Democrats Begin Caucus-Wide Whip Count For Public Option

A coalition of Democrats (Congressional Progressive Caucus, Congressional Black Caucus, Congressional Hispanic Caucus, and Asian and Pacific Islander Caucus) in the House have began a caucus-wide whip count on the robust public option.

The "whip count," started last night, seeks to prove that there are a majority 218 votes in the House for what liberals call a "robust public option." Robust generally means that providers' compensation would be tied to Medicare rates.

"We're asking everybody," said Congressional Progressive Caucus Co-chairwoman Lynn Woolsey (D-Calif.).

Progressives want a “robust” public option that would pay Medicare reimbursement rate plus 5%. By using modified Medicare payment rates the public option would be roughly 10% cheaper than typical private health insurance. It would also reduce the cost of the bill by roughly $110 Billion.

The robust public option has strong support among Democrats in the House but may not be supported by a full 218 members. Progressives have been challenged by Speaker Pelosi to prove that they have the votes need for their robust public option.

Using negotiated rates not tied to Medicare would reduce the cost saving from a public option by $85 billion. Presumably, going with a less robust public option would require a corresponding $85 billion reduction in affordability tax credits and/or aid to states to pay for an expansion in Medicaid.

Conrad (And Republicans) Wants Junk Insurance To Get Junkier

Sen. Enzi introduced an amendment to lower the actuarial value of the lowest quality plans (bronze level) that could be sold on the exchange from 65% to 60%. His amendment will allow insurance companies to offer plans that cover even less of the cost of medical treatment than Baucus originally proposed. The amendment would mean that people buying “health insurance” could end up shocked how little their policy really covers.

All ten Republicans on the committee voted in support of the Amendment. Sen. Kent Conrad was the only Democrat on the committee to also vote in support of Enzi's amendment. The amendment failed 11-12

Americans Think Congress Is Listening To Lobbyists And Not Regular People

NPR has an interesting new poll out today. They ask Americans who they think Congress is paying most attention to during this health care reform effort. By a wide margin 71% of Americans think members of Congress are paying too little attention to people like themselves.

On the flip side only 35% of Americans think Congress is paying too little attention health care interest groups, while 31% think Congress is paying too much attention to those groups.

This poll should be a wake up call the Democrats in Congress. The vast majority of Americans don't they are being listened to in this health care debate. It would be hard to argue that the American people wrong about who they think has ears of the members of Congress. The fact that the extremely popular idea of a public option is not guaranteed to be part of reform is a prefect example of this disconnect. If Democrats pass a bill that regular people think was write for and by health industry lobbyists it could spell trouble in the 2010 elections.

Carper's Brand New “Alternative” To The Public Option

Politico is reporting that Sen. Carper has a brand spanking new “alternative” to the public option that he has been secretly shopping around the senate.

Carper suggests giving states the option of creating a competitor to private insurers, which could include a government plan, a network of co-ops, or a large purchasing pool modeled after the revered Federal Employees Health Benefits Plan.

First, a “large purchasing pool modeled after the revered Federal Employees Health Benefits Plan” is what the new exchanges in health care reform are suppose to be. The is not a new idea. This is not an alternative to a public option. This is what the system would be similar to without the public option.

State based public plans are unlikely to have much of an effect on the health insurance market. Because they would likely be restricted to the new exchanges, state based public plans in less populated states would have extremely small risk pools. They would also lack the size need to negotiate the best rates possible. Finally the CBO has already looked into Conrad's idea of co-ops and found them to be basically worthless. Restricting them even farther will not help the matter.

Progressives should take heart though that Carper is floating a new “compromise.” It is a sign that progressive grassroots organizations and members of Congress have successful rejecting previous fake compromise, like trigger and co-ops. Carpers plan is just one more in a long line of worthless fig leafs, trying to masquerade as real reform.

Schumer Vows To Fight On For A Public Option

With in hours of losing the vote in the Senate Finance Committee on his public option amendment, Schumer fired off an email to his supports vowing to fight on. Schumer calls the vote in the Finance Committee, only “the opening day of the fight.” The email concludes with:

If we continue to fight, I am confident we will pass health care reform with a robust public option.

Schumer has previously said that he always thought the committee was the least friendly battlefield. He believes that he would have a better chance of including a public option on the full Senate floor or as part of the bill which comes back from conference committee.

Schumer's “Level Playing Field” Public Option Amendment, Fails 10-13

Directly following the debate over Rockefeller's robust public option amendments the Senate Finance Committee next debated Schumer's “level playing field” public option. The debate was much shorter and mainly repeated the same argues for or against Rockefeller's amendment. Schumer's public option amendment also failed but by a smaller margin, 10-13

Again all ten Republicans on the committee voted against the public option. Only three Democrats (Kent Conrad, Max Baucus, Blanche Lincoln) joined them in opposing Schumer's public option. Democrats (Jay Rockefeller, Jeff Bingaman, John Kerry, Ron Wyden, Charles Schumer, Debbie Stabenow, Maria Cantwell, Robert Menendez, Bill Nelson, Thomas Carper) vote in support of the amendment.

Most notable was that Sen. Bill Nelson and Thomas Carper voted against the Rockefeller public option but voted for the Schumer “level playing field” public option. Carper was not at the meeting to explain why he didn't support Rockefeller's public option but did support Schumer's.

Bingaman and Baucus both stated that Schumer's public option would be their preferred way to design a public option. Bingaman did vote for both public option amendments and Baucus voted against both. Baucus claimed that he support the idea of a public option and thinks that it would serve an important function keeping health insurance companies honest. Baucus refused to vote for either amendments, because he claimed it would prevent his health care bill from being able to get 60 votes in the full Senate.

Kent Conrad voted against Schumer's amendments, but he did have some positive things to say about it in his remarks. The fact that Schumer's public option would not be tied to Medicare payment rates addresses one of Conrad's major concerns with a public option. He said Schumer's public option was getting much closer to what he would like to see.

Once again senators Blanche Lincoln and Olympia Snowe did not speak about the issue of the public option. On arguably the most heated and important issue in health care reform these two Senators didn't feel any obligation to publicly explain their opposition.

Rockefeller's Robust Public Option Amendment Fails, 8 - 15

The entire morning of the Senate Finance Committee mark up was dominated with heated debate about Rockefeller's robust public option amendment. Liberals said would be need to increase choose, improve competition, and keep private insurance companies honest. Republicans claimed it would the start of a “slow walk” to government run single payer health insurance.

All ten Republicans on the committee voted against the amendment. Five Democrats (Kent Conrad, Max Baucus, Blanche Lincoln, Bill Nelson, Thomas Carper) also voted against the amendment. Eight Democrats (Jay Rockefeller, Jeff Bingaman, John Kerry, Ron Wyden, Charles Schumer, Debbie Stabenow, Maria Cantwell, Robert Menendez) vote in support of Rockefeller's amendments.

The debate did have some interesting political developments. Bill Nelson did not really like Rockefeller's public option, because it would pay Medicare rates for the first two years. Nelson seemed to be very open to the way Chuck Schumer designed their plan. He did not talk at length about Rockefeller's robust public option but has endorsed Schumer's “level playing field” public option.

Kent Conrad was very upset that Rockefeller's public option would be tied to Medicare rates given that North Dakota has one of the lowest Medicare reimbursement rates.

He also clearly lives in a fantasy world. Cornad talked about how some systems (Beligium, Netherlands) technically have universal provide by private insurance funds. Yes, it is possible to have a good universal health care system with only private insurance providers, but it needs to be extremely highly regulated. Baucus's bill doesn't come anywhere close to the level of government regulation that kind of system requires to work.

If Conrad offered an amendment copying the robust regulation, generous subsidies, strong bad practice penalties, and powerful risk equalizer of the Netherlands' system; than we can talk about the possibility of reform without a public option.

Olympia Snowe, Thomas Carper, and Blanche Lincoln do not bothered to publicly debate one of the most important amendments. It seems neither Olympia Snowe, Thomas Carper, nor Blanche Lincoln thought they needed to explain their opposition to a robust public option in the official Senate record.

Amendments To Watch For Tuesday And Beyond

When the Senate Finance Committee starts work again on Tuesday things should get heated. Here are some of the more interesting amendments to watch out for.

Free Choice Amendment – Wyden C1
What it hopes to do: It would allow employee's who do not like their current employer provided health insurance to ask for a voucher to buy insurance for themselves on the new exchange.

Background:
Wyden's Free Choice Amendments is very important to the Senator. He has gone so far as to say that it is “a prerequisite to supporting the bill.” The CBO concluded it would have very little effect on overall health insurance and only save $1 billion. Wyden has been selling his amendments to conservatives as a way to increase choice and to liberals as a way to give more people access to the public option. This amendment is a wild card with the possibility of some bipartisan support. The amendment is opposed by the Chamber of Commerce.

What to look for:
Watch to see if any Republicans (especially Snowe) decide to back Wyden's free choice amendment. Also check out how Baucus and Conrad vote. The amendment may upset the delicate balance of back room deals and compromises Baucus has tried to achieve.


Applying Regulation To Large Group and Self-Insured Market – Rockefeller C1
What it hopes to do: It would apply all new insurance regulations to self-insured and large group market

Background:
The bill as currently written would exclude insurance provide by large employers from most of the new consumer protection regulations. While big business (i.e. the Chamber of Commerce) is opposed to the amendment it should be very politically difficult vote for any Democrats to vote against it. No one wants to be on record voting against protecting everyone from some of the worst insurance practices

What to look for:
Watch to see if any Democrat besides maybe Baucus votes against the amendment. Also important is to see how Snowe votes. If she supports the amendment it should make it into the final bill.

Various Public Option Amendments - Schumer, Cantwell, Rockefeller
What it hopes to do: Add a public option to Baucus' bill.

Background:
Senators Rockefeller and Schumer have been the most vocal supporters of the public option on the Senate Finance Committee. Rockefeller is likely to introduce a robust public option tied to Medicare, while Schumer plans to introduce a “level paying field” public option which must negotiate it's rates independent from Medicare. Schumer and Rockefeller have been working closely on the issue and have not yet decided on the best political strategy. They may choose to only introduce Schumer's weaker public option in an attempt to show the idea of a public option has strong support. They might also introduce two public option amendments hoping to give conservative Democrats cover of voting against the robust public option but supporting the weaker “compromise.”

What to look for:
First watch to see how many public option amendments are debated. Pay close attention to the CBO scores each public option gets. Baucus's use of the second lowest cost plan as the benchmark for determining tax credits may prevent the CBO from scoring the public option as saving money. Finally, pay attention to how conservative Democrats (Baucus, Carper, Lincoln, Conrad, Nelson) vote on Schumer's “level playing field” public option.

“Safety Net” Trigger Amendment – Snowe C1
What it hopes to do: It would trigger a weak state base public option if a low standard of affordablity is not met in any state at some time in the future.

Background:
The new message from prominent Democrats seems to be that what ever Sen. Snowe wants is a great idea. Despite being a worthless fig leaf Peter Orszag, Harry Reid, and Bill Clinton have all talked positively about it. The idea of a trigger is opposed by all the other Republicans on the committee along with many liberals who think it is worthless.

What to look for:
It is possible liberals could join with Republicans to kill Snowe's trigger. Pay attention to how the more progressives Democrats like Schumer, Rockefeller, Stabenow, and Cantwell vote. If they vote for the amendment it is probably because they got pressure to do so from leadership. Also pay attention to how Baucus votes. A trigger will likely insure that the final bill won't get more than 1-3 Republican votes in the Senate. If he supports the trigger amendment it is a clear sign he has fully given up on any hope of broad bipartisan support.

If Snowe's trigger amendment is not brought for a vote in committee it might be a sign that enough liberals on the committee have threatened to vote against it. If it failed in committee it would be more politically difficult for Reid to insert the idea when he combines the two committee bills.

Eliminating The CO-OPS - Rockefeller C11
What it hopes to do: Remove co-ops from the bill

Background:
Conrad created the idea of the non-profit co-ops instead of a public option in an attempt to find broad compromise. The idea failed miserably. Liberals Democrats and conservative Republicans both attacked the idea. The idea seems to be losing support with even Conrad admitting they should be stronger.

What to look for:
Watch to see which progressive members of the committee vote against the co-op idea. The votes of Republicans Snowe, Grassley, and Enzi should be interesting. All three were part of the Gang of Six that negotiated the co-ops idea. With Grassley and Enzi unlikely to support the bill, it is interesting to see if they will vote against the co-ops idea they helped create.

Who Makes The Rules?

The Los Angeles Times highlighted today a troubling aspect of Baucus's health care reform bill. The bill basically gives a non-governmental non-profit, the National Association of Insurance Commissioners the power to write law.

From Baucus's Mark:

Enforcement Mechanism. The National Association of Insurance Commissioners (NAIC) will devise an NAIC Model Regulation within 12 months of enactment that is consistent with the new Federal law with regards to Federal health insurance rating, issuance and marketing requirements. This model becomes the new Federal minimum standard without any further Congressional action. The new model should be developed by NAIC with input from all NAIC members, health insurance issuers, consumer groups and other qualified individuals. Representatives shall be selected in a manner so as to assure balanced representation among the interested parties.

The main problem with this, besides handing over the Congressional power to make laws to a non-governmental association, is that:

"The NAIC is clearly an organization that is dominated by the insurance industry," said California Lt. Gov. John Garamendi, a former state insurance commissioner...

The group's 56 members are public officials -- the elected or appointed chief insurance regulators of the states, the District of Columbia and five U.S. territories -- responsible for enforcing laws that vary widely in rigor depending on jurisdiction.

But the association itself is a private organization not subject to open meetings and public records law, noted J. Robert Hunter, insurance director of the Consumer Federation of America and a former Texas insurance commissioner.

"They have no transparency," he said.

If trusting the power to write the rules governing consumer protection to a non-government group with no transparency isn't bad enough, it gets worse. Members of the NAIC have gone on to get lucrative jobs at private insurance companies.

Bonanza For Insurance Companies

It is not often that progressives and the Wall Street Journal are in complete agreement, but sometimes the facts are plain for everyone to see. The Wall Street Journal is running a story today about what a massive boon to the for-profit health insurance corporations Baucus's health care bill would be.

The health-system overhaul proposed by Sen. Max Baucus would create millions of new insurance customers without subjecting health insurers to government-run competition -- two key victories for the much-maligned industry.

The math here is very simple:
Individual Mandate (millions of new customers) – Competition (public option) = Huge Profits

The health insurance companies got the individual mandate they wanted, even though Obama campaigned against it. They also scored a huge victory when Baucus did not include the a public option in his bill, something Obama did campaign on.

The WSJ story concludes with:

The outcome is still uncertain. "I think there's only a limited chance that this could get worse [for the insurance industry]," said Sheryl Skolnick, who follows health-care services at financial-services firm Pali Capital Inc. "When all is said and done, the health plans should say a prayer of thanks to the Senate Finance Committee."

I couldn't have said it better myself.

Clinton Talks Positively About Snowe's Trigger

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Today on Meet the Press, former President Bill Clinton talked positively about Sen. Snowe's trigger proposal. Bill Clinton seems to be mirroring Senator Majority Leader Harry Reid who also had some very positive words for Snowe's worthless trigger idea. We should be expecting the full court press from both the White House and their allies on the issue of the trigger. It seems the only goal in health care is to do whatever Snowe wants and pretend like it is a great idea.

Former President Clinton's comments make it clear that the Democratic Party has a new leader and that leader is Republican Senator Olympia Snowe.

Bill Clinton-

Now, the one Republican who's come up with a good idea is Senator Snowe. She deserves a lot of credit for saying when we did this Medicare prescription drug bill, instead of giving the government the power to negotiate for lower prices we gave the drug companies a chance to offer them, but we held the power in reserve. And if there was any state in America where there was no competition, you could do it. So let's do that for health care. That's a good idea. That's, that's the kind of debate the country needs, and I hope that the Republicans will come forward with it. These...

A Trigger Is An Affront To The American People

With Senate Majority Leader now saying he thinks a trigger is “pretty doggone good idea” it is important to know what supporting a trigger says to the American people. To support the trigger idea you first need to already accept most of the arguments for a public option. You must believe that it could bring down cost, provide competition, and/or be less likely to use unethical practices. If one simply doesn't think a public option would be able to work they should oppose it in any configuration including as a possible trigger.

To support the trigger idea you must also believe that even after the new regulated marketplace is put in place there is still a distinct possibility that insurance companies will continue to rapidly increase premium and treat costumer badly. You must believe that it is possible that our new health insurance marketplace could turnout to have many problems, because of the lack of a public option.

When a politician says they support the trigger idea they are telling their constituents, I know insurance companies treat their clients bad and charge way too much for their products. I know there is a way the government could create a public option that would help millions of Americans with these problems, but helping people is not my top priority. I think it is much more important to give large for-profit corporations another chance to screw over the American people.

Of course, most politicians who claim to support the trigger idea are really opposed to the whole idea of a public option. They support a public option because they are cowards unwilling to be honest with the American people and say they are against the public option. Their goal is a trigger that will never be used, so they can trick their constituents into believing they stand with the vast majority of the country, which supports a public option.

Supporting the trigger idea is an affront to the American people. It is infinitely worse than opposing the public option. If a member of Congress honestly opposes the public option for philosophical reasons or because they think that it would be an unworkable policy, they should make their argument and let their constituents decide. The voters will eventually judge them for their stance.

Supporting a trigger is telling your constituents that there is this great idea which could help millions of Americans get more affordable health care, but I think it is more important to give the large for-profit health insurance corporations another chance to pay nice before providing regular people with relief. To support a trigger is to stand proudly with the health insurance industry against the middle class Americans.

Chamber Of Commerce Attacks Schumer's Public Option Amendments

Live Pulse has a letter from the US Chamber of Commerce attacking 4 amendments that have yet to be voted on in the Senate Finance Committee. (Rockefeller C1 – Applying new rating rules to the large and self-insured (ERISA) market, Schumer C1/C2 – Public Option Amendments, Wyden C1 – Healthy Americans Act)

The Chamber attacked the two public option amendments from Schumer, but did not bother to mention Rockefeller's more robust public option amendment. The letter indicates that the Chamber must believe that Rockefeller's robust public option is already DOA.

The fact that the Chamber did feel the need to publicly go after the two Schumer public option amendments at least leads me to believe that they have some concern that the amendments might have a chance in the Senate Finance Committee or on the full Senate floor. The lobbying on both sides of the public option issue should get very heated over the weekend.

The Fight For A Public Option Is The Fight For Affordability

I've heard some in the MSM argue that progressives have become too fixated on the issue of a robust public option. The fight to include a public option is not a simply philosophical argument or an insider policy battle. The fight of the public option is inseparable from the fight to make health insurance affordable for middle class Americans.

During his address to Congress, President Obama effectively set a $900 billion ceiling on the size of the health care reform bill. Anything that would make the bill more expensive would need to be offset with cuts. Those cuts almost by default must come in the form of reducing the amount of subsidies/tax credits to help Americans afford insurance or the quality of the insurance.

The National Journal is reporting that the CBO determined the robust public option favored by progressives would save the government $110 billion. A weaker “level playing field” public option would only save $25 billion.

This means removing the robust public option from the House bill would require a corresponding $110 billion reduction in affordablity tax credits. Depending on the final shape of the bill that would be somewhere between a 14%-23% reduction in the amount of tax credits to working class Americans. From different CBO reports (1,2) we know that in 2019 the average tax credit for an enrollee in the exchange, who needs help with affording health insurance, will be between $5,000-$6,000. Eliminating the robust public option would reduce the amount of tax credits to an individual by roughly $1,000.

The CBO also reported that, “on average the [robust] public plan would be about 10 percent cheaper than a typical private plan.”

For a family the robust public option would be roughly $1,300 cheaper in yearly premiums. (This year the average premiums for a family coverage is $13,375)

Not having a robust public option as part of health care reform would make health care dramatically less affordable (or lower quality) for millions of Americans. It would mean denying American families a health insurance option that would be roughly $1,300 cheaper and reducing the size of the average tax credit for an individual by nearly $1,000.

Progressives are fight hard for a strong public option, because they are fighting hard for working class people. A robust public option is critical to making this current health care reform bill affordable for middle income Americans. Not having a robust public option would cost millions of American families thousands of dollars a year.

Harry Reid Falls In Love With A Horse Named Trigger

According to the Las Vegas Sun, Senate Majority Leader Harry Reid said that he thought Snowe's trigger proposal was, a “pretty doggone good idea.”

I think the whole idea of a trigger is inherently flawed. Former Labor Secretary Robert Reich did a good job explaining that Washington is full of lobbyist whos job it is to make sure things like triggers never get pulled. Snowe's trigger specifically is worthless trigger that is designed never to be pulled. Even if pulled the single state based public options it would create are likely to lack the size or power to have an effect.

Reid do have some rather unkind words for the idea of co-ops which he thinks is worse than Snowe's trigger proposal. Reid said about co-ops,

It would be better than nothing but it’s nothing I’m going to jump for joy with.

I think that all signs point to the fact that the idea of co-ops are starting to lose favor (A very critical report from the CBO might have something to do with that). Even the father of the co-ops idea, Sen. Kent Conrad, is now admitting that they are as currently written too restricted and would not have the full ability to compete with private insurance.

Kent Conrad: Government-run Plan Doesn't Fit Our “Culture”

Sen. Kent Conrad has come up with a new argument against the public option. When asked by Ezra Klein, why he opposes a public option he said, he doesn't “think a government-run plan best fits this culture.”

I would be very curious to know how Sen. Conrad came to his conclusion. Just today a new NYT/CBS News poll was released showing that 65% of Americans favor creating a Medicare like public option open to everyone.

Government administered health insurance programs are not a foreign concept in this country. There are currently tens of millions of Americans who are currently very satisfied with the coverage they get from our country's existing government-run plans (Medicare, Medicaid, Tricare, VA system).

If Sen. Conrad meant to say that a government-run plan doesn't best fit the Washington DC culture of high paid corporate lobbyists, I would be inclined to agree with him. Out in the rest of America, where people are struggling with the crush cost of health care, most Americans think the idea would fit our culture just fine.

Baucus: Public Option Amendments Votes Likely On Tuesday

Senate Finance Committee Chairman Max Baucus said at the begin of today's hearing that there would not be time to get to the public option amendments today. He expects to debate and vote on the public option amendments on Tuesday.

Yesterday, Sen. Schumer and Rockefeller pushed hard for a vote today on their public option amendments.

The order in which the three public option amendments and Snowe's “safety net” trigger amendment are brought up for a vote should be the focus of intense back room negotiations over the weekend.

Another wild card on Tuesday will be the issue of co-ops. The idea has drawn bipartisan opposition on the Committee. It is possible that the liberal Democrats could join with conservative Republicans and strip the co-ops idea from the bill.

Is Opposing A Public Option Not A Top Blue Dog Priority?

Ryan Grim over at the Huffington Post has an update on the Blue Dogs' whip count.

The Blue Dogs have been surveying their membership over the last several days; coalition co-chair Stephanie Herseth Sandlin (D-S.D.) has been collecting the responses. She listed the four top priorities that have emerged: Keeping the cost under $900 billion, not moving at a faster pace than the Senate, getting a 20-year cost estimate from the Congressional Budget Office and addressing regional disparities in Medicare reimbursement rates.

So, the Huffington Post asked, the public option is not a top priority?

"Right, the group is somewhat split," she said.

It appears the rank and file Blue Dogs don't really think opposing a public option should be a top concern of their caucus. This seems to be in conflict with the Blue Dogs' health care task force chairman Mike Ross's firm opposition to any bill with a public option. Given the incredible cost saving potential of a robust public option, it might be getting hard to reconcile their claims of fiscal conservatism with opposition to a public option. It could also be that they have look at the public option's strong poll numbers in their districts and are having second thoughts.

There still seems to be concerns about a robust public option tied to Medicare rates, because most Blue Dogs represent rural districts. Rural areas tend to have slightly lower Medicare reimbursement rates. If this issue is really a sticking point may I offer a modest solution. In areas where the Medicare reimbursement for a procedure is less than the national average, have the public option's reimbursement rate tied to the Medicare national average (not the local Medicare rate) for that procedure.

Baucus, Menendez, and Carper Vote to Defend PhRMA Deal

Sen. Bill Nelson proposed an amendment which would fill the Medicare part D dough nut hole. He would pay for the change by making the pharmaceutical industry pay a rebate for the overcharging of dual eligible Medicare/Medicaid seniors. The amendment would fully cover the cost of filling the dough nut hole and provide an additional $50 billion in government savings. The amendment would violate the secret deal reach between PhRMA, The White House, and Chairman Baucus.

Democratic senators Baucus, Menendez, and Carper vote against the amendment. All Republican senators also voted against the amendment.

Democratic senators Nelson, Rockefeller, Conrad, Lincoln, Bingaman, Schumer, Wyden, Kerry, Stabenow, and Cantwell voted in support of the amendment. The amendment failed 10 to 13.

Kent Conrad: France’s Health Care “Not Government-Run”

Ezra Klein made an excellent catch the other day. Sen. Kent Conrad's said during the Senate Finance Committee hearing:

They're not government-run systems in Germany, in Japan, in Switzerland, in France, in Belgium -- all of them contain costs, have universal coverage, have very high quality care and yet are not government-run systems.

The problem is that France does have a government-run health care system with some supplement private insurance coverage. In fact the French system is very similar to the Medicare-for-All plan advocated by many in the progressive community.

Either Conrad is lying or his truly ignorant how arguably the best health care system in the world is managed. I do not know which of these two possibilities is more frightening. If one of the three Democratic senators who were tasked with writing the Senate Finance Committee health care reform bill is completely ignorant of how other countries run better health care systems, that could go a long way towards explaining how they produced such a terrible bill. On the other hand, I can't believe that anyone so involved in health care reform could be so dramatically uninformed.

You Need To Control The Growth Of Premiums

The Los Angeles Times has good piece addressing one of the most underreported problems with the Baucus bill. The Baucus bill lacks sufficient mechanisms to slow the out of control increase in premium.

Democrats have shied away from regulating premiums in the face of charges from business leaders and Republicans that controlling what insurers charge would be meddling too much in the private sector.

As a result, while states have long supervised what companies charge for mandated automobile and homeowners insurance, the idea has been largely banished from the health care debate...

Nor are lawmakers seriously considering any proposals to regulate what doctors, hospitals, drug makers and other health care providers charge -- a strategy used by several European countries to control health care spending.

There are some countries that have universal health care provided primarily by a regulated marketplace of private insurers (Switzerland and Netherlands). These countries use a variety of heavy handed regulations to slow the growth of premiums.

A robust public option was meant to be the mechanism to control health care cost instead of pricing regulation. The idea was to have a public option that would not dominated the market, but would dramatically reshape the marketplace. A strong public option which could sell insurance plans at cost would provide the competition needed to discourage private insurance companies from gouging costumers. A public option would also allow the government to introduce and encourage the adoption of delivery system reforms which could hopefully produce high quality, low cost health care. If the reforms work for the public option, the hope is that they will be copied by private insurance companies.

If you don't have a robust public option than the system needs strong heavy handed cost control and pricing regulation. Baucus's plan has neither. Under the Baucus bill, everyone would be forced to buy insurance from private insurance companies, the government would foot the bill when the cost of premiums go over some percentage of income, and there is no regulation preventing insurance companies from raising premium as much as the can get away with. No one should doubt that this is a recipe for a costly disaster.

Focus Increases On the Possibility Of Reconciliation And A Democratic Only Bill

Increasingly both parties are focusing on the possibility of passing health care reform using reconciliation. Yesterday Senate Majority Leader Harry Reid again threatened to use reconciliation if a bipartisan agreement can't be found.

“If we can’t work this out to do something within the committee structure, then we’ll be forced to do reconciliation,” said Reid, who said the tactic would be used as a “last resort.”

The threat may not be idle. The Hill is reporting that both Republicans and Democrats have started consulting the Senate parliamentarian to try to determine what parts of reform could pass using reconciliation.

Reconciliation is not the only option that Senate Democrats have to pass health care reform without Republican support. As early as tomorrow, Massachusetts's Governor David Patrick could appoint a new interim Democratic senator. The appointment would once again give the Senate Democratic Caucus 60 members. Sam Stein at the Huffington Post is reporting that some Senate Democratic leaders are renewing a push to convince the entire caucus to at least vote to shutdown a Republican Filibuster.

All 60 members of the caucus would need to vote to stop the filibuster, but passing the bill into law would only require a simple majority vote (50 senators plus a tiebreaker vote by VP Biden). Whether every Democratic senator is willing to allow a bill to come up for a vote even if they don't support the legislation remains an open question.

Meet The New Gang; Just Don't Call Them A Gang

The Hill is reporting that a new bipartisan group of seven senators has been formed to try to pass “bipartisan” health care reform.

The new Senate group includes GOP Sens. Susan Collins and Olympia Snowe of Maine, Sen. Joe Lieberman (I-Conn.) and Democratic Sens. Ben Nelson (Neb.), Claire McCaskill (Mo.), Landrieu and Ron Wyden (Ore.). Four of the members — Snowe, Collins, Lieberman and Nelson — played a significant role in helping pass Obama’s $787 billion stimulus package.

But these lawmakers are hesitant to call themselves a Gang of Seven, or any other type of gang. They are still wincing at the memory of the weeks of protracted negotiations among members of the Finance Committee that failed to produce a much-hoped-for bipartisan agreement.

Will this new gang (that is not a gang) succeed where others have failed? Only time will tell. It should be noted that five of the seven senators have publicly stated their opposition to a new national public option that would be available on day one.

Orszag Promotes Co-ops And Trigger, Ignores CBO Report

In an interview with Bloomberg.com, White House Budget Director Peter Orszag talked about his support for Co-ops and Triggers.

Orszag signaled the administration doesn’t consider a government-run insurance program essential to the legislation. He suggested it would be sufficient to either create nonprofit insurance-purchasing cooperatives or set “triggers” to activate a public option if needed to cut costs...“The goal here is just to introduce more competition where competition is inadequate,” Orszag said. “Either one could work.”

Orszag's statement directly contradicts a CBO report that says,

[The co-ops] seem unlikely to establish a significant market presence in many areas of the country or to noticeably affect federal subsidy payments.

I guess former CBO director Peter Orszag now also backs the new Conrad CBO Standard. He must share the belief that whatever the CBO determines is incredibly important unless they disagree with Senator Kent Conrad.

Carper Public Defends Secret PhRMA Deal In Exchange For Support Ads

In a stunning moment during the Senate Finance Committee markup Sen. Tom Carper defended a secret deal that the White House, Baucus, and PhRMA had reached. The White House has long denied the deal. Carper publicly acknowledges that part of the deal was that PhRMA would run millions of dollars worth of campaign ads in support of health care reform.

According to Carper the “golden rule” in Congress is that secret back room deals in exchange for advertising buys must be honored. Carper's statement below,

I was not involved in negotiations with PhRMA but I believe that the administration was, obviously PhRMA was, and I presume this committee was involved in some way in those negotiations.

And what PhRMA agreed to do through those negotiations is to pay about
80 billion dollars over 10 years to help fill up half the donut hole. That's my understanding. And they are prepared to go forward and to honor that commitment. As I understand it, the commitment from our colleague Senator Nelson would basically double what was negotiated with PhRMA.

And whether you like PhRMA or not -- remember I talked earlier today in our opening statements, I talked about four core values, and one of those is the golden rule, treat other people the way I want to be treated?

I'll tell you -- if someone negotiated a deal with me and I agreed to put up say, 80 dollars or 80 million dollars or 80 billion dollars and then you came back and said to me a couple of weeks later -- no no, I know you agreed to do 80 billion and I know you were willing to help support through an advertising campaign this particular -- not even this particular bill, just the idea of generic health care reform? No, we're going to double -- we're going to double what you agreed in those negotiations to do. That's not the way -- that's not what I consider treating people the way I'd want to be treated.

That just doesn't seem right to me.

Carper was speaking in opposition to an amendment from Sen. Bill Nelson and Sen. Jay Rockefeller. The amendment mirrors what Henry Waxman did in the House to close the Medicare Part D doughnut hole by requiring drug manufactures to provide rebates for the overcharging of dual eligible Medicare/Medicaid recipients. Recently a group of House Democratic freshmen sent a letter to Waxman to asking him a rewrite the bill to reflect the Medicare Part D language in the Baucus bill.

PhRMA's board approved the $80 billion in price reductions on June 19. On June 30, the Hill reported that PhRMA began running ads in the districts of vulnerable Democratic House freshmen.

Pelosi Makes The Public Option Robust Once More

Back before the August recess a deal was struck with a group of Blue Dogs, lead by Rep. Mike Ross, in the House Energy and Commerce Committee. The agreement was to make the public option weaker by not allowing it to pay modified Medicare rates. This deal dramatically reduce the cost savings that would come as a result of including a public option as part of reform. Since then Mike Ross has backed out of the deal and now publicly saying that he will not support any public option.

The Hill is reporting that Speaker Pelosi does not intent to stick to the deal which has already been violate. She plans to bring to the House floor a bill with a robust public option similar to the own originally proposed in the House.

Baucus Makes Some Improvements to Bill Before Markup

Igor Volsky at the Wonk Room has done a good job explaining many of the more important modifications made to the Baucus bill. To his list I would add three important changes which address a few of my own concerns with the Baucus bill.

Better Ombudsman Office
Baucus decided to significantly strengthen the new ombudsman office by basically adopting the Bingaman amendment I discussed the other day. Originally the costumer would need to fully exhaust all internal appeals before being able to seek help from the ombudsman's office. Now if the appeal last longer than three months they can get professional help from the ombudsman's office. Access to the ombudsman's services still needs to be improved but this is a step in the right directions.

No Multiple Exchanges
The bill would no longer allow states to create multiple exchanges. Originally states could allow “other entities” to operate multiple exchanges in the state. This was a bad provision that would not only dilutes the bargaining power of individual using the exchanges, but could easily become a way for insurance companies to game the system.

National Plans Restricted
Baucus' bill would have allowed insurance companies to sell “national plans” which would be exempt from state benefit mandates. This has been a long time goal of the health insurance industry and would have effective gutted most states' insurance regulations. Fortunately, this provision has be changed to allow individual states opt-out of allowing national plans to be sold in their state. States with very good benefit mandates can now at least prevent their state from being flooded with lower quality “national plans.”

Mike Ross's Lucrative Deal With Large Pharmacy Chain

The Politico is reporting that Mike Ross sold his pharmacy business in 2007, while a member of congress. USA Drug, a large pharmacy chain with an important stake in health care reform, overpaid for the property by roughly $160,000.

Ross sold Holly’s Health Mart in Prescott, Ark., to USA Drug for $420,000 — an eye-popping price for real estate in a tiny train and lumber town about 100 miles southwest of Little Rock.

“You can buy half the town for $420,000,” said Adam Guthrie, chairman of the county Board of Equalization and the only licensed real estate appraiser in Prescott.

Mike Ross is the Chairman of the Blue Dog Coalition's task force on health care. He was the lead Blue Dog negotiator in the House Energy and Commerce Committee. He held up the bill in committee for two weeks. NPR reports that,

So far this year, the Blue Dogs' political action committee has received $301,500 from health care and health insurance PACs. Ross, the coalition's lead negotiator, has received $100,600 for his campaign committee and a PAC that he operates.

Mike Ross now opposes the public option despite the fact that a plurality of his district favors the public option.

Conrad: I Only Trust The CBO When They Agree With Me

Throughout this entire health care reform debate Senator Kent Conrad has been the biggest advocate of the CBO. He demanded that CBO score health care reform over ten years. He also demanded the CBO must examine the bill and conclude that it would not increase the deficit over the next 20 years.

Yet, when the CBO disagrees with him, he had no problem simply ignoring their findings. Conrad has been pushing his idea of co-ops despite the growing evidence that they would have little or no effect. When the Star Tribune ask Conrad, If he agreed with CBO director Doug Elmendorf's conclusion that, "They seem unlikely to establish a significant market presence in many areas of the country," Conrad answered,

I do not agree with the Mr. Elmendorf's assessment on co-ops. Based on the advice of leading actuaries, we are providing enough federal seed money for these co-ops to insure 12 million Americans.

I think this should be defined as the new Conrad CBO Standard. It is the belief by Kent Conrad that everyone must follow the conclusions of the CBO, unless the CBO disagrees with Kent Conrad.

Co-ops Are No Threat To For-Profit Insurance

I highly recommend read this new Reuters story on how useless Conrad's idea of small statewide co-ops would be. The story quotes several experts who all agree with what most of the progressive community has been saying for months. The co-ops would be so legally restricted by Baucus' bill that they would have little to no impact on health insurance in this country.

Analysts said the proposal sets the stage for multiple regional co-ops that would likely lack the leverage in negotiating rates to strongly compete against established players.

The co-ops would enroll individuals and small groups, rather than large businesses, also limiting their sway. The bill further appears to avoid giving the co-ops any special pricing power for their plans, analysts said.

Small legally restricted statewide co-ops are in no way a substitute for a real national public option.

The Most Important Amendments You Have Not Heard About

Baucus' bill creates a new ombudsman office that will “act as a consumer advocate.” This is a good idea. The problem is that Baucus makes the new ombudsman's office nearly worthless by dramatically restricting individual ability seek help with their insurance companies. According to Baucus' mark:

Policyholders whose health insurers have rejected claims and who have exhausted internal appeals would be able to access the ombudsman office for assistance.”

This is a huge problem just begging to be abused. You will be forbidden to get help until you have exhausted all internal appeals. This will create a strong finance incentive for insurance companies to make the appeal process a long painful bureaucratic nightmare. The more complex and time consuming the appeal process the better for the insurance company because it would deny the patient access to professional consumer advocate assistance.

In affect this will replace the problems of “recession” and “pre-existing condition” with the new problem of “death delay.” The hope is that the patient (who would normally be very sick or dealing with a severe medical issue) will either give up in frustration or die before the many complicate internal appeals are exhausted.

Fortunately, Senator Bingaman and Senator Menedez have offer different amendments to help improve the problem by allowing individual to seek help from the ombudsman's office before exhausting internal appeals.

Menedez C#7 is the better of the two amendments and is described as:

Allow policyholders to access the ombudsman for assistance in pursuing internal appeals with their health plans.

Bingaman C#5 is weaker but would be a much needed improvement. It is described as:

This amendment would authorize a policy holder to access ombudsman services: (1) if their internal appeal lasts more than three months or (2) if their appeal involves a life threatening issue.

All the consumer protections in the world are worthless unless there is a strong regulator and consumer advocate to enforce them. As it is currently written the ombudsman's office is a massive gift to the for-profit insurance companies and would encourage bad behavior.

Of course, If Baucus' bill gave people the option of buying a non-profit insurance plan overseen by the government (a public option), they would not need to worry about protecting themselves from a for-profit insurance industry which makes money by denying people's claims.

Mike Ross' District Supports A Public Option, He Does Not

Recently Mike Ross sent a letter to his constituents saying, “I remain opposed to a government-run public option,” and called the idea “controversial.”

Dailykos just published a new poll by Research 2000 showing that a plurality of Ross' district support the public option. 47% of those polled favor creating a “government-administered health insurance option that anyone can purchase to compete with private insurance plans,” while only 44% opposed. Support for the public option was overwhelming among Democrats in the district (74% favor vs 19% oppose) and supported by a plurality of independents (47% favor vs 43% oppose).

Interestingly, the public option was much more popular than Obama's health care plan as a whole. When asked, “generally speaking, do you favor or oppose Barack Obama's health care plan?” 40% of all those polled said they favor the plan while 48% are opposed to it.

If Ross continues to oppose the public option it could hurt him with his base. 32% of Democrats said they would be less likely to vote for Ross if he opposed a public option, while only 12% of Democrats would be more likely to support him for opposing a public option.

Mike Ross Likes Baucus' Bill, Loves Co-ops

From The Hill we learned that Mike Ross (D-Ark) sent a letter to his constituents praising the Baucus' bill.

Ross used most of the letter to strongly endorse Conrad's small state-based co-ops idea. This should surprise no one given the overwhelming evidence that Ross has being working directly and/or indirectly with Conrad to get the co-ops idea included in the House bill.

Last week, the Senate Finance Committee unveiled its health care reform bill – the fifth version of health care reform presented on Capitol Hill. The controversial government-run public option is not included. In its place is a uniquely (and familiar) American proposal - a co-op. Co-ops have been around for years and not just in health care. Many of you are probably familiar with electrical co-ops and farmers’ co-ops. As a nonprofit, member-owned group, a health care co-op would operate similarly in that they are controlled by their members, who actively participate in setting policies and making decisions, and a member-elected governance board. And, unlike private companies where voting power is based on the number of shares you own, each member gets one equal vote.

Membership would be completely voluntary and open to any individual or family interested. The co-ops could operate on state or regional levels and startup money would most likely come from the federal government through grants or loans.

(emphasis mine)

It is too bad that Congressman Ross used his letter to mislead his constituents about the co-ops idea. Membership with in fact not be open to “any individual or family interested.” According to Baucus's Mark “CO-OP grantees would compete in the reformed individual and small group insurance markets.” Therefore the co-ops would not be an option for “any individual or family interested,” but would be restricted to only accepting memberships from a very small segment of the population.

Ross Admits experts believe a “co-op would need at least 500,000 members in order to succeed.” Given that Arkansas has just under 3 million people and the strong restricts placed on co-op membership, it would be nearly impossible for an Arkansas statewide co-op to ever get enough members to be viable.

Snowe Offers Worthless Trigger Amendment

Senator Snowe has offered a public option trigger amendment to Baucus' health care reform bill. The Amendment's description states:

This amendment establishes a non-profit government corporation through which a “safety net” plan would be provided in any state in which affordable coverage was not available in the Exchange to at least 95% of state residents. An individual would be deemed to have affordable access if either of two conditions is met. First, two or more plans are offered with premiums – the cost of which does not exceed a specified percentage of the individual‘s adjusted gross income (AGI), after deducting any available tax credit or employer subsidy from the cost of such premium. The percentage contribution shall range from 3 percent of AGI at 133 percent of the Federal Poverty Level, to 13 percent at 300 percent and above.

Assessment of affordability shall follow submission of plan premiums filed one year in advance of the first day of each policy year, and should a state be found to not meet the 95% threshold, plans would be permitted to submit of any revised premium filings, after which a second assessment of affordability shall be performed. If, after that second assessment, a state still be deemed as not meeting the affordability standard, the safety net plan shall be offered within that state, and shall be available at the pending open season enrollment.

This “safety net” trigger is worthless. Baucus' bill already mandates the government provide sufficient tax credits to make sure the outlined trigger conditions would never be met. Basically the only way the “safety net” plan will ever be trigger is if the federal government violates its own laws. If the government is violating its own laws about providing sufficient tax credits, why should we believe that it will ever follow the law by then creating this “safety net” plan? This is not public policy, this is pure theater.

Three Public Options Amendments Submitted For Baucus' Bill

A total of three different public options have been offered as amendments to Baucus' bill. The three public option run the gambit from the robust to the weak.

The best and most robust public option is the one submitted by Senator Rockefeller. It resembles the robust public option originally proposed in the House. It would pay Medicare rates plus 5% for the first three years. Medicare providers would automatically participate in the public option unless they choose to opt out. There is no penalty for providers opting out of Rockefeller's public option.

The second public option is the one submitted by Senator Schumer and Senator Cantwell. It would add to the Senate Finance Committee's bill the same public option that passed in Senate HELP Committee. The public option in the Senate HELP Committee's bill is called the “Community Health Insurance Option.” This public option does not pay modified Medicare rates but its rates “shall not be higher than the average of all Gateway reimbursement rates.”

The final and weakest public option amendment was also submitted by Schumer. It would be his national “level playing field” public option. The government would only provide start up funds to help create a new public option that must follow all the same rules as private insurance companies. Like any private insurance company it would need to negotiate rates and create it's own provider network from scratch.

AHIP Asks; Baucus Delivers

For a very long time the health insurance industry has been working hard to avoid state benefit mandates. Insurance companies hate that states make them cover conditions that actual Americans suffer from. Paying for medicine treatment when someone gets sicks does terrible things to their insurance profits margins.

When health care reform efforts got started AHIP put out the plan they wanted to see. A big part of that was “essential benefits packages.” They would be:

available in all states that provides coverage for prevention and wellness as well as acute and chronic care. To maintain affordability, the essential benefits plan should not be subject to varying and conflicting state benefit mandates.

Well AHIP asked and Baucus delivered. According to his bill he would create “national plans.”

These national plans must be licensed in every state that they choose to operate and would be regulated by the states in terms of solvency and other key consumer protections and would offer coverage through the state exchanges. Such national plans must be compliant with the benefit levels and categories detailed in the Mark, but would preempt state benefit mandates.

The for profit health insurance industry must be so happy. They can finally sell health insurance in any state, while avoiding covering health conditions the voters of those states decided should be covered. In states with good strong minimum benefits rules, health insurance companies will just choose to only offer “national plans” avoiding state law. In affect Baucus would completely strip the states of their power to decide what minimum benefits health insurance plans must cover.

More costumers, less regulations, less local oversight, few options to Americans to address lack coverage problems. It sounds like an all around big winner for the for profit health insurance companies.

(emphasis mine)

Baucus Keeps Up His End Of Secret PhRMA Deal

Last month Ryan Grim at Huffington Post uncovered an internal memo outlining at the secret deal made between Baucus, the White House, and PhRMA. According to Grim,

Representatives from both the White House and PhRMA, shown the outline, adamantly denied that it reflected reality. PhRMA senior vice president Ken Johnson said that the outline "is simply not accurate." "This memo isn't accurate and does not reflect the agreement with the drug companies," said White House spokesman Reid Cherlin.

After complete my preliminary reading of the Chairman's Mark of Baucus' bill it appears that Baucus has followed the deal outlined in the memo quite faithfully. Baucus bill would increase the Medicaid rebates from 15.1% to 23.1% (page 53). It would provide Medicare part D patients in the donut hole a 50% discount of brand name prescription drugs (page 122).

In accord with the internal memo, Baucus bill does nothing to change current law regarding drug re-importation from cheaper countries. It does not contain the Medicaid/Medicare dual eligibility rebate promoted by Henry Waxman. It does not allow Medicare to directly negotiate drug prices which was added to House Energy and Commerce committee bill. There also appears to be no change to Medicare Part B in reference to pharmaceuticals.

Baucus bill differs from the memo in only two points. There does not appear to be any change to current law regarding follow on biologics, FOBs. The Baucus bill also imposes an annual fee of $2.3 billion on the entire drug sector ($23 billion total) which is more than what the memo says (page 214). If you do combine the $12 billion agreed to fee with the $9 billion agreed to savings from FOBs (which appear not to be in the bill) it is a total of $21 billion. Overall it appears that the internal memo uncovered by Grim very accurately reflects a secret deal Baucus and Obama cut with PhRMA.

Baucus Writes Bill To Kill The Public Option For Good

Senator Baucus finally released his long awaited health care reform bill with zero bipartisan support. I've been looking through the bill and discovered something very interesting. Baucus has purposely written his bill to make sure adding a robust public option would not dramatically reduce the CBO score of his legislation (it would still save average Americans hundreds of billions). It would also make it harder to add a robust public option later in the process or eventually add a robust public option in the distant future using reconciliation.

In the Baucus bill, “The amount of the tax credits for exchange plans in each area of the country would be tied to the premium of the second-lowest-cost plan in the “silver” tier (the “reference plan”), which would have an actuarial value of 70 percent." That is very strange. The second-lowest-cost plan? Isn't the lowest-cost something usually the benchmark?

In all the House committee bills and the Senate HELP committee bill, the tax credits are calculated using the “reference premium”. The “reference premium” is the average of the three cheapest plans in each area for each plan tier.

Why does this matter? A robust public option would almost always be the lowest-cost plan offered. It would reduce the average for the “reference premium” and therefore reduce the government's cost of providing tax credits. A robust public option would dramatically reduce the government's cost of those bills. But the Baucus bill uses the “reference plan,” which is the second-lowest-cost plan. This means offering a dramatically cheaper robust public option would not substantially change the size of “reference plan” or the amount of tax credits the government would need to provide. Adding a robust public option to the Baucus' bill would not reduce the cost to the government by very much.

Very clever, Senator Baucus, not only do you not have a public option in your bill but you are making sure to salt the field to stop one from ever coming into being.

Conversely, if an amendment removed that one word "second" and added a robust public option like Senator Rockefeller's, it should reduce the cost of Baucus bill by over a hundred billion.

7 Important Facts In The Baucus Bill CBO Report

Today Baucus released the Chairman's mark of his health care reform bill along with a CBO report on the legislation. I've found 7 interesting and important issues in the report.

1. It looked like Baucus purposely left himself a small possible giveaway to liberals. His bill in fact saves $49 billion, which could be used to increase subsidies by that amount while still keeping it budget neutral. A little "look, liberals won something":

According to CBO and JCT’s assessment, enacting the Chairman’s proposal would result in a net reduction in federal budget deficits of $49 billion over the 2010–2019 period

2. It appears that the CBO agrees with almost every health care reform expert and also concluded that Conrad's small state-based co-ops are worthless.

The proposed co-ops had very little effect on the estimates of total enrollment in the exchanges or federal costs because, as they are described in the specifications, they seem unlikely to establish a significant market presence in many areas of the country or to noticeably affect federal subsidy payments.

3. Baucus made sure adding a robust public option would not make his bill much cheaper. This is very technical, but please follow. His plan would base tax credits on the "reference plan," which is the second lowest-cost plan at the "silver" level. The House and HELP bills uses a "reference premium" which is the average of the three lowest-cost plans in an area at a level. Adding a robust public option brings down the average and the cost of the tax credits. Adding a robust public option would be the cheapest plan and therefore would probably not substantially change the "reference plan", since it is the second lowest-cost plan. This means adding a robust public option to this bill would not score as saving as much money and make it even harder to add one using reconciliation in the future. Very clever, Senator Baucus:

The amount of the tax credits for exchange plans in each area of the country would be tied to the premium of the second-lowest-cost plan in the “silver” tier (the “reference plan”), which would have an actuarial value of 70 percent.

4. The individual mandate will be costly to people and hit a lot of Americans, raising $20 billion.

Penalty payments by uninsured individuals, which would amount to $20 billion.

5. It would only reduce the number of uninsured by 29 million. That leaves about 17 million Americans/legal residents uninsured (and around 8 million illegal immigrants uninsured). That means 37% of currently uninsured Americans/legal residents will still be uninsured. Baucus's bill will only reduce the number of uninsured Americans/legal residents by 63%. Lots of money, no universal coverage, and almost half the uninsured still uninsured.

By 2019, CBO and JCT estimate, the number of nonelderly people who are uninsured would be reduced by about 29 million, leaving about 25 million nonelderly residents uninsured (about one-third of whom would be unauthorized immigrants). Under the proposal, the share of legal nonelderly residents with insurance coverage would rise from about 83 percent currently to about 94 percent.

6. The individual mandate does not apply to Native Americans. Not surprisingly the three Democrats which are part of the “gang of six” come from states (Montana, North Dakota, New Mexico) with disproportionately large Native American populations.

Exemptions from the mandate would also be granted to Native Americans

7. The excise tax on high-end insurance plans is indexed to overall inflation, so over time the tax will hit more and more employer-provided insurance plans.

Except as described below, the threshold would be set (beginning in 2013) at $8,000 for single policies and $21,000 for family policies. After 2013, those amounts would be indexed to overall inflation.

Death By Hissy Fits Continues

A month ago I wrote about how Grassley and the rest of the Republican party were trying to kill reform one childish hissy fit at a time. It has proven surprisingly successful, since Chairman Baucus has been rewarding them with surrender each time.

The pattern has continued with Rep. Wilson's rude outburst being rewarded with a provision to bar illegal immigrants from buying health insurance even if they are willing to fully pay for it. This policy is just not cruel and expensive (we all end up paying for illegal immigrants going to emergency rooms because we don't allow them to pay for their own care by buying health insurance), but it is also terrible political optics. Working class Americans will be forced to buy insurance or pay huge fines but illegal immigrants will not.

With a Finance Committee bill expected tomorrow, Senator Grassley and Enzi have moved the goal post again. The New York Time is reporting that Grassley is now opposing an individual mandate that he has previously supported for months,

The committee documents show that Mr. Grassley has reservations about this approach. He believes that “the individual responsibility to have health coverage should be reconsidered and replaced with a reinsurance policy to ensure that affordable health coverage is available to everyone in a voluntary system, with a lower overall cost for the package,” one document says.

Hoping to capitalize on Obama's and Baucus' willingness to give in on anything in order to pass something labeled “health care reform,” the AHIP is going for the double jackpot. No sooner than did prominent Democrats signal they might forgo their only idea which could rein in health insurance company profits (a strong public option), the AHIP switched to fighting to protect their favorite cash cow, Medicare Advantage. Our current Medicare Advantage program may have the dubious distinction of being the biggest and most wasteful form of corporate welfare in the country.

Even with all but maybe two Republican senators likely to oppose Baucus' bill, he has decided to still include all the terrible compromises he made to win their support. Grassley has proven himself to be maybe the greatest negotiator in Senate history. He convinced Democrats to waste valuable months and adopt many ill-conceived compromises, without needing to risk voting for the final product.

What is at stake here is even more important than health care reform. If Obama and the Democrats allow themselves to be rolled, they will never be feared or respected by congressional Republicans or the special interest groups. Obama should demand that 48 hours after the Baucus' bill is released that a majority of Senate Republicans publicly endorse it, or it will be revamped to reflect his original uncompromised proposal.

Negotiation requires both carrots and sticks. If Democrats pass a bill containing all the awful Republican demands with almost zero Republican support, they will doom any hope of future good faith dealing and real political discourse. The Republicans and special interests will know that if they throw a loud enough hissy fit Democrats will accept their demands without Republicans needing to risk anything by voting for compromise. Giving in now assures “death panels” and “you lie” will become the modis operandi of the Republicans party. If Obama does not stand up to declare a willingness to pass a good, Democrat-only bill, it is going to be dark, loud, shrill, and depressing next three years.

Why Do Republicans Want Illegal Immigrants To Get Jobs Instead Of Americans? - Updated

To make the current health care reform proposals work there must be some form of an employer mandate to provide health insurance. If there is not one, companies would have a strong incentive to drop coverage knowing the government will help their employees get insurance.

The easiest, best, and simplest way to create an employer mandate is to charge companies a flat fee if they don't offer health insurance. The fee could be some percent of payroll or a set fine multiplied by the number of employees at the firm.

The Republicans don't want a simple employer mandate and instead are demanding it take the form an extremely complex and dysfunctional “free rider” provision. Senator Baucus has given in to their demands and is promoting a byzantine free rider provision. Instead of penalizing companies for not offering health insurance, it would only penalize companies for each employee they have that gets tax credits to help afford insurance on the new exchange. Not only would this idea be a bureaucratic nightmare to enforce, it would provide a powerful financial incentive to only hire people who don't get tax credits to buy individual insurance. This group includes spouses whose partners get good employer health insurance and, of course, illegal immigrants.

Baucus has made it clear that legislation is not going to allow undocumented workers to get tax credits to help afford health insurance. Since they can't get tax credits to buy insurance, employers who hire illegal immigrants won't face any penalty for not offering health insurance. The free rider provision championed by Republicans will provide another large financial incentive to hire illegal immigrants instead of American citizens.

After years of demagoguery from Republicans on the issue of illegal immigration, I'm left wondering: Why are Republicans (and Max Baucus) fighting so hard to encourage employers to hire illegal immigrants instead of working class Americans? The other important question is, of course, are Democrats so afraid of passing a bill without a few Republican votes that they would embrace such a clearly dangerous and stupid idea?

[Another Note: The Republican backed free rider provision would only penalize employers if their employees get tax credits on the exchange, but not if they are on Medicaid (according the the current framework). Medicaid would cover everyone making under 133% of the federal poverty level ($14,404 a year for individuals). Paying an employee one dollar more than $14,404 could increase the cost of employing them by thousands of dollars. The Republican/Baucus free rider provision not only encourages the hiring of illegal immigrants, but also encourages businesses not to pay Americans more than $14,404 a year.]

Updated - Breaking: Baucus' bill will now not let illegal immigrants buy health insurance on the new exchange even if they are willing to fully pay for it themselves. Not only is this a stupid and cruel policy but it is also very expensive. Illegal immigrants will be force to get very expansive emergency room care (which the government will end up playing for) since they are not allowed to buy health insurance.

What Real Compromise Looks Like

A vast majority of Democrats in Congress want health care reform to include a robust public option. As I have discussed Conrad/Ross' co-ops and Snowe's trigger are not in any way compromises. They are fig leaves. The vast majority of Conrad's state based co-ops have too many restrictions and would be too small (by Conrad's definition) to ever work except in a handful of states. A trigger can too easily be made useless. As Robert Reich pointed out, the whole reason Washington DC is filled with lobbyists is to slowly and quietly kill things like a trigger. They would do nothing except make it look like Democrats had not given up on the key promise of a public option. They are not compromises; they are surrender and capitulation. Real compromise would at least try to address all or some of the reason why progressives want a public option.

Overhead, Waste, and Cost

Health care is too important and too expensive. To the extent possible, every dollar spent on premiums should be used for treatments and not for CEO bonuses or excessive corporate profits. Progressives believe that if the government is going to spend hundreds of billions expanding coverage and force individuals to pay hundreds of billions more, the nation needs assurances that their money will be well spent. A public option would provide a strong alternative with very little overhead. This issue can be partly addressed by setting a minimum medical loss ratio of 92%. Any insurer who wants to use the exchange must spend at least 92 cents of every premium dollar on medical treatments.

Another option that could be used instead of or in addition to a minimum medical loss ratio is to only allow not-for-profit insurance to be sold on the exchange. This is very similar to how health insurance is done is Switzerland. It would have the added benefit of possibly making at least a few new non-profit insurance co-ops viable.

Guarantee for Vulnerable Groups

Progressives are not convinced that insurance companies will ever work for the needs of groups that tend to have the highest medical bills. Even if the new exchange as a whole works well there is still a great fear that traditionally vulnerable groups will continue to fall through the cracks. Two groups, individuals close to the poverty line and individuals very close to retirement should at minimum be guaranteed access to at least one decent insurance option structured for their needs. If it is not a public option it should be existing government programs.

This could be improved with two ideas from Senator Baucus. Baucus originally proposed the idea of allowing older Americans (55-64) currently without insurance the option of buying into Medicare by paying full price premiums. This is a good idea progressives could support. Senator Baucus has also proposed allowing individuals on the exchange making between 100%-133% of the federal poverty line the option of Medicaid or equal value tax credits to buy private insurance. This idea should be expanded to individuals making between 100%-230% of the FPL. People between 133%-230% would need to pay a sliding scale premium for Medicaid.

Benchmark

The public option is meant to be a benchmark. A transparent public option would give individuals, politicians, and policy experts something to compare the effectiveness of private insurers against. Allowing people who don't have insurance and are over 50 years old the option of buying into Medicare would at least provide some form of a benchmark. Giving a small segment of people using the exchange the option of buying Medicare or Medicaid will let us see if private insurers are able or not to more effectively provide them with coverage.


Setting a minimum floor for medical loss ratios on the exchange of 92% would be a good idea. Only allowing non-profit insurance companies to sell policies on the exchange should eliminate some of the pressure to adopt anti-consumer practices. Providing a small group of uninsured Americans close to retirement the option to buy into Medicare early by paying full premiums is smart policy. Giving individuals without insurance making between 100%-230% of the FPL the choice of private insurance on the exchange or the option to use their tax credits to buy into Medicaid would provide continuity of insurance and a guarantee of decent coverage for an often vulnerable group of Americans.

A combination of all of these ideas would fulfill at least some of the goals of a public option. This is what compromise looks like. It is finding different ways to achieve some of your goals. Unfortunately, you will not hear this ideas discussed. Most politicians who oppose the public option are really opposing any efforts to stop private insurance companies from overcharging the American people. It does not matter if it is a public option or some new pricing regulations. If it hurts the bottom line of private insurance companies they will oppose it. Triggers and small state based co-ops are useless face saving measures. They will not discipline private insurance companies or bring down cost. They are not a compromises; they are surrender.

CBO: Public Option Would Reduce Premiums Across The Board

The CBO recently published a new letter on health care reform. They were asked to evaluate the impact of the weak (level playing field) public option in the Senate HELP committee's bill. Their conclusion was that the competitive pressure from the public option “would probably lower private premiums in the insurance exchanges to a small degree,” and with a public plan in the exchange “the costs and premiums of competing private plans would, on average, be slightly lower than if no public plan was available.” By reduce the cost of buying private insurance on the exchange, a public plan, “would tend to lower federal subsidy payments through the exchanges.”

It is important to remember that the premimums for an average health insurance plan for a family of four is $13,000 a year. Even reducing the cost by a very small 4% would saving a family $520.

The benefits of the public option would not be restricted to just the minority of people who choose to sign up for it. The public option would also reduce premiums for those choosing private plans. The public option would also reduce the overall government cost of health care reform.

Progressives are not fighting for a public option for some purely ideological reason. They are fighting for it because Congress' own budget office concluded that even a weak public option would reduce the cost of health care reform and would save millions of Americans billions of dollars on their health insurance premiums, regardless if they select a private or public plan. A public option is both a smart and a very popular idea.

Conrad's Co-ops Are No Compromise Because They Are Designed To Fail

The problem with Conrad/Ross' state based co-ops idea is not just that co-ops have proven to be a mostly unsuccessful model for health insurance. The real problem is that they are purposely designed to fail. Conrad wants there to be 51 co-ops (50 states plus DC), and he would restrict the co-ops to only offering plans to the individuals and small businesses using the new health care exchange (roughly 10% of the population). According to Conrad's own admission a health insurance co-op needs a minimum of 500,000 members to be able to negotiate competitive rates.

Using Conrad's own 500,000 member threshold, even if every single person using the new exchange joined a new state based co-op, over half the states in the country would not have a sufficient population to create a competitive co-op. Using a more reasonable assumption that as many as one fourth of individuals on the new exchange would choose to join a new state based co-op, only four states (CA, TX, NY, FL) might have enough people sign up for their state's co-op to barely reach the important 500,000 membership mark.

The restrictions placed on the new health insurance co-ops would make it financially impossible to create 51 new co-ops. With the restrictions, it seems that creating even 15 viable co-ops nationwide would probably be impossible. From what information I have, I suspect that between 4-8 is the maximum number of viable competitive co-ops that could be created nationwide. That would only be possible with a massive capital investment, focus on creating national not state based co-ops, and serious start up help from the government.

If the legislative restrictions were not bad enough to kill the co-ops, the absurd way they are set up should. According to Baucus' framework,

Grants and loans will be awarded by the Secretary of HHS based on recommendations made by an advisory board. The advisory board will be chaired by the Secretary (or a delegate) with other members appointed by the Majority Leader of the Senate (4 members), the Minority Leader of the Senate (3 members), the Speaker of the House of Representatives (4 members) and the Minority Leader of the House of Representatives (3 members).

This means that Senator Mitch McConnell and Congressman John Boehner would likely appoint half the board who decides which groups receive help establishing co-ops. Both have been highly skeptical of the whole idea of co-ops and health care reform. They have a strong political reason to make sure the co-ops fail. Giving them this power is like hiring a butcher to start a vegan restaurant.

I've previously explained how the trigger idea can very easily be made worthless with only a minor change. Robert Reich has done a great job explaining how Washington is filled with highly paid lobbyists whose job is to make sure things like a trigger are never pulled.

Neither Conrad's co-ops or Snowe's trigger are a compromise on the issue of a public option. They are fig leaves designed to fail. Their only purpose is to be a face saving measure to pretend that Obama did not break another campaign promise. A real “compromise” would be something (or group of things) that could fulfill the many goals of a public option in another manner. Small state based co-ops and triggers are not compromises, they are surrender.


Note: None of the Gang of Six represent a state large enough to support a state based co-op. In fact even if there was only one co-op for all six states it would still lack sufficient membership to be able to be competitive.