The central argument made by proponents of the Lieberman-wrecked health care reform bill is that it would expand coverage to 30 million Americans who would otherwise be uninsured. It would accomplish this, they say, through subsidies, subsidies that comprise the bulk of the bill's $800+ billion price tag.
Given the centrality of those subsidies to the expansion of coverage, one of the biggest questions about this reform effort is whether the subsidies are politically sustainable. Unfortunately, history suggests they may not be. While Medicare and Social Security have broad-based support because everybody benefits from them regardless of income, means-tested welfare programs -- including Medicaid and even health insurance for children -- are constantly at risk of being cut, entirely dependent on the prevailing political winds.
The important point here is that because the mechanism for making coverage affordable is subsidies for low-income Americans rather than systemic reform that would apply across the board, the subsidies will constantly be on the chopping block -- and the expanded coverage that is the goal of this bill will always be at risk.
Moreover, because subsidies don't kick in until 2014, it's possible that in a nightmare scenario, they could be dramatically cut or even eliminated before seeing the light of day. In the absence of any systemic reform, then, we face the unpleasant possibility that with a realignment of power in Washington, DC, we could end up with a mandate -- and fewer, or even no, subsidies.
It's true that short of a universal insurance scheme funded by payroll taxes, some form of direct subsidies will have to be in the mix no matter what reform we pursue. But the current plan contemplates subsidies in the context of an out-of-control health care system, which means that even in the best case scenario, subsidies will have to grow rapidly to keep pace.
If we had true, systemic reform that lowered health care coverage costs for everybody, then not only would the overall reform effort be more popular, but it would also require far less subsidies to achieve the same results, making them far less politically vulnerable.
Broad-based programs like Medicare or Social Security have served as a safety net in much the same way that subsidies would, but because everybody participates in them, they've endured. Similarly, health care reform that systematically addressed affordability across the board would also be popular. In contrast, doubling down on the current system with subsidies to help low-income Americans afford overpriced insurance is political unsustainable, no matter how laudable the goal. Unless subsidies are coupled with broad-based reforms that significantly reduce the burden of health care costs, at some point they will fall victim to the budgetary knife. The only question is when.
