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Congress would do well to keep two key provisions in Senate health bill

Tuesday, December 22, 2009; A18

THE PARTY-LINE, early-morning Senate vote Monday to end the Republican filibuster of health reform all but assures Senate passage of the measure before Christmas. That is a welcome but worrisome outcome.

It is welcome because, as we said in a snowed-under editorial Sunday, the United States is the last developed country not to ensure affordable health care for its citizens. The Senate bill, like its House counterpart, would extend coverage to more than 30 million Americans who would otherwise be uninsured, with subsidies to those who cannot afford coverage on their own. It would change the rules -- and to some extent, the underlying incentives -- for insurance companies: No longer would they be able to exclude people or charge them higher prices because of preexisting conditions. And it would carve a toehold of cost control into the health-care system, potentially yielding both better results and lower spending. Rapidly rising health costs and an aging population make the status quo unacceptable. Controlling health-care costs is a necessary though insufficient step toward putting the country on a sustainable fiscal path.

Yet the grim fiscal picture is also the reason that the measure is worrisome. No one should contemplate without concern a vast new entitlement program when the federal debt has ballooned so dangerously. The measure is paid for, and more, on paper; President Obama was right to insist that it should be. But the tab is paid in large part with $500 billion in Medicare cuts to health-care providers, raising the question of whether future Congresses, beseeched to provide relief, will withstand entreaties to soften the hit. Likewise, with the new mandate that individuals obtain insurance, there will inevitably be a clamor for Congress to increase the subsidy amounts.

Those risks are one reason that, as the measure heads to a House-Senate conference, lawmakers must retain the Senate's approach on two key provisions: the excise tax on high-value insurance plans and the independent Medicare commission with power to get changes through Congress on a fast track.

The tax on high-value insurance plans, endorsed by health economists of every ideological stripe, would bring the dual benefit of helping pay for reform and imposing a brake on rising prices. It is far preferable to the surtax on high-income individuals contained in the House measure. Likewise, the Medicare commission, which is not part of the House bill, would bring rational decision making to health-care administration. This, too, is an essential element of the package. In fact, it was improved in the version of the bill that Senate Majority Leader Harry M. Reid (D-Nev.) brought to the floor -- leading the Congressional Budget Office to give the bill even more credit for reducing deficits in the second 10 years than the earlier version.

The outcome in the Senate seems foreordained. The final, critical hurdle will be the massaging of the two measures in conference committee. Given the exquisite difficulty Mr. Reid faced in cobbling together 60 Democratic votes for his manager's amendment, there does not appear to be much room for bargaining with the House; the Senate seems, once again, to have the upper hand. Given the important differences between the two measures, that is a good thing.

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