Economic Adviser Romer goes to bat for 'Cadillac tax,' ways to control costs

Oct 27 2009

ABC News reports that Christina D. Romer, chair of the president's Council of Economic Advisers, "went to bat on Monday for a tax on high-priced insurance plans, the so-called 'Cadillac tax,' calling it 'probably the number one item that health economists across the ideological spectrum believe is likely to stem the explosion of health-care costs.'" The tax, she explained, would "encourage both employers and employees to be more watchful health care consumers," and would "discourage insurance companies from offering high-priced plans that would otherwise eat up larger and larger shares of workers' wages" (Davis, 10/26).

The Hill: "Romer also said that the public option, which has gained currency in recent weeks on Capitol Hill, is a 'potentially important source of cost containment,' especially in states were small handfuls of insurers dominate the individual and small-group market." But she "would not comment on the trigger or an alternative proposal, which could be part of the Senate bill, to allow states to opt out of the public option" (Young, 10/26).

Kaiser Health News reports that Romer said the White House was interested a proposal from Sens. Kent Conrad, D-N.D. and Judd Gregg, R-N.H. to create "a bipartisan commission to draft proposals to control the long-term costs of Medicare, Medicaid and Social Security. Together, the three programs account for 40 percent of all federal spending, other than interest on the debt." The commission could figure out how to "bend the cost curve" of health care spending. "But for now, she said, the administration's primary focus is on passing a health care overhaul bill to extend coverage to millions of uninsured Americans - a plan that is estimated to cost about $900 billion over 10 years - and to begin imposing discipline on health care costs and expenditures" (Pianin, 10/27).