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Department Of All Kinds Of Stupid, Afscme Edition

One of the most auspicious signs in the reform debate has been the impressive focus of supporters on the left. Liberal interest groups been pouring money and manpower into advertising and organizing; they've been putting up a united front; and, for the most part, they haven't focused on parochial issues that could undermine the whole effort.

Until now.

On Tuesday, one the nation's most powerful unions, the American Federation of State, County, and Municipal Employees (AFSCME), announced an advertising buy in Oregon. Why Oregon? Because that's the home state of Senator Ron Wyden.

The ad--a 60-second radio spot--begins by making a well-crafted, persuasive case for reform, including a vibrant public insurance option:

Finally, Congress is working to fix heatlh care. 

They should start by making insurance affordable for families and busiensses. 

We shoud also have a choice, keep the insurance we have or pick another plan--including a public health insruance option. That way, we'll hae good benefits at a price we can afford, no matter what happens.

But then the ad turns to its intended target: Senator Wyden. Wyden has proposed a universal coverage plan; to pay for the expansion of coverage for everyone, he'd end the tax exclusion on group health benefits. And that's what AFSCME doesn't like:

The last thing we need is to pay more.

But Senator Wyden would tax health benefits at work, as if they were income. Taxing health benfeits? That doesn't make sense. Tell Senator Wyden oregon families want quality, affordable health care, not taxes on their health benefits.

Call Senator Wyden today.

We can fix health care reform without paying for the benefits that we already have.

To go with the advertisement, AFSCME has also launched a website: "Stop Wyden's Health Tax." 

Wyden is a liberal Democrat with a strong record on labor issues; he's also the one who put universal health care back on the political agenda after the 2006 elections. Targetting him in this way seems rather odd.

But leave that aside. This isn't about Wyden. It's about the future of health reform. While Wyden's plan has some serious flaws, like the lack of a public insurance option, the proposed tax change is a strength. Liberals who go after it--and AFSCME has company here--are making a big mistake.

As I've written before, finding the money to pay for coverage expansions is the single biggest obstacle to reform. If Obama, the Democrats, and their allies can't agree on a way to come up with somewhere between a half-trillion and a trillion dollars in additional money, universal coverage will not happen. Stop. Period. End of story.

Modifying the exclusion could provide most if not all of that money. And it could do so in a highly progressive manner (by, for example, capping the exclusion only for more affluent taxpayers) while simultaneously appealing to moderates who think it's a smart way to streamline the tax code.

To be clear, modifying the exclusion has political perils, too. What's more, AFSCME objects--fairly--that such a move would disproportionately affect public employees, who have passed up wage increases over the years in order to secure good health insurance. But if tinkering with the exclusion isn't a perfect solution to the money problem, it's a good one. Progressives serious about reform simply can't afford to take it, or any other viable funding options, off the table.

To its credit, AFSCME has done more than its share to advance the cause of health reform over the years. This move, alas, could set the cause back.

Update: I should mention that there are some other ideas for financing health reform out there. A new paper from a Washington think-tank, due out later this week, mentions a few good ones. (More on the ideas, and their virtues, when the paper goes public.)

But ask around Washington, and you'll find most people working full-time on this issue think the way I do: We can't pay for universal coverage without taking at least some money from the exclusion.

--Jonathan Cohn