A final health-care order from the House and Senate menus

By Ezra Klein
Washington Post Staff Writer
Sunday, January 10, 2010

After a long legislative season and a hard fight, we're down to the decisive final moments on health-care reform. Over the next few weeks, the House and Senate will merge their bills into a single, final piece of legislation. This is, in other words, their final chance to improve the bill before passage.

I'm an ardent defender of the legislation at hand -- the most important social policy advance since the Great Society, cuts the ranks of the uninsured by more than 30 million, reduces the deficit, starts on cost control, etc. -- but there is room for improvement.

Negotiators will take up the hard work of deciding whether to use the House's approach, the Senate's approach or some synthesis of the two. To be sure, it's not likely that the legislation will stray far beyond the boundaries set by the House and Senate bills, and those two bills really aren't that far apart anyway. But they do have differences. A document floating around Congress this week takes 11 pages to outline 50 of them. The opportunity to merge the measures gives us armchair taxpayers a chance to second-guess the process -- to pick and choose from the two lists like coaches selecting in the draft -- our very own health-care reform fantasy draft.

Mine focuses on five areas. The House bill is better on coverage, affordability and insurance regulations. But the Senate bill is better on cost control. Ready?

From the House

The subsidy scheme: This one's really a no-brainer. The House's legislation makes insurance more affordable than the Senate's does. And really, that's what this process is all about. The House would expand Medicaid coverage to households with incomes of up to 150 percent of the poverty level, rather than the 133 percent proposed by the Senate. And between 150 percent and 300 percent of the poverty level, the House's subsidies are stronger, helping people buy better insurance, at a lower cost, with less out-of-pocket risk, than the Senate bill. For decades, Democrats have worked to ease the plight for folks who can't afford insurance. To come this far only to choose the less generous subsidy scheme would be like building a grand house only to decide to save a few bucks by not putting locks on the doors.

National insurance exchanges: The exchanges are the new marketplace -- complete with regulations on insurer behavior and Amazon.com-like consumer ratings -- where people will buy insurance. At the beginning, they're only for very small businesses and the uninsured. Over time, larger employers will enter the fold, and the exchanges could prove the future of our health-care system. The Senate bill hands them over to the states, and it separates the exchanges for small businesses and individuals. The House bill lets the federal government run them unless the states specifically seek the authority, and it combines the small business and individual markets into one. Bigger exchanges with stronger regulators are better exchanges with more protections for consumers. Go with the House version.

Employer participation: The original sin of the American health-care system is that a tax quirk meant to prevent profiteering during World War II ended up routing health-care insurance through employers. That's bad for all sorts of reasons, not least that it drives up costs because individuals don't know the real cost of their insurance. But employers like controlling their worker's benefits, and so they've prevailed on Congress to leave it unchanged. Fine. The House bill forces employers with more than $750,000 in payroll to provide insurance to their employees or pay a fine. This gets people covered and raises more than $130 billion from employers that choose to pay the fine rather than cover their workers. If employers decide they don't like this arrangement, then maybe we can finally strike a deal to get beyond the employer-based system once and for all.

From the Senate

Excise tax: Keep the tax for expensive, employer-provided insurance. The House bill taxes the rich. The Senate bill taxes extremely expensive insurance plans. If that were all there was to it, the House bill would be better. But the Senate bill's tax also controls costs: By making extremely costly insurance even more costly, it gives a big advantage to insurers that manage to keep costs down. It also begins to redress our system's insane and regressive decision to tax wages but not employer-provided health benefits. Most economists think this one of the most promising cost-control ideas in the bill. It's also one of the riskiest: If the legislation doesn't control costs, the tax will begin to hit more and more plans as time goes on. But cost control is going to be hard to do. At some point, we have to muster the courage to try.

Independent Medicare Commission: The reaction most Americans had to watching the health-care bill wind its way through the Senate was disgust. Disgust at the partisanship, at the power of special interests, at the cynical use of the filibuster, at the senators who extorted last-minute goodies and concessions and bribes. Oddly enough, the Senate itself agrees. The Medicare Commission is an effort to remove continuing reform of Medicare from the Senate's clutches. An independent body of experts would propose reforms that bring Medicare in line with spending targets. Those packages could not be amended or filibustered or ignored. The House bill doesn't have this provision, possibly because the House is less dysfunctional. But the Senate is right: The Senate is terrible, and it needs to be removed from the process to the greatest extent possible.

There's much more that you can imagine being improved in the bill: Regulations on insurers could be stiffened, the start date could be moved from the 2014 envisioned by the Senate to the 2013 preferred by the House, more could be done to move Medicare away from paying for volume and toward paying for quality. It's a big bill, with a lot of moving parts. So much of the effort in past weeks was getting it ready for passage. Congress shouldn't waste this opportunity to get it ready for America.


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