Curing What Ails Health Reform With More Reform

Max Baucus, chair of the crucial Senate Finance Committee, wrote a health reform plan. Apparently he was expecting it to carry a price tag of around $1 trillion. Instead, the CBO says it’ll cost $1.6 trillion. Baucus could have responded to this by insisting that the CBO is mistaken and he intends to pass his bill with $1 trillion in offsets and prove the world wrong. Or he could have responded with a determination to find $600 billion in additional money. Or a mixture of those two. But instead, he’s promised to cut the bill down to a $1 trillion bill — setting a fairly arbitrary constraint around what happens. That said, you could actually do a perfectly good health care overhaul for not that much money. As Ezra Klein explains:

This CBO estimate could be the first step towards making health reform better rather than worse. Rather than capping the employer tax exclusion, the Finance Committee could end it entirely and convert it, as Ron Wyden does, to a progressive standard deduction. Wyden’s plan, incidentally, was scored by CBO as being revenue neutral in two years and revenue positive in four. Rather than protecting the private insurance system, the Finance Committee could include a public plan with the ability to bargain to Medicare rates, thus saving, according to the Commonwealth Fund, 20 percent to 30 percent against traditional private insurance. Ezekiel Emmanuel, brother to Rahm and health-care adviser to Peter Orszag, has a proposal for a universal voucher system funded by a value-added tax. All these ideas would make health reform better, cheaper, and more sustainable.

The kicker comes in the very next sentence, however, when Ezra observes that “None of them, so far as I know, are under serious consideration.” I complained about this phenomenon this morning already, so I won’t bore you again. But it makes me mad! This is important stuff. Americans are going to have a substantially lower standard of living in the future than we could have in an alternate reality in which more radical health reforms were on the table.