When I think of the future of the Democratic Party I think of Ted Kennedy's 1980 convention speech where he defined his party in terms of its values, "old values," as he described them, "that will never wear out. Programs may sometimes become obsolete, but the ideal of fairness always endures. Circumstances may change, but the work of compassion must continue."

Famously, Kennedy's speech ended: "For all those whose cares have been our concern, the work goes on, the cause endures, the hope still lives, and the dream shall never die." At this year's convention, both Michelle Obama and Kennedy himself echoed those words.

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What is delightful about James Galbraith's The Predator State is that he says things that are, at once, outrageous-- and completely true. Because he shows so little concern for what one "can" and one "cannot" say in a polite capitalist society, one might call him an idealist. But Galbraith is not tilting at windmills; he is simply toppling the conventional wisdom of the past 28 years.

Begin with "the market." When you come down to it, Galbraith explains, "the market" is a fiction. In theory, "it is the broker, the means of detached and dispassionate interaction between parties with opposed interests. . . . Buyers want a low price, sellers wants a high price. The market works out the price that exactly balances these desires, a price that is fair because it is the market price." Even liberals believe in this mythy "market"--a higher intelligence that hovers over transactions ensuring that, as long as you let "the market" work its magic, everything will work out for the best

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Today was the day that Medicare was supposed to take an axe to physicians' fees, slashing them by an average of 10.6 percent, across the board. But last week, in a stunning turn-around, the House voted 355 to 59 to block a pay cut for physicians. The Senate leadership reacted by reneging on a compromise that progressives had forged with conservatives. What ensured included name-calling and open threats on the Senate floor.

Reading about the battle, I couldn't help but think that HHS Secretary Mike Leavitt may be correct when he suggests that Medicare reform could require "a degree of bipartisan statesmanship" that a highly polarized Congress just doesn't posses. Health Care reform may be too hot to handle. Perhaps Congress should delegate the job to someone else.

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Imagine a society that lets its automakers oversee crash tests on new models, allowing the industry to report results, as it sees fit, to government and consumers. Sometimes, an automaker might not reveal the outcome of a test that turned out badly, deciding that the dummies in the vehicle were too short--no wonder their chests were crushed!

In other cases, a company might postpone reporting on crash test results for a year or two, hoping that later trials would turn out better. In these cases dozens of trials might be required in order to achieve the desired outcome. The car maker would, of course, pass along the additional cost, in the form of higher sticker prices. In this society, crash tests are not run and paid for by an independent entity like our National Highway Traffic Safety Administration (funded by taxpayers) or the Insurance Institute for Highway Safety (funded by auto insurers). Instead, the auto industry itself finances and controls the trials. Automakers also provide most of the funding for the government agency that rules on car safety. Finally, under this system, head-to-head comparisons of cars in a similar weight class are frowned upon. Such trials would create winners and losers--and who wants to be a loser? Instead, each company tests its own cars, and when outcomes finally are published, they tend to be excellent.

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The Second Obstacle to Health Care Reform
The High Cost of Care

If we are going to win enough votes in Congress to achieve health care reform, we need to confront runaway health care inflation. Without the votes, reform is a wonderful idea, and we could talk endlessly about what shape it should take. But it will never happen until we learn how to rein in spending.

The truth is that our national health care bill has been growing faster than the economy—and faster than the average worker’s wages—for years. And now we are talking about covering 47 million uninsured Americans, many of whom haven’t seen a doctor for years. In addition, we plan to offer millions of underinsured Americans comprehensive health coverage. Many of them have put off getting the health care they need. In both cases, there will be a lot of very expensive catching up to do.

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It is time, I think, to face the realpolitik of health care reform. This means asking a question few reformers dare to discuss: How will we win the Congressional votes needed to pass universal care?

The American Prospect’s Ezra Klein put this question on the table at “Take Back America’s” conference three weeks ago: “There are so many people in this town [D.C.] who do such smart policy thinking,” he observed, “but what we don’t give enough thought to is the politics of reform.” Yet this is a political problem. Without the votes,” Klein told his audience, “you don’t have a plan; you have a position.”

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Should you care about the flap over healthcare “mandates”? Does it really tell us anything about whether Hillary Clinton or Barack Obama is more likely to deliver healthcare reform?

In yesterday’s New York Times, Paul Krugman said “Yes.” He pointed out that Clinton’s plan favors mandates that would require everyone who can afford the premiums to sign up for healthcare insurance. Low-income and lower-middle income Americans who cannot afford the premiums would receive subsidies from the government, just as they do in Massachusetts. There, a single person earning less than $31,000 is eligible for a subsidy --as is a family of four earning less than $64,000. (There are still serious problems with the Massachusetts plan, but it offers a useful real-world examples of who would receive subsidies.)

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 In the past, we have debated how soon Americans will be ready for national health reform.  Many observers believe that we’ll only get reform when more people are uninsured—specifically when more middle-class and upper-middle-class families find themselves “going naked.”

Meanwhile, a new Commonwealth Fund Report shows that while two-thirds of low-income adults (earning less than 200 percent of the federal poverty threshold) were uninsured or underinsured in 2006, just 17 percent of those earning more than 200 percent of the federal poverty level (FPL) were either underinsured or uninsured at some point during the year.

In other words, the people with political clout are pretty well covered.

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John Edwards' declaration that under his health reform proposal anyone who refuses to sign up for health insurance will be subject to having their wages garnished has led to a blogstorm of often confusing debates.  Under national health reform, should everyone be required to enroll? The Edwards and Clinton plans have mandates insisting that all Americans purchase insurance; the Obama plan has a mandate for children, but not for adults.

New York Times columnist Paul Krugman stirred controversy Friday by defending Edwards, and criticizing Barack Obama: “Under Obama’s health care plan, healthy people could choose not to buy insurance—then sign up for it if they developed health problems later,” Krugman observed. “As a result, people who did the right thing and bought insurance when they were healthy would end up subsidizing those who didn’t sign up for insurance until or unless they needed medical care.”

On Sunday former FCC Commissioner Reed Hundt called Krugman out  here on TPM Cafe in a post headlined “Ease up, Dr. Krugman.” According to Hundt: “The very idea of government mandates directed to individuals evokes a command-and-control model that disturbs citizens who want to enjoy certain freedoms in choosing health care.”  His post (below) is drawing many comments--some on point, some muddying the waters.

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A recent Bloomberg News story highlights a moment in a video for the movie ``American Gangster,'' where hip-hop maestro Jay-Z thumbs through a wad of 500-euro notes on a night of cruising the concrete canyons of New York City. Of course he can’t spend Euros in Manhattan, but the scene says something about the value of today’s greenback.

The Bloomberg piece on the dollar's decline begins by reminding us just how cavalier the U.S. was in 1971 when President Richard Nixon, in a stopgap move to cope with the inflationary financing of the Vietnam War, announced that the dollar would no longer be backed by gold: ``It may be our currency, but it's your problem'' was Treasury Secretary John Connally's taunt when the U.S. unhooked the dollar from the gold standard in 1971, unilaterally rewriting the rules of world business in America's favor.

Now Bloomberg notes, “the world is taunting back. Almost four decades after the U.S. tore up the monetary arrangements that governed the post-World War II international economy, the dollar's fall from grace amounts to a tectonic shift in the global hierarchy. This time, the U.S. currency is on the losing side.

 “After declining in five of the last six years, the weakest dollar in the era of floating currencies reflects a period of diminished U.S. political and economic hegemony. Whoever wins the White House next year will confront two unpopular choices: Accept the fall in U.S. clout and the rise of new rivals, or rein in record public and consumer debt that the rest of the world no longer wants to bankroll.”

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For the past year, progressives have begun to talk about health care reform as if it is inevitable. After all, the polls show that the majority of taxpayers, employers and even most doctors want to see a major change. What’s stopping us?

I’m no longer as optimistic as I was six months ago. Recently, I spoke at a Massachusetts Medical Society Forum where what I heard about the Massachusetts plan made my heart sink. While everyone in Massachusetts wants health care reform, no one wants to pay for it. Those who are receiving state subsidies to buy insurance are enthusiastic. But uninsured citizens earning more than 300% of the poverty level are expected to purchase their own insurance. The state hoped that 228,000 of its uninsured citizens would sign up; as of last month, just 15,000 had enrolled. Many have decided that they would rather pay the penalty than buy health insurance.

At the forum, Robert Blendon, professor of health policy and political analysis at Harvard’s Kennedy School of Government, talked about what Massachusetts’ experience might mean for the national health care debate: “Massachusetts is the canary in the coal mine,” Blendon, who is also a professor at Harvard’s School of Public Health, declared bluntly. “If it’s not breathing in 2009, people won’t go in that mine.” If the Massachusetts plan unravels, he suggested, Washington’s politicians will say “If they can’t do it in a liberal state like Massachusetts, how can we do it here?"

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Each year, developing nations spend $500 million to educate health care workers who leave to work in North America, Western Europe and South Asia. In other words, as the most recent issue of the Journal of the American Medical Association (October 24-31) puts it: “developing nations are subsidizing healthcare in wealthier nations.”

And we are not talking about a small clutch of physicians: close to 25 percent of U.S. doctors are foreign-born. According to JAMA, “These unchecked flows of health workers leave regions with the greatest health care needs the fewest workers…37% of the world’s health care workers live in the Americas, predominantly in the United States and Canada , yet these countries carry only 10% of the global disease burden. In contrast, Africa is home to only 3% of the world’s healthcare workers, yet it has 24% of the global burden of disease.”

Yet as the American Medical Association points out, we don’t have enough home-grown physicians to serve our needs here. Some 35 million Americans live in areas where there are not enough doctors. Nationwide, primary care doctors are in short supply, in large part because they are paid so much less than specialists. Medical students who know that they are going to be graduating with $100,000 in loans report that that they just can’t afford to become internists or family doctors.

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When compared to other developed countries, the U.S. ranks near the bottom on most standard measures of health. Many people assume that this is because the U.S. is more ethnically heterogeneous than the nations at the top of the rankings, such as Japan, Switzerland, and Iceland. But while it is true that within the U.S. there are enormous disparities by race and ethnic group, even when comparisons are limited to white Americans, our performance is “dismal” observes Dr. Steven Schroeder in a lecture published in the New England Journal of Medicine yesterday.

Why? It’s not the lack of universal access to healthcare, says Schroeder, though that’s important. And it’s not just that we don’t exercise enough and eat too much—though that is a major cause. But there is one factor undermining the nation’s health that we just don’t like to talk about in polite society: Class. When it comes to health, as in so many other areas of American life, class matters. In fact, it matters more than whether or not you have access to medical care.

Schroeder, who is the Distinguished Professor of Health and Health Care at the University of California San Francisco (UCSF) underlines how poorly even white Americans stack up when compared to the citizens of other countries by pointing to maternal mortality. When you look at “all races” you find that in the U.S. 9.9 out of 100,000 women die during childbirth. Focus solely on white women, and the number is still high—7.2 deaths out of 100,000 –especially when compared to Switzerland where only 1.4 women out of 100,000 die while giving birth.

Statistics on infant mortality and life expectancy reveal the same pattern. For example: white women in the U.S. can expect to live 80.5 years, only slightly longer than American women of all races (who average 80.1 years). Both groups lag far behind Japanese women (who, on average, clock 85.3 years). “How can this be?” asks Schroeder. After all, as everyone knows, the U.S. spends far more on health care than any other nation in the world.

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The Wall Street Journal reports that it has been talking to "people familiar with" the final third of HCR's health care plan, the section that she will unveil tomorrow. According to the Journal, the new Clinton plan will mandate that everyone buy insurance, with the federal government providing subsidies for those who cannot afford the premiums.

Although the mandate will be controversial, I think it is key to creating a sustainable, affordable system that can offer high quality care to everyone. To achieve that goal, we need everyone in the same pool--young and old, sick and healthy, all making an equal contribution to the fund.

I wrote about this on my blog (www.healthbeatblog.org) last week, in a post where I asked "If We Mandate Insurance, Should Twenty-Somethings Pay Less?" My answer was "no" in part because if younger people pay less, premiums for older citizens could become rise beyond the reach of many. (This is now happening in Massachusetts.)

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