President Obama’s speech last Wednesday night was an “8” in public presentation terms. The speech gave health care reform new life and his administration new spirit. But the sense afterward, among both Republicans and Democrats in the House and the Senate, was that it was very general. And it was: It had nothing beyond the President’s assurance that costs would begin to be managed and that there were going to be more turning points –- probably.
One of the first of those turning points will arrive within a week. Max Baucus, chairman of the Senate Finance Committee, will release what is called a “chairman’s mark.” This mark will present the chairman’s view –- derived after months of negotiation -– of where the committee’s draft legislation should be. The administration has begun to work closely with the c hairman and very clearly wants this mark to be where health care eventually ends up. Beyond its “make nice” words, the administration has recognized what everyone else has: None of the other pieces of legislation being developed has a chance, or ought to have a chance. I do not think this mark will be the final story, but it will be important. No matter what is in the bill, it still has to get out of the Senate, it still has to go to conference with an awful House bill, and the whole issue of reconciliation remains directly in front of us.
Let’s move to substance. The problem is no one really knows what is in the chairman’s mark (so much for transparent government), and the field of play in terms of policy is still so wide that we could wind up with (a) a terrible bill; (b) a bill that improves access but does nothing real about costs (the most likely); (c) a bill containing the seeds of real structural change (the least likely). The president’s speech moved the game from “a” toward “b,” but there is no actual administration position. So all of this is much more subject to negotiation than is even normally the case.
My concern today is that the Senate, and the administration are headed in a direction that in absolutely no sense can be considered transformational. (I guess it is transformational that there is anything at all, but the health care system itself is not transformed.) There are still vast problems with the system; those are not fixed by the changes being considered; and there is no reason at all to think that change will be easier in the future than it is now. The last thing anyone in this administration or Congress will want to do is take up this issue again. President Obama is not going to be the last president to have to deal with this problem, and we will be a lot closer to the impending fiscal cliff the next time.
There is a way we could make a modest step toward real improvement. Senator Ron Wyden (D-Ore.) has introduced a “free choice” proposal which he will seek to have made a part of the chairman’s mark. Senator Wyden proposes that current employers who offer health care to their employees be permitted to make use of the “exchanges” –- the national insurance marketplace -– being established. Employers would provide their employees with a voucher equal to the employer’s health insurance payment. Employees would then be free to buy their current insurance or to go to the exchange and buy insurance of their choice.
Right now, the approach proposed by everyone else actually prevents employers from using the exchange. I think this is nuts. Such a preclusion restricts exchanges, making them much smaller and less competitive than they would other wise be; lessens the degree of choice individual buyers have; and keeps all of us permanently in the hands of corporate human resource bureaucracies. Progressives seem to be willing to go to the mat for the principle of competition (when embodied in a public option). Here is a way that produces far more competition in the health exchanges and actually makes the over-all system better. This would seem to me to be the kind of direction President Obama would take to immediately.
Roosevelt Institute Braintruster Bo Cutter is a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team.