Romer sees health care reform as critical to ease deficit

Top White House advisor Christina Romer said that health reform would help to ease the deficit at a speech today. Reuters reports: "While some critics say Democrats' efforts to regulate the insurance sector should wait until the deficit is under control, they should instead see it 'as the most significant act we could take to tackle the deficit,' Romer said in speech to the Center for American Progress, a Washington-based think-tank" (Heavey, 10/26).

The Wall Street Journal Blog reports that Romer, who heads the president's Council of Economic Advisors, spoke about the fiscal benefits of the White House's health care agenda and said: "'It is fiscally irresponsible not to do health-care reform. ... To bury our head in the sand for even one more year and pretend that the problem of rising government health-care expenditures will go away is simply untenable.'"

"Earlier this month, the U.S. Treasury Department reported the fiscal year 2009 deficit was $1.4 trillion, or about 10% of Gross Domestic Product. That's the U.S.' biggest budget deficit since World War II. Meanwhile, in August, the Obama administration estimated that a cumulative deficit over the 10-year budget window from 2010 to 2019 would reach $9 trillion. ... With deficits potentially becoming a key 2010 campaign issue, the gloomy fiscal outlook could complicate Democrats' legislative efforts, including hopes to overhaul health care. Still, Romer on Monday defended the Obama administration's $787 billion fiscal stimulus program and the federal government's financial-bailout program. She pinned most of the blame for the latest projected deficit on policy actions taken during the Bush administration" (Randall, 10/26).

Meanwhile, ABC News reports that Romer touted the "Cadillac Tax" as a critical part of reform: "President Obama's chief economic forecaster 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.'" Romer said such a tax would encourage employers and employees to be more vigilant health care consumers. "Romer's full-throated endorsement of the 'Cadillac tax' keeps the Obama administration at odds on this issue with some of its closest allies. Organized labor has made killing the 'Cadillac tax' a top priority and more than half of House Democrats have signed a letter to Speaker Nancy Pelosi urging her not to include a 'Cadillac tax' in health-care legislation."

Romer talked about how the tax should be designed, noting that "a handful of ideas were under consideration by Congress including: (1) making special provisions for high-risk occupations such as firefighters; (2) taking regional differences in health-care costs into account "for a period of time"; and (3) making special provisions for firms with older, more costly workers. ... Among the multiple ideas touted as cost savers during her speech, Romer touted the capacity of a public insurance option" (Davis, 10/26).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.