09-12) 04:00 PDT Washington – — President Obama’s ultimatum in his health care reform speech to Congress this week was not to insist on a government-run insurance option that is dear to his party’s liberals. His promise was to veto any bill that “adds one dime to the deficit – either now or in the future. Period.”
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His emphasis on an often-overlooked bottom line points to the chief constituency that Obama must win over to pass health legislation this year – moderate Senate Democrats, including California’s Dianne Feinstein.
Those moderates, and the independent voters whose allegiances tilt public support one way or the other, will determine if and what kind of health care overhaul reaches his desk.
After Obama’s address to a joint session of Congress Wednesday night, Feinstein remained skeptical about the wholesale overhauls to the nation’s health care system that Obama contemplates.
“I just find that if you’re going to remake a sixth of the American economy, it’s very difficult at this time of great economic angst,” Feinstein said in an interview with The Chronicle.
Public hospitals
Among her chief concerns are the hundreds of billions of dollars in savings that Obama promised would not come out of California’s public hospitals, which use federal funds to help provide care to the state’s poor, including an estimated 2 million illegal immigrants – 22 percent of the nation’s entire illegal population.
Many overhaul proposals call for cutting subsidies to public hospitals to care for the uninsured, assuming that everyone – except illegal immigrants -will get insurance.
Feinstein echoed the alarm of many governors, including California’s Arnold Schwarzenegger, that states can ill afford a large expansion of the Medicaid program for the poor to cover some of the uninsured. States share Medicaid funding.
Like her red-state colleagues, Feinstein also worried about creating new automatic spending programs – known as entitlements – that would compound an already serious fiscal situation.
“There is real concern over debt and deficits, and whether this bill will create additional entitlements,” Feinstein said. “That’s important to me and I think it’s important to them.”
The Democratic Party is now the “big tent” that Republicans once were, and recently elected senators from swing states such as Virginia and North Carolina, along with rural moderates from such states as North Dakota and Nebraska, provide the majority that Obama needs to get a health care bill through the Senate.
Unlike those conservatives, Feinstein is a coastal social liberal who supports the public insurance option that House Speaker Nancy Pelosi of San Francisco and other liberals want. Like Pelosi, she expressed support for San Francisco Mayor Gavin Newsom’s burgeoning experiment with universal care, known as Healthy San Francisco.
She made a radical call for making the insurance industry a nonprofit, a goal she acknowledged is politically untenable. She supports a mandate requiring individuals to carry insurance.
But she made clear she is not a guaranteed vote for Democrats.
Polls show gains
There is little doubt that Obama made gains with his speech. Polls showed a double-digit bump in public support. Democrats appear re-energized. Pelosi indicated for the first time that she is open to compromise on the public option, a signal that liberal Democrats will fall in line.
“This is about a goal. It’s not about provisions,” Pelosi said, echoing Obama’s lead. But she also postponed any House vote until the Senate Finance Committee passes its long-delayed bill, an acknowledgement that it will be the template.
The goal Obama laid out – expanding care to 46 million Americans who lack insurance, while not adding to deficits, not just over the next decade, but after that – will be extremely difficult to achieve, experts said.
His $900 billion, 10-year price tag averages $90 billion a year. To put that in perspective, that’s 3.6 percent of the $2.5 trillion the nation spends each year – spending that is expected to total $35 trillion over the next decade.
Despite criticism from Republicans, Obama made a clear shift to the center Wednesday. He embraced a tax on expensive “Cadillac” insurance plans, a step toward limiting the tax exclusion on health insurance that economists advise and unions oppose. He proposed finding most of the money from savings in current programs, mainly Medicare and Medicaid.
Republicans for decades have called for slowing the growth of these giant programs for the elderly and poor, but now decry any such moves as cutting benefits – a charge Democrats once leveled against them.
Worries over cuts
Obama promised the savings would come from “reducing waste and inefficiency,” but that is more easily said than done. States would share a costly expansion of Medicaid to cover near-poor families.
“If you put everybody on Medicaid at 133 percent of the federal poverty rate, the cost to the state is $2 billion,” Feinstein said. “Where does the state get that money when it’s got a $15 billion shortfall next year and probably for many years after that?”
Feinstein, who has outlined her positions on her Web site, embraces Obama’s call for tough new regulations on insurance companies, such as bans on coverage denials for pre-existing conditions and terminations of policies when people get sick.
But she is to Obama’s right when it comes to expanding coverage, preferring to do that through community health centers that could provide basic care.
She also supports an idea Republicans propose: tearing down restrictions on selling insurance across state lines, which would allow bigger risk pools that could lower premiums.
“I happen to think that’s a good idea,” Feinstein said.

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