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Crunch Time for Fixing Health Care

By Ruth Marcus
Sunday, March 22, 2009

You wouldn't know it from the headlines, but it's crunch time on health-care reform. In a series of high-level meetings at the White House and on Capitol Hill, critical decisions are being made that will help decide whether the comprehensive health reform that has eluded policymakers for decades finally comes to fruition -- and what the system will look like for decades.

What's being fitted together right now -- in ambitious hopes of a public unveiling this spring and floor action this summer -- are interlocking parts of an intricate jigsaw of clashing ideologies, interest groups, political personalities and congressional fiefdoms.

The stakes are enormous. "If it isn't done this year, it won't be done for the next four years," Iowa's Charles Grassley, a key player as the senior Republican on the Senate Finance Committee, said last week at a breakfast sponsored by the Kaiser Family Foundation. "If we do something incremental this year, we're never going to have comprehensive health-care reform."

Here are Five Hard Pieces on the way to that goal:

Piece One: Should there be a public insurance option? This is a question that evokes near-religious fervor and that could crash the whole enterprise. Republicans hate the notion of a government program because they fear, with ample reason, that it is a slippery-slope step to a single-payer program. Liberals demand a public insurance alternative for precisely that reason.

Potential solution: Have the public program abide by the same rules as private plans, so it has no inherent advantage.

Drawbacks: In that case, what's the point? Plus, anything that smacks of a public program will be unacceptable to Republicans.

Piece Two: How to pay for the program? Specifically, should employer-provided health insurance, no matter how generous, continue to be treated as tax-free income? This is a huge pot of money -- more than $200 billion annually. The current arrangement is not only unfair, it's also counterproductive, encouraging overconsumption of health care. But unions, which have negotiated generous health packages, oppose changes, and during the presidential campaign, Barack Obama denounced John McCain's proposal to eliminate the exclusion as a $3.6 trillion tax hike.

Potential solution: Go partway, taxing benefits above a certain dollar amount and/or for those at a higher income level. A cap on benefits has the added cost-dampening advantage of encouraging insurers to offer policies in this range.

Drawbacks: This approach produces a lot less money, somewhere between $30 billion and $90 billion, depending on how it's structured. At some point, all the burden of reform can't be put on the wealthiest.

Piece Three: Should individuals be required to purchase insurance? The argument is that this individual mandate would keep spending and premiums down by spreading costs over a healthier population, ensuring preventive care. Health insurers have embraced such a mandate (more customers!) in exchange for having to insure applicants regardless of their health status. But Obama condemned Hillary Clinton's proposed mandate as a scheme to "go after people's wages."

Potential solution: Go for the mandate because it makes sense and the politics are reasonably uncomplicated: insurers are for it; unions aren't opposed; small business won't go ballistic, as with an employer mandate. Use automatic enrollment to get people covered and a relatively "soft" mandate, without draconian penalties.

Drawbacks: The mandate is difficult to structure and enforce. It will be effective only with generous low-income subsidies, which will be expensive. (See Piece Two, above.)

Piece Four: What mechanism should there be to control costs? Specifically, should there be some kind of national health board to determine what benefits should be covered -- or not? Electronic health records and comparative-effectiveness research are important steps, but not enough on their own to bend the curve of ever-increasing health-care costs.

Potential solution: Have a board that makes these decisions only for federal programs. As with Medicare now, that ends up influencing private insurers' behavior.

Drawbacks: This opens the door to charges of rationing and government-controlled health care -- and ads that make "Harry and Louise" look like "Sesame Street."

Piece Five: How much muscle should Democrats use to get health-care reform done? The temptation is to use special budget procedures known as reconciliation that would allow Senate Democrats to approve health reform with just 51 votes. House leaders, fed up with being held hostage by Senate gridlock, are pushing this approach.

Potential solution: The White House is already floating one: hold out the stick of using this shortcut down the road -- say, September -- if agreement can't be reached.

Drawbacks: The rules limit how much policy change can be done this way and give huge power to the Senate parliamentarian to rule things in or out. Simply including this technique as a possibility in the soon-to-be-unveiled budget resolution would be incendiary. And wielding the stick would be the end of bipartisanship as we never got a chance to know it.

The writer is a member of the editorial page staff.

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