Health Reform Essentials

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

February 25, 2010

Making sense of the health summit and its aftermath means appreciating three key points.

The first is that, despite complaints by Republicans that Democrats have not been bipartisan, Republicans have shown no real interest in compromise. Unless that changes, Democrats have no option but to try to agree on procedures to enact some close cousin of the two bills already approved by both houses of Congress.

Second, the major coverage provisions of the House and Senate bills are inseparable. Those components are:

1. The requirement that each person have health insurance

2. Subsidies to make that requirement affordable

3. The rule that all but small employers either provide coverage for their workers or pay a penalty

4. The prohibition barring insurance companies from cutting off coverage or jacking up premiums for the sick

5. The creation of insurance market exchanges to cut insurance sales costs

6. New taxes or spending cuts to pay for subsidies

These are inextricably linked. Cut back subsidies, for example, and the individual mandate becomes unacceptable. The inseparability means that those opposed to the Democrats’ approach can ask for the inclusion of additional elements, but they cannot expect much receptivity unless they are prepared to accept the basic outline.

Third, given the lack of wiggle room, Republican intransigence and the Democrats’ inability to cut off a Republican filibuster, the only way forward is for House Democrats to pass the Senate bill. Mobilizing enough House Democrats will require prior agreement over key changes in the not-yet-passed Senate bill. But House Democrats are unwilling to vote on the Senate bill unless and until a set of changes has been enacted. Those must be passed under reconciliation procedures that require only a simple majority in both houses. But enacting changes in a bill not yet passed is subject to restrictions that will preclude key changes in the Senate bill that some House Democrats may regard as essential. The rules for reconciliation get into the weeds. But you cannot understand the obstacles to mobilizing majority support in the House for the Senate bill without appreciating the technical difficulties created by the rules governing reconciliation legislation that first have to be enacted.