The case for passing the Senate bill

DURHAM -- The election of Scott Brown in Massachusetts ends the Democrats' filibuster-proof majority in the U.S. Senate and sent political shock waves through the system. On balance, my guess is that there is a 5 percent chance that 218 House Democrats pass the Senate bill and it becomes law, a 5 percent chance a scaled-back health plan passes, with no legislation being the most likely outcome.

The reality of the health system didn't change last Tuesday, and remains unsustainable. We will spend $35.3 trillion on health care from now until 2019 if no legislation is passed ($2.6 trillion in 2010, rising to $4.7 trillion in 2019; 1 trillion, is 1,000 billion). The rate of "uninsurance" is escalating. For people with employer-based insurance, wages rose by 30 percent in the last decade while insurance premiums rose by 130 percent; expect more of the same.

And the financing problems of the Medicare program that have been inevitable since the baby boomers had fewer children than their parents are now upon us. In 2009, Medicare consumed 14 percent of the federal budget. In 2019, it will be 20 percent, simply because the baby boomers are moving into Medicare.

Deleting a Tax Subsidy from the EquationThe Senate bill is politically partisan, but from a policy perspective, bipartisan. It is reminiscent of the Republican alternative to the Clinton plan in 1994 with an individual mandate to purchase insurance, and the setting up of insurance markets in which individuals could purchase private policies with income-based subsidies, while covering lower-income persons via Medicaid. With the bill passed by the Senate on Christmas Eve, 31 million Americans would have coverage in 2019 who otherwise will be uninsured. And no one would be denied coverage due to pre-existing conditions. CBO says the bill reduces the deficit.

The Senate bill has aspects that should begin to slow health care cost inflation. If it were the last thing done it would not be enough to put us on a path of fiscal sanity. As a first step it is good policy and puts us on this path, and I would vote to pass it on the policy merits.

However, I get why many are opposed. In talking with people over the last month, the following are what most know about reform: Abortion controversy (it will either roll back a woman's right to choose or explode the number of abortions; it is really hard for it to do both of these at the same time!); and special deals (Nebraska and Louisiana Medicaid deals and the delay in the high-cost insurance tax applying to labor union insurance plans). "Inside deals" is the primary narrative of reform, and people understandably hate it.

The biggest problem with not passing the Senate bill is that it is hard to see how the problems will be addressed later. Two straight Democratic presidents have attempted comprehensive reforms; the first ended in failure, and this one is headed that way. The Republican Party is effective and unified on defense. However, when in power, they do not show an inclination to tackle these problems, and their ideological clarity that is a plus on defense doesn't translate easily into actual policies.

Take the Patients' Choice Act (PCA), the most comprehensive Republican reform alternative, co-sponsored by Sen. Richard Burr. It sets up private insurance markets with a soft individual mandate in the form of auto-enroll procedures. It would repeal the tax exclusion of employer-paid insurance, which is a policy goal I agree with. Tax credits would be provided to help persons buy insurance ($5,710 for family cover) and this has been promoted as a tax cut.

However, I get $7,200 in tax-free income from Duke University's paying my premiums, so PCA would result in about a $1,500 net tax increase for me. If you are now uninsured, it would effectively be a $5,710 tax cut.

At its heart, the PCA simply redistributes the federal government's subsidy of private insurance to give everyone the same amount. Of course we know what Republicans would call that while playing defense.

I am willing to get less tax-free income via health insurance because I think it would be good for the country, and I also don't know that my children will get a job with such good insurance when they grow up. And with some additional policy tweaks, PCA could be better than the status quo.

But recent history doesn't give me much confidence that the Republicans will wade into the politically difficult swamp of health reform if nothing passes this year and they regain control. However, if the Senate bill is passed, then I do believe all sides will return to reform with inevitable tweaks and changes, probably each Congress for the next five.

Is there a chance of a scaled-back bill? Maybe. But the one thing I can think of that is worse than doing nothing is passing the consumer protections (ban pre-existing conditions, etc.) and doing nothing else. This will cause the small and fragile individual insurance market to implode as only sick people sign up, premiums shoot up, and the healthy drop insurance. This option is very popular according to polls, which shows the limits of doing health policy via what is polling popularly this week.

The House should pass the Senate bill because it is a good step ahead, whose passage will ensure the continued focus on the health system that will be needed to take further steps to slow cost inflation and create a sustainable health care system.

Donald H. Taylor Jr. is an assistant professor of public policy. His blog is available for discussion of this article and health care reform in general. This is part of a series of articles by Donald Taylor exploring aspects of the health care reform issue originally published in the News & Observer