The rocky road for Obama's health care journey

[September 09, 2009]  WASHINGTON (AP) -- Harry Reid could hardly believe his ears.

The Senate majority leader was in Denver for a mid-August Democratic conference when he heard one of Congress' pivotal negotiators on health care trashing a bill on that very subject.

"You have every right to fear," Republican Sen. Charles Grassley told a raucous citizens' forum in Iowa that day. "We should not have a government program that determines you're going to pull the plug on Grandma."

Grassley's stunning comments made Reid second-guess a decision he and President Barack Obama had reluctantly made months earlier: to give six senators from small states, the so-called Gang of Six, the time and prominence to fashion a bipartisan bill on overhauling the health care system.

In retrospect, it was just one of several risks, missed opportunities and dubious decisions that have forced Obama to schedule a high-stakes address to Congress on Wednesday night in hopes of salvaging his top domestic priority.

A team of Associated Press reporters, interviewing dozens of key players, identified several crucial moments and decisions that brought the health care saga to this point.

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The first big blow to Obama's health care agenda came from a bearded, bespectacled Harvard University-trained economist with a background in the Clinton administration.

Douglas Elmendorf, director of the nonpartisan Congressional Budget Office, sat before the Senate Budget Committee on July 16. Chairman Kent Conrad, D-N.D., cut to the chase: Would newly released House bills curb federal health care costs?

Nope, Elmendorf said. "On the contrary," he said, "the legislation significantly expands the federal responsibility for health care costs."

Kaboom.

Republicans pounced. House GOP leader John Boehner of Ohio said Elmendorf "confirmed that the Democrats' government-run plan will make health care more costly than ever."

Obama later said Elmendorf was simply stating the obvious, that bringing 46 million new people into the system would cost money.

But the testimony emboldened conservative "Blue Dog" Democrats who felt the House's liberal leaders were ignoring their concerns about costs. House leaders agreed to postpone a floor vote until September.

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Warning signs about the cost issue's volatility came as early as March 4.

Treasury Secretary Timothy Geithner explained the president's proposal to limit tax deductions for wealthy people as a way to raise money to help pay for expanded health care. But when lawmakers pushed back, Geithner did not dig in.

"We recognize there are other ways to do this," he told members of Congress. The comment seemed to unleash a flood of ideas, trial balloons and mixed messages.

There were proposals to tax soda pop and increase taxes on alcohol. The Gang of Six senators spent months discussing a new tax on health benefits packages, then dropped it. Now it might be back in play, with Democratic Sen. Max Baucus of Montana proposing a 35 percent tax on the value of insurance plans exceeding $8,000 for individuals and $21,000 for families.

In July, several House committees agreed to a new tax on families making more than $350,000. But House Speaker Nancy Pelosi, D-Calif., said it should apply only to those making more than $1 million.

Obama? He said he didn't want to raise taxes on families making less than $250,000 a year. But a top Obama economic adviser, Larry Summers, said on Aug. 2 that "it is never a good idea to absolutely rule things out."

The next day, White House press secretary Robert Gibbs said Obama stood by his campaign pledge not to raise taxes on the middle class.

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Republicans appeared quicker to grasp the intricacies and political value of exploiting worries about cost.

On June 19, pollster Wes Anderson traveled to the Capitol to show GOP leaders some surprising results from a poll that his firm, OnMessage Inc., had conducted for Republicans.

Most likely voters wanted to control health care costs, but only one in five wanted greater access to health care. And 90 percent of them already had health insurance, limiting the impact of Obama's emphasis on covering the uninsured.

If Republicans could drag out the debate, the group agreed, they could gain ground by hammering at costs.

"This is a can of tuna fish," Anderson told the House and Senate GOP leaders. "If you let it sit there in the sun for a couple of hours, no one is going to want to touch it."

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It's almost a Democratic article of faith that Obama is the best possible salesman for tough issues such as health care. But findings by the Herndon Alliance, a partnership of liberal, labor and some health care provider groups, raised doubts about that in June.

"All references to President Obama tend to be polarizing," the group said in a memo, drawing on findings from Lake Research Partners, a Democratic polling firm. "If President Obama is mentioned," it said, "use his name AFTER the strong and less polarizing message language so people don't tune out our core message."

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Obama's team negotiated quietly last spring with the powerful drug manufacturing industry, which eventually agreed to reduce costs to the health care system by $80 billion over 10 years.

On June 22, the White House proclaimed it a "historic agreement to lower drug costs" and to help pay to cover uninsured Americans. The industry's top trade group agreed to pour $150 million into TV ads supporting the Democrats' proposals.

But critics soon spoke up, causing new headaches for the White House. Democratic Rep. Henry Waxman of California, chairman of the House Energy and Commerce Committee, said the pharmaceutical companies were yielding far less than they had gained when Medicare began covering prescription drugs years ago.

Waxman vowed to wrest more concessions from the industry, even as Obama struggled to get Democrats on the same page.

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Reid always had questioned whether the Finance Committee's Gang of Six could produce a bipartisan bill that would attract enough Republican votes to pass the Senate without prompting a revolt by House liberals. But he and Obama decided to take that chance.

It was risky because it would send lawmakers into the long August recess unable to show voters a health care bill passed by the House or Senate. Sure enough, critics seized on the legislative vacuum to describe Democrats' intentions in highly unflattering and sometimes patently false ways.

And at the mid-August forum in Iowa, Grassley, the Republican most vital to hopes for a bipartisan breakthrough, seemed to be stabbing Democrats in the back with his comments.

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If Reid had any doubts that his political foes were taking full advantage of the drawn-out debate, all he had to do was watch the footage playing endlessly on cable news shows from Lebanon, Pa.

"One day God will stand before you and judge you!" a man shouted at Sen. Arlen Specter, D-Pa., before leaving as security guards approached him at a highly emotional public meeting.

For White House officials and Democratic leaders, Specter's widely broadcast berating was an early warning of what awaited dozens of other lawmakers. And it was an unmistakable sign that the wind was shifting against them.

"We weren't prepared for how angry it was," said Gerald Shea, the AFL-CIO's top health care policy adviser.

[Associated Press; By CHARLES BABINGTON]

Associated Press reporters Ricardo Alonso-Zaldivar, Julie Hirschfeld Davis, Philip Elliott, Ben Feller, Alan Fram, Jim Kuhnhenn, Jennifer Loven, Stephen Ohlemacher and Andrew Taylor contributed to this report.

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