Two cheers for US health reform

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My latest column for the Financial Times:

After a frazzled week, the politics of US health reform looks messier than ever. Yet the odds on a bill passing in the end are improving. It will be an untidy thing, but if it moves the country close to universal health insurance the administration will call it a success. And on the whole, despite the avoidable mistakes this legislation seems bound to embody, that will be a fair assessment.

At the moment this view may seem unduly optimistic. The Democratic leadership in the House of Representatives had hoped to produce a finished bill last Friday. That plan came to nothing when the party's fiscal conservatives demanded further savings. House Democrats are also divided on revenue-raising measures. Proposals ranging from a fat tax on sugary drinks to a fat-cat surtax on households earning more than $350,000 a year are still being debated.

The Senate is struggling with the same issues: how to contain the cost of expanded insurance coverage, and how to pay for what remains, so that the reform adds nothing to the budget deficit over 10 years. Like the House, the Senate aims to broaden coverage with a mixture of mandates, regulation and subsidies. Those basic elements are decided. But at the end of last week the chairman of the Senate budget committee said that the bill's drafters would have to start all over on key aspects of the proposal.

This apparent lack of progress is misleading, however. A mixture of creative accounting and substantive amendment on both the cost and revenue sides is closing the financing gap. Meanwhile, the already broad consensus that some kind of comprehensive health reform must pass continues to strengthen. Action is now seen as inevitable. Barack Obama has staked his presidency on it. Even those who oppose elements of the bills - including organised interests that felled previous attempts--concede that something must be done. Almost certainly, something will be.

Unfortunately, as the article goes on to argue, the reform that's coming will be far from ideal:


Ending the tax break [on employer-provided health insurance] altogether would pay for universal coverage, with revenue left over to set against the long-term budget deficit. At most, Congress is likely to snip, adding some revenue to other tax increases and cost-side nips and tucks. As a result, the country's labyrinthine tax code will end up even more complicated, the full benefit of ending the US model of employer-provided insurance will be lost and needed reforms in the delivery of services will mostly be ducked. But a law will be signed. Coverage will be widened. Health reform will have happened.

The White House will call it "mission accomplished". In fact, the challenge of long-term cost control will be more urgent than now, because of broader coverage. More than today, if that were possible, the tax system will need radical simplification. And health insurance, regardless of the mandates, will still be less than guaranteed. But there will be no going back - and in politics that is success.



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