Peter Orszag’s Sensible Yet Illogical Column
This morning, former Obama Administration OMB Director Peter Orszag published a Bloomberg column regarding employers’ growing desire to transition towards defined contribution health insurance. Orszag notes that “the movement toward defined-contribution plans for health insurance is…similar to the one that occurred for pensions,” that employers have already made this change for many retirees, and that they are likely to apply these changes to their existing workforces in the coming years. Some Republicans would support these types of changes, which have helped to bring innovations like Health Savings Accounts to millions of American workers.
But there are two faults with Orszag’s logic – one technical, one philosophical. The technical concern lies in his breezy assumption that it is “generally accepted” that “defined contribution plans that are sufficiently generous [will] count as employer-based coverage,” thereby ensuring business’ compliance with Obamacare’s employer mandate. But it is NOT generally accepted that the regulations regarding employer coverage will be flexible for businesses – the Administration has yet to introduce so much as proposed rules for important definitions relating to actuarial value and the employer mandate. Moreover, the definition of “sufficiently generous” lies in the eye of the beholder – and many employer groups are concerned that the Administration’s interpretation of same will be far costlier than they can afford.
The philosophical problem lies in the bridge Orszag doesn’t want to cross – namely, applying the defined contribution model to entitlements. How can Orszag title his piece “Defined Contributions Define Health Care Future” and yet ignore the need to apply similar changes to the fiscally unsustainable Medicare program? Is the deafening silence from this column when it comes to fundamental Medicare and Medicaid reform yet another sign that Democrats are more interested in “bludgeoning” Republicans on entitlements than solving the problem?
Again, the general premise of Orszag’s column is sensible, as far as it goes. But what it does NOT address says more about the state of the Democrat party right now than what it does.