'This is what change looks like': Obama basks in historic victory

Healthcare reform passed by House of Representatives by a slim majority, but the battle is not over yet, vow Republicans

(PETE SOUZA/WHITE HOUSE)

Democrats and Barack Obama were yesterday celebrating a victory that has revitalised the party, revived a faltering presidency, and set in motion the biggest changes to America's system of healthcare since the heady days of Lyndon Johnson's "Great Society" programmes of the 1960s.

The 219-212 vote by which the House of Representatives approved the Senate's version of healthcare reform late on Sunday night is of course anything but the end of the battle. Republicans who unanimously opposed the legislation vow to continue their fight, and the chief legal officers of a dozen Republican-governed states threaten to block it on constitutional grounds, as a violation of states' rights.

More immediately, the Senate must pass a separate package of fixes to the measure enacted by the House – anything but a given, even under the budget-related "reconciliation" process that will be used, whereby Democrats require only a simple majority of 51.

Republican leaders again served notice they will throw up every possible procedural obstacle, as John McCain, the party's defeated 2008 presidential nominee, declared that Democrats had not heard the last of the argument. He personally was disgusted by "all this euphoria going on", while citizens across the country were angry with what had happened: "They don't like it, and we're going to repeal this".

But, for the moment, there was no hiding the delight of Democrats at the achievement of a goal that has eluded every President since Harry Truman, of bringing guaranteed health insurance to virtually all Americans. Whatever happens now in the Senate, Mr Obama will be signing a bill within days.

In a deliberately symbolic gesture, the gavel used to close debate and announce the result was the same one used in 1965 when Congress passed the Medicare and Medicaid reforms, providing coverage for the elderly and the poor. Afterwards, an exultant Mr Obama acknowledged that the $940bn (£623bn) measure will not correct every failing of the vastly expensive and inefficient US health system. But "it's a victory for common sense. It moves us decisively in the right direction. This is what change looks like."

The victory sealed an extraordinary turnaround since 19 January, when the shock Republican capture of the late Edward Kennedy's seat in Massachusetts cost Democrats their 60-vote filibuster-proof majority in the Senate. At that moment, reform hopes seemed dead. But, prodded by Nancy Pelosi, the House Speaker, Mr Obama resolved to press on regardless, with a new strategy involving only a simple majority in the Senate, where Democrats and their allies still hold 59 seats. Having decided to stake all on victory, a galvanised President produced the passion and rhetoric not seen since the campaign trail of 2008. On Sunday evening, his gamble was triumphantly vindicated.

Now a long period of stocktaking is likely. On Wall Street, the final passage of a healthcare bill came as a relief, and shares in insurance and hospital companies rose at the opening, amid the realisation that many of the bill's most important provisions will not take effect until 2014, and that its ultimate impact is unclear.

Some 32 million Americans will be covered, extending insurance to 95 per cent of the population. In future almost everyone without insurance will be required to buy it, with the aid of tax credits and other subsidies for families earning less than $88,000 (£58,000). If they do not, they will face fines.

In return for the windfall of new customers, the insurers will be barred from such controversial practices as refusing coverage to people with pre-existing conditions, and arbitrarily withdrawing it when people need it most. Medicaid meanwhile will be expanded, while high earners will have to pay a higher Medicare payroll tax. From 2018, workers will also be taxed on so-called "Cadillac" plans offered by high-end employer-based schemes.

Republicans were confident yesterday that they could keep the issue alive, aided by an unrelenting drumbeat of criticism from the conservative talk shows and the burgeoning anti-government Tea Party movement – hundreds of whose members protested loudly and crudely, but ultimately in vain, against the measure outside the Capitol building here over the weekend. Polls show that Americans are split down the middle on the issue, with half supporting the reform, and half believing that the measure is a "socialist" increase in government that the country cannot afford.

Amid their delight, even Democrats admit hostility to health reform will cost them some seats in November's mid-term elections. But, they argue, the damage would have been far greater had the bill been lost. Not only would Mr Obama's top domestic priority have been defeated, but the party would have been seen as incapable of governing, despite its large Senate and House majorities. Now however, they believe they can turn the tables on their opponents, who may have overplayed their hand.

Healthcare: The key changes

*What does this mean for America?

The reforms will extend health insurance to another 32 million people by 2019, guaranteeing that 95 per cent of the population is covered.

*Who is affected?

Almost every American will be affected whether it is the better-off paying more in taxes and fees, or those who have, until now, been outside the health insurance net. Many Americans who are employees of large companies are already covered and the changes to the system would not be significant for them. But almost everyone without insurance – such as healthy young people who previously chose to opt out – must now buy in or pay a fine.

*Who is eligible for insurance?

Thousands of previously uninsured Americans with pre-existing health conditions will now be able to buy insurance under the reforms, according to the White House. They had previously been outside of the system because, for example, insurers considered them too ill to be insured or they could not afford the high premiums. Insurance companies will be barred from dropping people from coverage when they get sick, and from excluding children from coverage because of pre-existing conditions. Many young adults will also be able to stay on their parents' health plans until the age of 26 – instead of when they turn 19 or finish their education.

*How much will it cost?

The $2.5 trillion US healthcare industry accounts for one-sixth of the nations's gross domestic product. The Congressional Budget Office estimated that the reforms would cost $940bn over 10 years. But because of higher fees and taxes paid by those who can afford it, the office also said that the US deficit would be cut by $138bn over the same period.

*What does it mean for US business?

From 2014, firms with 50 or more employees who do not offer coverage could be fined. Some smaller firms will be offered tax breaks to provide insurance to their workers.

*How do the changes affect the poor?

The national government-run healthcare programme for the poor, Medicaid, will be expanded under the reforms from 2014. The poorest families will be exempted from having to buy insurance.

Reactions to the bill: Triumph or compromise?

*We [Republicans] followed the most radical voices in the party, and they led us to abject and irreversible defeat. There were leaders who knew better, who would have liked to deal. But they were trapped ... How do you negotiate with somebody who wants to murder your grandmother? Or – more exactly – with somebody who your voters have been persuaded to believe wants to murder their grandmother? David Frum, FrumForum

*My father [Senator Edward Kennedy] always believed that our country was about expanding opportunity for more and more Americans ... As he said, this is the unfinished business of America. Congressman Patrick Kennedy

*This legislation is a major political symbol wrapped around a shredded substance. It does not provide coverage that is universal, comprehensive or affordable. It is a remnant even of its own initially compromised self.

Ralph Nader, The New York Times

*It may prove to be the signal accomplishment of Obama's administration, even though the controversy surrounding it threatens to end his party's majority. Rarely has such a good thing for Americans been perceived by so many as a threat ... The path to a sustainable healthcare system is long and complex; Sunday's vote was a good start.

Editorial, The Los Angeles Times