Health Plan Means Bigger Deficits and Higher Taxes

In his campaign and in the White House, Barack Obama has talked from time to time about solving the American government's long-term fiscal problems. The bill he is urging the House to pass will make that much harder.

This is unfortunate. Obama, elected with 53 percent of the vote and with large Democratic majorities in both houses, entered office better positioned to champion fundamental reforms in entitlement spending than any other president in the last three decades. The tenor of his campaign, and of the 2004 national convention speech that introduced him to the American people, suggested that he was disposed to do so.

On health care, he had an opportunity to address fundamentals by eliminating the tax preference for employer-provided health insurance established in 1943 that has made health care consumers and providers insensitive to costs.

There was even a bipartisan vehicle headed in that direction, co-sponsored by Democratic Sen. Ron Wyden and Republican Sen. Bob Bennett with a dozen bipartisan co-sponsors. Their idea was to provide universal private insurance coverage with premium support for low earners and to eliminate the tax preference whose benefits go disproportionately to high earners.

Obama chose to ignore this initiative and to hand off the task of crafting legislation to Democratic congressional leaders and committee chairmen. That process has produced monstrosities like the Cornhusker kickback that was in the bill before the House morphed it into an open-ended subsidy for high-tax, high-spending state governments.

The result is a highly unpopular piece of legislation that has gotten worse with each iteration, driving down the president's approval ratings and threatening an electoral disaster for members of his party next fall. The bill, if it passes, will threaten the economic recovery and make our long-term fiscal problems even harder to solve.