Healthcare and Social Security Reform Loom

A divided Congress is likely to pass a stimulus package in the coming weeks. The resulting law will almost certainly be an imperfect construction by imperfect alliances. Further, the effect of the stimulus package will take years to measure and longer to pay back. Despite that prognostication, at least there is a reasonable chance that the bill will have a net positive impact on the economy (this is the deflating reality of governing).

Still, if you thought a trillion-dollar stimulus package was difficult to pass and painful to swallow, then wait for the second large project the Obama administration is considering: either Social Security or healthcare reform. Both efforts require President Obama putting much of his political capital on the line with no guarantee of success. To make matters worse, he is essentially faced with either touching the third rail of American politics or reliving the most traumatic policy failure of the Democratic Party.

Neither option is appealing. Reforming Social Security requires painful choices (reduced benefits, increased taxes, or shorter retirements) with none of the immediate gratification of a stimulus bill. On the other hand, healthcare reform is actually an opportunity to extend a needed benefit to Americans. However, despite the obvious downside, reforming Social Security is perhaps the more attractive task because the fixes are relatively simple (now that privatization is off the table). If the menu of fixing Social Security resembles the hot-food choices at a Little League concession stand, then the suggested options for fixing healthcare resemble the combined menu of every chain restaurant in the country.

It’s also important to remember, healthcare reform is much more than just the crisis of the uninsured. America pays too much for its healthcare and gets too little in return. If more effective ways to control healthcare costs are not found, then the reform efforts will likely collapse under the weight of future federal deficits. There are a few encouraging practices that might lower costs; this week, a study published in the Archives of Internal Medicine found that hospitals with electronic medical records had significantly fewer deaths, complications and medical costs than comparable offline hospitals. Beyond noncontroversial measures like Health IT, there are a diversity of suggested fixes and industry interests, all of which increases the likelihood that Congress — with its all its deliberative powers — will not reach a resolution.

A major legislative failure can be devastating to a presidency. The wounds of the failed Clinton healthcare reform effort are still raw within the Beltway. Perhaps the best course of action is to secure Social Security’s solvency and then pivot off that momentum to push for an incremental healthcare fix, one that covers most of the uninsured (especially children). In the meantime, we can continue to search for more effective and efficient healthcare reforms.

UPDATED: Stephen Pearlstein’s insightful column today about the pharmaceutical industry points out yet another reason for runaway healthcare costs.

The views expressed in this blog do not represent the views or opinions of Generations United.