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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Health Care Money Woes

Even as much of the elite-level discussion of universal health coverage continues to focus on the “public option”–the existence and nature of a government-run insurance plan that would compete against private plan, as proposed by the administration–a more basic issue may prove to be the biggest obstacle to health care reform: money.
Yesterday TNR’s health care specialist Jonathan Cohn metaphorically hit the “panic button” over two Congressional Budget Office estimates of the cost and impact of health care proposals eminating from the Senate HELP and Finance Committees:

On Tuesday, the Congressional Budget Office delivered its scoring of a bill that the Senate Finance Committee had submittted. The (relatively) good news was the projected impact: The proportion of people without insurance would drop by two-thirds. But the price tag came in at $1.6 trillion over ten years. That was a lot higher than expected.
It’s not clear to me why the score came so high; I don’t know whether it was a problem of bigger outlays (on subsidies, Medicaid expansions, etc.) or smaller offsets (efficiency savings, tax increases, etc.). All I know is that Finance members and their staffers were hoping to come in a lot lower.
And the timing of the announcement was just awful. It came one day after the CBO delivered another projection, this time to the Senate Health, Education, Labor, and Pensions (HELP) Committee. That verdict was different: HELP’s language, according to CBO, would mean outlays of just $1 trillion. But CBO also predicted the HELP bill would ultimately reduce the number of people without insurance by less than half.

Keep in mind that two of the original ideas submitted by the administration for helping offset the cost of moving to universal health coverage–significant auction fees from a cap-and-trade system for carbon emissions, and a tighter cap on income tax deductions for high earners–have pretty much been killed in Congress. And a third–limiting the exclusion on health care benefits from income taxation–is unpopular as well (and it doesn’t help that Democrats harshly criticized John McCain for proposing “a tax increase” via this route last year).
All these money problems with financing health care reform come at a time when polls are showing heightened concerns about budget deficits. Just today, a new NBC/Wall Street Journal survey shows 58% of Americans
agreeing “that the president and Congress should focus on keeping the budget deficit down, even if takes longer for the economy to recover.” Similarly, a new CBS/New York Times poll shows respondents favoring deficit reduction over spending to stimulate the economy by a 52%-41% margin.
It’s becoming increasingly obvious that the President will need to spend some serious political capital in convincing both Congress (especially nervous Democrats) and the public that we can’t afford to put off health care reform any longer. That’s what Stan Greenberg has been suggesting based on the bad experience of the Clinton health plan, and all the current signs point to the need for a big push from the bully pulpit.
UPDATE: Ezra Klein concurs with Jon Cohn’s unhappy assessment of the impact of CBO’s cost estimates this week:

[H]ealth reform has just gotten harder. The hope that we could expand the current system while holding costs down appears to have been just that: a hope. And CBO doesn’t score hopes. It only scores plans. The question now becomes whether we want health-care reform that achieves less of what we say the system needs, or more. Doing less would be cruel to those who have laid their hopes upon health reform. But doing more will be very, very hard.

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