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Oberlander: Health Reform Likely To Depend On (Budget) Reconciliation



March 30th, 2009

Whether comprehensive health reform passes this year is likely to depend on whether Senate Democrats are willing to use the so-called budget reconciliation process, which would allow them to pass health reform with a bare majority of 51 votes, Jonathan Oberlander said in a March 25 interview for the Health Affairs Blog. Oberlander, an associate professor of social medicine and health policy and management at the University of North Carolina, recently published an article in Health Affairs examining the history of the State Children’s Health Insurance Program and the lessons SCHIP offers for today’s health reform debate.

If the reconciliation process is not used — and some prominent Senate Democrats such as Finance Committee Chair Max Baucus (MT) have expressed opposition to using the procedure – 60 votes would be needed to break a Senate filibuster. Oberlander said he doubted that Democrats could find 60 votes for many of what most in the party “consider to be the pillars of reform,” even if Al Franken is seated as the junior senator from Minnesota.

“I don’t think that any of the big issues have been resolved at this point, be it the public plan, or the employer mandate, or perhaps most critically how to pay for all of this,” Oberlander observed. On the financing issue, he noted that the approximately $630 billion over ten years included in the Obama budget was “at best half” and perhaps only a third of the money needed to pay for comprehensive health reform and universal coverage. He also pointed out that the House and Senate budget committees had “taken out even the few limited specified measures” that the Obama administration had proposed to pay for health reform, including capping certain tax deductions for wealthier Americans.

“The spin is that this gives them maximum flexibility,” but the other way to look at it is “they’re simply avoiding hard decisions,” he said.

Oberlander said he saw grounds for optimism in the Obama administration’s commitment to passing health reform this year, even in the face of the economic crisis and the overwhelmingly full plate of other issues the administration faces. He also noted that the administration has adopted an inclusive attitude toward stakeholders, avoiding the Clinton administration’s hostility toward the insurance industry, and he  pointed to the different situation in Congress today as compared to 1993: “You have folks like Baucus, running the Senate Finance Committe, who really want to make this work, and that contrasts greatly with Sen. Moynihan back during the Clinton years.”  

But Oberlander also emphasized that at points in 1993, many of the key stakeholders had actually signed on to the Clinton plan, and “it didn’t last.” He warned that many of the agreements among the Obama adminstration and various stakeholders have been limited to “noncontroversial” general principles, but “when you get to actual legislation there are going to be losers in this. This has to be in some sense a zero-sum game.”

Oberlander added, “One of the issues I think has been neglected is how controversial it is going to be to impose a ‘play or pay’ employer mandate to provide health insurance in this sort of economy.” He pointed to the idea of including a public-plan option – which most Democrats enthusiastically back and most Republicans just as fervently oppose – as a huge issue likely to defy bipartisan agreement.

A Reluctance To Impose Serious Cost Controls

There have been some attempts to craft compromise versions of the public-plan option, Oberlander noted. For example, “Len Nichols has suggested ways to constrain the public plan and put out a watered-down version.” However, Nichols’ proposal “worries me” because the public plan is “the one part of the health reform model at the moment that actually has cost-control potential, and if you water it down, then we’ve lost an element of cost control,” Oberlander said. 

In general, Oberlander expressed great skepticism about Congress’s willingness to impose serious cost control:

“Everyone in Washington, in Congress and to some extent in the administration, are in love with the idea of painless cost control. Everyone wants huge savings from prevention, health IT [information technology], and comparative effectiveness, and there is just not much reason to believe that those things are going to generate huge savings.” 

Under Congressional “pay-go” rules, new spending has to be paid for by either reductions in other spending or increased revenue. The Congressional Budget Office has already signaled that it would not score big savings from prevention, health IT, and comparative effectiveness research,  forcing Congress to choose between enacting other, more stringent cost-control measures and increasing revenue.  Oberlander suggested that Congress might well choose the latter option: “It is actually possible that we may see Congress embrace more controversial revenue options, like capping the tax exclusion [for employer-sponsored health benefits] because they don’t want to go into controversial cost controls; they’re afraid of the health care industry.”

Oberlander predicted that legislators seeking more revenues would be pushed toward limiting the current tax exclusion for employer-sponsored health benefits because “that’s where the money is.” In December, when CBO examined various options for limiting the exclusion, the middle ground of estimated savings was about $500 billion over ten years, he observed.  “That doesn’t get you all the money you need, but that’s a really big chunk of it. The health reform debate is not all about what happens with the tax exclusion, but it’s probably the most important thing to watch over the next few months,” Oberlander said.

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2 Trackbacks for “Oberlander: Health Reform Likely To Depend On (Budget) Reconciliation”

  1. Oberlander: Health Reform Likely To Depend On (Budget) Reconciliation / Health Affairs Blog « Eclectic Buzz Blog
    March 31st, 2009 at 2:03 pm
  2. Wonk Room » The WonkLine: March 31, 2009
    March 31st, 2009 at 10:02 am

2 Responses to “Oberlander: Health Reform Likely To Depend On (Budget) Reconciliation”

  1. jackshoemaker Says:

    Using reconciliation to pass this legislation is a terrible idea. Meaningful health-care reform is a complex issue with many constituencies and points of view that must be considered in order to get to a lasting and workable resolution. I am sure the author is just itching to get some legislation passed now that the opportunity presents itself. But surely that would be a Cadmean victory at best. If you don’t get the “bad guys” – insurers, pharma, etc. – on board with the solution, it will never work properly.

  2. Don McCanne Says:

    Jonathan Oberlander has an established track record as an astute observer of the political scene in health care reform. His observation that many of the agreements amongst the various stakeholders have been limited to noncontroversial general principles has been confirmed by the report just released by the Health Reform Dialogue. The major stakeholders involved dodged all of the important policy proposals.

    Those of us who support an efficient public financing program that would cover everyone while slowing cost escalation have already been disappointed since we were excluded before the process began. But if we continue down our current path during this rare opportunity for reform, almost everyone is going to be disappointed since effective policies will be blocked, and we’ll end up with only a few tweaks to our dysfunctional multi-payer system that is exorbitantly expensive and serves us so poorly.

    If we truly wanted an affordable high-performance system that served everyone well, the policies that we would choose are easy. But as Professor Oberlander reminds us, the politics are almost impossible. That’s not just sad; that’s tragic.

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