Andrew Sprung has a great analysis of Obama's reasoning on conversation with Fred Hiatt. The reason is that he wants MedPac to do the cost cutting, on more rational grounds than the cruder cost-cutting that ending the tax break would achieve. Money quote:
The role that Obama envisions for MedPAC is a window on the way he conceives of systemic change generally. He's what you might call a radical incrementalist. Recognizing that the fundamental task in tackling healthcare inflation is to change incentives -- end fee-for-service -- he also recognizes that the payment system cannot be changed by fiat, that the task needs to be done in stages, experimentally, on the basis of what is shown to work. To empower MedPAC in Obama's view is to create a "powerful lever" to "move this big battleship a few degrees in a different direction" and set the stage for a long series of subsequent reforms.
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