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As rhetoric, President Obama’s speech last night was an A+. As policy, it was the clearest description we’ve yet heard of what he really wants. As a step towards getting a bill passed...we’ll see. Here are some thoughts about what the President said.
After a summer of confusion, Obama told us what he wants health reform to look like: Everyone would be able to buy insurance at a reasonable price, regardless of health status; everyone would have to purchase coverage; government subsidies would be available to help many (though not all) of the uninsured buy coverage; and any bill would be fully funded. This is insurance restructuring, not system reform. Still, if Washington can pull it off, it would be a very impressive achievement.
The public option, at least as the left envisioned it, is a goner. Obama left no doubt that a public insurance option is just one possible solution to the technical problem of monopoly pricing in some insurance markets. If some other answer can be found, that is fine with the President. Despite what the left hoped and the right feared, Obama has no interest in a public option as the first step to a single-payer system.
He made two very carefully parsed statements that could be key to the success of health reform: “Reducing waste and inefficiency in Medicare and Medicaid will pay for most of this plan” and “I will make sure that no government…or insurance company bureaucrat gets between you and the care you need.” The last word here is critical--the care you need. Not the care you want—or the care your doctor orders. Just as Republicans are hypocritical when they simultaneously promise to protect seniors and reduce government health spending, so Obama was being more than a little disingenuous last evening. I wish pols would be upfront about the need to change the dangerous and costly “more is better” mindset that drives both providers and consumers.
Obama promised that “I will not sign a plan that adds one dime to our deficits.” Sadly, changes in the size of the projected deficit have been hopelessly devalued as a measure of fiscal responsibility in recent years. The Administration’s baseline is so bloated (by, for instance, assuming most of the Bush tax cuts will be extended forever) that a very expense health reform could meet his test and still add hundreds of billions to the federal debt. Better to use the TaxVox Rule: Compare the future gap between spending and revenues to today’s. If health care spending widens that chasm, there is a problem.
Pay no attention to Obama’s promise to cut future spending if health reform costs more than planned. The Medicare Part D law, “PAYGO,” and the old Gramm-Rudman law all included similar vows that were ignored.
I hate to be the one to break the news, but the tax on insurance companies that sell high cost plans is no different than taxing the people who buy them. If the illusion that the companies will pay the tax makes people feel better, that’s fine. But let’s not kid ourselves. Much of that tax will be passed on to workers.
Finally, a political note: Despite all the hype, speeches don’t get bills passed. Obama’s goal is to convince Congress that a health bill is now inevitable and to pick off the fence-sitters one-by-one. That's why all that pomp and ceremony last night was aimed mostly at a half-dozen swing senators.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.