Companies & Industries

Health-Care Reform: The Right Kind of Compromise


President Obama offers a case-study in decision-making as he tries to forge a health-care reform compromise without surrendering his fundamental objectives

This week's brouhaha over whether the White House is ready to give up on a public insurance plan as part of health-care reform provides a fascinating window into the give-and-take of Capital politics. But it's also a window into what Peter Drucker called "the elements of decision-making."

In that sense, the dust-up in D.C. is instructive for any leader charged with implementing a difficult decision. Invariably, he or she will be forced at some point to take a step that many people instinctively resist: compromise.

"The leader sets the goals, sets the priorities, and sets and maintains the standards," Drucker wrote in his 1992 book, Managing for the Future. Yet he also "makes compromises, of course; indeed, effective leaders are painfully aware that they are not in control of the universe.

"But before accepting a compromise," Drucker added, "the effective leader has thought through … whether the compromises he makes with the constraints of reality—which may involve political, economic, financial or people problems—are compatible with his mission and goals or lead away from them."

It was many months ago, back on the campaign trail, that President Barack Obama made the fundamental decision to move full steam ahead in trying to overhaul the nation's health-care system. In doing so, he seemed to follow to a tee Drucker's counsel regarding one of the most crucial questions that any executive should ask: "Is a decision really necessary?"

After all, as Drucker pointed out, "one alternative is always the alternative of doing nothing." And this is precisely the course that should be taken "if the condition, while annoying, is of no importance and unlikely to make much difference."

In this case, however, inaction was not a possibility—not with health-care costs soaring and not with 45 million-plus Americans uninsured and as many as 15,000 more losing their coverage every day, by some estimates.

But now has come what the President himself recently described as "the hard part." This is the inevitable stage, Drucker observed, when "it becomes suddenly quite obvious that the decision is not going to be pleasant, is not going to be popular, is not going to be easy."

Making it all the tougher for Obama is that lies are being spread about his beliefs: that he favors "socialism," government "death panels" for the elderly, and other nonsense. Maddening though this may be, the President needs to be extremely careful in the way that he and his surrogates push back, lest they stifle legitimate debate over the details of reform.

Conflict Can Produce Good Solutions

That would be a disaster because, as Drucker knew, the best outcomes emerge from sharply conflicting points of view. For starters, he explained, dissent "safeguards the decision-maker against becoming the prisoner of the organization" he or she is in. In addition, it can present other ideas to fall back on should something later go wrong with the initial effort.

"Above all," Drucker wrote in Management: Tasks, Responsibilities, Practices, "disagreement is needed to stimulate the imagination" and come up with truly "creative solutions" that require "a new and different way of perceiving and understanding."

In the end, the key is to avoid what Drucker termed "the trap of 'being right.' " Rather than beginning "with the assumption, 'I am right and he is wrong,' " Drucker wrote, a great leader "starts out with the commitment to find out why people disagree" and is then prepared to yield where it makes sense to do so.

On Aug. 18, as members of the Administration took to the Sunday morning talk shows, this is exactly what appeared to be happening. They suggested that they were not completely wedded to a "public option"—that is, setting up a government-run medical insurance plan that would compete with private insurers. Such flexibility is wise. All along, opponents have painted this proposal as a federal "takeover" of health-care, and it's this kind of rhetoric that most threatens to derail reform.

At the same time—and even more important—Obama's advisers stressed that their openness to other approaches doesn't in any way mean that the President is forsaking certain essential aims: heightening competition (which should help curb costs) and offering choice. These, though, can conceivably be met through other avenues, including the establishment of health-care cooperatives.

How all of this will shake out is far from clear. Some of the Administration's closest allies are insisting on keeping the public option. More broadly, voters remain deeply skeptical of what the President and congressional Democrats are trying to achieve.

But know this: If we do ultimately get real reform, it will be because the Administration has forged what Drucker characterized as the right kind of compromise—one best expressed, he said, in the old proverb "Half a loaf is better than no bread."

On the other hand, if too much is bargained way—if the President, in desperation, gives up not only the public option but its underlying goals as well, he will have made a very different kind of compromise, expressed in the story of the Judgment of Solomon: "Half a baby is worse than no baby at all." As Drucker noted, half a baby "is not half of a living and growing child. It is a corpse in two pieces."”

And one, we can be sure, whose parents couldn't afford any insurance to begin with.

Rick Wartzman is the executive director of the Drucker Institute at Claremont Graduate University.

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