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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

TDS Co-Editor William Galston: Does Wyden Offer Last Chance For True Reform?

Most accounts of what’s going on in the Senate Finance Committee on health care reform view the various amendments being offered as a buffet of Republican efforts to derail the legislation, and Democratic efforts to make the Baucus bill more like the versions already approved by the House committees and the Senate HELP Committee. And that’s generally the case.
But as TDS Co-Editor William Galston points out at The New Republic, there’s one big exception: Sen. Ron Wyden’s “Free Choice” amendment.
Under the previously approved reform blueprints, and in the Baucus bill, participation in the new “exchanges” that would establish a competitive system of health insurance plans offering federally-established minimum benefits is very limited: basically, they are for the uninsured who do not qualify for public programs, the self-employed, and small businesses. People already covered by employer-sponsored plans are barred from participating. That approach is designed to reassure those who fear the new system will discomfit people happy with their current insurance (other than, perhaps, rising premiums), and to avoid abandonment of employer-based insurance by younger and healthier folk who make coverage affordable for older and sicker employees.
But as Galston argues, the same logic greatly limits the ability of reform to hold down future costs, or for that matter, to satisfy consumer. Wyden’s amendment would require employers who do not offer a choice of affordable plans to offer employees vouchers that could be used on the exchange, and even converted to cash if low-cost alternatives were chosen. And that would have a powerful effect:

Wyden’s plan would offer more choice for both workers and employers, and it would encourage cost containment by encouraging consumers to select lower-cost options. CBO scores the plan as roughly deficit-neutral; the Lewin Group believes that it would actually lower the deficit by reducing the amount of revenue the federal government foregoes because of the tax exclusion for employer-provided health benefits.

So Wyden offers another way to reduce the revenues lost to the vast tax subsidy for employer-sponsored health coverage, while expanding individual choice. But at a time when Democrats are largely committed to a different approach, and Republicans are largely committed to the goal of killing reform altogether, it’s hard to see where Wyden will get any votes.
Perhaps a reformed system could move towards the Wyden approach in the near future, once the exchanges are set up and fears about costs gradually overcome fears about the disruptive effect of changing the employer-based system. But as Galston notes, the issues raised by Wyden can not be avoided perpetually.

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