Health Care: Back to the Drawing Board
Senate Finance Committee Chairman Max Baucus had hoped to be unveiling a bill around now, but instead is looking for ways to fill a gaping funding hole on the order of $300 billion or so over the next 10 years. That's because Majority Leader Harry Reid has told him that his original plan to tax high-end health benefits--a proposal that Barack Obama had been warming up to lately--is not going to fly. (As Jonathan Cohn notes, this was the real news from Reid's big meeting the other day with Baucus--not the initial report that Reid had told his Finance Committee Chairman to quit playing so cozy with the Republicans.)
Indeed, Reid himself met with key Republicans yesterday, though--as Politico notes--your understanding of exactly what happened in that session depends on who you are talking to. One thing that does seems clear is that it seems less likely today than it did on Monday that the Senate is actually going to pass a bill before Congress leaves town in August for its annual vacation district work period. None of this is fatal, mind you, but it is a reminder of what we have known all along, which is that this is not going to be an easy or smooth process.
At this point, you might be asking yourself: What's the problem here with the Democrats? Don't these guys have 60 votes now, enough to blunt any threat of a Republican filibuster? Haven't they already made it clear they are willing to use "reconciliation," a process by which they could pass a bill with 51? It's not quite that simple, as I try to explain in this story.
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1
I understand the 'Swiss cheese' nature of the reconciliation procedure, but here is what you left out:
If they pay for it with a progressive increase in income tax rates, they cannot strike any portion of it
There, I said it. Do it right and do it now...
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1.1
My understanding is that Ways and Means in the House is looking at a "surcharge" on high-income people. However, the Senate seems pretty committed to the idea that any tax increase should be health-related. By the way, I'm also told that the idea of taxing sugary food is running into problems--not only from the sugar-state lawmakers, but from people who are trying to imagine what vending machines would look like if Diet Coke is one price and regular is another.
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2
BTW, FYI KT, Obama never said:
"Read my lips, no new taxes!"
That was from another era in another time...
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2.1
Obama did say he would not raise taxes on people making less than $250,000.
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3
KT: Is there anything that would prohibit allowing the expiration of the Bush tax cuts to pay for it?
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4
KT, I think you and 53 already answered some of this?, but…Is the main snag over reconciliation the financing or simply getting the Blue Dogs and Ben “Mutual of Ohama” Nelson to toe the line? Or does Reid still want Collins, Snowe, and Voinovich on board? Sorry for any repetition and pardon my cynicism. I'm shopping for new HC insurance policy and not liking it, too many moving parts and skeptical over claims….
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4.1
Also--and here's something I didn't know until Kent Conrad told me yesterday--if they use reconciliation, they have to pay for this bill in FIVE years not TEN. If they are having this much trouble writing a bill that can balance over a decade, this would be a nightmare--and would produce at best a teensy tiny bill.
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4.2
"Omaha" not "obama" wordplay, oops, sorry. Thanks, KT for the 5-yr update...and all of your HC reports.
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5
Wow. Reid is actually showing a spine, if a vestigial one.
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6
KT:
On reconsideration, you're half right and I'm half right.I think taxation is the way to go. The Senate may feel that way, but the people don't:
http://www.cbsnews.com/stories/2009/06/19/opinion/polls/main5098517.shtml"By two to one, Americans disapprove of taxing employer health benefits, and many are uncertain about it."
Fourth paragraph of above article
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7
In my comment "...The Senate may feel that way..." I was referring to the taxing of health benefits.
Oops.
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8
KT:
I think that with the proper taxation level, the program would start off and continue to be on a sound financial footing.
The idea that it would take a certain amount of startup funds above and beyond normal operation is probably correct, but I think that is a technical issue that can be addressed fairly easily.
My feeling is that 51 votes exist, no R's and blue dogs, but Obama can be stronger on guiding the process. The only reason taxation was not considered (excepting your comments about the surcharge) was no GOP would come on board at that point.
I think just like everything else this year, the GOP needs to be left behind. Baucus has no real power, except unless the Dems give it to him. The time has come to start laying out a bold direction change and hit the campaign trail to get the message out.
Of course, Jeb Bush, whose sage intellect is vaunted around the world, has been undecided about Obama:
http://politicalticker.blogs.cnn.com/2009/07/09/jeb-bush-i-dont-know-if-obama-is-a-socialist/This will give him the opportunity to check 'Yes' in the next FOX poll.
And who cares? Do things right and do them now!
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9
If the Senate ponders new taxes to get reconciliation, is this specific debate really going on now behind closed doors? (ha!)
non-colored link – http://www.youtube.com/watch?v=lTfdn5x7td8 (with Italian subtitles)
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10
This be why we need single-payer, tho' I be understandin' tha' be complete off th' table.
If people an' businesses were able t' quit payin' any sort o' premium in return fer payin tha' amount an' progressive-applied more in taxes, wouldn't tha' be workin'?
I know I wouldn'a mind switchin' th' pot fr'm me insurance company an' me HSA t' th' govt in return fer full coverage.
arrgh
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11
An; HALLELUJAH!
Paragraph breaks be here!
ARRGH!
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12
Thank ye, KT?
.
arrgh! -
13
"a gaping funding hole on the order of $300 billion or so over the next 10 years."
Current military spending is over $700 billion annually. We can't handle a 4% mil. spending decrease per year to provide health care coverage?
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14
deconstructiva:
Probably a pap for the GOP, I think.
Pirate Wench:
I agree with you, the public plan can be modeled after Basic Health and available to all those who have no insurance, and subsidized with higher taxes on the rich.
Some additional ideas
You can't leave your current plan
We regulate private insurance companies
We give tax breaks to companies based on the amount they pay for employee premiums
These may not all be good ideas, but heck, with what Obama and Congress are cooking, anything is better.
Even hardtack and a lime...
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15
What is the "problem" with Democrats and President Obama? Unlike the GOP, the Dems are actually serious about making a bipartisan solution and reaching out to a viciously ungrateful minority.
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16
Why do it be sayin' thar be 19 comments, bu' no matter wha' I try, I only be gettin' 15!
yarr!
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17
I think thar be more'n one issue 'ere wi' health care reform - tha' s been mentioned several times b'fore.
I've no problem wi' tort reform
I've no problem wi' regulatin' insurance companies.
I've no problem wi' some o' th' other aspects comin' into play.
Bu' short o' single-payer, th' public option be a deal-breaker fer me. If me own reps, Patty an' Maria, an' Rick Larsen in th' house, don't be active in makin' sure tha' option be available, I be workin' me pirate ass off t' be sure th' 3 o' em get primaried and sent back home whar they be b'longin' if they can't be representin' th' overwhelmin' will o' th' th' folks that were sendin' 'em to th' other WA!
Sorry - this waterin' down th' rum be really gettin' me goat!
Arrgh!
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17.1
pirate: oh please, oh please, oh please write and speak to your congress reps in piratespeak. I'd love to do the same with mine in Palinspeak but I don't think they'll understand. You'd have a much better chance, yes?
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18
"Why do it be sayin' thar be 19 comments, bu' no matter wha' I try, I only be gettin' 15!"
The Hideous Shebazz lady?
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19
Better yet, Pirate wench should just sail up the Potomac and let Congress have it with a couple broadsides!
That'll larn 'em...
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20
Sh!t, pirate wench, if you let me join your jolly crew, I'll pull the lanyard!
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20.1
An' 'ere I was all this time thinkin' ye were already aboard wi' th' crew!
I be pierced, 53, ri' t' me soul tha' ye weren't knowin' tha!
An' deconstructiva -
I be thinkin' tha' if I be callin' 'r writin' me reps in pirate-speak, they be disregardin' me complete instead o' just sighin' an' rollin' their eyes an' addin' me t' th' list b'cause I be callin' 'em AG'IN 'bout health care reform! I be sure they be ri' sick o' hearin' fr'm me...an' th' President, too - he be takin' t' task by th' pirate wench nearly daily as I be beggin' fer some public leadership, prod-ership, elbow-twistership, SOMETHIN t' make th' spineless scalliwags in th' congress get off their fat asses an' to th' ri' thing!
Ah, there I be goin' - rantin' ag'in!
ARRGH!
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21
KT, then candidate Obama ripped McCain for taxing benefits. It's amazing how facilely this guy will change his tune.
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21.1
Spongy - go F yerself!
YARR!
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22
Max is dead to me.
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23
pirate wench
I was ashore for awhile.
Found a bottle of fortitude and passed out, missing your last call.
Hope you don't hang me from the yardarm. I'd rather be keelhauled.
That way, at least, I'll be able to wave goodbye to the sharks before they eat me...
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23.1
Nah, me rage be consumed wi' th' congress, laddie, come on back aboard!
Ye can even man th' lanyard!
arrgh!
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24
Wha' about settin' up some sort o' mechanism whar those who wish t' participate in th' public option be paying their premiums into th' pot?
An' open it t' employers, too - they could be payin' their portion into th' same pot.
Wouldn'a tha' lower th' tax burden?
I be swearin' - they be lookin' fer an excuse t' drop th' public option.
An' by th' by - anyone see th' autism commercial whar the kid in th' state-regulated private insurance State be gettin' treatment, bu' his next-door neighbor, apparent in a diff'rent State, wi' a "government" system be not?
Harry an' Louise be startin' up wi' a vengeance - whar be th' counter attack, me hearties?!
Arrgh!
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25
KT,
I am going to reveal my ignorance and admit that I just don't understand the funding issues with the health care bill. In general, I find that (virtually all) reporting on health care costs is done without providing any meaningful context.
A few thoughts:
1. One of the driving forces for health care reform is the fact that, as a nation, we vastly outspend other developed countries on health care, as a % of GDP. And yet I never see any reporting in most media stories about what affect various plans would have on total health care spending in the U.S.
2. Similarly, under our present system, many Americans are going broke paying for either health insurance or health care out of pocket. Again, reporting on various reform plans tends to downplay the net effects on Americans' wallets. Sure taxes may go up, but if I am potentially paying $10-15k less per year in insurance, can't I afford a modest tax increase?
3. I find sentences like "...looking for ways to fill a gaping funding hole on the order of $300 billion or so over the next 10 years." to be totally baffling. Why is there a funding hole? How much of the hole is due to reforms and how much is due to the rising costs of existing health care obligations for the government.
4. If a public option is created, Obama has made clear it wouldn't be subsidized. So, presumably, if it is competing fairly, the premiums should cover the expenses, right? Am I missing something? Why would a public option be a budgetary drain at all?
5. If the public option, which is currently the most controversial issue, does not play a significant factor in plugging the "gaping funding hole" shouldn't that be made clear so that the public doesn't get confused about which parts of the bill to support or oppose.
6. (BTW, Why are Democrats so stupid as to even talk about taxing any health care benefits? I don't care how gold-plated they are.)
All this is a very long-winded way of asking why, if the driving force behind reform is an effort to SAVE MONEY, that I keep reading about how much this bill will COST.
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25.1
An' why be no one providin' th' context o' what it be costin' us NOW, and what th' costs be expected t' be 10 years fr'm now WI'OUT reform an' th' public option?
I be thinkin' ever' time they be mentionin' wha' reform be goin' t' cost, they ought t' be required t' point out th' alternative!
arrgh!
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25.2
I've written about this before, but maybe it's worth going over how this works. Under the "pay-go" rules that the Dems reinstituted when they took back control in 2006, this bill has to be deficit neutral over the next 10 years. This does not measure the effects on the costs of health care overall, but rather the effects on the costs of health care TO THE GOVERNMENT--which means we are largly talking about what it pays for medicare and medicaid, and how much it brings in in taxes. As Orszag has pointed out, you can do things that make a HUGE difference to health care costs overall, but if they don't "score" on the government's books, you don't get any credit for them.
A reminder: I don't make these rules; i just write about them.
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25.3
The big-ticket costs, BTW, are providing subsidies to people who need them to buy coverage (they are talking abour providing them for those making as much as 400% of poverty) and expanding medicaid.
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