A Few Symptoms
President Obama's first foray into the details of health-care reform

Monday, June 8, 2009

THROUGHOUT the first months of his administration, President Obama was resolutely fuzzy about the details of health-care reform. Last week, he modified that strategy, which was designed to avoid a repetition of the dictated-from-on-high approach of the Clinton health-care debacle. In a letter to Sens. Edward M. Kennedy (D-Mass.) and Max Baucus (D-Mont.), who are leading the legislative process in the Senate, Mr. Obama laid down more specific markers than he had previously about his preferences.

One of the most important was the president's reaffirmation that health-care reform must be fully paid for. "Health care reform must not add to our deficits over the next 10 years -- it must be at least deficit neutral and put America on a path to reducing its deficit over time," Mr. Obama wrote.

Mr. Obama was less clear, however, on how the bill should be paid. The administration's budget identified $635 billion in spending cuts and tax increases over the next decade -- about half the amount needed. But half of that half -- a proposal to generate $326 billion by limiting the value of deductions of those in the top tax bracket -- landed with a thud on Capitol Hill; lawmakers ought to reconsider their opposition to it.

Mr. Obama, for his part, ought to reconsider his aversion to changing the unfair and counterproductive arrangement by which employer-provided health insurance is not treated as income for tax purposes. Following a White House meeting, Mr. Baucus reported that the president was open to limiting the value of this tax-free benefit, and we hope that is what the president meant when he referred in the letter to "appropriate proposals to generate additional revenues." As to the rest of the funding, Mr. Obama spoke vaguely about another $200 to $300 billion in Medicare and Medicaid savings. Details of these savings are supposed to be unveiled this week; we look forward to seeing them but wonder why, if sensible and achievable, they were not included in the administration's original plan. Perhaps of even greater long-run significance, Mr. Obama proposed a kind of supersizing of a group called the Medicare Payment Advisory Commission (MedPAC). This advisory group annually recommends smart changes that would improve Medicare and save money -- and annually sees most of its recommendations ignored by lawmakers who have no appetite for the political heat those changes would generate. Mr. Obama would have MedPAC operate on the model of the military base-closing commission, with its proposals subject to a fast-tracked, up-or-down vote. This would professionalize a process now driven more by politics and lobbying than by sensible health policy, helping control costs of private plans as well as Medicare.

More disappointing was Mr. Obama's restated commitment to a public health insurance option as part of the array of available plans. A public plan is not necessary to maintain a competitive market in health insurance, but including a public plan is almost certain to doom what Mr. Obama says are his hopes for a bipartisan agreement. Given the high stakes involved in an overhaul of this magnitude, it would be unfortunate indeed if health reform were to be a one-party endeavor.

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