Fix Baucus’ Health Reform Rx: Three Big Changes Democrats Must Make for the Bill to Work

Henry J. Aaron
Henry J. Aaron The Bruce and Virginia MacLaury Chair, Senior Fellow Emeritus - Economic Studies

October 14, 2009

It’s sausage-making time for health reform. The full Senate will now try to reconcile the draft bill approved yesterday by the Finance Committee with the more costly bill approved in July by the Health, Education, Labor and Pensions Committee. A final bill must resemble Finance’s, the only bill which satisfies President Obama’s budget condition – that reform not boost the deficit or cost more than $900 billion over 10 years.

But some modifications of the Finance Committee bill, authored by Sen. Max Baucus (D-Mont.), are essential if it is to truly expand coverage, improve care and drive down costs.

The fundamental challenge is straightforward. Health insurance costs more than many households can afford or are willing to pay. Extending coverage requires both subsidies to make insurance affordable and a mandate to buy insurance to make sure that the cost is averaged over the currently healthy as well as the sick. And because health reform cannot boost the deficit, Congress must raise taxes or cut other spending enough to pay for it.

Therein lies the challenge.

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