Sustainable health reform
THE HEALTH reform proposal working its way through Congress represents a major risk, above all to the nation's fiscal well-being. But it also offers a major opportunity for America's fiscal and physical health alike. Depending, of course, on the final shape of legislation, we believe that the risk is worth taking. We hope 60 senators keep the process alive by voting for the bill now before them.
Lately, opponents of the bill have seized the initiative in public discourse and opinion polls. Many of their arguments are weak. Republican scare-mongering about changes to Medicare seems rooted more in a desire to hobble President Obama and his Democratic Party than in genuine concern about the changes, given that not long ago many Republicans understood the need to control Medicare costs. Some Democrats, meanwhile, object to the bill because it contains no "public option" -- no government-run insurance company to compete with private firms. Since an honestly designed public option that would operate on a level playing field would have a minor impact at most, this is an odd bit of ideology to get hung up on. Labor unions, in trying to kill an excise tax on the most expensive insurance plans, have targeted what virtually all economists agree is the single best method of cost containment in order to protect a narrow slice of the workforce that has negotiated better-than-average health insurance plans. And it should not be so difficult to work out a compromise that keeps public funds from paying directly for abortions.
So if these loudest arguments were also the strongest, a vote in favor of health reform would be easy. Unfortunately, there is a far more serious concern. At a time of unprecedented debt, Congress is preparing to enact a new entitlement program that will cost close to $1 trillion in its first decade, and more thereafter. The Congressional Budget Office (CBO) says that both the Senate and House bills are "paid for," as Mr. Obama has rightly insisted they must be, with offsetting budget cuts or tax increases.
But the bulk of those cuts -- $500 billion over 10 years to Medicare -- are at risk of being scaled back when their effects begin to be felt, as both the CBO and the agency that oversees Medicare have noted. Another $200 billion-plus in costs for physician payments has been set aside to be dealt with in a separate bill, as if that makes them less real. And when the law is fully implemented a few years from now, Congress is sure to come under pressure to increase the subsidies it has provided for families to buy health insurance.
AGAINST THIS cost must be balanced, first, the great benefit of raising the insured portion of the legal, nonelderly population from 83 percent to what the CBO estimates would be 94 percent and ending the anxiety among the insured that they could lose their coverage. This would be a major advance, one that was taken long ago by every other developed country, and its positive impact on the country should not be minimized. Poor childless adults would be entitled to health insurance for the first time. The near-poor would receive government help to buy insurance. Insurance companies would no longer be able to deny coverage to those they deem too likely to get sick.
But these benefits, substantial as they are, cannot be argument enough for a deficit hawk -- and any American surveying the deadening effect of debt on opportunities for the next generation must be a deficit hawk. What tips the scale for us -- again, depending on the details of the final legislation -- are the seeds of cost control contained within the bill. Since rising health-care costs are one of two principal factors driving America toward bankruptcy -- the other being the aging of the population -- cost control is critical.
The legislation provides for all manner of pilot programs and experiments to promote efficiency, more rational methods of paying health-care workers, and wellness and prevention initiatives. It provides for research on comparative effectiveness, so that pilot programs that succeed might be replicated and expensive treatments that do not work could be discarded. It contains, as noted above, a tax on the most expensive health insurance plans which, though imperfectly designed, could over time play a huge role in restraining costs. And it provides for the empowerment of something like a medical Federal Reserve Board that would have considerable power to promote cost reductions even in the face of political pressure.
For each of these, much will depend on the fine print. The tax, already weak, cannot be bargained away, despite strong opposition in the House. The medical board must be given sway over more of the health-care system than the Senate bill allows, and it must be tasked to tolerate less health-cost inflation than the bill has deemed acceptable. The administration has said it agrees; it will have to back up its words if the bill reaches conference.
Even then, Congress might undo any of these elements in subsequent years, even while expanding the entitlement. Is that a risk worth taking? Our judgment is based partly on the belief that, with the fiscal picture darkening by the year, the government will seize the tools of cost control if they are provided, almost because it will have no choice.
It is based also on Mr. Obama's commitments, both to capitalize on the cost-containment potential of the bill and to proceed with more general deficit reduction once health reform is in hand. Given his willingness in his first year to make some tough decisions -- on financial rescue, on Afghanistan -- it seems to us he has earned the benefit of the doubt.