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How To Finance Reform? Keep An Open Mind.

The Senate Finance Committee is staging a hearing about the issue many observers, myself included, believe is the single biggest challenge in health care reform: Paying to expand coverage over the next few years, before efficiency improvements and other cost-cutting measures start to yield real savings.

The purpose of this hearing is not to hash out a final deal. (That's a long process, one that will not really start until the Committee's members meet in private soon.) Rather, the main purpose of this hearing is education--of individual Senators, lobbyists, and members of the public--about the various options on the table.  

With that in mind, I'd highly recommend reading the prepared testimony of Robert Greenstein, president of the Center on Budget and Policy Priorities. He's one of the smartest, most knowledgeable policy experts in Washington. And while his liberal sympathies are hardly a secret, he is intellectually honest to a fault. Even conservatives respect him.

In his testimony, Greenstein runs through the possibilities now getting serious attention in Washington. It's as good a primer as I've seen, in fact. But the most important point he makes, I think, is this one:

I wish there were a number of painless options. There aren’t. As you well know, some types of improvements in health care hold promise as ways to slow health care cost growth, but either we don’t have firm knowledge about the savings they would produce or the savings would be unlikely to materialize on a substantial scale for a number of years. In other words, these initiatives don’t “score.” ...

Moreover, the number of spending and revenue offsets that will be needed is likely to be substantial. There appears to be no single option that is politically viable and that can, by itself, produce most or all of the savings needed.

This leads to my first recommendation, in the form of a plea to the Committee. Please do not take any offset options off the table at this time. I believe you ultimately will need to put together a package that contains an array of spending and revenue offsets. The more that options are taken off the table now, the harder this will be to do.

By the way, the one idea that has nearly unanimous support from the large and ideologically diverse panel of experts is changing the tax treatment of health insurance. As readers of this space know, I think they are right.

--Jonathan Cohn