debate in health care is symptomatic of progressive thinking generally – progressives saw public ownership, financing, and operation as the litmus test for a strong public role. I think that most of these activities are precisely those the public sector shouldn’t do. I want the public sector (1) defining the structure of the market; (2) creating a set of rules which will allow the market to function; and (3) developing a regulatory system that enforces the rules. We have none of this today. I would argue that these activities in health care – which is 17% of GDP – are a much more creative, and productive way to involve the public sector.
The position liberals or progressives took here was an emotional fit rather than a policy. Progressives really wanted a single payer option. But this was never going to happen in the United States in this universe – policy is path-dependent and we were never going to redo the entire path. (But in my view the single payer option would be a disastrous path to take even if it were available.) Therefore Progressives argued for a public option. The honest ones will say that they want to keep the path open for movement to a single payer option, but that isn’t going to happen and maintaining the position has a big opportunity cost. This is the failure to see reality.
Progressives were then driven to a set of arguments in support of a public option that sounded good to them, but made no sense to anyone else. As I have written, how can anyone possibly argue with a straight face that an option with a free cost of capital, a guarantee against failure, and the possible right to use governmental power to force their suppliers – doctors and hospitals – to cut prices was anything even remotely like real competition? These kinds of arguments made progressives feel good when they talked with each other, but accomplished nothing else and have convinced no one. I found myself, for the first time in my life, agreeing with the Wall Street Journal editorial and opinion page on this.
More troublesome to me is the opportunity that was missed to define the market (the exchanges) for health care/insurance; create the rules of the road for that market (for example what set of rules will make it more likely that insurance companies do not risk shift by having some version of pre-existing conditions); and create the regulatory system that will oversee all of this. If progressives had joined with centrist business organizations like, for example, the CED, there is no question that together we could have fundamentally changed American health care for the better. Instead, we will wind up with an extremely disappointing health care reform, one that is severely compromised in every direction, and it is just as much the fault of the left as the right.
I have an even broader problem about how this debate proceeded, and it involves a bigger debate. In the aftermath of the economic/financial debacle we have gone through, there should be a debate about the nature of the capitalist system we want to have. Our core economic system has enormous strengths and has basically delivered for the American people over the whole post-war period. But the last 10 years have also shown some weaknesses that must be addressed. Are progressives going to allow themselves to be part of this debate or are they, once again, going to substitute emotional and psychological fits for policy?
Roosevelt Institute Braintruster Bo Cutter is a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team.