Is health reform on track?

This week's story was the faltering momentum of health reform, tending to contradict the argument I advanced on Monday. Despite the ongoing Congressional tussles, which are exactly what one should expect, I stand by my prediction that health reform will pass this year. There might not be a measure by the August recess--a phony deadline if ever I saw one--but there will be by the end of the year. I have three main reasons for thinking this. 1. So far as substance goes, the differences between the various bills are pretty small, and the financing gaps are bridgeable. A House-Senate deadlock is easily avoidable. 2. Obama has come close to staking his presidency on this. On Friday, reacting to a couple of perceived setbacks, of which more in a moment, he doubled down on that commitment in an unscheduled press conference. 3. Most important, Obama has said he is willing to sign more or less anything and declare victory. If a Democratic Congress cannot oblige him even to the extent of giving him some bill, any bill, to sign, when failing to might sink his presidency, I will be astonished.

Whether it's a good bill is of course an entirely different question, and I would say the odds on that are now  slim. We will get a substantial increase in coverage, which is good, but without meaningful action on cost control, and the necessary revenue will be raised, if at all, in stupid ways.

One thing that surprised me about Obama's statement today was that he continues to emphasize cost control, as opposed to wider access, as the principal driver of reform. It is obvious by now that Congress has no stomach at all for cost control, and is arguing mainly over how to raise the taxes necessary to pay for wider coverage. Obama's selling proposition, so to speak, is therefore beside the point; moreover this rhetorical defect is obvious, which is not like him at all.

Douglas Elmendorf's statement in Congressional testimony on Thursday only underlined the point. The CBO director said the bills barely even try to address costs in a meaningful way--"In the legislation that has been reported, we do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount"--and on the whole push in the opposite direction. This should have surprised nobody: the CBO has been saying the same for weeks in its various efforts to score the bills. Be that as it may, Elmendorf's testimony was widely called "devastating" and was greeted as a crucial new development.

This was the setting for Obama's remarks on Friday. With the CBO critique fresh in people's minds, what did the president say? That we must have health reform to control costs! With the best will in the world, you have to call this strategy puzzling.

What would be so wrong with saying we must have health reform to address economic insecurity--note this is not just about the 40m uninsured; people with insurance are worried about losing it--and that the price in higher taxes is worth paying. It happens to be true, after all. That should count for something. Is it really so hopeless a platform?

Max Baucus, chairman of the Senate Finance Committee seems to get it. He is keen on rolling back the tax deduction for employer-provided insurance, a move that, outside union circles, is universally regarded as a great idea. So far, the White House has said no. Noting that Obama is apparently willing to say yes to everything else, his objection to the most straightforward financing solution is difficult to understand. (Well, he promised not to raise taxes for non-rich Americans, you say. That's true. So he did. But he knows that he will have to break that promise regardless. The payroll tax component in the bills breaks it. The tax penalty on individuals defying the mandate breaks it. Why not start work right now on explaining, um, what the pledge really meant?) The second thing that surprised me this week was Baucus's open criticism of the president. "He is not helping us," Baucus said. My word. Three cheers for Baucus. Obama should listen to him. Three cheers for CBO as well. Where would fiscal policy be without it?

My column for NJ this week looks at France's wonderful healthcare system, and says why it may not be much use as a model for US reformers [link expires in two weeks]. A mandatory read if you follow this subject at all is the piece by the invariably excellent Marilyn Werber Serafini, also in this week's NJ. The real model for what the US is going to do this year is the Massachusetts health reform. "Not an unqualified success," says Marilyn. Do yourself a favor and read her article.

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