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Obama's Sense of Entitlements

A big question looming over the White House's "fiscal responsibility summit" on Monday is whether President Obama is willing to consider major cuts in future benefits for the poor and elderly to win bipartisan support for his long-term budget plans -- or whether he's going to try to redirect the "entitlement reform" fervor toward the goal of bringing down skyrocketing health costs for everyone.

It's turning into something of a public contest for Obama's soul. Some liberals are alarmed that he could be casting his lot with an alliance of Washington elites who believe that "entitlement reform" is essential to preserve the long-term fiscal health of the country -- and that only non-serious thinkers could possibly disagree.

What's odd about all this is that, despite a few puzzling signs to the contrary, Obama and his top economic advisers have made it abundantly clear that they don't consider Social Security a major problem and think the answer to Medicare and Medicaid's unsustainability is taming health care inflation -- a goal which fits neatly into their wider agenda to cut costs and make health care available to everyone.

Obama has long resisted the "entitlement reform" movement, which is currently focused on establishing a blue-ribbon commission that would present Congress with a finished proposal -- presumably calling for steep cuts in the nation's bedrock social safety programs -- for an up-or-down vote. But the coverage of his comments during a meeting with Washington Post editors a few days before his inauguration set off a new round of speculation about his intentions.

"Obama Pledges Entitlement Reform" said the front-page headline over Michael D. Shear's story the next morning. Shear wrote: "President-elect Barack Obama pledged yesterday to shape a new Social Security and Medicare 'bargain' with the American people, saying that the nation's long-term economic recovery cannot be attained unless the government finally gets control over its most costly entitlement programs."

Obama did say, according to the transcript, that "the real problem with our long-term deficit actually has to do with our entitlement obligations" and that "we're going to have to craft what George Stephanopoulos called a 'Grand Bargain.'"

But consider this, from further down in the story: "Obama was careful not to outline specific fixes for Social Security and Medicare, refusing to endorse either a new blue-ribbon commission or the concept of submitting an overhaul plan to Congress that would be subject only to an up-or-down vote, similar to the one used to reach agreement on the closure of military bases...

"'Social Security, we can solve,' he said, waving his left hand. 'The big problem is Medicare, which is unsustainable....We can't solve Medicare in isolation from the broader problems of the health-care system.'"

Similarly, in an interview with opinion columnists last Friday, Obama had this to say: "Medicare and Medicaid on their current trajectory cannot be sustained. And the only way I think we're going to fix it is if we see those two problems in the broader contest of bending the curve down on health care inflation.

"The problem is not just demographics. Peter Orszag, before he joined us, loved to make this presentation -- you sat through the chart -- that, yes, people are getting older, but that's not the problem. The problem is health care costs going up 6, 7, 8, 10 percent a year."

A slide from Peter Orszag's PowerPoint presentation on health-care costs.

Orszag is Obama's new budget director. And here is the PowerPoint presentation Obama was talking about.

So although some of the leading advocates of "entitlement reform" will be at the summit on Monday, I suspect this will be the beginning of an attempt by Obama to co-opt them into supporting his preferred approach -- and the kickoff of a campaign to educate the general public on the issues as he sees them.

William Greider's recent essay in the Nation provides a lot of essential background on the battle over entitlements.

Ben Smith interviews Orszag for Politico: "Orszag's long-running project — something that has made him the left's favorite Cabinet member — has been replacing talk of an 'entitlement crisis' with his argument that Social Security requires only modest tax hikes and benefit cuts, while Medicare and Medicaid have much more dramatic fiscal woes.

"'Social Security faces an actuarial deficit over the next 75-100 years. In the past, I've resisted the term 'crisis' to describe that kind of situation,' he said. 'This is not quantitatively as important as getting health care done.'"

Nevertheless, as Walter Alarkon writes for The Hill: "Liberal groups are worried that the White House bipartisan fiscal responsibility summit on Monday will set the stage for President Obama to compromise with deficit hawks....

"Obama's announcement of the event last month and his initial invite list alarmed his allies on the left...Obama said in January that the summit would have a special focus on Social Security, Medicare and Medicaid and that he would invite Sen. Kent Conrad (D-N.D.), Sen. Judd Gregg (R-N.H.), Blue Dog Democrats and fiscal health advocacy groups. They have all called for a reduction of the deficit and have proposed a bipartisan commission to produce a plan to do it."

Firedoglake's Jane Hamsher is among the liberal bloggers worried that Obama is paying too much attention to -- and might even heed -- the people she calls "'entitlement reform' fetishists."

And Chris Bowers blogs on OpenLeft on one reason to worry about Obama's steadfastness in opposition to the blue-ribbon commission proposal championed by Conrad and Gregg (who, of course, just last week withdrew as Obama's commerce secretary nominee).

Lori Montgomery wrote in The Washington Post on February 2 that "Obama specifically mentioned the Gregg-Conrad proposal when he met with Senate Republicans last week.... But Obama 'was not supportive' of that idea, said Gregg."

And yet Jonathan Weisman wrote in the Wall Street Journal on February 14: "The president met with 44 fiscally conservative 'Blue Dog' Democrats this week and gave a nod to legislation that would set up commissions to deal with long-term deficit strains...

"'We feel like we've found a partner in the White House,' said Rep. Charlie Melancon (D., La.), a Blue Dog co-chairman."

Writes Bowers: "There are two possibilities here. First, President Obama changed his position on the commission between February 2nd and last week. Second, either the Wall Street Journal or the Washington Post is incorrect."

Other liberal bloggers, however, say not to worry.

Jonathan Cohn blogs for the New Republic: "Obama has said consistently that the federal government doesn't have an entitlements problem. It has a health care problem....

"So what's up with this fiscal responsibility summit? It's all about education--and, yes, some public relations. Obama wants to signal that he is serious about fiscal responsibility and he wants to make clear the linkage between fiscal responsibility and health care."

Ezra Klein blogs for the American Prospect: "The Obama administration believes that the entitlement problem is a health care entitlement problem, and the health care entitlement problem is a health care system problem. And so the focus now is on health care reform: The fiscal responsibility summit will be used, in part, to make this argument. In Obama's Washington, a plan to cut Social Security is no longer enough to qualify you as 'fiscally responsible.' You need an answer to the Medicare and Medicaid questions, which means you need an answer to the health care system. We will see the beginnings of the White House's answer -- an answer that has required a series of decisions by President Obama himself -- when the budget emerges next Thursday. That, and not Monday's summit, is where the nature of the administration's commitment to fiscal responsibility will come clear."

As for that budget, Lori Montgomery writes in today's Washington Post: "When President Obama rolls out his first budget proposal next week, it will contain some of the ugliest deficit numbers this nation has seen since the end of World War II. So the Obama administration is planning an entire week of budget-focused activities to prepare the country for the painful spending cuts and program changes that will be needed to begin reducing the red ink.

"The schedule kicks off Monday with a White House summit on fiscal responsibility...

"On Tuesday, Obama will lay out the severity of the nation's economic crisis in a speech to a joint session of Congress.

"And on Thursday, the president will deliver his budget plan to lawmakers."

Jackie Calmes writes in the New York Times: "For his first annual budget next week, President Obama has banned four accounting gimmicks that President George W. Bush used to make deficit projections look smaller. The price of more honest bookkeeping: A budget that is $2.7 trillion deeper in the red over the next decade than it would otherwise appear, according to administration officials....

"Mr. Obama's banishment of the gimmicks, which have been widely criticized, is in keeping with his promise to run a more transparent government....

"The $2.7 trillion in additional deficit spending, Mr. Orszag said, is 'a huge amount of money that would just be kind of a magic asterisk in previous budgets.'

"'The president prefers to tell the truth,' he said, 'rather than make the numbers look better by pretending.'"

Massimo Calabresi and Nancy Gibbs, in Time Magazine, look at how central the curbing of health care costs is to Obama's long-term budget plans -- along with "winding down the war in Iraq, cutting fat and raising taxes on the wealthiest Americans." They also raise what could be some important questions.

Orszag and his colleagues "think they can tackle this problem in part through better data processing. First, a massive investment in health-information technology will track how America's health-care dollars are being spent. Next, a $1.1 billion government study, funded as part of the stimulus package, will take that information and figure out which treatments get the best outcomes for the least money. Which makes more sense for a clavicle fracture: a simple sling and waiting six weeks or surgical repair with a stainless-steel plate? The final step could be to create a federal health-care board that would shape Medicare- and Medicaid-reimbursement plans based on those studies.

"Administration officials suggest that some savings would come from controlling drug costs and changing reimbursement procedures....

"If the President tries to go down this road, the line of opponents will stretch well past the horizon. Even the idea of the 'effectiveness' studies sparked a huge fight in Congress over the prospect of rationing health care in the U.S. It's easy to say better information will help doctors avoid expensive treatments that don't work. But what about expensive treatments that do work? Who decides whether they count as being sufficiently cost-effective? Might the same treatment be approved for a 25-year-old but not for a 75-year-old, who won't live as long to benefit from it? What about treatments that work differently for men and women, or blacks and whites? Doctors warn that treatment decisions will be made by bureaucrats whose interest in saving money competes with their interest in saving lives."

By Dan Froomkin  |  February 20, 2009; 1:27 PM ET
Categories:  Financial Crisis  
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The PBS / Front Line series, "Sick around the world" supports the idea that the U.S. has a health care problem, not an entitlement problem. The series breaks through the rigid mindset about how a health care system can work--and how fast it can change (see the German example). It's all about political will.

Posted by: org1 | February 20, 2009 3:12 PM | Report abuse

Do we really need middlemen to have decent healthcare?

The sooner the better. We simply cannot aford to wait any longer, as a person, a family or a nation.

Posted by: mpinney1 | February 20, 2009 3:24 PM | Report abuse

There is plenty of evidence that U.S. Healthcare is on its death bed. Talk to any health care provider and you will quickly understand that healthcare insurance is standing in the way of reforms. Make no mistake, heatlhcare insurance is a for-profit business, whose aim is to reduce costs, and increase profits (like most other for-profits). By nationalizing healthcare insurance, and bringing each state into compliance, with a single-payor health insurance programme, patients and healthcare providers will benefit. Healthcare insurance workers can be re-trained and re-hired by the non-profit national healthcare agency. More government? Yes. Better government? Yes. Better national insurance? Yes. Nationalizing healthcare insurance is a good prescription for the death bed of U.S. healthcare.

Posted by: rmorris391 | February 20, 2009 3:54 PM | Report abuse

I agree with the President that Social Security is not a major problem. As soon as Congress stops stealing money from the SS Trust Fund, and, perhaps, when it starts paying back what it owes to that Fund, we can stop moaning and wringing our hands over social security.

Medicare and Medicaid are the biggest problems, and I think a large part of that problem lies with insurance companies, doctors, our tort system and ourselves. There is little need to discuss the problems endemic in our system of health insurance. But I would like to say something about doctors's contributions to high medical costs. In December, I came down with a case of an old-fashioned intestinal virus, I am a senior, live alone and started to dehydrate one weekend, so I went to the emergency room. I needed as anti-diarrheal and something to stop the stomach cramps, as well as some liquids in my system. The ER doc took stomach X-rays, considered ordering a CT scan of my stomach until I refused, and sent me home with an anti-diarrheal meds but no cramp reducer. What a waste of time and money! When I finally got in touch with my doctor the following day, I got the medications I needed without even an office visit. Of course, I recognize that the ER doc was afraid that if he didn't order upteem million tests, I'd sue if anything went wrong. So, I consider litigation-happy citizens as much to blame for high health costs as I do insurance companies and doctors.

Finally, too many Americans run to their doctors and ask for every expensive test in the book for a hangnail! We are so afraid of dying that we are willing to bankrupt the country for generations in order to live a few more years. I hope that Obama can do something about this, but I doubt that he'll be able to pull off the miracle that it will take to change the nature of all the beasts!

Posted by: marmac5 | February 20, 2009 4:10 PM | Report abuse

Calabresi and Gibbs make a decent size leap in this excerpt that Dan includes. How does "better data processing" imply rationing of health care? The insurance companies and HMOs are the major players who have and continue to deny care (sometimes the care denied is very expensive, and sometimes relatively cheap). Obama's plan cannot be worse than 45 million Americans uninsured, and the thousands who have literally been driven to bankruptcy by a serious, protracted illness.

This quote is particularly irksome: "Doctors warn that treatment decisions will be made by bureaucrats whose interest in saving money competes with their interest in saving lives."
This happens RIGHT NOW. But the state bureaucrats are not the ones with an eye on costs as opposed to patient health.

CIGNA, Kaiser, Aetna and other oh so profitable companies are the ones dictating what patients can and cannot have due to these private companies' rapt attention to the bottom line.

Posted by: crix | February 20, 2009 4:19 PM | Report abuse

The health care system is not broken. It is an oversimplification that a national health care system will solve problems. It will not.

The U.S. Healthcare system needs a problem/solution methodology to get it working so people are not excluded unfairly. Most problems are related to employment status.

Employed people are getting too much health care and virtually free ($10 co-pays e.g.) in many cases. They are also receiving untaxed benefits which is not fair whatsoever. In addition, big companies negotiate discounted care that means that the un- and underemployed pay the difference.

We need to get deep pocket payers out of the system. We need to get individuals paying their own health care and insuring themselves for catastrophic costs. In some cases, we need govt subsidy for those who fall through the cracks.

Posted by: hz9604 | February 20, 2009 4:23 PM | Report abuse

No hz, we don't need every individual to negotiate their health care individually. That's a nightmare scenario in a nation of 300 million plus. We need what the rest of the industrial world has--a public health care system covering everyone. Or said another way, extension of Medicare to all. What we don't need is private health insurance companies. After all, we don't expect every individual to support their own army.

Posted by: lowercaselarry | February 20, 2009 4:39 PM | Report abuse

Have a disease that will kill you and yet the pharmaceutical manufacturer was able to pass off a drug that had a 30% adverse reaction rate in it's phase 2 clinical Trials. Our health care system has been ruined by the for profit health industry and saying that people are responsible for their own disease because there are so many wonderful drugs . . .Yeah, right.

Posted by: sailorflat | February 20, 2009 5:55 PM | Report abuse

Obama is using smoke and mirrors. If he says that the problem is with the health care provider and not the health care needs of the country - then he can turn his back on the problem and hope it goes away while he goes on self-promotion tours.

The reality is that Americans want the best healthcare when they need it - so it does cost more. Obama is willing to sacrifice all American's healthcare while he and his congressional buds keep their own golden coverage. Didn't he promise all of us the same level of healthcare benefits as congress?

Posted by: mgd1 | February 20, 2009 6:15 PM | Report abuse

The average monthly Social Security pension is only about $1,000 a month. Those who seek to balance the budget on the backs of the retired people, most of whom have relatively modest annual incomes, in the guise of "entitlement reform" need to try living on $1,000 or so a month.

Major reductions in Social Security and Medicare would not be "reform," but a reactionary policy, back toward the days of Coolidge and Hoover. This would result in the impoversishment of millions of retired persons and force others in their fifties and sixties to work many more years to try to fend off such poverty when they retire.

Universal health care coverage can be paid for by restoring tax levels on the wealthy to where they were during the Clinton presidency and reducing unnecessarily high military spending. Neo-cons, get a grip, the Cold War is over.

Posted by: Aprogressiveindependent | February 20, 2009 6:32 PM | Report abuse

All the President has to do is get the cap on earnings for Social Security and Medicare lifted and both run in the black for the next 2500 years.

Seriously, why should millionaires get a free ride?

Posted by: WillSeattle | February 20, 2009 6:59 PM | Report abuse

I'm with WillSeattle. I totally do not understand why Social Security and Medicare taxes aren't applied to income above a certain limit.

"Doctors warn that treatment decisions will be made by bureaucrats whose interest in saving money competes with their interest in saving lives."

Hahahaha as if that wasn't happening already, only it's insurance bureaucrats, not government bureaucrats, so they're not even accountable to voters. I can't believe anybody said that with a straight face.

Posted by: herzliebster | February 20, 2009 8:48 PM | Report abuse

Bwahahahahaha! The Republican piggy has a ring in its nose called "entitlements reform." Now Obama grabs that thing and leads piggy down the path to health care reform. So politically astute you have to love it.

Posted by: fzdybel | February 20, 2009 9:50 PM | Report abuse

We must get the profit-motivated insurance companies OUT of healthcare. They make their profits by denying care.

Single-payer healthcare is the only system that will help Americans to receive the healthcare they need. And now, a new study shows single-payer healthcare would be good for our failing economy!


** 2.6 Million New Jobs,
** $317 Billion in Business Revenue,
** $100 Billion in Wages, and
** $44 Billion New Tax Revenues

You can find out more about this study here:

The press release is here:

Posted by: 4progress | February 21, 2009 12:43 AM | Report abuse

Health insurance companies play a major role in our current healthcare crisis. These companies make huge profits and their CEOs make millions, while the rest of us face skyrocketing healthcare costs, impossible bureaucracy, and life-diminishing insurance denials.


1. UnitedHealth Group -- $ 4.654 BILLION. UnitedHealth Group owns Oxford, PacifiCare, IBA, AmeriChoice, Evercare, Ovations, MAMSI and Ingenix, a healthcare data company

2. WellPoint -- $ 3.345 BILLION. Wellpoint owns BLUES across the US, including Anthem Blue Cross Blue Shield, Blue Cross Blue Shield of Georgia, Blue Cross Blue Shield of Wisconsin, Empire HealthChoice Assurance, Healthy Alliance, and many others

3. Aetna Inc. -- $ 1.831 BILLION

4. CIGNA Corp -- $ 1.115 BILLION

5. Humana Inc. -- $ 834 million

6. Coventry Health Care -- $626 million. Coventry owns Altius, Carelink, Group Health Plan, HealthAmerica, OmniCare, WellPath, others

7. Health Net -- $ 194 million

The huge insurance company profits—BILLIONS EACH YEAR—could be used to provide quality healthcare for millions of people, and to pay physicians adequately for their work.

We need to get the insurance companies OUT of healthcare . The only solution is a NON-PROFIT SINGLE-PAYER HEALTHCARE SYSTEM – and the single payer should not be an insurance company or a group of insurance companies.

Learn about The National Health Insurance Bill (HR 676) at:

Posted by: 4progress | February 21, 2009 12:46 AM | Report abuse

ok, so lets say in 5 years we have health care for everyone. well, seeing that there will be no add'l doctors, demand will outstrip supply dramtically, which means rationing of healthcare. That means 75+ year olds with cancer don't get treatment nor to 2 lb babies. It also means waiting much longer for non-critical procedures (months). I'm ok with this (Im 52 and healthy) but those of you that think you just wave a wand and all is good and just are not thinking this through.

Posted by: mmourges | February 21, 2009 8:36 AM | Report abuse

So lessee, the boomer population is getting older, living longer, and in massive numbers.

And health care costs are skyrocketing. It's more positioning; the industry is all set to make yet another killing.

Posted by: chauncykat | February 21, 2009 9:43 AM | Report abuse

While watching "Sicko", I was struck by the reaction of the Europeans who were told about our health care--they laughed at us. We're still allowing ourselves to be frightened by horror stories of British National Health in the early fifties.

Posted by: huskerkernel | February 21, 2009 11:40 AM | Report abuse

It's a sad, sad era for the American Healthcare System to go bust. As the most powerful and richest country in the world, the state of its healthcare system has deteriorated to such a gutter level is unbelievable.

In the first place, the foundation of the Healthcare System was not laid on a solid foundation. Hence, the collapse. In the first place, the HEALTH and WELL-BEING of the American people cannot and should not be privatized at all.

It's not too late for Obama and his Administration to turn the Healthcare System around. Take for example the Healthcare systems of its neighbors up north, Canada, and across the Atlantic Ocean, UK, with a sustainable and workable national healthcare system that lasted for decades. I believe there are other national healthcare systems around the globe that work as well.

Perhaps, the Administration should seriously consider nationalizing its Healthcare System as its topmost priority instead of creating rumors of nationalizing the banking system.

The HEALTH and WELL-BEING of a nation is undoubtedly its most important asset. The billions spent on promoting democracy and human rights through propaganda, wars, etc around the globe should be redirected to its healthcare reform from a privatized to a national system where every citizen's health and well-being is cared for.

The American people are pragmatic and innovative and hence, I believe the new Administration is and should be able to bring about nationalizing its healthcare system. It's never a shame to study other national healthcare systems that work and are sustainable around the world, especially among the G8 nations. America has all the wealth and human resources, expertise, technology and the like to bring about a better workable and more sustainable National Healthcare System in the world.

Thanks for airing my thoughts and ideas as the Administration comes to grips with the dire state of its healthcare system and how to transform it into the best system in our modern world today.

Posted by: ronlim1 | February 21, 2009 5:38 PM | Report abuse

I am 51 year old veteran and correctional from Ohio.I am Now disabled and bothe the state and the Us army are responable for my not being able to work any more.BUT I got Cheated out of both VA and worker comp,because of politics.I am now only being given $200 dollars SSI,and am on verge of losing everything. VA keep saying it non service connected in spite My medical records Show differantly.As for ohio well They completely denigh me my right to even file.To Top it all off Social securty claims I do not have enough working credits. So Tell me What ever Happend With We Take Care Of Our Own?

Posted by: rossmanwilliam1 | February 23, 2009 5:35 AM | Report abuse

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