Mr. Obama's Prescriptions
The president offers more specifics on health reform but still leaves key questions unanswered.

Thursday, September 10, 2009

"THE TIME for bickering is over," President Obama declared Wednesday night. Perhaps that will work better on members of Congress than it does in some families of our acquaintance, but we have our doubts. Mr. Obama spoke Wednesday night to a nation skeptical of his health-care plans and a Congress divided, within the Democratic Party as well as between Democrats and Republicans, about the proper approach. The president was more prescriptive than he has been previously in detailing what he wants the legislation to contain and how it should be paid for; this specificity was welcome, and much of the president's approach is sensible.

But he chose again to duck the biggest dispute of all: whether the new insurance exchange must contain a government-run "public option." Mr. Obama once again outlined the arguments for a public plan and once again said it was not essential. Perhaps the president's advisers made the right political calculation in determining that Wednesday night was not the time to embrace a particular alternative, such as nonprofit cooperatives or a trigger under which a plan would be created only if private insurers do not reduce premium costs to a certain level. But this laissez-faire strategy guarantees that the rather peripheral debate over the public option will continue to dominate the health-care discussion.

Mr. Obama sketched out a measure that would cost $900 billion over the next decade -- about three-fourths the size that the administration initially envisioned but still containing the basic elements of universal coverage. The money would come from an amalgam of savings in federal health spending programs and a new tax on insurance companies that offer plans costing more than a set amount. This is an ungainly and inefficient, but politically safe, way to approach the goal of limiting the amount of health benefits that can be offered tax-free.

The president extended something of an olive branch to conservatives pressing for limits on malpractice lawsuits, but it remains to be seen whether his proposed demonstration projects are a sturdy limb or mere twig. The medical malpractice system is an expensive lottery that does a poor job of both assigning blame and compensating victims; the threat of liability encourages some doctors to order unnecessary tests and procedures. Mr. Obama's pilot projects -- which the Bush administration discussed but never got around to implementing -- may be useful but are hardly a major overhaul of a flawed system.

Likewise, the president's suggestion for a "fiscal trigger" strikes us as contrived. Mr. Obama announced a mechanism by which the president would have to certify, before the measure goes into effect in 2013, that the planned expansion of coverage remains fully paid for. If not, additional savings would have to be found, or spending scaled back. This doesn't seem like a major means of restraint -- especially when the president's Office of Management and Budget would do the calculating. The real need for a trigger mechanism arises once the plan goes into effect. How can the brakes be put on if planned savings don't materialize or if costs are higher than anticipated?

On that score, a new study of the projected costs of the House version of reform offers some chilling numbers. During the second 10 years in which the measure would be in effect, the Lewin Group study found, the expanded coverage would add more than $1 trillion to the deficit. In that case, the cure would be worse than the disease. It is essential, in the coming weeks, that the president hew to his promise that whatever plan emerges won't make the country's dire fiscal situation even worse.

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