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Alarm Bell on Health Reform

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Wednesday, September 16, 2009

With apologies to E.F. Hutton: When Ron Wyden talks about health-care reform, people should listen. When Ron Wyden balks at a Democratic health-care reform proposal, people should definitely listen.

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The Democratic senator from Oregon has been the Energizer Bunny of health reform for the past five years. This week he lobbed a big rhetorical stink bomb. Wyden warned publicly that the package being crafted by the Senate Finance Committee would cost lower-income Americans too much and give many people too little choice of insurance plans.

Under the Finance Committee proposal, individuals would be required to obtain insurance. But to drive down the cost of the package, Montana Democrat Max Baucus's Gang of Six -- a gang that pointedly does not include Wyden -- trimmed the size of the subsidies available for those who could not afford insurance on their own.

Now, a family earning three times the poverty level -- $66,150 for a family of four -- would have to pay up to 13 percent of their income for health insurance. And that's just the premiums -- not counting deductibles, co-payments and out-of-pocket expenses.

"I don't know very many working-class families who you can look in the eyes and say: 'Do you have that kind of money in your checking account?' -- because they don't," Wyden told me.

Those without coverage would face a fine of as much as $3,800, unless costs exceeded 10 percent of their income, in which case they would be given an "affordability exemption." In other words, they wouldn't have insurance, but at least they wouldn't be penalized for it.

"Folks are having trouble affording coverage that meets their families' needs now. And they have been hearing from the White House and Congress that they're going to get health-care security," Wyden said.

If the Baucus proposal passes, he said, "They're going to say, 'Huh? Health-care security means I pay a whole lot more than I'm paying today or I get to be exempt from it, or I pay a penalty?' They're not going to say that meets the definition of health-care security."

The "hardship exemption," he said, is "a big congressional punt." The people most in need of insurance -- those in their late 50s and early 60s -- will end up saying, as Wyden put it, "I'm just as uninsured as I was before I heard all the politicians speak."

On choice, Wyden argues, the White House and congressional plans have defined eligibility for the new insurance exchanges so narrowly that the vast majority of Americans won't be allowed to participate.

For all the hullabaloo over the public option, the reality is that most Americans would not be eligible to choose even a private option. In an effort to avoid destabilizing employer-sponsored health care, the exchanges will be open only to the uninsured and small businesses.

"Nobody ever told the folks carrying the public-option signs all over America that 85 percent wouldn't even get to choose it," Wyden said. "For hundreds of millions of people, they're going to have no more leverage after this bill passes than they do today. They work in some company, some person they don't know in the human resources department decides what's good for them. Nothing has changed."

There are reasonable explanations for why Wyden's colleagues and the White House made the choices they did. A price tag of more than $1 trillion for a more generous subsidy package induced sticker shock -- though the cost ought not to have been surprising.

Lawmakers and the White House were unwilling to take the political risk involved in paying for a more generous package. The most logical way would have been limiting the amount of employer-sponsored insurance that can be provided tax-free -- an approach that ran headlong into union opposition.

Likewise, opening up the exchanges to more takers could destabilize the employer-sponsored system -- to which one rational response might be, "Yippee." But President Obama decided not to mount such a broad assault on what Wyden describes as "the status quo caucus." Wyden noted that Obama, speaking to a rally in Minneapolis on Saturday, emphasized the importance of choice and competition in the health-care marketplace. "Now, the question is: Can you make the legislation resemble the speech, and so far there's a big gap."

From an ally of the administration, those are strong words. From someone who has put so much effort into health reform, they are disturbing ones.

marcusr@washpost.com



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