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Stick With Plan A

Harold Pollack is the Helen Ross Professor of Social Service Administration at the University of Chicago and a Special Correspondent for The Treatment.

The Washington Post has an editorial this morning that doesn't exactly oppose the President's health reform proposals, but gives the President a rap on the knuckles for not being more aggressive controlling costs. They are particularly aggrieved that the President proposes to delay the implementation of the "Cadillac tax" on high-cost health plans to 2018.

Count us among the worriers. The tax is key for two reasons. It would raise revenue needed to pay subsidies to the currently uninsured; Mr. Obama chose the politically easier option of extending the Medicare tax to unearned income of the wealthy, thus making it more difficult down the road to prevent Medicare from going bankrupt. And, by discouraging expensive plans, such a tax would be the single most effective tool to reduce the cost growth that threatens the nation's well-being.  

This editorial is one of the more exasperating documents to appear during health reform.

I happen to favor the "Cadillac tax," though I wish it were more explicitly limited to affluent taxpayers. This is a sensitive issue. Workers have made wage concessions to expand or to preserve generous health benefits that might be affected by the new policy. I see nothing inherently wrong with giving unions and firms more time to adjust collective bargaining agreements in light of new tax policies. 

Especially perverse is the Post's criticism of proposals to raise Medicare taxes on the wealthy. Viewed outside the context of health reform, this provision provides one needed corrective to the regressive tax cuts enacted during the Bush years. The idea that it is simple political expediency to raise taxes on capital income of the wealthy comes as a great surprise to anyone who has followed American tax policy over (say) the past 30 years. 

Three other issues are especially irksome in the Post's editorial. 

First, President Obama proposes many features designed to reduce the level and growth of medical spending. He has gotten little political credit for these complex and controversial measures, but they are there.

Insurance exchanges will reduce administrative and marketing costs in the markets for individual and small-group coverage. This idea enjoys wide Democratic and Republican support. The President would reduce significant overpayments to Medicare advantage plans. He supports bundled payment models and other innovations designed to improve quality and cost-effectiveness of care. He supports greater use of comparative effectiveness research to provide an evidence-base for improved resource allocation decisions. 

Over considerable opposition from within his own party, the President supports an Independent Medicare Advisory Board modeled after the commission that recommends military base closings. The Congressional Budget Office gave the President little credit for this in the scoring numbers. Yet this change could have a potentially revolutionary impact on Medicare policy--which is exactly why so many pharmaceutical and medical device manufacturers, many medical specialties, and many elected politicians are unhappy with this measure. 

Some of these measures are buried in the fine print. Others were included despite deep opposition from self-avowed fiscal conservatives whose concern for the federal budget precisely stops at the boundaries of their own states or their own favored constituencies. (The most powerful cost-control measure, a strong public option, was brought down by Republicans, insurers, and virtually the entire supply-side of the medical economy, but that is another story.) 

These obvious realities underscore the second reason why the Post's argument is so irksome. Although the House and Senate bills include many specific elements favored by (for example) officials in the last Bush administration, Republicans have made a basic strategic decision to filibuster and to vote in lockstep against the signature policy initiative of the Obama Presidency.

As a result, President Obama needed to corral every single Democratic vote to pass the signature measure of his presidency. The President was willing to deal on tort reform and other difficult matters. Although the gang of six talked interminably, no Republicans were willing to deal. 

Proposed piecemeal, the cost-control measures already contained in the President's proposal would command little public or interest-group support. These measures would command little enthusiasm from a Congress freed from the fiscal constraints required to pass a comprehensive bill that simultaneously provides critical benefits to millions of people.

The Post seems oblivious to the fact that defeat of the President's comprehensive reform would damage any future cost-control effort. Interest groups that oppose specific measures--certainly including the "Cadillac tax" --would cite this defeat in discouraging politicians from supporting similar efforts. They would cite the success of crudely demagogic "death panel" rhetoric to deter serious measures to improve the quality and economy of Medicare services.

Progressive politicians desperate to help millions of uninsured people would learn from this episode that the smart move is to propose a politically attractive package of benefits without offsetting spending reductions or taxes to pay for it. I would hardly blame them.

Then there is the third reason. The Post writes: "We think that it is not asking too much, given the dire fiscal straits, for Washington to show that it can swallow distasteful medicine while, and not after, it passes out the candy."

No candy is being distributed here. The bill whose survival is at stake is not some pork-barrel agriculture or weapons bill. After decades of failure, this bill would provide critical protection for 30 million uninsured people. It would help millions of others facing medical bankruptcy because they are underinsured or because they have serious illnesses leading them to exceed lifetime insurance caps that would be immediately ended under the President's proposal.

This very morning, our local Catholic church presented an appeal from a family whose infant son was diagnosed with Hemophagocytic Lymphohistiocytosis, a rare and deadly disease. As the costs of his care approach $1 million, the family has established a website appealing for help. They have no plan B. There is no plan B for states, either, which desperately need this bill to avoid even more dire fiscal difficulties than are projected for the federal government.

The President has spent the past year, and has risked much of his presidency, to address these critical needs. After this bill is passed, he and the Congress should pursue further serious cost-containment efforts. The current bill provides the best platform to do this. 

There is a moral urgency to passing this bill. The President, House and Senate leaders might have done more to cut costs if they had even secured one or two moderate Republican votes. They had to cut some messy deals to get this done. There were good reasons to do so. Against heavy odds and several decades of failed efforts, President Obama and his allies are close to getting this done. By fetishing a single imperfect aspect of the President's proposal, the Post mischaracterizes the policy dilemma. The Post also misses the magnitude of what is at stake.