The Baucus Bill's Bad Math
The Associated Press has some speculative details of the "compromise" health care bill that looks ready, at long last, to emerge from Max Baucus's Senate Finance Committee:
[Any] legislation that emerges from the talks is expected to provide for a non-profit cooperative to sell insurance in competition with private industry, rather than giving the federal government a role in the marketplace. The White House and numerous Democrats in Congress have called for a government option to provide competition to private companies and hold down costs.
Officials also said a bipartisan compromise would not subject companies to a penalty if they declined to offer coverage to their workers. These businesses would be required to reimburse the government for part or all of any federal subsidies designed to help lower-income employees obtain insurance on their own.
Democratic-drafted legislation in the House includes both a penalty and a requirement for companies to share in the cost of covering employees.
So there's not a public option in the Finance Committee's bill -- which should come as no great surprise to anyone who's been following this debate. Instead, there's Kent Conrad's plan for regional, non-profit cooperatives. The real fight over the public option will take place when the HELP Committee's bill, which does include a public option, is reconciled with the Finance Committee's version, and/or when the Senate's version is ultimately reconciled with the House version.
The bigger news, rather, is that Baucus's bill will not contain an employer mandate -- a requirement that employers provide health insurance to their employees -- even though it does contain an individual mandate.
Does this look familiar to anyone?
-- No employer mandate
-- No public option
-- But yes, an individual mandate
It's not quite right to say that the public option and the employer mandate would allow us to cover an additional 21 million people for "free". That's because the employer mandate represents a burden on businesses, and could in turn result in some additional costs in the form of lower wages and/or reduced employment. A recent study by the Federal Reserve Bank of San Francisco found that in the state of Hawaii, which does have an employer mandate, wages dropped but by a "statistically insignificant" amount. It also found that there was an increase in the reliance on sub-part-time workers (people working fewer than 20 hours a week are not subject to Hawaii's requirement) but no overall drop in "employment probabilities". The upside, however, is significant: Hawaii has both the broadest coverage among adults aged 18-64 (only 11 percent are uninsured) and (!) the cheapest premiums. Although some of this has to do with Hawaii's climate, ethnic makeup, and diet, that seems like a pretty good trade-off.
Baucus's bill makes a different trade-off. In order to placate business interests on the employer mandate, and what are frankly ideological interests on the public option, it sacrifices coverage. If I'm reading this right, in fact, 16 million might be on the high end in terms of the net gain in coverage. That's because whereas the HELP Committee's unfinished draft subsidized insurance at up to 500 percent of the poverty line (meaning $54,150 for an individual or $110,250 for a family of four), the assistance in Baucus's draft would end for people making more than 300 percent of poverty ($32,490 for an individual or $66,150 for a four-person family).
The AP may be right that Baucus's bill will cost less than $1 trillion, but it accomplishes that by shifting the burden to middle-income families, some of whom have poor balance sheets and will face a really tough choice between paying for health insurance they can't quite afford and facing some kind of penalty. Odds are that many of them will take the penalty, which is why coverage probably won't expand very much. Or, the enforcement mechanisms could be more stringent, in which case they'll have to buy health care, at the cost of reducing their spending in other areas -- and in probably being very teed off at the Democrats who passed the bill**.
This is a pretty poor combination of attributes for a health care reform bill to have. If Baucus & Co. wanted to get the cost below $1 trillion, they could have chopped the subsidies down to, say, 350 percent of poverty, while keeping the employer mandate and the public option. As a very rough guess, a bill like that might insure another 30-35 million people at a gross cost of about $850-$900 billion. The actual Baucus bill is going to cost about the same but will be lucky to insure half as many.
The good news is that the math on this bill is so bad that I doubt it will survive intact. Personally, I think the public option is probably a goner, but that the employer mandate will probably be restored -- especially if Baucus dares to put his bill before the CBO and see what they think of it.
** Just to underscore this point: when it scored a similar bill, the CBO estimated that 15 million people would lose their employer-provided coverage. Most of these people are likely to be lower-to-middle income persons with somewhat tenuous employment situations, a group that tends classically to be swing voters.
Now, how are those 15 million people going to feel about health care reform when they find out that:
a) Although the bill was supposed to guarantee access to health insurance, they've in fact lost theirs;
b) They're required to buy an expensive, private plan on their own, or to pay a fine;
c) They're probably not getting any government assistance;
d) They certainly don't have any Medicare-like alternative to fall back upon;
e) All of this cost the country about $1 trillion dollars.
You think those 15 million people are going to vote for the Democrats again, like, ever?
EDIT: The Politico article on the subject implies a little bit more of a compromise approach toward the employer mandate.
CBO boosts Obama's health care plan
President Obama and his Democratic allies, scrambling to broker a health care deal Monday, finally got an upbeat assessment from Congress' official scorekeeper when it said the plan for government-run coverage would not force out private insurers.
House Majority Leader Steny H. Hoyer trumpeted the report from the Congressional Budget Office, Congress' nonpartisan budget analyst, that said private insurers could survive competition from a government health insurance option - contradicting a chief criticism from Republicans.
"Now we've heard that the reform will represent a government takeover of health care. A point of fact: The opposite is true," said Mr. Hoyer, Maryland Democrat.
Republicans have said the public health insurance option, which would likely have low reimbursement rates, would drive private insurers out of business. They argue that once private insurers are gone, the public option would be the only health insurance option.
Republicans touted a report from the Lewin Group, a health research firm owned by an insurance company, that predicted 100 million people out of the 160 million now covered by employer-sponsored insurance would go to the government coverage.
But the CBO estimates about 12 million people would opt for the public plan. The wide difference in estimates is the result of drastically different assumptions about the price of the plans. CBO estimated the public plan would cost 10 percent less than private plans, compared with the Lewin Group estimate that it would be 20 percent cheaper.
The CBO has been a source of partisan angst in the health care debate, with recent reports undermining the Democrats' plans by determining they would not cut costs and result in unsustainable growth in government spending.
That verdict helped cement resistance from the conservative Blue Dog Democrats in the House and bolstered Republican criticism that the country can't afford the $1 trillion price tag.
It also prompted Mr. Obama last week to summon CBO Director Douglas Elmendorf to a White House meeting - a somewhat unusual move that Republicans warned smelled of playing politics with a nonpartisan entity.
The CBO report, which also found that the employer requirement to provide insurance would cover 12 million new people, comes as Democrats try to push the bill through the Energy and Commerce Committee and to the full House floor.
Blue Dog Democrats on that panel are holding up Mr. Obama's top domestic priority over the public plan that they say needs more cost-saving measures. The plodding pace of those talks and the crowded floor schedule make it increasingly unlikely the House will meet the August deadline set by Mr. Obama.
Senate Democrats, who are scheduled to remain in Washington until Aug. 7, have already abandoned hope of finishing a bill by then.
The Senate Finance Committee continued negotiations on its plan Monday, which likely will not include a requirement that employers provide insurance, said Sen. Olympia J. Snowe, Maine Republican. Instead of the mandate, the group is considering strong incentives to encourage employers to provide insurance, such as requiring employers to cover the cost of their employees' subsidy if they go on the public plan.
House Democrats called an all-member meeting late Monday, expected to last five hours, to review the 1,000-plus-page bill and counter Republican criticism that members haven't even read it.
While the House is trying to patch things up with the Blue Dogs, some of the more liberal members in the House were concerned the bill would get skewed too far to the right.
Rep. Jerrold Nadler of New York said he would only support the bill if it has a "robust" public option, something that could be sacrificed to get Blue Dog support, which is required to get the bill out of the committee.
He said Democratic leaders were walking a fine line between wooing Blue Dogs and satisfying the caucus' liberal faction. But he was confident the liberal side would win.
"I think there are more of us than them," Mr. Nadler said.
A vote in the full House is still unlikely this week before the House is scheduled to adjourn Friday for its August recess.
"When the Energy and Commerce Committee finishes its work, then we can make a decision about when we will have that vote," said House Speaker Nancy Pelosi, California Democrat.
But underlying the debate in the House is anxiety over how the Senate is going to act. The Senate has already pushed its floor vote to September. Majority Leader Harry Reid, Nevada Democrat, said he expects the Finance Committee to mark up its bill next week.
The House plan includes a new set of taxes on the most wealthy Americans - a proposal not likely to be included in the Senate plan. Couples making more than $350,000 would face new taxes, including a 5.4 percent increase on millionaires. House Democrats are reluctant to vote on the measure, particularly if it isn't likely to become law.
As the Blue Dogs continued to press for changes to the bill, they got a taste of the political pummeling in store for them during the August break back home, where Republicans are painting them as collaborators in Democrats' government takeover of health care.
The National Republican Congressional Committee on Monday hit dozens of vulnerable Democrats - including Blue Dog leaders Mike Ross of Arkansas, Heath Shuler of North Carolina and Charlie Melancon of Louisiana - for lining up with party leaders against the interests of local businesses.
The attack, which found its way into local news coverage, cited companies in the members' districts that signed on with 39 national business groups to a letter to Democratic leaders criticizing the House plan as a "step in the wrong direction."
Shuler spokesman Doug Abrahms said it was "ironic that Republicans are attacking Representative Shuler for supporting the current health care bill when he opposes it in its current form because it does not do enough to cut wasteful spending or lower the cost of medical services."
Meanwhile, the Republican National Committee launched radio ads in 33 states targeting 60 House Democrats warning about a "dangerous experiment" with health care.
"If Barack Obama and the Democrats get their way, the federal government will make the decisions about your health care," the radio ad says. "And, their plan costs a trillion dollars we don't have. You have to pay a new tax to keep your private insurance. It's too much, too fast."
It is part of the RNC's $1 million radio and TV ad campaign in August against the health plan.
Negotiations between Energy and Commerce Committee Chairman Henry A. Waxman, California Democrat, and Blue Dogs devolved Friday into accusations from each side accusing the other of torpedoing discussions.
By the end of the day, the groups agreed to make up and continue discussions.
Blue Dogs have said they won't support a public health insurance option that is based on Medicare rates. They say Medicare rates are not distributed evenly and put their rural areas at a disadvantage.
They're also concerned that small businesses are going to be hit too hard by the "pay or play" requirement. And Blue Dogs say the shape of the bill doesn't do enough to limit the rising costs of health care.
Fuuuuuuuuuuck. I'm not certain there's any point to this whole clusterfuck unless we're getting a public health care option. Those co-ops mentioned? States can have them IF THEY WANT, so it's not like it's a requirement. Not to mention which, the co-ops are run by private health care companies, so it's basically like the fox guarding the henhouse hospital here. I wouldn't mind the co-op idea so much as a state option IN CONJUNCTION WITH a federal public plan. But without one, we're just going to continue to be enslaved even further by corporate health care insurance companies, who are far too busy counting their record quarterly profits to give an ever-loving fuck what happens to all of the American people they screw over on a daily basis.
The public health plan option scares the hell out of private insurance. Why? BECAUSE IT'S THE RIGHT THING TO DO.
Call or email your Senators and Representatives in Congress. Make sure they hear what you really want before it's too late.