DAVID BROOKS: Baucus health bill gets a gentleman's B

WASHINGTON -- The longer the health care debate goes on, the more I become convinced that the American system needs fundamental reform. We need to transition away from a fee-for-service system to one that directs incentives toward better care, no...

WASHINGTON -- The longer the health care debate goes on, the more I become convinced that the American system needs fundamental reform. We need to transition away from a fee-for-service system to one that directs incentives toward better care, not more procedures. We need to move away from the employer-based system, which is eroding year by year. We need to move toward a more transparent system, in which people see the consequences of their choices.

I've also become convinced that the approach championed by Sen. Ron Wyden, D-Ore., is the best vehicle for this sort of change. The Wyden approach -- first introduced in a bill with Sen. Robert Bennett, R-Utah, and now pared down to an amendment to the current bills --would combine choice with universal coverage.

People with insurance could stay with their existing health plans. But if they didn't like the plans their employer offered, they could take the money their employer spends, add whatever they wanted to throw in, and shop for a better option on a regulated exchange. People without insurance would get subsidies to shop at the exchanges.

Americans would have real choices. The vigorous exchanges would reward providers and insurers that are efficient, creative and innovative.

But barring a legislative miracle, the Wyden approach effectively was killed in committee last week. The business and union lobbies worked furiously against it. They want to control their employees' and members' benefit packages. Many politicians support it in principle but oppose it in practice. They fear that if they try to fundamentally reform the system, voters will revolt.


So, what we are going to get is health insurance reform, not health care reform. We'll be adjusting and expanding the current system, not essentially changing it.

At this point people like me could throw up our hands and oppose everything. But that's not what adulthood is about. In the real world, you often don't get to choose what your options will be. You have to choose from a few bad options.

The real health care choice now is between the status quo and the bill primarily authored by Sen. Max Baucus, D-Mont., that is emerging from the Senate Finance Committee.

The Baucus bill centralizes power, in contrast to the free choice approach, which decentralizes it. The Baucus approach aims to reduce costs, expand coverage and improve efficiency by empowering regulators to write a better set of rules. It aims to rationalize the current system from the top down.

This approach has many weaknesses. It entrenches a flawed system. It creates greater uniformity and rigidity. It redistributes income from the politically disorganized young to the politically organized old. It squeezes people into a Rube Goldberg complex of bureaucracies based on their income level. It will impose huge costs on people as they rise up the income ladder, distorting the whole economy.

The biggest problem is that it will retard innovation. Top-down systems just don't innovate well, no matter how many Innovation Centers you put in the Department of Health and Human Services. The bill will retard innovation by using monopoly power to squeeze costs. It will also retard innovation by directing resources toward current care (and current voters) and away from future technologies and future beneficiaries.

But the Baucus bill has some advantages over the status quo as well. It would insure an additional 29 million people, a social benefit critics never grapple with.

It also is more fiscally responsible than any other committee bill. It courageously cuts Medicare benefits by hundreds of billions. It raises taxes on the upper and middle classes in many necessary (and covert) ways.


The bill will not really be budget neutral, but the authors have taken fiscal responsibility seriously. They've earned that good score from the Congressional Budget Office.

Most impressively, the Baucus bill includes many provisions to make government-run health care more rational. It would bundle payments to hospitals and encourage doctors to work in efficient teams. It would punish hospitals that have to readmit patients. It would create a commission to perpetually squeeze costs. It would improve information technology. It would measure the comparative effectiveness of different treatments. No one knows how much savings would be produced by these changes in payment method, but they could be significant.

If you asked me to compare the Baucus approach with the Wyden approach, the answer is easy. But if you asked me to compare it with the status quo, the answer is hard. The Baucus bill contains hidden bombs that could lead to a rigid bureaucratic system that still doesn't address the fundamental problems. On the other hand, it contains hidden experiments that could lead to new models that might spread across the system.

If I were in Congress, I'd figure there's an 80 percent chance of something like this passing anyway. I might as well get engaged as a provisional supporter to fight to make it better, or at least to fight off the coming onslaught to make it worse.

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