If you were playing a drinking game while watching the Democratic National Convention this week and had to take a swig of alcohol every time a speaker uttered the word “change,” you would get plastered each night. Your hangover would last until well into the Republican National Convention next week.

Democrats are promising the most change in health care. In her rousing speech on Tuesday, August 26, Sen. Hillary Rodham Clinton, D-New York, assuaged supporters disappointed that she didn’t win the presidential nomination by promising them that Sen. Barack Obama, the soon-to-be Democratic standard-bearer, would usher in universal health care if he is elected president.

One expert in Washington cautions against such optimism. Paul Hewitt, executive director of Americans for Generational Equity, a group that promotes entitlement reform, says Obama would likely get hamstrung by Democratic majorities in Congress.

They will prevent him from making the compromises necessary to enact legislation that will undoubtedly require a lot of complex negotiations. In the same way that it took a conservative president—Richard Nixon—to open relations with China in the early 1970s, it could take a conservative president today—John McCain—to make headway on an intractable domestic issue.

“Our best hope for health reform is McCain,” Hewitt says. “A Democratic Congress is going to tie Obama’s hands. If you’re going to broker the deal, you are going to get a lot of your partisans mad.”

McCain has the advantage in that sense. The conservative Republican base is perpetually upset with him because he has made a career of compromising with Democrats on major legislation. If he wins the presidency, he’s less beholden to conservatives than ever.

McCain could cobble together a majority in favor of health care reform by combining at least one-third of the GOP congressional caucus with enough Democrats to get over the top, Hewitt says.

I took advantage of the quiet in Washington this week to meet Paul for lunch. He is a novel thinker and straight shooter, a combination that is sometimes difficult to find in Washington.

Full disclosure: Paul is a former colleague of mine. He headed the Global Aging Initiative at the Center for Strategic and International Studies when I was the think tank’s director of communications.

Entitlement reform will define the next president’s term, Hewitt says. The favorable demographic trends—e.g., more U.S. workers than retirees—that allowed political parties to squabble mindlessly over health care and Social Security for the last 25 years have dissipated. Copping out by cutting taxes while increasing entitlement spending was possible in the past.

With baby boomers potentially retiring in droves, hard choices now face President Obama or President McCain. Currently, health care spending accounts for 17 percent of U.S. economic output. The health care bite is set to grow to 30 percent of GDP by 2030.

Bringing down those numbers, Hewitt says, can’t be done by a policy that is being embraced by Obama—raising taxes on the wealthiest Americans.

“In order to solve the problem, we’re going to have to create new wealth,” Hewitt says. “The only way you can create new wealth is by not beggaring the people who make it. You cannot means-test your way or progressively tax your way to a solution. You’re going to have to go after the households getting benefits or their kids.”

He also recommends raising the eligibility age for entitlements. He also backs reducing the amount of money paid to doctors and eliminating their incentive to run more tests to increase revenue.

If raising taxes becomes central to health care reform, Hewitt says that could eventually undermine support for Obama from one of his strongest constituencies—young people in college or who have recently graduated.

Earlier this summer, Hewitt hosted a Capitol Hill summit on entitlement reform featuring about 100 young leaders.

“When you present them with the facts, they make some pretty tough calls,” Hewitt says. “Obama is going to be confronted by a group, if they focus on [entitlement reform], that is going to set themselves in opposition to a core Democratic strategy for the last 30 years, which is pandering to senior citizens.”

The supremely confident, aggressive and impatient Generation Y could blanch at the soaring costs of caring for geriatric baby boomers. “They’re going to resist having the benefits of their college education taxed away,” Hewitt says.

Either Obama or McCain is going to inherit a tough job.

Michelle Obama provided a fist-bump to the National Partnership for Women and Families on Friday, June 20, by appearing at the organization’s annual luncheon in Washington.

The sense of optimism and momentum surrounding her husband’s chances to win the White House are apparent when Mrs. Obama is in a room.

That’s why it was a coup to get Mrs. Obama on the partnership program. She rearranged her schedule to be there, according to event organizers.

Washington is a town based on relationships and appearances. The people with whom you associate directly affect your status. For the partnership, that means their issues will be at the forefront of an Obama administration.

The group is a leading advocate for equal pay for women, paid sick days and paid family and medical leave. In her remarks, Mrs. Obama spoke of mothers she met on the campaign trail whose salaries haven’t kept pace with the price of groceries. If they take a second job, they can’t afford baby sitters, she said.

“When will our leaders not only support but champion the cause of working families?” she asked. “It’s time for the leaders of this country not only to champion these causes but to fight for them every day.”

After missteps earlier in the campaign season, she was fairly heavily scripted and didn’t achieve the soaring rhetorical levels of her husband. She got her point across more sharply when she said, “Basic health care is not a privilege but a fundamental right of every single American.”

In closing, she reflected the urgency that her husband tries to convey.

“We don’t have time to wait,” she said. “There’s too much at stake.”

The political ground may be shifting even before the presidential election in November. On Thursday, June 19, the House passed a bill that would provide four weeks of paid parental leave to 1.8 million federal employees for the birth or adoption of a child. The measured passed with a healthy margin at 278-146.

The White House has threatened to veto the measure, calling it a “costly, unnecessary new paid leave entitlement.” Yet it garnered the backing of 50 Republicans. Its fate in the Senate is unclear.

But Democrats are using the bill to frame their approach to employment issues. They argue that they don’t want workers to have to make a choice between loved ones or their jobs.

“It is time to turn family values into a reality in the lives of the workforce,” said Rep. Carolyn Maloney, author of the bill, during the House floor debate.

The partnership touts gains it has made this year—expanding family and medical leave for military families and gaining approval for paid leave in a couple cities and states.

“If we can accomplish all this in a recession … in an election year … in the seventh year of an administration that has turned such a blind eye to women and families, just think of what we’ll be able to accomplish next year—and in years to come,” said Debra Ness, president of the partnership.

If Democrats increase their margins on Capitol Hill, which is likely, and win the White House, which is looking more and more probable, organizations like the partnership will be in ascendance.

That will put pressure on groups like the Society for Human Resource Management that represent the management side of these issues. They raise concerns about costs and the regulatory burden on business operations.

They’ll have to work hard to reach compromises with the partnership to keep themselves in the fray on Capitol Hill. So far, they’ve been able to come to agreements with advocacy groups on mental health parity and disability law. Look for the same approach during an Obama administration.

In my next two blog entries, I will outline ways that this fall’s elections will affect issues that are important to our readers. Too often, American politics is portrayed as a horse race, focusing on who’s ahead, who’s behind and who has momentum.

This fixation notwithstanding, the party that crosses the finish line first will produce real consequences on a range of issues. And it’s no mystery that the victors will be the Democrats—at least on Capitol Hill. The White House is still in question.

In the House, the 17-seat Democratic majority could increase by as many as 25 seats. The Republican Party has a branding problem worse than that of New Coke a couple decades ago. For a variety of reasons, the GOP is leaving a bad aftertaste with the American people, which has led to three consecutive Republican losses in recent House special elections.

In the Senate, the picture is equally bright for the Democrats. They are likely to end up with 56 to 58 seats, a sharp increase from the 51 they currently hold.

One outcome of increased Democratic majorities is that consumer-directed health care in general, and health savings accounts in particular, will be under attack.

Democrats oppose HSAs for the same reason they resist individual Social Security accounts. They believe they are emblematic of what they call the Republican preference for an “on-your-own society.” HSAs make people fend for themselves in the health care market, as Social Security accounts would make them do in the retirement market.

An example of the Democratic attitude toward HSAs was on display at a House Ways & Means subcommittee hearing May 14. At the meeting, a Government Accountability Office study of HSAs was released.

It showed that HSAs are growing in popularity. The number of lives they cover has risen from 438,000 in 2004, when they were introduced, to 6.1 million in January.

It also showed that people who indicated HSA activity on their tax returns in 2005 had an average adjusted gross income of $139,000, compared with $57,000 for everyone else. Average contributions were $2,100, while average withdrawals were $1,000.

These statistics fueled the Democratic charge that HSAs are for the “healthy and wealthy.” Here’s what the subcommittee chairman, Rep. Pete Stark, D-California, said in prepared remarks:

“The selection of healthy and wealthy people, if these plans were widely adopted, would lead to a devastating cost increase for all who decided to remain in conventional insurance. These plans simply shift costs and responsibilities to consumers. It will discourage lower- and middle-income people from seeking care when they need it.”

Rep. Dave Camp, R-Michigan, responded that the GAO made a mistake in relying on data from 2005, when HSAs were being rolled out, instead of today, when more than 6 million people use them. He accused the GAO of drawing an “erroneous sweeping conclusion.”

He said that HSAs were instrumental in increasing coverage among employees of small companies. He also cited statistics that showed 45 percent of people using HSAs made less than $45,000.

The Republicans were allowed to invite one witness to the hearing: Wayne Sensor, CEO of Alegent Health in Omaha, Nebraska. Sensor said that his firm’s health costs have dropped 15 percent since he started offering HSAs and other consumer-directed health care to his employees.

But Stark chided Sensor for only contributing $100 when employees open their HSA accounts. “You’re giving the store away there,” he said.

Democrats portrayed HSAs as tax shelters in which wealthy people can keep money away from the IRS until they use it for non-medical reasons after turning 65. Before 65, there is a 10 percent penalty for withdrawals for non-health-related purposes.

Democratic antipathy toward HSAs finds its way into legislation. Last month, the House passed a tax bill that would require stricter IRS reporting requirements for the use of HSAs, a move that HSA advocates say would add cost and complexity to the accounts and could cause employers to drop them.

Most Democrats, including freshmen from conservative districts, voted in favor of the bill. Even though many newly elected members of the party are more conservative than Stark and other Democratic leaders, they probably won’t defend HSAs.

Compelling arguments can be made that HSAs do little to address the needs of the 47 million Americans who lack health care coverage and that they cause low-income Americans to avoid needed care. And it may be that President Bush and the Republicans want to skew the tax code to favor misguided health care policy.

What do you think? Does your company provide HSAs and other forms of consumer-directed health care? Why or why not? Is it effective? I’m curious to know where our readers come down on this heated congressional debate.

Something rare happened this week in Washington. AARP, the mammoth retiree organization, struck out on an issue it had been advocating for years.

The Mighty Casey of special interest groups whiffed in its effort to force companies to provide the same level of benefits for retirees regardless of their age. 

On Monday, March 24, the Supreme Court declined to hear a case that centered on whether the Equal Employment Opportunity Commission can allow companies to offer less medical coverage to retirees who qualify for Medicare than they do to retirees  younger than 65.

The EEOC wrote the rule in 2003 in response to a 2000 decision by the 3rd Circuit Court of Appeals in Philadelphia stating companies that coordinate retiree coverage with Medicare violate federal age discrimination laws.

AARP filed suit against the EEOC rule. That led to several years of litigation. During that time, the Supreme Court ruled on a separate case dealing with the authority of agencies to interpret statutes.

In June, the court effectively reversed itself and upheld the EEOC rule. Now the Supreme Court has stiff-armed AARP’s appeal, ending the legal process.

Business groups hailed the Supreme Court’s lack of action. “Retirees and employer benefit plan sponsors can breathe a little easier,” said James Klein, president of the American Benefits Council, in a statement.

The court found persuasive the argument that businesses and the EEOC make in favor of wrapping retiree benefits around Medicare: Employers might reduce or abandon health care coverage for all retirees if they can’t offer less coverage to their post-65 population and depend on Medicare to make up the difference.

AARP called that approach a double standard.

“By allowing employers to reduce or even eliminate health benefits for retirees when they reach age 65, this rule essentially shifts the costs of all retiree health care onto the backs of older retirees,” said David Certner, AARP legislative policy director.

Don’t look for Congress to jump in and try to clarify the legislative intent of age discrimination legislation to prohibit companies from using a Medicare carve-out.

Although Democratic majorities on Capitol Hill have been eager to push back against court rulings (e.g., a bill to overturn the Supreme Court decision in the Lilly Ledbetter age discrimination case), their ardor is likely to be diminished this time because unions joined business advocates in siding with the EEOC.

Although they opposed AARP in this battle, unions and business have joined AARP in a strange-bedfellow alliance called Divided We Fail, a national advocacy campaign designed to force congressional—and presidential—candidates to deal with health care and entitlement issues.

AARP acknowledges the legal setback it suffered in the Supreme Court this week. But it remains hopeful about setting the election agenda.

The EEOC rule “is an unfortunate byproduct of the bigger problem, which is skyrocketing health care costs,” said Jim Dau, an AARP spokesman. “We’re keeping our eyes on the big picture. Affordable health care and financial security are closely linked.”

As the clock winds down to the two-minute warning for the Bush administration, the Department of Labor has proposed to modify the Family and Medical Leave Act for the first time in its 15-year existence.

That move drew a predictable reaction—from Democrats who say the changes are an assault on employee leave and from the business community, which sought more profound action. Here is a summary of the situation from February 14:

“Democratic Leaders Oppose Revising FMLA Regulations”

One of the objections that Democrats brought up at the February hearing about the regulatory proposal is that it is coming too late in President Bush’s tenure. The comment period ends April 11. Then there is precious little time to issue a final rule and get the approval of the Office of Management and Budget.

Why did the Labor Department wait so long to offer the 477-page proposal? The answer provides some hope that middle ground can be found between FMLA advocates who don’t want a syllable of the law changed and business interests that would like to see fundamental revisions to two areas most prone to abuse—the definition of a serious condition and the use of unscheduled intermittent leave.

Victoria Lipnic, assistant secretary of labor for the Employment Standards Administration, said the administration came forward with FMLA changes as soon as it could. She notes that the DOL has been engaged in meetings since 2003 with those who use, administer and promote FMLA.

Those sessions produced a raft of questions that became the basis for a survey, concluded in 2007, that produced 15,000 comments. The department then sifted through that feedback, reviewed FMLA court cases during the last 15 years and finally put out the FMLA regulatory proposal in February.

That hefty volume was strengthened because the long gestation gave the DOL a better understanding of how FMLA is working, according to Lipnic.

“We came to this in a deliberative way,” she said in an interview after the February 14 hearing.

A close reading of the regulation shows that the DOL painstakingly included both sides of the story. Within the same paragraph, it quotes champions of FMLA and opponents. Then it offers a recommendation that doesn’t fully please either side.

The proposal is hardly revolutionary. It could have been much better or much worse, depending on your frame of reference. It declines to change the definition of a serious health condition and does not significantly alter rules for intermittent leave, other than to require that employees warn their supervisors before the beginning of their shift that they will be out.

The DOL does allow companies to contact directly an employee’s health care provider to determine whether leave is legitimate. But if the company denies leave, under the new rules, it would have to do so in writing and give the employee a chance to respond.

Despite balancing attempts, tweaking FMLA causes political sparks to fly. “The administration couldn’t publish the current rules without getting into a fight,” said Marc Freedman, director of labor law policy at the U.S. Chamber of Commerce.

But in the midst of political heat, FMLA also generates light. Most HR professionals acknowledge that the leave law works well more often than not. Sen. Christopher Dodd, D-Connecticut and the original FMLA author, wants to enact paid leave but also has indicated in the past that he would listen to calls from the business community for some FMLA modifications.

After the February 14 hearing, Dodd met with Lipnic in private. Perhaps in the quiet of a Capitol Hill office, they inched closer toward middle ground that is overshadowed by politics in congressional hearings.