13 August 2009

Know when to hold 'em

I'm a terrible poker player. There are a lot of reasons for this: I can never remember whether a full house beats a flush (it does) and I don't do the mental arithmetic to calculate whether I should draw one more and hope it completes my hand or not. So, I suck at poker for a lot of reasons. But those reasons don't really matter when I'm playing against other amateurs, but I still lose. I think it's because I'm not skilled at getting the best outcome out of a given hand. I fold early, or bet big on a weak hand, or accept a small pot on a very strong hand. I'm a guy you are happy to see at the table when you're playing for real money.

So, just to be clear, I'm not the guy Obama should be taking advice from when it comes to negotiating strategy in the health reform debate.

Like many other progressives, I've become concerned about the prospects for the health insurance reform currently before Congress. It was going to be a tall order even before the August recess, and the angry backlash and waning public sentiment may well erode the support of the centrists, who were none-too-enthusiastic to begin with. Are we going to lose this? Might it be a better strategy to "take our money and run"?

By which, I mean that, despite the hard-core conservative opposition to the reforms, there really is agreement over about 85% of the reform package. The public option is the irreducible sticking point, with some technocratic disagreements over funding mechanisms and threshold for subsidies. The take-away from interviews like this, is that if progressives dropped the public plan, or even accepted a triggered public plan (which might be the same thing as no public plan), there would be quite a few moderate republicans who would sign on and the bill could easily pass the Senate*.

There's a potentially compelling reason to cut this deal before the final cards are played: if health care reform goes down to defeat in the Senate, it's not a given that the Democrats will be able to revive it in any form, save perhaps some trivial incremental reforms. If heath reform dies, it would be catastrophic from a policy perspective, and somewhat worse from a political point of view. It would kill the hopes for meaningful reform, and possibly deal a near-lethal blow to the nascent Obama presidency. Given the downsides of a clear loss, the opportunity to cut a deal and walk away with a win, albeit more modest than we would like, seems like a preferable alternative.

Should we? What would reform look like, absent a public option?

As much as I really believe in a public option, it's important to note that the other elements of the proposed reform packages are very good indeed. If you had offered me these bills eighteen months ago, I'd have jumped at it. We have, at least in HR 3200:
  • Universal coverage (or nearly so)
  • Individual mandates
  • Employer mandates
  • Community rating
  • Guaranteed issue
  • No recissions
  • Subsidies for middle-income individuals
  • Elimination of the SGR
It's not perfect, and it's not complete. Further entrenchment of the employer-based system may not be the best policy. Expansion of Medicaid is obnoxious. There's no automatic enrollment (which would take the place of indivdual mandates). An argument could be made that Wyden-Bennett is a better bill. The biggest deficiency of the bill, absent the public option, is that it would do very little to constrain the growth in health care costs. There is the proposal to expand and strengthen IMAC and the Comparative Effectiveness Research office, each of which should have some element of cost control. I do not think that these reforms will be sufficient to "bend the curve" back to a sustainable level. The public option was intended to fulfill this function, at least on a complementary level with the other cost control mechanisms.

This is where we're at: do we accept an imperfect and incomplete health care reform bill, or do we go for broke and try for the big win? Robert Reich put it colorfully: This is it, folks. The concrete is being mixed and about to be poured. And after it's poured and hardens, universal health care will be with us for years to come in whatever form it now takes. But Paul Begala sees the cup as half-full: No self-respecting liberal today would support Franklin Roosevelt's original Social Security Act. It excluded [long list of stuff.] If that version of Social Security were introduced today, progressives like me would call it cramped, parsimonious, mean-spirited and even racist. Perhaps it was all those things. But it was also a start.

I don't know where we should go from here, but as I disclaimed earlier, I'm a terrible poker player. If we take the modest reforms we have on the table, it's a more-or-less sure win, but are we walking away from so much more? On the other hand, if we walk away with the proverbial bird in the hand, the failure to impose cost controls guarantees that we will need to revisit this issue in a few more years, and perhaps incrementalism is in order here.

We are not yet at the point that we have to show our cards. It's possible that the tides will turn and the pro-reform sentiment will be back on the rise come September. And Obama has nerves of steel, and an uncanny tendency to get exactly what he wants in the end. I'm glad he's on our side. And I'm equally glad that I don't have the responsibility for making the call on this one.

* It's possible that all the Senate GOP are working in bad faith and, as so many times before, Lucy will pull the football away from Charlie Brown once again. I don't think so in this case: I think Snowe, Collins, Graham, Voinovich and Grassley are possibly "gettable" if the right deal is offered.


  1. Be careful; be very careful . . . I hear ya on trying not to throw out the possibility of real reform simply because there's no public option, but I am definitely once burned here.

    From 1990 to 1993, I worked furiously to help build the electronic transactions that would enable a wide-ranging shift from wasteful health insurance to some new solution. In 1993-94, I actually led the technology project that produced the first live EDI electronic records transactions in the United States.

    Not only did the Clinton healthcare initiative fail spectacularly, HIPAA, which is what those transactions became, is a joke. Insurance companies reveal the plight of sick employees to employers with impunity--as they raise the rates or deny renewal of group plans based on illness among employees or family members.

    That's just one example. I'm sure you know that the entire industry has run amok, with executive pay through the roof and underwriting a virtual shell game of denial under almost any circumstance.

    No; we need the public option. We need to ration the insurers, not the patients.

  2. exactly, Nora22Q; let's play our cards out, as the public option is essential in reducing costs and stopping for-profit health care from driving all of us financially and morally bankrupt.

  3. To follow your poker-themed analogy, here are the problems the Democrats face, Texas Hold 'Em style. (If you don't play poker, you will find this utterly useless -- but if you do, you'll see the conundrum Obama faces.)

    In Texas Hold 'Em, you start with two cards. For this analogy, Obama's two cards are the House bill, which everyone on the table can see, and the Senate bill, which no one has yet seen.

    Normally, a smart player would look at both his cards first, see how strong they are TOGETHER, and then make a calculated bet based on the strength of your cards.

    Unfortunately, Obama was too impatient. He believed his hand was so strong, and that public opinion was so much on his side, that he didn't need to look at his cards. In poker terms, he bet blind without analyzing his hand. Betting blind is considered a cocky and reckless move.

    Fortunately, Obama has a big stack of chips: Democrat control of both the House and the Senate. He is the chip leader, and he can dominate the poker table if he can manage his chips effectively.

    Meanwhile, the Republicans have a shorter stack, but they are representing strength in the form of rising opinion polls against Obama's health care push. Is it a manufactured bluff or genuine strength? It doesn't matter, because the net result is this: It's making reform supporters nervous.

    Compounding the problem is that everyone can see the House bill, and conservative critics think it is weak enough to beat no matter what the Senate comes up with. So while the Republicans don't have much, they're raising with what little they've got.

    So now we get to the crux of Obama's problem: What's the best way to play a hand he bet blindly on when he controls the big stack?

    1. Use The Big Stack: Push all in. Use your chips to bully your opponents into submission. Analogy translation: Line up all the Democrats. Prove to them that the final bill is a winner, then force them to vote party line on this bill. That guarantees health care reform victory. Of course, this is high-risk, high-reward gambling: if the Republicans reveal their strong hand wasn't a bluff (i.e. the public was genuinely teed off) it could have a devastating effect on the poker table: Obama might win today, but lose important "chips" in 2010.

    2. Fold: This is a terrible move for Obama. By folding, it's an admission that his cards were weak and not worth playing to begin with. No one will have faith in his bets when it comes to future hands.

    3. Call and Look at the Flop: An analogy to "wait and see," this would give Obama time to look at his cards, and then see what's on the table for him to work with in terms of other proposals and changes in public sentiment. Unfortunately, if the flop winds up bad for Obama and good for the Republicans, they will force Obama to raise or fold -- don't expect any compromise to "chop the pot."

    So the poker lesson here is this: Don't bet blind on something as important to the American people as health care reform. Make sure you're holding a winning hand first. For Obama, it may already be too late to fix the way he's misplayed his hand thus far.


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