Paul Nitze: Guest Opinion
July 29, 2009
If and when someone tries to write the 2009 health care reform version of “Profiles in Courage,” expect the volume to be very thin. Think pamphlet-sized. One person I can assure you will not be featured is Max Baucus, senator from Montana and chairman of the Senate Finance Committee.
So you should shudder at the news that the fate of health care legislation lies in the hands of Sen. Baucus and five other moderate senators, who have been meeting around the clock to fashion a compromise bill. The chances are vanishingly small that those six senators – three Republicans and three Democrats – will produce a bill that “bends the cost curve” and produces more and better coverage for less money.
Contrary to much of the popular wisdom, “success” on health care reform will not be defined by the degree to which legislation expands coverage. There is only moderate political risk and no courage in fashioning a bill that expands coverage but does little to squeeze costs. No one is better than Congress at using accounting tricks, optimistic cost estimates, and an armada of deferrals to hide the cost of legislation.
So any senator can draw up a bill that dramatically expands coverage but scores, for budget purposes, at a reasonable number – say less than $2 trillion (!) over 10 years. But real courage is required to include features that reduce cost. Those features might include the following: taking Medicare reimbursement rates out of the political process, incentivizing providers to move away from fee-for-service, stripping some tax advantages from employer-provided benefits, and using a public option to squeeze administrative costs.
All of the jawboning about the “public option” and “individual mandates” has obscured some of the first principles of health care reform. The first is that we are already suffering mighty economic pain from health care costs – we pay over 15 percent of GDP for the same outcomes that other countries achieve for no more than 10 percent of GDP. The second is that our pain is about to get much, much worse.
It’s a given that our political climate does not allow for a bill that in one stroke of the pen brings our health care costs into line with other developed countries. But that’s not cause for despair – we should not expect whole cloth reform. Rather, the real choice is between a bill that includes the seeds that will blossom into future cost controls and a bill that expands coverage but further calcifies the status quo.
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If a bill contains those seeds, we will provide them rich fertilizer in the years ahead. The pain we feel now on health care will only escalate, and so we will be forced to turn to whatever tools we have available to control those costs. The trick is to use the current moment to provide those tools, initially dormant, to future lawmakers.
Industry knows this, and so industry will fight hard to keep those seeds out of the final bill. I fear that on this point industry has a good friend in Max Baucus and his quintet of pliable moderates. What industry wants is a bigger pie, with the same-sized slice. The net result will be a plumped-up version of the 2003 Medicare prescription drug bill. That bill cost much more than initially advertised, provided a new entitlement we couldn’t afford, and did almost nothing to keep drug costs down.
Perfuming the air around this reform effort is the odor of the two major parties jostling for power. Not so much an effort to display political muscle today as a tussle for future spoils. Republicans have fought health care reform since the Truman administration in part because a successful reform effort will strengthen the Democrats’ power base for years.
For the same reason, health care reform has been Democrats’ grail quest. Democrats have long argued that the case for government regulation of health care is much stronger than the case for government intervention in other sectors of the economy. Our private health care market has profoundly failed us, and there is no cure for our ailments in the marketplace.
The bill that is likely to emerge from the Baucus group could poison Democrats’ hard-won electoral majorities in no time. With control of both chambers of Congress, Democrats will be tagged with any fallout from this legislation.
Whether it is private insurers who continue to provide a large chunk of coverage, or government that begins to insure many of the roughly half of Americans it doesn’t already cover, we must keep our eyes on the prize. The prize is not universal coverage, as worthy a goal as that may be – it’s avoiding personal and national bankruptcy.
Tag it with whatever label you wish, but a much more intrusive government role in the provision of health care is the only way to get from here to there. No bill that emerges this fall will get us there, but it can point the way. What we are likely to get from the great compromisers is a bill that tries to buy off the American people with increased coverage, while winking at industry on costs. For the country, that is a fiscal disaster. For Democratic politicians, that is political suicide.
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