February 28, 2007

BUSH/WYDEN:

Better Health Through Politics: Ron Wyden's smart plan (Jacob Weisberg, Feb. 28, 2007, Slate)

The action at the moment is all in the big space between the status quo and single-payer. President Bush started the conversation in his January State of the Union address, in which he proposed capping the tax deductibility of employer-provided plans and creating a new tax deduction for individuals. By turning the health-care tax deduction into a kind of voucher, Bush would discipline spending and allow more individuals to afford insurance. His proposal didn't deserve the scorn heaped on it by leading Democrats. A paper from the liberal Tax Policy Center calls the president's proposal "in some respects ... innovative and a step in the right direction." But Bush is thinking too small. His plan risks undermining the current employer-based system without replacing it, and fails to grapple in a serious way with the problem of the uninsured. [...]

Ron Wyden, the Democratic senator from Oregon, would directly sever that link. Wyden is a politically savvy wonk, who in drafting the bill he recently introduced has tried to learn from previous Democratic mistakes. He recently told me he had read The System, David Broder and Haynes Johnson's massive tome on the failure of the Clinton health-care reform plan, no less than five times. (Apparently, Starbucks now offers an intravenous drip.) Wyden's bill is 166 pages against Hillary's 1364, and he thinks he can pare it further. When he was getting started, Wyden drew a grid of the major interest groups and made sure there were plusses as well as minuses for each in his bill. He has support from CEOs, labor leaders, and even one maverick health-insurance executive. And instead of trying to flatten the opposition, as the Clintons did in 1994, Wyden is courting Republicans. He recently got five of the most conservative men in the Senate to join him and four other Democrats as co-signers of a letter to Bush responding to the White House proposal. The letter endorses the principles of universal coverage and cost containment, and proposes that they all work together on a compromise

Under Wyden's plan, employers would no longer provide health coverage, as they have since World War II. Instead, they'd convert the current cost of coverage into additional salary for employees. Individuals would use this money to buy insurance, which they would be required to have. Private insurance plans would compete on features and price but would have to offer benefits at least equivalent to the Blue Cross "standard" option. Signing up for insurance would be as easy as ticking off a box on your tax return. In most cases, insurance premiums would be withheld from paychecks, as they are now.

Eliminating employers as an additional payer would encourage consumers to use health care more efficiently. Getting rid of the employer tax deduction, which costs a whopping $200 billion a year, would free up funds to subsidize insurance up to 400 percent of the poverty line, which is $82,000 for a family of four. The Lewin Group, an independent consulting firm, has estimated that Wyden's plan would reduce overall national spending on health care by $1.5 trillion over the next 10 years and that it would save the government money through great administrative efficiency and competition.

Can Wyden and his allies market this kind of bill as an advance for competition and choice, which it is?


Which perfectly illustrates how the final deals on such matters will require that Democrats be allowed to pretend. Having your employer give you a voucher for your HSA hardly severs the link, but if Mr. Wyden needs to make believe it does, the President can easily yield the point.

Posted by Orrin Judd at February 28, 2007 6:24 PM
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