The odds that comprehensive health reform will pass are up – a bit. Word from Washington is the Democrats in the Senate Finance Committee are ‘coalescing’ around Baucus’ original bill’s provisions. While there’s been much discussion, few of the 564 amendments have passed.
While the public option will be offered up as an amendment, odds are it won’t become part of the Finance Committee’s bill – but may be added when that bill is combined with the Senate HELP Committee’s version later on.
The Democratic strategy appears to be focused on maintaining unity, while peeling away the one Republican Senator (Snowe, ME) that has voiced some support for Baucus’ bill. The White House is working every angle, including schmoozing Snowe’s fellow Maine Republican Senator, Susan Collins. Whether they can keep the Dems together is anyone’s guess, but with White House Chief of Staff Rahm Emanuel focused on this issue, it would be difficult indeed for the Democrat who wavers.
Meanwhile, the for-the-moment-still-unified GOP is facing dissension among the ranks of traditional supporters. Big business, and small business as well, appear to be rallying behind the Baucus bill, due in large part to the lack of an employer mandate. What’s pushing the usually-reliable GOP base to back reform is a recognition that health care costs are out of control – one statistic released by the Business Roundtable has focused attention on the issue: “the cost to insure a single employee, including the person’s own out-of-pocket expenses, would jump to more than $28,000 a year by 2019, from around $11,000 a year now.”
Even the US Chamber of Commerce said nice things about Baucus’ effort, notably that the bill: “will actually…get health-care costs under control.”
“The reality with the business community is that we want reform, while some Republicans want to stop this train and start over,” said Bruce Josten, the chamber’s chief lobbyist. “That is just not going to happen.” [emphasis added] (WSJ)
THIS IS BIG NEWS.
The traditionally fractious Dems are banding together, while a critical GOP constituency is breaking with the Party.
What to watch for
If the Baucus bill comes out of committee with unifed Democratic support, that tells a lot. And if Snowe signs on, that’s even more telling.
But remember, nothing gets passed without sixty Senators voting ‘aye’. And right now there are exactly 60 Democrats in the Senate. The two Senators from Maine are possible supporters, but there may be defections among the Dems.
What’s going to be the most important single factor? Likely the political calculation on the part of the Democrats, many who clearly remember the disastrous fallout after the failure of the Clinton plan, when the GOP won control of both Houses for the first time in forty years. The Democrats are almost all-in on health reform; at the end it will come down to some Dems deciding if they’re better off holding their nose and voting in favor or handing the victory to the GOP.
Sep
28
Maybe I am just in a bad mood today, but the current proposals are looking very ill-considered. The Baucus proposal seems laden with incentives that will 1) gradually produce a two-tiered insurance market for high and low-income purchasers, 2) involve high and rising subsidies for those eligible, and drive all those who don’t to opt for remaining uninsured and paying the penalty.
Subsidies are available to lower-income households only if they purchase through the exchange. For employers with lots of low-income workers, this will increase the incentive to eliminate coverage altogether. However, given the requirements for guaranteed issue and (limited) community rating, there will be strong forces driving premiums up within the exchange, even well beyond the general trend in medical spending. First, as seen with Harvard Pilgrim Healthcare in Massachusetts, there will be incentives for households to pick up and drop coverage when they anticipate large medical costs. Preventing this would require large penalties – probably a lot more than would be politically palatable. Without large penalties, middle-income households with no subsidy (or low subsidy) will increasingly choose to opt out. Result: growing problems with adverse selection that will feed a spiraling premium – and spiraling premiums mean spiraling subsidies for those eligible. Result: fiscal mess, and still a problem with uninsured.
Meanwhile, if the exchange does not provide an affordable, workable alternative, employers with a higher-income workforce will maintain health insurance coverage. However, “health reform” as envisioned will drive higher demand for medical care. Insuring many of the currently uninsured (plus subsidies plus penalties) will pour new money into the system. Primary care, already in limited supply, will probably become unaccessible for many of the newly insured. Increased coverage will reduce constraints on the provision of high-cost care for the catastrophically ill who account for the vast majority of costs since the problem of uncompensated care will substantially diminish. Rising medical trend means that the problems for those with employer-provided insurance will only get worse, cutting into take-home pay.
The worst problem is that there is little in the current proposals that would contain costs. The proposed cuts on the Medicare side are basically price cuts, which have been tried repeatedly without more than a passing effect on the overall trend in costs (due to cost-shifting, upcoding, etc.) Most households lucky enough to retain coverage through their employers will still be faced with something close to a take-it-or-leave option to buy into a system whose costs will only climb further.
Ultimately, the Federal government will be forced to try to fix the mess again. However, having promised cost containment with lamentable results, how much credibility will the government have? Meanwhile, we will have created a whole new set of vested interests to stand in the way of effective change.