By Kristin Jensen and Edwin Chen March 31 (Bloomberg) — Five days after President Barack Obama ’s inauguration, Tom Daschle requested a meeting with the new president. Daschle, tapped to become Health and Human Services secretary, wanted a commitment that Obama still planned to pursue an overhaul of the health-care system. Top advisers, from Vice President Joe Biden to members of his economic team, were pushing Obama to wait and focus instead on the recession. As Daschle, 62, and Obama huddled in White House Chief of Staff Rahm Emanuel ’s office on the president’s first Sunday in office, Obama assured him the issue was a major priority. “I said, ‘Well, I just need to know: Is this as important to you as you said it was when you asked me to do the job?’” recalled Daschle, who later had to withdraw his nomination over a tax controversy. “And he said, ‘Let me tell you, this is even more important to me.’” That Obama chose to stake his presidency on the U.S. health overhaul will define his legacy even as he risked the careers of many fellow Democrats in doing so. Republicans are now vowing to work toward repeal and make Democrats pay at the polls in November, ensuring that the president will spend almost as much time defending the legislation as he did getting it passed. Obama’s pursuit of health care reflected his desire to succeed where no other president had, as much as a determination to seize the chance to fix a broken system, according to Daschle. “Once committed, he felt he just couldn’t afford to lose,” Daschle said last week. Biggest Since Medicare When Obama, 48, signed the last piece of the legislation yesterday, he cemented the biggest changes to the health system since the 1965 creation of the Medicare insurance program for the elderly. He also brought to a close a year-long fight in which he gambled his presidency and came out on top. The health-care initiative would be marked by missed deadlines and political missteps. Obama rewrote the rules for an industry covering one-sixth of the economy on a partisan basis with public support eroding. He and Democratic leaders revived the effort through legislative crises, party infighting, and opposition from Republicans determined to make it his downfall. “If we’re able to stop Obama on this, it will be his Waterloo,” South Carolina Senator James DeMint said in July. Former Republican vice presidential candidate Sarah Palin warned of “ death panels ” stemming from a provision for end-of-life counseling. The Tea Party movement mobilized voters to confront Democrats at town-hall meetings in August, which drew so much attention they almost sank the bill. Sagging in Polls Polls showed the legislation had become unpopular, and Obama drew the ire of lawmakers in his own party. Many complained that he failed to provide direction at key junctures, shifted his rationale for the bill, and had made a campaign promise to air negotiations on C-Span that was coming back to haunt them because it was impossible to keep. In the end, the insurance industry, which fought Obama’s plans, offered what may have been his biggest boost by doing what he had said it would do: A WellPoint Inc. unit proposed a 39 percent rate increase for some California customers. Still, the deals that had to be cut meant that no one was completely happy with the final product, which Republicans said didn’t come close to putting a dent in rising U.S. health-care costs , already the highest in the world. “We have a bill that is chock full of gimmicks and hidden mandates,” said Representative Paul Ryan , a Wisconsin Republican, before the House’s March 21 vote to approve the measure. “The European-style social welfare state promoted by this legislation is not sustainable.” Significant Changes Democrats focused on the potential for significant changes down the road. They argued that free preventive care would mean less serious health problems; pilot programs designed to change the way Medicare operates would have larger ramifications for the system; and about 32 million uninsured Americans would get coverage. Over the past year, Obama and his aides liked to repeat a prediction credited to White House congressional liaison Phil Schiliro : The health-care effort would be “pronounced dead” four or five times before passage. They were right. The prospects began to look grim enough last summer that Emanuel suggested the president consider a scaled-back version and declare victory, according to one person with knowledge of the discussions. Obama said no. ‘Dead’ The worst day for the White House may well have been Jan. 19, when Democrats were stunned by the loss of a special election to fill a Massachusetts seat that had been held by the late Senator Edward Kennedy for 47 years. The party had been close to finishing a House-Senate compromise bill. Now, Republicans controlled 41 seats in the Senate, enough to kill the plan to push the new measure through both chambers. “Dead,” White House health policy adviser Zeke Emanuel wrote in response to an e-mail days later asking about the bill’s prospects. “F—–g dead.” Obama was already talking about the next steps even before the polls closed the night of the election, meeting with Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi in the Oval Office. Eventually, they would hit on a compromise: The House would pass the Senate bill and both chambers would pass another measure making changes to it. Emanuel, 52, the brother of Rahm Emanuel, said the mood soon turned around as the way forward became clear. The one thing that never wavered was Obama’s determination, said Emanuel as well as others in the White House and on Capitol Hill. “You’re the guy that made it happen,” Biden, 67, said to Obama before the president signed the first of two pieces of health-care legislation into law on March 23. Pessimism At the beginning, Biden and other top aides were pessimistic. They urged him to avoid making health care a top priority in the face of the worst economic recession in seven decades, two wars and the likelihood that special interests would fight any effort to overhaul the system. During one meeting soon after Inauguration Day, Biden said Americans didn’t care enough about health-care coverage to make it a priority, said two people involved in the discussions. Rahm Emanuel, 50, and senior adviser David Axelrod voiced caution, according to three people involved, who like others in this story spoke on condition of anonymity. “I had a whole bunch of political advisers telling me, this may not be the smartest thing to do,” Obama remembered a year later as he spoke in Elyria, Ohio, on Jan. 22. “I had no illusions when I took this on that this was going to be hard. Seven presidents had tried it, seven Congresses had tried it — and all of them had failed.” Obama had been persuaded by the data he had seen and the stories he heard from Americans. He also knew it was the lifelong cause of Kennedy, the Democratic Party icon who had given Obama’s political fortunes an early boost in the presidential primary fight against Hillary Clinton . Not Scoring Points That day in Ohio — three days after the loss of Kennedy’s seat — Obama said he was fighting on because the status quo was unsustainable. He cited soaring medical costs and premiums, Americans without insurance and struggling small businesses. “I didn’t take this on to score political points,” he said. Once Obama decided, his team fell in line. Biden’s chief of staff, Ron Klain , said his boss was “working to bring outside allies on board, and personally persuading key senators and congressmen to support the effort at critical moments — including the close vote on final passage in the House.” A year earlier, it was Daschle himself who set back the timetable as word trickled out that he had to file amended returns and pay $140,000 in back taxes and interest for unreported income. On Feb. 3, 2009, he withdrew his nomination, saying he didn’t want to prove a “distraction.” Missing Kennedy As a former Senate Democratic leader with relationships throughout Congress, Daschle was positioned to head the effort. Obama could ill-afford to lose him as he was already working without the legislative skills of Kennedy, who was suffering from brain cancer and would die at age 77 on Aug. 25. To win passage, a minority of more conservative Democrats overcame the majority’s desire for a government-run insurance program, or public option, that many said was the best way to reduce costs for average Americans. The White House team had studied the failed health-care push in 1993 and 1994 by former President Bill Clinton and his wife, Hillary, now secretary of state. Bill Clinton underlined the continuity of the effort when he stood in for Obama to speak at the Washington Gridiron Dinner on March 20, the night before the House vote, so the president could lobby lawmakers. The former president, who jokingly invoked the words of General Douglas MacArthur by saying, “I shall return,” about his visit to the capital, urged Congress to pass the bill. Winning Over Companies One lesson from the Clinton failure on health care was to try to win the support of health-care companies, many of whom helped destroy the earlier attempt. Obama cut deals with drugmakers and hospitals, ensuring a limited impact on their profits in return for specific dollar contributions to the overhaul effort and a pledge of support. Another lesson they drew was to leave the drafting of the legislation largely to Congress, Axelrod, 55, said in a July interview. That strategy backfired with some lawmakers. Iowa Senator Tom Harkin , 70, the Democratic chairman of the health committee, said Obama should have been more assertive. “The White House took a hands-off position until right before Christmas,” Harkin said in a Jan. 22 interview. “Maybe if they had gotten involved earlier we wouldn’t be in this mess.” ‘Lot of Grousing’ During summer months filled with protests and shouting at congressional town-hall meetings, Axelrod said he went to see Obama and told him, “The polls are difficult and there’s a lot of grousing on the Hill about it, and this is going to cost a lot politically in the short run.” “I know you’re right,” the president said, Axelrod recalled in a March 23 interview on the “ Charlie Rose Show.” Axelrod said Obama then told a story about a woman he had just met in Wisconsin with ovarian cancer. While the married mother of two had insurance, the policy didn’t cover her treatments, and the family was slowly going broke. Axelrod recalled that Obama patted him on the shoulder and said: “So, you know what? We’ve got to keep on fighting.” That September, Democrats came back shaken from encountering angry constituents during the August recess. Obama tried to revive the legislation and address some misconceptions with a Sept. 9 speech to a joint session of Congress. End of Bipartisanship Senator Bob Corker , a Tennessee Republican, said he saw a hardening by Democrats, tracing the end of bipartisanship to that address. Rahm Emanuel called Corker at home the weekend before and said “listen to the speech.” That night, Emanuel sat four rows ahead of Corker and could see he wasn’t applauding much. “He motioned for me to call him on the cell phone, which I did,” Corker, 57, recalled. “I told him that speech is the kind of speech you might hear in an Iowa primary or something. It had nothing to do with advancing policy, it was about consolidating the base.” There were efforts at bipartisanship, even if the prospects of success were slim. The most notable was the group known as the Gang of Six put together by Senate Finance Committee Chairman Max Baucus and his Republican counterpart, Senator Charles Grassley of Iowa. The group met 31 times over 63 hours and much of their work became the basis for the final legislation: They had decided against a public option; it didn’t make the final law. Instead of a straight employer mandate to provide insurance to workers, the final bill used Baucus’s model for penalties on certain companies. The group had moved toward medical industry fees and a tax on high-end insurance plans. Both made the bill. Building Blocks “At the very least, Democrats figured out how much reform their caucus could tolerate,” said Jennifer Duffy , a senior editor at the nonpartisan Cook Political Report in Washington. “At best, the group provided the building blocks of what would become the Senate bill.” That none of the Gang of Six Republicans signed on to the legislation reflects the deep political divide in Washington. On Sept. 16, when Baucus, 68, of Montana finally presented his plan, it was under his own name. Standing alone against a red, white and blue backdrop in Room 215 of the Dirksen Senate Office Building, he lacked the usual phalanx of back-slapping lawmakers involved in such moments. This, he said, “is a bill that can pass.” For the Senate, the following months were filled with special deals and arm-twisting. Reid, 70, needed every one of his Democrats to support the bill and used anyone he could to help. Courting Lincoln Rahm Emanuel asked Hillary Clinton to make dozens of phone calls to lawmakers, said two people familiar with the effort. Biden worked on Arkansas Senator Blanche Lincoln , 49, a friend from his years in the Senate, according to two people with knowledge of the meeting. Lincoln won assurances the bill would be made available to the public for three days before a vote. Louisiana Senator Mary Landrieu , 54, got what she called a “fix” of almost $300 million to help her hurricane-ravaged state fund the Medicaid health program for the poor. To secure the vote of Nebraska Senator Ben Nelson , 68, a former director of the Nebraska Department of Insurance, Reid promised not to include a provision repealing the insurance industry’s antitrust exemption. ‘Cornhusker Kickback’ Reid would have to add another sweetener — special aid for Nebraska’s Medicaid program later dubbed the “Cornhusker Kickback.” And on Dec. 18, he would spend 13 hours wooing Nelson and satisfying him that federal funds wouldn’t be used for abortion, with the help of White House aide Pete Rouse and New York Senator Chuck Schumer . The Senate passed its legislation on Dec. 24, and final approval of a House-Senate compromise looked on track until the Jan. 19 election in Massachusetts. Immediately after Scott Brown ’s victory, House members rebelled at the idea of simply passing the Senate bill, and Pelosi on Jan. 21 said she couldn’t get it through her chamber without changes. At one point, she said she was 63 votes short, according to a person with knowledge of the discussions. Obama took the fight behind closed doors, outwardly focusing on other issues while holding meetings to get health care done. California Rate Hike Within days, the announcement by WellPoint’s Anthem Blue Cross subsidiary in California to raise rates provided new fodder for a White House that billed the legislation as “health insurance reform.” That moment crystallized the fight, said Nancy-Ann DeParle , who ran the overhaul effort for the White House. “Anthem raising the rates in California was like, you must be kidding,” Pelosi said in a March 23 roundtable with seven reporters. “Thank you very much. That’s horrible for the people of California, but it’s great for the passage of our bill.” Democrats came up with a plan. First, the House would pass the Senate bill and then it would approve another bill to fix the things House members didn’t like. The Senate would also take up that second bill under a budget process called reconciliation that only required a simple majority vote. Obama’s Campaign Obama started a lobbying campaign, holding 64 meetings or phone calls with lawmakers between March 15 and March 19. He had no tougher or more effective ally than Pelosi. At one House Democratic caucus, shortly before the showdown votes, tempers flared as some members complained that neither the Senate nor the White House could be trusted, according to a person with knowledge of the meeting. “Do you trust me?” Pelosi replied, changing the tone. New York Representative Anthony Weiner said Pelosi, 70, told the members, “The Senate is going to go along because I am telling you I am going to make sure they go along.” By the time the House passed the Senate bill along with the other measure making changes, it was clear the Democrats would win. Obama had his victory. “When I spoke to him after the vote, he said that he was happier after the vote than he was the night that he won the presidency,” Pelosi said at the March 23 roundtable. “And I said, well, I’m pretty happy, but I’m not happier than the night he won the presidency because if you hadn’t won the presidency, we wouldn’t be here.” To contact the reporters on this story: Kristin Jensen in Washington at kjensen@bloomberg.net ; Edwin Chen in Washington at echen32@bloomberg.net
