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Obama's Moment to Mold Health Reform

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Thursday, October 15, 2009

It has taken much longer than President Obama had hoped, but we are finally at the point where he can -- and must -- put his personal stamp on his main domestic initiative, the overhaul of the health-care system.

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Now that the Senate Finance Committee has joined four others -- three in the House and one in the Senate -- in drafting versions of the complex, expensive legislation, lawmakers will turn to the White House for guidance in resolving the many policy questions that must be settled before final votes can be cast.

Through careful navigation of the fiscal and political barriers that have doomed efforts by other Democratic presidents to grasp this nettle, Obama has steered the enterprise to the point that odds now favor a bill-signing ceremony.

But the hardest choices still lie ahead, and what Obama and his key aides -- Rahm Emanuel, Peter Orszag and Nancy-Ann DeParle -- do from this point on will determine whether this is a substantial achievement for the country or simply another gesture toward real reform.

Fortunately, all members of that foursome -- the president, the chief of staff, the budget director and the operating head of the health-care task force -- recognize the priorities and are approaching the task with the right combination of practicality and policy sophistication.

With most Republicans regrettably isolated, by their own choosing, from the negotiations, the White House quartet can focus on their fellow Democrats as they try to line up the 218 votes they need in the House and the 60 that probably will be required in the Senate.

Two things will be needed to reach that goal: first, a plausible plan for making affordable and comprehensive health insurance available to millions who now depend on emergency-room care or go untreated. And second, a way of financing the coverage that pays the prospective bills while reducing the ruinous health-care inflation that threatens family budgets, business bottom lines and the finances of every level of government.

The Democrats are much closer to agreement on the first goal than the second. The months of debate have produced a largely unspoken consensus for offering those without insurance subsidized coverage through a closely regulated market dominated by private firms. The Democrats are still divided on whether a government-sponsored entity should be in the mix. Obama favors it, but he will not insist on it. Whether or not the public option is included, it is clear that most, if not all, Americans who are not enrolled in Medicare or Medicaid will continue to deal with private insurance firms.

The only other coverage question is how many individuals and families will remain uninsured. There is a recognition that millions of people will not be reached in this first bill; how many will depend on how far the money for subsidies can be stretched. But almost everyone now realizes what Obama acknowledged in the campaign: There will have to be a Health Reform 2.

The second challenge -- financing the coverage and reducing medical cost inflation -- is much harder both fiscally and politically, and it is here that the White House's help is most needed.

The House bills envisage a high-income surtax, which is doubly undesirable. Any tax that started immediately would jeopardize a shaky economy. And the general revenue will certainly be needed down the line to combat staggering deficits stretching as far as the eye can see.

The Senate Finance Committee bill, which depends on taxes on high-value private insurance policies, is a far better option. But a simpler and more straightforward way of accomplishing this goal is to end the tax exemption on some or all employer-financed benefits -- a step that would require Obama to face down his labor union allies.

If Obama steps up to that challenge and presses Congress to include more of the delivery system reforms than are included in any of the pending bills, he could find himself signing a really significant law.

If he succeeds, he will deserve the domestic equivalent of the Nobel Peace Prize.


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