The Healthy Americans Act is No Laughing Matter

William A. Galston
Bill Galston
William A. Galston Ezra K. Zilkha Chair and Senior Fellow - Governance Studies

April 14, 2009

Of all the major items on Barack Obama’s ambitious agenda, health reform has the best chance of passage during the current congress. While many battle-scarred veterans are skeptical, more stars are in alignment than in the past. Previously secure workers have lost, or are afraid of losing, their employer-provided health insurance. Employers are losing confidence that they can continue to provide insurance on terms their workers and businesses can afford. And there is more agreement on the broad outlines of reform than there was 15 years ago, when the collapse of the Clinton initiative chilled comprehensive health insurance efforts for a generation.

The strategic question now before the Congress is whether this year’s legislation will proceed on a bipartisan or Democrats-only basis. Early battles over the stimulus package and the budget have convinced many Democrats that cooperation with Republicans is impossible–or possible only on terms that amount to surrender of key hopes and core principles.

Before framing the health care debate in these terms, however, Democratic leaders should take another look at the Wyden-Bennett “Healthy Americans Act,” the only truly bipartisan proposal on offer. Sponsored by six Republican and eight Democratic senators (including liberals like Dan Inouye, Debbie Stabenow, and Jeff Merkley), the HAA would create a centrally financed, publicly regulated private market in health insurance. There’s much else to recommend it: Public standards would ensure that all Americans enjoy coverage at least equal to what members of Congress now enjoy. Employers would terminate their existing coverage and pay the equivalent to their workers in increased wages. They would also be required to pay an assessment per worker of between two and 25 percent of the national average premium for the basic insurance package.Workers would be given a new health premium tax deduction so that wage gains would not increase their income taxes. And premiums for those at or below the poverty level would be fully subsidized, while individuals and families with incomes between 100 and 400 percent of poverty would receive subsidies on a sliding scale.

Would the HAA work? An analysis by the Lewin Group found that it would cover more than 99 percent of all Americans, reduce national health spending, and decrease the rate of growth in health spending, generating savings of nearly $1.5 trillion during the first decade. All new federal program costs would be fully funded, and state and local government would reap substantial gains through lower costs. A 2008 CBO/Joint Committee on Taxation analysis largely confirmed these findings. A letter from then-CBO director Peter Orszag to Wyden and Bennett stated that “your proposal would be essentially self-financing in the first year that it was fully implemented,” and that in the following years, “the fiscal impact would improve gradually, so that the proposal would tend to become more than self-financing and thereby would reduce future budget deficits.” In a comprehensive analysis from September of last year, Edwin Park of the Center on Budget and Policy Priorities found “a number of positive features,” cited some “challenges,” but concluded that “these problems are not insurmountable.” In February 2008, Ezra Klein wrote that “the process Wyden and Bennett have kicked off is by far the most promising development in health reform. It’s more important than anything the presidential candidates have proposed, more important than anything done in the states.”

So here’s my question: Why aren’t Democratic leaders talking more about the HAA as a point of departure for health reform? It would achieve universal coverage, guarantee robust coverage, lower costs, and reduce the federal budget deficit. It’s not perfect, but neither is anything else. And after polarizing battles between Democrats and Republicans early in his administration, it would offer President Obama the opportunity of redeeming his pledge to change the way Washington does business. The alternative–ramming health care through reconciliation– would do just the reverse. And besides, it might not work.