David Brooks on health care reform: Into the Mire

David Brooks writes in The New York Times:

Barack Obama came to Washington with the nation’s hope for change riding on his shoulders. He promised to reform the health care system. He hired many of the country’s top experts who had written brilliantly about how to do reform.

He immediately moved away from some of their ideas. This was understandable. America isn’t Plato’s Republic. It’s not a nation governed by experts. It’s a democracy. To get things passed, you’ve got to allow for political reality.

So President Obama promised to keep health insurance the same for most Americans. This meant it was going to be harder to bring down costs. This meant it wouldn’t be possible to replace the fraying employer-based insurance system. But these compromises could be justified.

Then the Congress began its deal-making. There were special favors put in for certain senators. There were special arrangements made for big Democratic donors, like the trial lawyers. These were compromises, too. They were ugly, and they soiled everybody involved. But, again, they could be justified for reasons of political expediency. The bill that emerged from the Senate was not to everybody’s liking. It wouldn’t reduce the nation’s overall health care spending.

But at least the Senate bill had some integrity. It would cover 30 million people without adding to the deficit. It did this in real ways. It included real Medicare cuts. Most importantly, it included an excise tax on luxury insurance plans.

The excise tax is one of those ideas health care economists of all stripes love. Currently, we have a perverse tax system that taxes salaries but not health benefits. This exclusion favors the rich over the middle class. It encourages extravagant health spending.

According to the Congressional Budget Office, taxing health benefits is one of the two most effective ways to bring down health care costs. Plus, it brings in a ton of revenue. According to the Lewin Group, a health care consulting firm, the excise tax in the Senate bill would bring in $957 billion between 2020 and 2029. This is what pays for expanding coverage. This is why the president could promise to veto any bill that adds a dime to the deficit.

But, alas, this is Washington, 2010. The muck rises. The compromises never stop.

As the year went on, health care reform grew more unpopular. If you average the last 10 polls, 38 percent of voters support the reform plans and 53 percent oppose. Obama’s reform is more unpopular than Bill Clinton’s was as it died.

As the political costs rose, members of Congress squealed louder. Congress is not a bastion of courage in the best of circumstances. When it is asked to actually pay for its expenditures, it verges on hysteria.

Some Republicans campaigned against the excise tax. John McCain had made the excise tax a centerpiece of his reform plan. But Scott Brown of Massachusetts and others ran against it.

Unions went next. They demanded a special deal so their members would be exempt from the tax. The Democrats caved and gave it to them.

Blood was now in the water. Everyone smelled weakness. If the White House hopes to pass something in this atmosphere, it needs every Democratic vote it can get. It needs to cater to every special-interest plea. Right now, the White House has no leverage.

Efforts to kill the tax mounted. On Jan. 27, Nancy Pelosi told a group of journalists, “The excise tax has no support, very little support, in our caucus.” The pollsters said it was a loser. That was a sign the Congressional leadership wanted it dead.

On Monday, the White House made another compromise. On the surface, it seems mundane. The imposition of the excise tax will be delayed until 2018, and the threshold at which the tax kicks in will be raised. In reality, the delay turns the tax into another Washington gimmick. Lord, give me virtue, but not yet.

The odds are high that the excise tax will never actually happen. There is no reason to think that the Congress of 2018 will be any braver than the Congress of today. It will probably get around the pay-go rules or whatever else might apply and it’ll postpone the tax again. The excise tax will turn into another “doc fix.” This is a mythical provision in which doctors are always about to get their reimbursements cut. But somehow they never do because the cuts are always pushed back, year after year.

So we’ve sunk another level in our tawdry tale. The White House, to its enormous credit, has tried to think about the long term. But it has been dragged ever lower into the mire by Congressional special interests that are parochial in the extreme.

This bill may be deficit-neutral on paper. But it has just become a fiscal time bomb. The revenue will never come. Compromises have to be made to keep it (barely) alive. But responsibility ebbs. Politics wins.