The Center for American Progress proposed a “fail-safe” mechanism designed to ensure that a health care overhaul wouldn’t add to the federal deficit. The plan, part of a financing proposal for health care legislation that was released at a breakfast with reporters, is aimed at addressing concerns that a revamping might not produce expected cost savings over the long run, leading to a big increase in the budget gap.
Under the plan, national health care spending would be held to a specific growth rate. If growth were higher, the “excess spending” would trigger the fail-safe mechanism for the following year.
The proposal was authored by David Cutler, an economics professor at Harvard University, and Judy Feder, a professor of public policy at Georgetown University and a senior fellow at the think tank, which has close ties to the Obama administration.
Some of the ways spending could be reduced, they said, would be: slowing payment increases to Medicare providers; making individual insurance subsidies contingent on the achievement of system-wide savings, and reducing the tax preference for employer-provided insurance beyond what was already included in any health care legislation.
Cutler and Federal proposed that the policy options be decided by a new commission overseen by Congress.
John Podesta, head of the think tank, said he thought the administration “would be interested” in the report. “I know they are concerned” about keeping the legislation budget neutral over the long run, he said.
USA Today reports that the proposal “was released as the health care debate enters a critical moment.” Former Senate Majority Leader Tom Daschle , who also backs the proposal, appeared with Podesta at the CAP event. Both put “the odds of the House and Senate passing a bill before the August recess as somewhat better than 50-50. They called for flexibility and compromise to reach an agreement, but neither seemed particularly optimistic about the chances of drawing significant Republican support.” Daschle defined bipartisanship as “the involvement of one or more” Republicans. He also said the use of “a parliamentary procedure known as reconciliation was ‘certainly a viable fallback.’ Using reconciliation would prevent opponents from threatening a filibuster, meaning a plan could pass with Democratic votes alone” (Page, 6/29).
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