On health care, Mr. Obama lets the next president do the hard stuff

Tuesday, February 23, 2010

FOR ALL THE happy talk about Thursday's "bipartisan" health-care summit, President Obama's "opening bid" on health reform is not designed to entice Republicans to join the game. Neither is the framework, based on the relatively centrist Senate version of the bill, aimed at pleasing liberals; it contains no public option or national insurance exchange. But just because both flanks are unhappy doesn't mean Mr. Obama has found the right mix. The changes the administration suggests to the Senate-passed measure heap more dessert on an already calorie-laden plate; the 10-year cost would be $950 billion, the White House says, about $70 billion more than the Senate's approach. Meanwhile, the time for eating spinach would be pushed off even further.

Mr. Obama, following the advice of nearly every economist who has examined the issue, identified a tax on high-cost insurance plans as a key mechanism for curbing the growth of health-care costs. He was right. Unfortunately, in the legislative process the tax already was whittled down several times. Now the president proposes delaying it until 2018 -- long after he leaves office -- and raising the threshold at which it applies. Meanwhile, to recoup the $120 billion lost by the delay, Mr. Obama would apply the Medicare payroll tax to unearned income for the wealthiest taxpayers -- money that should be used to shore up Medicare's shaky finances rather than subsidizing cushy insurance.

The president also would give the government power to block increases in health-care premiums. Given public concerns about a federal takeover of the health-care system, letting the government essentially dictate premiums hardly seems like a step in the right direction. More than half the states already require their insurance commissioners to approve rate increases in the individual or small-group markets; the House- and Senate-passed bills provide authority to review increases for insurers participating in the newly created exchanges. The White House argues that this power will help shield consumers in the four years before the exchanges are up and running, but its recent use of the insurance industry as a political scapegoat does not bode well for its responsible use of such authority.

Mr. Obama has scant operating room between Republicans interested in inflicting political damage and House Democrats disdainful of the more centrist Senate bill. He did improve that bill in some respects: The repugnant special treatment for Nebraska is dropped; states get additional money to help with increased Medicaid costs; subsidies for those who cannot afford to purchase plans on their own are increased. The proposal wisely prohibits makers of brand-name drugs from paying competitors to keep cheaper, generic versions off the market. And it retains an independent commission that could recommend savings in Medicare that would take effect unless Congress intervened.

Overall, though, the president has proposed a plan whose uncertain savings are made even less certain, and whose known costs are increased. Already a trillion-dollar plan was "paid for" with hundreds of billions of dollars in promised "savings" from Medicare; already it ignored a known cost of well over $200 billion in Medicare payments to physicians; already it relegated too many reforms to pilot programs with long horizons.

Now it postpones the key savings mechanism. Administration officials argue that Mr. Obama deserves credit for not dropping the tax altogether. But when did he stand up and fight for the better approach? And what credit or credibility is due a president who endorses a tax but leaves to his successor the unpleasant task of collecting it?

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