November 17, 2009
President Barack Obama
The White House
Washington, DC 20500
Dear Mr. President,
As the full Senate prepares to debate comprehensive health reform legislation, we write as economists
to stress the potential benefits of health reform for our nation’s fiscal health, and the importance of
those features of the bill that can help keep health care costs under control. Four elements of the
legislation are critical: (1) deficit neutrality, (2) an excise tax on high-cost insurance plans, (3) an
independent Medicare commission, and (4) delivery system reforms.
Including these four elements in the reform legislation – as the Senate Finance Committee bill does
and as we hope the bill brought to the Senate floor will do – will reduce long-term deficits, improve the
quality of care, and put the nation on a firm fiscal footing. It will help transform the health care system
from delivering too much care, to a system that consistently delivers higher-quality, high-value care.
The projected increases in federal budget deficits, along with concerns about the value of the health
care that Americans receive, make it particularly important to enact fiscally responsible and quality-
improving health reform now.
In developing our analysis and recommendation, we received input and suggestions from
Administration officials, including the Office of Management and Budget and others, as well as from
economists who disagree with the Administration’s views.
The four key measures are:
Deficit neutrality. Fiscally responsible health reform requires budget neutrality or deficit reduction
over the coming years. The Congressional Budget Office (CBO) must project that the bill be at
least deficit neutral over the 10-year budget window, and deficit reducing thereafter. Covering tens
of millions of currently uninsured people will increase spending, but the draft health reform
legislation contains offsetting savings sufficient to cover those costs and the seeds of further
reforms that will lowe