GOP: Run, Teabaggers Run

Today's announcement by Dede Scozzafava that she would suspend her campaign is a huge victory for Doug Hoffman, third parties, and the conservative grassroots. Whether it will be a true victory for the Republican party is less certain. Like rats fleeing a sinking ship, the Republican party has moved quickly to jump on the Hoffman bandwagon. They want to share his victory as their own. While it is true that he will likely caucus with the Republicans in the House, this is likely to be a pyrrhic victory for the national party.

Say what you will about Scozzafava's lack of conservative credentials, she has been an elected Republican for years and was the official nominee of the party. If Doug Hoffman had not jumped into the race, it is very likely that Scozzafava would have won. Hoffman did not enter a primary to become the Republican candidate; he ran to defeat the Republican. He has spent weeks trying to tear down the Republican.

Hoffman has benefited from a perfect storm. The Democratic candidate Bill Owen has proven to be surprisingly weak and Scozzafava suffered a series of set backs. Scozzafava's last minute decision to drop out should help the right rally behind a single candidate and not split the vote. Hoffman did run a great campaign, but he also got very lucky. The more likely outcome was that Hoffman's conservative party candidacy would have cost the Republicans the seat.

Hoffman may win this time, but what about the dozen potential conservative third party candidates who will be inspired to become the next Doug Hoffman? They have been shown that they can run and win. The number of Republicans which rallied to Hoffman even before Scozzafava dropped out is a bad precedent. It gives the message that candidates having nothing to fear from trying to tear down Republican nominees. If they can hurt the Republican candidates enough the national party will embrace the cause of their own down fall with open arms.

The NY-23rd special election maybe nothing more than that: a very special election. Hoffman could become part of the Republican fold, and his example could soon be forgotten. On the other hand, he may prove to be a harbinger of things to come. He could be the inspiration the very conservative grassroots need to openly challenge the Republican party. Dozens of Republicans could end up facing extremely conservative primary challengers or much more importantly, conservative candidates running against them in the general election. Many seats might be lost to a split right cause by a small but very active conservative grassroots movement. The Republicans may celebrate Hoffman's possible win but in the long run they may regret their lack of dedication to party loyalty and integrity. They should hope the message sent by a Hoffman win is not: run, teabaggers run.

Republican Drops Out Of NY-32rd Congressional Race

The local Watertown Daily Times is reporting that Dede Scozzafava, the Republican candidate for the special election to fill the NY-23rd congressional district, has just suspended her campaign. The announcement comes only days before the election. Scozzafava was facing Democratic party candidate Bill Owens and Conservative party candidate Doug Hoffman.

Recently, Hoffman has been gaining in the polls at the expense of Scozzafava. A series of high profile Republicans, like Sarah Palin, have taken the unusual step of endorsing Hoffman over their party's official candidate. This move should be seen as a huge victory from the conservative grassroots movement.

Snowe Will Not Offer Trigger Amendment

The AP is reporting that Olympia Snowe (R-ME) does not plan to offer a public option trigger amendment, because it does not have the votes to pass. With Snowe planning to vote against Reid's bill, it would be ideal if we can remove some of the other terrible compromises that were added to win her support.

Sen. Olympia Snowe, R-Maine, has been the leading proponent of the "trigger" approach but she told The Associated Press in an interview Friday that she didn't plan to offer it as an amendment because it didn't have the votes to prevail. Snowe is the only Republican in Congress to have supported Democrats' health care legislation, voting "yes" in the Finance Committee. But she said Friday she couldn't support Reid's current version.

CBO Director Elmendorf Calls “Bending the Cost Curve” a Meaningless Evaluation

Several months ago, CBO Director Doug Elmendorf and Sen. Kent Conrad (D-ND) created a huge media hoopla when Conrad got Elmendorf to claim that the House health care bill would not “bend the cost curve.” Fast forward a few months, and Elmendorf has now taken a far more philosophical look at what “bend the cost” curve even means.

This is probably not what the Blue Dogs were hoping for when they sent a letter to the CBO asking the CBO to analyze things that they are simply not designed to study. I guess the Blue Dogs will now need to look elsewhere to for a reason to oppose reform. Claiming it is for “fiscally conservative” reasons will just not cut it. They killed the robust public option, even though it would save $85 billion, and now, for the most part, they remain uncommitted to voting for a bill that will reduce the deficit by over a $100 billion in the next ten years. Elmendorf's letter reads, in part (PDF):

“Bending the Curve”
The question often arises: How does CBO evaluate whether health care reform proposals “bend the curve”? But that question raises another one: Which curve? Several cost trends are of interest to policymakers, and even though they are related, proposals might not have the same effects on each one. One such curve is the federal budget deficit as a whole, and another is the federal budgetary commitment to health care. A third is the trajectory of national health expenditures (NHE), and a fourth might be the premiums charged for health insurance.

Moreover, what does it mean to “bend the curve”? If a proposal makes the expected budget deficit 20 years from now smaller than it is expected to be without any policy changes, then the deficit curve is clearly being bent downward, on average, during the next 20 years; that is, the average growth rate of the deficit during those two decades would be lower. On the other hand, if the expected deficit is larger, then the deficit curve is being bent upward, and the average growth rate of the deficit in that period would be higher. Would that slower or faster growth rate continue indefinitely? That sort of extrapolation might seem natural, but it may not be appropriate. Distinguishing between a series of shifts in the level of the deficit and permanent changes in the growth rate of the deficit is difficult. Although CBO can provide a rough indication of a proposal’s effect on the level of the budget deficit 20 years ahead, the agency does not have an analytic basis for projecting the proposal’s effect on the growth rate of the deficit at that point, much less for evaluating whether that growth rate will continue in future years. Those same considerations apply to the agency’s analysis of the federal budgetary commitment to health care. Therefore, CBO has concluded that it is more appropriate to talk about whether proposals would “lower” or “raise” the curve of the federal budget deficit or budgetary commitment to health care 10 to 20 years from now than to discuss those proposals’ effects on the shape of the curve in that time period or the level or slope of the curve beyond that period.

Blanche Lincoln Should Wish She Were As Popular As The Public Option In Arkansas

A new Research 2000 poll sponsored by the PCCC shows that the public option is dramatically more popular than Blanche Lincoln. When asked:

QUESTION: Would you favor or oppose the government offering everyone a government administered health insurance plan -- something like the Medicare coverage that people 65 and older get -- that would compete with private health insurance plans? (Wording of NYT poll)

A solid majority (56%) of the people of Arkansas said they favored this proposal while only 37% said they were opposed. The interesting thing is this question is asking about a theoretical public option substantially to the left of the public option actually proposed in either the House or the Senate. In both cases, the public option is much more conservative, because it would not be offered to “everyone.” It would only be for the small segment of the population which has had the most trouble getting affordable health insurance (uninsured, self-employed, and small business).

Unlike the public option, Blanche Lincoln's favorability numbers are terrible in Arkansas. Only 41% of have a favorable view of her, while 49% view her unfavorably. This would probably explain why Arkansas Democrats would, for the most part, be less inclined to support her if she continued her opposition to the public option.Voting against a strong public option would make 46% of Democrats less likely to vote for Lincoln in a primary and only 11% Democrats more likely to back her in a primary. (Note: Lincoln has already twice voted against the public option in committee.)

CBO: Public Option Would Do Too Good A Job Of Providing High Quality, Low Hassle Health Insurance

The media is making a lot of hay about the CBO conclusion that the House's negotiated rates public option will have premiums slightly higher than private insurance on the exchange.

That estimate of enrollment reflects CBO’s assessment that a public plan paying negotiated rates would attract a broad network of providers but would typically have premiums that are somewhat higher than the average premiums for the private plans in the exchanges. The rates the public plan pays to providers would, on average, probably be comparable to the rates paid by private insurers participating in the exchanges. The public plan would have lower administrative costs than those private plans but would probably engage in less management of utilization by its enrollees and attract a less healthy pool of enrollees. (The effects of that “adverse selection” on the public plan’s premiums would be only partially offset by the “risk adjustment” procedures that would apply to all plans operating in the exchanges.)

What this means is that the public option would be able to provide high quality, low hassle health insurance at a better unit cost. The public option would have a very large provider network, lower administrative overhead, very little paperwork for doctors and patients, and be much less of a headache to use.

The problem is that these great qualities would make the public option substantially more attractive to less healthy people. People with medical problems have tended to be treated extremely poorly by private health insurance (imagine that!). They are also the individuals who are most likely to be diligent shoppers on the new exchange.

The public option would be one of the best health insurance providers on the new exchange (if not the only good one). As a result, it will attract the sicker customer base which has been screwed over by private insurance companies. This is called “adverse selection.” It would have slightly higher premiums, ironically, because it can provide health care at a lower cost. The public option's problem is that it would be one of the only plans doing its job properly and not trying to get around the regulations at every turn.

This illustrates a serious, reform-crippling problem with the House's bill. It has an insufficient “risk adjustment” procedure. The risk adjustment mechanism should be a re-insurance program that redistributes a large amount of money among the plans on the exchange based on the health of their different customer bases. Without a strong risk adjustment mechanism you are literally guaranteeing it will be impossible to get high-quality, low-hassle insurance on the new exchange.

I have explained the critical issue in more detail before. The problem is, if any insurance company tried to be socially responsible, it would soon be flooded with sick costumers tired of being treated badly. This would end up making “bad” insurance companies more profitable because their bad behavior will drive away their unprofitable, unhealthy customers. The result is a marketplace were it is financially impossible to run a social responsible insurance company. Unless the risk adjuster is dramatically strengthened (or a very robust public option that can afford to absorb a lot of adverse selection is enacted), I can promise you reform will create incentives that prevent you from getting quality health insurance.

CBO: House Bill Budget Neutral In This Decade And Next

The CBO has concluded that the House bill will reduce the deficit over the next ten years, and will also reduce the federal deficit over the next twenty years. This was accomplished without an excise tax on health insurance benefits.

All told, H.R. 3962 would reduce the federal deficit by $9 billion in 2019, CBO and JCT estimate. After that, the added revenues and cost savings are projected to grow slightly more rapidly than the cost of the coverage expansions. In the decade after 2019, the gross cost of the coverage expansions would probably exceed 1 percent of gross domestic product (GDP), but the added revenues and cost savings would probably be greater. Consequently, CBO expects that the legislation would slightly reduce federal budget deficits in that decade relative to those projected under current law.

How The House's Public Option Might Differ From The Senate's

We now have the legislative language for the House's less robust public option (PDF page 211), and it has been reported that Harry Reid plans to include the Senate HELP Committee's public option--with some form of state opt-out procedure. (Whether legislative language for the public option in the merged Senate bill is exactly identical to the HELP committee's public option is not yet 100% guaranteed. We will not know until Reid releases his bill--presumably after the CBO scores it.) Both public options would be very similar. They would only be available on the new exchange. They would both be run by the HHS, and negotiate rates with providers. In both cases, the providers' rates will not be higher in the aggregate than the average rate for other plans on the exchange. While similar, there are a few important differences.

State Opt-Out
The biggest difference between the House's public option and the Senate's public option will be the state opt-out provision. Harry Reid has not yet released how the opt-out would work, but it would give the state government the power to stop the public option from selling health insurance that state. The House's public option will be a true national public option without an opt-out.

Presumed Enrollment and Provider Opt-Out
The House's public option has presumed Medicare provider enrollment with a provider opt-out provision. This is a huge strength that makes the House's public option better than the HELP committee's public option. Under the House bill providers that are part of the Medicare network would be presumed to want to take part in the public option. Medicare providers can easily opt-out of the public option before it starts, and would face no penalty for doing so. This presumed enrollment should make it much easier for the public option to get up off the ground. The HELP committee's public option would require providers to actively sign up for the program.

Provider Rate Floor
The House public option would set a provider rate floor. It could not pay providers less than Medicare rates. The HELP public option contains no rate floor. In theory, it could negotiate rates even lower than what Medicare pays for a procedure. While that is unlikely to happen, it is possible that there are some procedures where Medicare is paying above market rates. Because of this small bit of added flexibility on this issue, the HELP public option is technically slightly stronger. Both would not pay rates in the aggregate higher than the average for other insurance plans on the exchange.

State Advisory Councils
Under the HELP public option each state would establish public or non-profit State Advisory Councils. They would be responsible for making non-binding recommendations to the Secretary of HHS on how to better run the public option in their state. What effect their non-binding recommendations would have is hard to guess, but, in general, it sounds like a smart if limited idea. The House bill would not create State Advisory Councils.

Preferred Physicians and Participating Physicians
The House bill directly spells out how the public option's physicians network would work. It would have “preferred physicians,” who would be like in-network providers that accept the negotiated rates as full payment. It would also have “participating, non-preferred physicians.” They agree to not impose additional charges equal to or greater than 15% above the negotiated rate. They would function sort of like out-of-network providers. The HELP bill does not spell out how the public option's network would work.

Besides the state opt-out (and we still don't know how that will work), the most important difference is the presumed enrollment for Medicare providers. The House bill will not force any Medicare providers to take part in the public option and would let them start opting out a full year before the program starts. But it is just human nature that people are much more likely to not drop out of a program than they are to actively enroll in one, regardless how easy it is to enroll or drop out. The benefit of having a ready network to potentially build off of could be critical to successfully launch a new nation-wide insurance entity. Maintaining this provision is very important moving forward.

What Will Health Care Reform Do Right Away?

One of the biggest problems for Democrats going forward is that they have failed to properly inform the American people that most of the planned health care reforms will not kick in until 2013. This is huge potential political ticking time bomb of disappointment, confusion, and anger going into the 2010 mid-term election. Very few if any uninsured Americans will gain coverage until after the 2012 elections. To deal with the problem, House Democrats tried to front load some of the least costly reforms right away. Below is a list of the 14 reforms that, under the House plan, will kick in 2010. You can judge for yourself if the voting public will think it is sufficient.

1. BEGINS TO CLOSE THE MEDICARE PART D DONUT HOLE — Reduces the donut hole by $500 and institutes a 50% discount on brand-name drugs, effective January 1, 2010.

2. IMMEDIATE HELP FOR THE UNINSURED UNTIL EXCHANGE IS AVAILABLE (INTERIM HIGH-RISK POOL) — Creates a temporary insurance program until the Exchange is available for individuals who have been uninsured for several months or have been denied a policy because of pre-existing conditions.

3. BANS LIFETIME LIMITS ON COVERAGE — Prohibits health insurance companies from placing lifetime caps on coverage.

4. ENDS RESCISSIONS — Prohibits insurers from nullifying or rescinding a patient’s policy when they file a claim for benefits, except in the case of fraud.

5. EXTENDS COVERAGE FOR YOUNG PEOPLE UP TO 27TH BIRTHDAY THROUGH PARENTS’ INSURANCE — Requires health plans to allow young people through age 26 to remain on their parents’ insurance policy, at the parents’ choice.

6. ELIMINATES COST-SHARING FOR PREVENTIVE SERVICES IN MEDICARE — Eliminates co-payments for preventive services and exempts preventive services from deductibles under the Medicare program.

7. IMPROVES HELP FOR LOW-INCOME MEDICARE BENEFICIARIES — Improves the low-income protection programs in Medicare to assure more individuals are able to access this vital help.

8. PROVIDES NEW CONSUMER PROTECTIONS IN MEDICARE ADVANTAGE — Prohibits Medicare Advantage plans from charging enrollees higher cost-sharing for services in their private plan than what is charged in traditional Medicare.

9. IMMEDIATE SUNSHINE ON PRICE GOUGING — Discourages excessive price increases by insurance companies through review and disclosure of insurance rate increases.

10. CONTINUITY FOR DISPLACED WORKERS — Allows Americans to keep their COBRA coverage until the Exchange is in place and they can access affordable coverage.

11. CREATES NEW, VOLUNTARY, PUBLIC LONG-TERM CARE INSURANCE PROGRAM — Creates a long-term care insurance program to be financed by voluntary payroll deductions to provide benefits to adults who become functionally disabled.

12. HELP FOR EARLY RETIREES — Creates a $10 billon fund to finance a temporary reinsurance program to help offset the costs of expensive health claims for employers that provide health benefits for retirees age 55-64.

13. COMMUNITY HEALTH CENTERS — Increases funding for Community Health Centers to allow for a doubling of the number of patients seen by the centers over the next 5 years.

14. INCREASING NUMBER OF PRIMARY CARE DOCTORS — Provides new investment in training programs to increase the number of primary care doctors, nurses, and public health professionals.

11 Ways The House Bill Is Much Better Than The Baucus Bill

The Harry Reid is in the process of merging the two Senate bills, but what the final Senate product will be is still a secret. For the most part, the bill from the Senate Finance Committee (SFC) is expected to serve as the base that the new Senate bill is being built upon. It is by far the worse of the two Senate committee bills.

Here is a compare/contrast between the new House version and the Baucus version of the Senate bill. The House bill is superior in many ways:

1. It covers more people. The Senate Finance Committee (SFC) bill, written by Max Baucus, would only provide coverage to an additional 29 million people. The House bill with extend coverage to roughly 36 million individuals. That is 7 million more people.


2. Contains a public health insurance option. The SFC bill did not contain a public option.


3. Employer mandate instead of "free rider” provision. The “free rider” provision is a terrible and probably unworkable idea that would hurt low-income Americans.


4. Stronger, better regulated exchange. At the insistence of Olympia Snowe, the SFC's exchange was made basically worthless, the equivalent of a health care yellow pages. The House bill will let the exchange use its power to help hold down premiums and get the best deal for customers.


5. Lower out-of-pocket cap. The House bill places an annual out-of-pocket limit on expenses for individuals at $5,000 and families at $10,000. The SFC places the annual limit at $5,950 for individuals and $11,900 for families


6. Higher quality insurance plans. In the House bill's lowest qualified plans must have an actuarial value of 70 percent. In the SFC bill, the lowest qualified plans must only have an actuarial value of 65 percent.


7. More generous affordablity tax credits. The House bill will provide working class American families more help affording health insurance than the SFC bill will.


8. Tighter age ratings. The House bill will only allow insurance companies to charge older people twice as much as younger individuals. The SFC bill would let insurance companies charge older people four times as much. The health insurance lobby has been pushing hard for an age rating of 5:1.


9. Minimum medical loss ratio. In the House bill, there is a minimum medical loss ratio of at least 85%. An insurance company needs to use 85 cents of every dollar it brings in through premiums to pay for claims. The SFC bill does not have a minimum medical loss ratio.


10. One national exchange instead of state-based exchanges. Creating a single national exchange is better than having states create 50 different state-based exchanges like the SFC bill. It should increase efficiency and bring down cost.


11. Better ombudsman. Both bills would create a new health care ombudsman office (or offices) to help people deal with insurance companies. In the SFC bill, people would only be allowed to seek help from the ombudsman if their internal appeals last more than three months, or they were facing a life-threatening situation. The House bill puts no restrictions on when a person could seek help from the ombudsman.

These are not the only eleven ways the House bill is significantly better than the bill written by Baucus, they are just some of the most glaring examples.

House Health Care Bill Unveiled

Today, Nancy Pelosi unveiled the House's health care reform bill. The bill will cost $894 billion over the next ten years, but will be fully paid for. It will expand coverage to an additional 36 million Americans and eventually close the Medicare Part D doughnut hole.

Thanks to the successful efforts by the Blue Dog caucus, the bill will not contain the “robust” public option, one that pays Medicare rates plus 5%. The bill will still contain a national public option run by the HHS, but will pay rates negotiated by region instead. This move will increase the cost of the bill by roughly $85 billion.

To make up some of the reduced saving by going with the less robust public option, the bill will expand Medicaid to cover people making below 150% of the federal poverty level (FPL) instead of 133%. It is much cheaper to cover individuals with government insurance programs (Medicare or Medicaid) than through private insurance.

The bill will not contain the excise tax on employer provided health insurance found in the Senate Finance Committee bill. Most of the money to pay for the bill will come from savings from Medicare and Medicaid and a new “millionaire's tax.” It will be a surtax on individuals making over $500,000 and couples making over a million a year. This should create a real showdown during the conference committee. A large number of House Democrats are strongly against the tax on health insurance benefits while many senators are against the new “millionaire's tax.”

UPDATE: Full text of the bill now available (PDF).

Blue Dogs Win Huge Victory For The Health Insurance Industry

In a huge victory for the health insurance industry, hospitals, and PhRMA, the Blue Dogs managed to stop the robust public option tied to modified Medicare rates. The Blue Dog Coalition, who must call themselves “fiscal conservatives” purely as part of some elaborate ironic joke, fought tooth and nail to kill the robust public option, which would have saved the federal government roughly an additional $85 billion. It would also have provided families with an option roughly 10-11% cheaper than the typical private health insurance plan. That would be roughly a $1,400 a year reduction in premiums for the average family.

The Blue Dogs fought hard and they won a big victory for the for-profit health insurance companies. If I were an insurance company CEO, I would be writing each of them a very large thank you note (i.e. a campaign contribution). Of course, today was a huge defeat for the American taxpayer, serious health care reform, and working class Americans who are going to be denied a robust public option which could have saved them thousands of dollars.

Their efforts to weaken the public option make it clear who the Blue Dogs really represent. With a few notable exceptions, the Blue Dogs don't stand with working class Americans or for “fiscal conservatives.” When it really mattered, the Blues Dogs fought for the health insurance corporations, regardless of how much their efforts will hurt the federal deficit or middle-class Americans who need relief from out-of-control premiums.

Evan Bayh: If Fifty Senators Really Wanted A Public Option They Can Get It Using Reconciliation

Evan Bayh said on CBS Washington Unplugged said that if fifty senators were dead set on getting a real public option they could always do that by using reconciliation. Reconciliation measures can't be filibuster, so a bill being passed through reconciliation would only need a simple majority to pass (50 votes plus the VP).

Evan Bayh said, “If the people want the public option in its fullest form are just adamant about that they can always just get that with fifty votes.”

Fifty Democratic senators could pass all of health care reform using reconciliation or in theory pass just the public option using reconciliation. Trying to pass all of reform using reconciliation could potentially face problems because of the Byrd rule, which could strip individual provision is they are not properly related to the budget. Passing just the public option through reconciliation should be easier because it is less likely to run afoul of the Byrd rule.

The option of using reconciliation does provide Congressional progressives with some leverage. If they determine that the most conservative Democratic senators are demanding too much they can always bypass them and still get a bill passed. The question may come down whether a bill which would be watered down by the strange Byrd rule would still end up a better bill than one watered down to fulfill the whims of Joe Lieberman, Blanche Lincoln, or Ben Nelson.

House Bill To Be Unveiled Tomorrow

The merged House health care reform bill is expect to be announced tomorrow around 10:00 AM EDT. Reporting indicates that it is unlikely to contain the public option tied to Medicare rates favored by progressives. This will hurt the public option's ability to strongly drive down prices and dramatically save the government money.

Regardless of which public option the House bill contains, the CBO says it will extend coverage to 6-7 million more Americans than the Senate Finance Committee package. The House bill is expected to cover an additional 36 million Americans, while the Senate Finance Committee bill would only cover an additional 29 million people.

Lieberman Demands Public Option Taken Off The Table Completely

Joe Lieberman (I-CT) is demanding the public option be taken off the table completely:

"Just take this government-created, government-run health insurance company that will cost the taxpayers, premium payers and the debt a lot of money -- take it off the table," Lieberman said, emphasizing that he believes that the rest of the bill includes a number of positive reforms.

Lieberman has decided to stick to his completely unfounded lies about the public option, refusing to acknowledge that the CBO said the public option will reduce the cost of reform for both premium payers and the government. Joe the Dumber also added another crazy talking point to his rant:

"We can come back in three or four years if the reforms -- the other reforms we adopt are not working," Lieberman explained. "But I think they will."

It is unclear if Lieberman even realizes that reform will not start until three or four years from now. It will be impossible to even tell if the other reforms are "working" because they would have just started. Of course Lieberman could be implying that he might be willing to maybe look at adding a public option three to four years after reform starts, around 2017. One hopes that will be long after Lieberman is no longer in the Senate.

Reid Crossed The Rubicon

Most of the political media, many of the people in Congress, even Harry Reid himself may not have realized it yet, but Monday, Reid crossed the Rubicon. Like Julius Caesar stepped across the point with his progressive base. Reid can't back down and expect to be cheered for trying his best. To fail now would prove him a weak, worthless, ineffectual leader. Nationally, progressives will begin to seriously ask, “would we be better off with one fewer Democratic senator but Chuck Schumer as Majority Leader?” If the public option opt-out dies in the Senate, or is seriously watered down, there will be hell to pay.

Reid has left his party with no safe outs. Democrats have only three different opportunities to eliminate or water down the (already watered) public option opt-out. First, Reid can go back on his word and strip the provision before bringing the bill to the floor. While the Senate bill is not yet final, as far as the Democratic base is concerned, it is a done deal. To singlehandedly raise the hopes of the progressive community only to quickly smash them could have devastating consequences for Reid. It would prove that a mere threat from Joe Lieberman could completely cause Reid to abandon his principles. This move would make him look incredibly weak. Reid would be abandoning the wishes of a majority of his caucus, the Congress, the Democratic party, and the country simply because Lieberman kind of threatened him.

The second opportunity is when the bill is first brought to the floor--where a handful of Democrats could vote against allowing debate to proceed. The plan would then be for Reid to bring a modified version of the bill up a week later without the public option, after saying “oh well I tried.” This would be incredibly dangerous to the party, and would require of conspiracy of stupidity to even attempt. Letting the first vote on health care reform go down in flames would be depicted as a huge setback in the media.

The two to four senators who voted against allowing the bill to proceed to debate would be cut off from the labor movement and declared pariahs by the grassroots. PACs would instantly be formed, with the single goal of making sure those Democrats never get re-elected. Any argument that attacking these Senators could result in electing a Republican would fall on deaf ears. If a “Democrat” will actively fight against his party on a procedural vote about the number one issue for most Democrats, they might as well be Republicans.

If Reid thinks that move will deflect heat from him, he's in for a rude awakening. The progressives will demand the defiant Senators have their seniority stripped, and Reid will be blamed for failing to strong-arm the last few members. Much of the blow-back will also hit Obama. Unless he is practically on the Senate floor screaming at the members to vote as a caucus, he will have zero credibility left with the base. The base will demand the bill gets moved through reconciliation, not watered down further. Reid has the power to pass reform with a simple majority, and it will be his fault for not using it. Trying to move forward with a much weaker bill will need to be done over the objection of a very angry and betrayed base.

The final opportunity to water down or kill the public option is with amendments, but any amendment to change the public option would require 60 votes. Even assuming all the Republicans would be willing to vote for an amendment to water down the public option (I don't see that happening), it would still take 20 Democratic senators to make it happen. I don't see where Reid will find the 20-plus Democratic votes to cripple the public option, especially if Reid does not want to be one of those votes. Those 20 Democrats might try to explain that voting to kill the public option was necessary for “compromise,” but regardless, they will be labeled “public option killers.” It is a title that will hang like a dead weight on any Democrat.

I know many attempts are going to be made to cripple or kill the public option before health care reform passes. I wouldn't be surprised if it did get watered down at some point. I just can't see how it will happen without blowing up in Reid's and several other Democratic senators' faces. Reid may not know it, but he is across the Rubicon. He got his base expecting a real public option. With the power of reconciliation, Reid can get a public option passed is he was truly determined to. If he fails on his promise to deliver on the public option he will have no one to blame but himself, and will look incredibly weak going into the 2010 election.

Whip Count - Data Removed By The Hill

October 27, 2009
8:00am
Whip Survey - Health Reform with "Robust" Public Option

Undecided - 12
Arcuri
Cuellar
Edwards (TX-17)
Ellsworth
Kanjorski
Kirkpatrick
Kosmas
Langevin
Mollohan
Rodriguez
Schrader
Smith

Leaning No - 8
Boyd
Giffords
Halvorson
Klein
Maffei
Nye
Sanchez (CA-47)
Scott (VA-03)

No - 47
Adler
Altmire
Baird
Barrow
Bean
Berry
Boren
Boucher
Bright
Cardoza
Chandler
Childers
Cooper
Costa
Dahlkemper
Davis (AL-07)
Davis (TN-04)
Donnelly
Gordon
Griffith
Herseth Sandlin
Hill
Holden
Kagen
Kratovil
Lipinski
Markey (CO-04)
Marshall
Massa
Matheson
McIntyre
McMahon
Melancon
Michaud
Minnick
Mitchell
Murphy (NY-20)
Peterson
Pomeroy
Ross
Shuler
Skelton
Space
Stupak
Tanner
Taylor
Teague

Update - The Hill is reporting that Majority Whip James Clyburn is disputing the accuracy of the previous published whip count.

Making Public Option Less Robust Is A Double Slap In The Face To Working Class Americans

Nancy Pelosi may not have enough votes for the "robust" public option tied to Medicare rates plus 5%. The Hill has published the official whip count of those House Democrats who oppose the robust public option.

As I've pointed out countless times before, a robust public option would have premiums roughly 10%-11% less (according to the CBO and CMS) than typical private insurance. That would be around a $1,400 reduction in premiums for the average family that could choose the robust public option. Forcing Americans to pay roughly $1,400 more a year on health insurance premiums, by denying them the choice of a robust public option, is the first slap in the face.

The second big slap in the face is that robust public option would save the government $85 billion more than a weaker public option (with negotiated rates instead of those based on Medicare). Since Obama set an absurd $900 billion ceiling on the cost of health care reform, most of that $85 billion will need to be made up by reducing affordability tax credits to low- and middle-income families. As Ryan Grim at Huffington Post reports:

The public option tied to Medicare rates saves $110 billion over ten years. Requiring it to negotiate rates only saves $25 billion.

If leadership goes with the negotiated-rate plan, that $85 billion difference will have to come from somewhere to meet President Obama's ten-year, $900 billion price ceiling. The fattest target is the subsidies to help people afford insurance.

Going with negotiated rates instead of a robust public option will deny American families a choice that would save them roughly $1,400 a year on their health care premiums. But making the public option less robust might also cause the government to reduce the amount of tax credits it can give to low-income and middle-income Americans to help them afford health insurance by roughly 20%. So, not only will American families be denied a much cheaper insurance option, but they will also be given less financial assistance to help them afford health insurance from a selection of more expensive options.

Making the public option less robust will end up costing working class families thousands more each year on health care. That is what the 47 Democrats who are "Nays" on the robust public option are desperately fighting for. They are fighting for a position that they know will make health care dramatically more expensive for millions of Americans.

Update - The Hill is reporting that Majority Whip James Clyburn is disputing the accuracy of the previous published whip count.

Carper Pushes Public Option Opt-in, Lieberman Open to State-Based Public Plans

Politico is reporting that Thomas Carper (D-DE) is working on an alternative to the public option opt-out, which would be the public option opt-in. This is would a “national” public option where states must pass a law to join. Joe Lieberman (I-CT) told the AP he was against any federal public option, but might open to the possibility plans set up and run by the states.

As I wrote earlier today, the public option opt-in is a federal public option that would likely be denied in a majority of states. I suspect, at least for the first several years, only a dozen or so of the bluest states would opt-in. The much smaller customer base should seriously limit the ability of the public option to drive down premiums. A public option opt-in would likely produce a technically viable insurance entity, but one with almost no real impact on our health care system, and one only available to few individuals in a handful of states.

As weak and worthless as the public option opt-in idea is, the state-based public plan idea is an even bigger joke. As Sen. Jeff Bingaman (D-NM) pointed out states currently have the power to set up public plans right now. There is nothing legally stopping them. Saying you want to “allow” states to set up state-based public plans is the equivalent to saying you want to do nothing at all. The other big problem with this idea is that the public plans would likely only be available to the roughly 10% of people using the exchanges. Most states have a populations below 3 million and therefore would be unlikely to create state-based public plans with sufficient costumer bases to be truly viable.

Carper's national public option opt-in is a nearly useless “compromise.” While Lieberman's state-based public plans is a complete joke and by definition can't even be called a "compromise" because it is the status quo. If someone tells you they believe state-based public plans are a “compromise,” they are either ignorant, a liar, or likely both.

Most Major News Polls Show Support For Public Option Increasing and Opposition Fading

A new NBC/WSJ poll will be released later today that shows support increasing for the public option:

According to the poll, 48% say they favor a public health plan administered by the federal government that would compete with private insurers, compared with 42% who oppose it. That's a shift from last month, though within the margin of error, when 48% opposed the public option and 46% supported it. And it's a 10-point swing from August, when 47% were in opposition and 43% were in favor.

The NBC/WSJ poll confirms the general trend, that the public option has been gaining support and losing opposition. The trend was found in almost every major news organization's polling: CNN, CBS New/New York Tims, and ABC News/Washington Post.

The CNN poll released Oct 21 showed that people favoring a public option jumped from 55% in August to 61% in October, while people opposing the public option decreased from 41% in August to 38% in October. The recent ABC News/Washington Post poll showed the support for the public option jump to 57% from its August low of 52%, while at the same time opposition eroded from 46% to only 40%. The CBS/New York Times poll from late September also showed people favoring the public option rebounding to 65%, up from the summer low of 60%. While opposition dramatically weakened to only 26% of Americans opposing the public option, compared to 34% who opposed it in August.

While each poll asked the question in a different way, the trend across all the polling is clear: Not only has support for the public option been increasing since August, but opposition to the public option has been quickly eroding. The public option has clear upward momentum.

Obama Still Working To Undermine Reid And Kill The Public Option

According to the Huffington Post,

NBC News correspondent Chuck Todd reported Tuesday morning that the Obama White House, despite public expressions of support for Senate Majority Leader Harry Reid's decision to pursue an opt-out public insurance option, remains skeptical that Reid can come up with the votes.

The administration basically told Reid, "You're the vote counter. But don't come crying to us when you need that last vote," Todd said on MSNBC.

Would Obama, only one vote shy of a huge victory, refuse to even attempt to twist the arm of that last Democratic hold out? This is a level of disdain, exhibited by the Obama administration for the public option, that boarders on insanity. The White House is telling the media that he will refuse to lift a finger to help pass his signature domestic policy goal simply because it contains a public option (which Obama continues to claim he supports). Is Obama so obsessed with killing the public option and winning the support of one Republican that he is willing to cripple his own Senate Majority Leader?

Instead of accepting that Reid has made his decision and backing him 100%, the Obama administration seems ready to undercut Reid at every turn. Reid will have a hard time whipping the votes he needs if Obama's advisors are telling everyone in Washington that they are secretly expecting (or promoting) Reid's failure. If Obama's advisors have convinced him that angering his base, throwing labor unions under the bus, and making his Senate Majority Leader look so weak it could cost him his re-election is the best way to get a "victory" and pass something labeled "health care reform," he has truly disappeared deep into the bubble.

Update - Greg Sargent is reporting that Chuck Todd is trying to clarify his statement which he claims got twisted. He claims the White House did not literally send that message, it is only "as if' they were sending that message."

A Public Option Opt-In Is Not The Same As State Based Public Plans

The news yesterday was the Harry Reid would include a public option with an opt-out provision in the Senate bill. There has been some reporting Reid might not have the votes for the opt-out and might need to water it down to a public option "opt-in," state-based public plans, or trigger. A public option opt-in and state-based public plans are two very different proposals that many in the media seems to be falsely equating.

A true public option opt-in would be a national public option that states would need to actively opt in to. The federal government would create a single public option entity, but it would only be able to sell health insurance in states that passed a law to allow the public option in their state. This would be similar to the opt-out proposal where states would need to pass a law preventing the public option from providing health insurance. Probably only a dozen of the very bluest states would pass a law opting in to a national public option. Compared to the opt-out, where the hope is only a dozen of the reddest states would pass a law opting out. Besides denying the public option to most Americans, the other big potential problem with the opt-in is that too few states will opt-in to the public option, and it would be unable to develop the sufficient customer base needed to be viable.

State-based public plans was an idea proposed by Sen. Thomas Carper. States already have the power to create their own public companies to sell insurance right now if they want. “Allowing” states to create their own public plans would in no way be a “compromise,” it is the status quo. Besides the federal government potentially providing states with a large quantity of seed money to help start up these state-based public plans, there really is nothing to this proposal. Given the strong restrictions it would place on potential state-based public plans, Carper's original proposal would literally be worse than nothing at all.

A public option opt-in would create a single national public option that states would need to opt in to. It would probably be restricted to only a few of the bluer states in the country. A state-based public plan proposal would help states set up public plans if they wanted. They would probably only be established in the same few blue states, but suffer from several additional problems. Many states would probably be too small to properly support a public plan. Having several different state-based public plans would hurt insurance portability and would probably drive up cost since the many different public plans would lack the benefits of scale.

State-based public plans would be a substantially worse idea than a public option opt-in. I suspect the public option opt-in would be able to function (i.e. remain a viable entity that could sell insurance) but its impact would be extremely limited. Since it would operate in only a few states, I can't see it improving our overall health care system or being big enough to really hold down premiums. Many of the state-based public plans, on the other hand, could easily be too small to even get off the ground or ever function properly. Since the state-based public plans would be limited to the roughly 10% of people on the exchange states like Vermont, Rhode Island, Iowa, West Virginia, Montana, Kansas, etc. would be too small to create a truly viable public plan. While some have confused these two ideas, there is a dramatic and important difference between a public option opt-in and state based public plans.

Reid Defies Snowe, Chooses Helping Americans Over Veneer Of Bipartisanship

I'm glad to see that Senate Majority Leader has decided to be a real leader and defy Olympia Snowe (R-ME). There is no reason to have a 60 member caucus if you are unable or unwilling to use it to fulfill the top priority of the Democratic party with the best reform bill possible. It is long past time to dethrone Empress Snowe.

It is important that the Senate bill going into conference committee contain a public option, even if it is one far weaker than it should be. But the bigger news seems to be that Snowe will no longer drive the bill, since she will not support a bill with a public option. Her demand that the bill contain a trigger was only one of her many ill conceived proposals.

I hope that including the opt-out public option is just the first of the positive changes which are made because Reid no longer needs to shape the bill to meet Snowe's every whim. Unfortunately, it seems the Senate bill with still contain the very stupid free rider provision, which Snowe wanted, instead of a mild employer mandate. This is a provision that desperately needs to be improved going forward.

There are areas that should be revisited now that Snowe is no longer on board: Strengthening the exchange so that it can negotiate to help individuals get a better bargain on their health insurance is a critical improvement previously opposed by Snowe. John Kingsdale, who runs the current Massachusetts exchange, said that if the exchanges remain how Snowe wants them, it will be a “policy disaster.”

I would like to see the “national plans,” which would gut a state's ability to properly regulate health insurance, revisited. Increasing the actuarial value of the “bronze level” (lowest minimum qualified insurance plans) and expanding Cantwell's “basic health plan” proposal were both ideas opposed by Snowe, but can ideally now be improved. Strengthening the new ombudsman's office and setting a minimum medical loss ratio for health insurance are two additional changes that should be made.

If Reid can convince his caucus to vote as a bloc on cloture, it would be a display of true leadership. Losing Snowe, and being able to pass a bill with only a simple majority, would be the single best development for health care reform yet--far better news than even the addition of a very weak public option with an opt-out. A bill that can pass the Senate without Snowe's vote will likely be a much better bill in the end. Reid has laid down a good marker today, now he needs to deliver.

Repealing Insurance Antitrust Exemption: All Smoke, No Fire

The CBO examined the effect of ending the anti-trust exemption and found:

Based on information from the Justice Department, the Federal Trade Commission, the National Association of Insurance Commissioners, consumer groups, and private attorneys, CBO estimates that both of those effects would be very small, and thus that enacting the legislation would have no significant effect on the premiums that private insurers would charge for health insurance. Changes in those premiums can affect federal revenues because of the favorable tax treatment that is accorded to employment-based coverage under current law, but any such effects of the legislation would be negligible in CBO’s estimation.

Senate Majority Leader Harry Reid along with other Democrats made a big show about pushing to eliminate the antitrust exemption for insurance companies. While it maybe decent policy it should have very little effect on the health insurance market. The CBO echos the find of some analysts who have also concluded that the change would be a very minimal. If the move is meant to punish the health insurance companies it is at best a light slap on the wrist. If Democrats want to show that they are being tough on the health insurance companies, then we need some real fire, not so much smoke and mirrors.

The When, How, Who, What Of The Public Option Opt-Out

Several news sources are reporting that Harry Reid plans to put a national public option with an opt-out provision in the merged Senate bill. So far, there have been almost zero details on how this national public option with an opt-out provision would be structured. I'm going to explain four important variables and how they could affect the success and availability of the public option.

When
When can states first choose to opt out? There are two different opt-out time frames, which I will call “pre-reform opt-out” and “post-reform opt-out.” The public option is not going to be available until most of the reforms really start in 2013. A “pre-reform opt-out” would allow states to opt out anytime before the public option would first be made available in 2013. This would be a “bad” opt-out provision which would probably result in more states opting out. The earlier that states would be allowed to start opting out, the worse it is. Since no one would yet have access to the public option, opting out before reform started would be politically easier.

A “post-reform opt-out” would only allow states to opt-out after first having the public option available in their state for a period of time (say, 1-4 years). This is a “good” opt-out provision, and the longer the delay before a state can opt out, the better. By first making the public option available, states and their residents would be able to better know if it is something people like. If the public option succeeds as progressives hope, it would be politically more difficult to take away something people already have and like.

How
How would a state opt-out? There are several ways a state could be allowed to opt out: the reform package could require passing a law, or it could allow opt out solely by an act of the state legislature, a decree by the governor, popular ballot referendum, an order by a state insurance regulator, or some combination of the proceeding options. I've previously broken down how many people would likely be denied the public option depending on the different opt out mechanisms. The harder it is for a state to opt out, the better. I suspect, based on polling, a popular ballot referendum would be the mechanism to result in the fewest states opting out. The “best” opt out mechanism would require the state to pass a law opting out of the public option, then requiring it be upheld by a popular referendum.

Who
Who will pay for the added cost of states opting out? By holding down cost on the new health insurance exchange, the public option will reduce the amount of tax credits the federal government will need to provide individuals to help them afford health insurance. The CBO expects even a weaker “level playing field” public option would save the government $25 billion over the next decade. (I've examined the issue in more detail earlier.)

If a state opted out of the public option, it could increase insurance rates and the cost of reform to the federal government. Who should pay for this increased cost? The federal government could just pay the increased cost (the “federal government pays”). Uninsured people living in the state which opted out could pay the cost, by the federal government reducing the amount of their tax credits (the “middle-class pays”). Or the state government could be forced to reimburse the federal government for the added cost that resulted from them opting out (the “states pay”). I think it is unfair to force the rest of the country to pay higher taxes because Texas wants to reject a potential cost saver. The only fair solution would be to make states cover the added cost of opting out. This “states' pay” provision should dramatically discourage states from opting out.

What
What kind of public option will it be? From reporting, the public option is likely going to be a “level playing field” public option which must negotiate rates with providers. We still do not know how the public option will be structured, or how it will be run. Will it get to combine its administrative paperwork functions with Medicare for better efficiency? Will all providers need to opt in to the public option or would Medicare providers be presumed to part of the network unless they opted out? Will it be part of the federal government or just have congressionally appointed management? It could be run directly as a part of department of HHS and run by government employees. It could also be structured like a quasi-public government corporations similar to Amtrak, the Federal Reserve, FDIC, or the Corporations For Public Broadcasting. The Senate HELP Committee's public option would have quasi-subsidiaries in each state to slightly customize the public option for local needs. Would this feature be retained?

A public option that most closely resembles Medicare would be the best possible structure. Having a Medicare provider presumed opted in should help the public option get off the ground more quickly. Allowing Medicare and the public option to use a combined paperwork processing system would save the government money, and cut down on paper work for doctors. Preferably, the public option would be part of HHS and not a stand alone public corporations.

These four categories are some of the most important (but not the only) variables which should determine the viability of Reid's public option with an opt-out. It is possible to design an opt-out that would result in very few if any states opting out. It would be a “post-reform opt-out” with a “states pay” provision. It would require a state law to opt out and a ballot referendum.

On the other hand, it is possible to design an opt-out that would result a large number of states opting out of the public option. If it were a “pre-reform opt-out” where the federal government paid 100% of the added cost, that would be a very “bad” opt-out design. Allowing only a decree by the governor or an act by the state legislature to opt-out the state would also dramatically increase the likely hood of states opting out. Like all things, the devil is in the details. We will soon know if Reid scored a real victory or delivered only an empty triumph.

Occam's Razor: Obama Lied About Supporting The Public Option, Like He Lied About Everything Else Related To Health Care

It is amazing to me that some reporters honestly believe Obama would "prefer a strong public option." All the evidence points to the contrary. For months Obama has been trying to down play the public option. His advisers have been running around saying anything (triggers or co-ops) would be acceptable substitutes even after the CBO declared the co-ops unworkable.

With momentum recently building for the public option Obama has done nothing to help it (and a fair amount to hurt it). Senate Majority Leader Harry Reid is often praised for his ability to count votes. When he went to the president on Thursday to brief him about his support for the public option opt-out, Reid must have know he was extremely close to getting it passed in the Senate. A few calls from the president, some horse trading, and/or a public statement of support could have easily pushed the proposal over the edge. What did Obama do when it looked like, with a little effort, he could get a public option? He had word leaked that he would fight against the public option and wanted Snowe's worthless trigger instead. A trigger proposal Rahm Emanuel and other had advisers have been pushing for months.

It is important to note that Obama has been consistently less than true to his word when it comes to health care reform. Obama originally claimed to be against the individual mandate; now he is fighting to make sure it is included in the final bill--even though the all-important Olympia Snowe opposes the individual mandate. Obama promised not to tax employer provided health care benefits; now Peter Orszag claims it is a critical part of reform. Obama promised to allow drug re-importation and give Medicare the power to directly negotiate drug prices; several months ago, Obama made a secret deal with PhRMA in which he agreed to actively fight against both of these proposals. And, the president has clearly broken his promise about putting all the health care reform negotiations on C-SPAN. On issue after issue related to health care reform, Obama has, for all intents and purposes, lied.

All the evidence points to one simple conclusion: Obama does not truly support a strong public option.

Maybe Obama never really supported the idea of the public option because he thought it could not work. Maybe he sold it out as part of his still-secret deal with the hospital industry. Perhaps he promised some conservative Democrats in the House and/or Senate that he would kill the public option in exchange for them not criticizing health care reform. Months ago, Obama might have secretly promised Snowe veto power over any proposal if she agreed to support reform.

Regardless of why, Occam's razor dictates only one conclusion: Obama does not support--and likely never supported--a strong public option. There is no tangible evidence to support an alternative conclusion.

$100 Billion For Second Chances

Republican Senator Olympia Snowe really thinks the health insurance industry deserves another chance to behave. This is why Snowe supports the trigger. Just how strongly does Snowe feel about giving the insurance companies another chance? She thinks it is so important that she wants to waste $100 billion of your tax payer money on this second chance for large, for-profit health insurance corporations.

The CBO says a strong public option would save around $110 billion. Snowe has repeatedly stated that she is completely against this serious cost saver. Snowe admits the CBO has scored her trigger as only saving between $10-$15 billion. (That is assuming that the trigger is not neutered some time in the next five years, which is the most likely outcome.) Snowe is demanding we waste $100 billion of your tax dollars by giving the private health insurance companies another chance to get their act together.

To gain her support, Snowe is insisting that the country waste $100 billion for the explicit purpose of protecting the private health insurance industry from public competition. That money could be used to reduce the deficit, make health insurance more affordable for millions of Americans, and/or reduce taxes. Snowe thinks protecting the health insurance companies is more important than providing people with more affordable health insurance or reducing the national debt.

Keep in mind that the senator demanding the nation waste $100 billion only for the purpose of protecting the nearly worthless private health insurance industry is considered to be one of the most “reasonable” and “moderate” Republicans in Washington. Dropping the $100 billion randomly from a few thousand hot air balloons is a more reasonable and moderate use of the money. With my proposal, at least a few regular Americans who could really use some help might get some of the money, instead of every single dollar of it being funneled directly to the health insurance corporations.

Obama Fighting For To Kill Public Option With Snowe's Trigger

Talking Points Memo is reporting that Obama is now actively working to kill the public option.

Multiple sources tell TPMDC that Senate Majority Leader Harry Reid is very close to rounding up 60 members in support of a public option with an opt out clause, and are continuing to push skeptical members. But they also say that the White House is pushing back against the idea, in a bid to retain the support of Sen. Olympia Snowe (R-ME).

Given the reports that Reid is within a vote or two of being able to pass a bill that includes a national public option with an opt-out, a full-court press by both Reid and Obama should be sufficient to insure health care reform contains a public option. Democrats clearly seem to have the power to get a public option with an opt-out provision passed through the Senate using regular order (or, of course, using reconciliation).

Reid and Obama both claim they want a real public option. Now they have a chance to deliver.

The grassroots, House members, senators, and policy experts have all called Snowe's trigger idea worthless. A public option has strong majority support, and is favored overwhelming among self-identified Democrats. If Reid and Obama reject this chance to deliver on both of their promises to provide Americans with a the choice of a public option, it will stand as a monumental betrayal.

If the public option is sacrificed, just to possibly win the support of one unnecessary Republican vote, Harry Reid might as well resign and officially declare Olympia Snowe Senate Majority Leader. In the next few days, if there is a “trigger,” we will know Reid's continued "leadership" is less than worthless to progressives.

The Health Care Reform Political Time Bomb

I think the single greatest political disaster in store for Democrats over the issue of health care reform is not about policy, mandates, or taxes; it is about time. Americans for the most part do not know that they will be forced to wait for three years before reform really starts.

A recent Kaiser Family Foundation poll asks:

If Congress and the president did pass a health care reform bill, when would you expect that people without insurance would begin to get financial help in buying coverage?

13% answered this year, 36% answered next year, and only 25% correctly answer three years from now. These are numbers that should completely terrify Congressional Democrats. Basically, half the country expects health care reform to be underway and there to be a noticeable drop in the number of uninsured by the time of the 2010 midterm elections. In reality, most of the reforms (and the decrease in the number of uninsured) will not start until several months after the 2012 election.

Most of the American people will know when “health care reform” has passed, but a majority will probably not realize that it means nothing will really change for next three years. That is a recipe for an angry, confused, and disappointed electorate. I would not want to be a Congressman trying to defend a reform package that has not started. And I would sure as hell not want to while stumping for re-election. Just try to explain to individuals in serious need of health insurance reform that they are out of luck until 2013.

I know delaying the onset of reform caused the bills to have a pretty CBO scores (below the magic $1 trillion). It was a stupid, short-term political calculation. Unless Democrats doing something to rapidly speed the roll out, I believe Democrats will pay a huge political price for this clever accounting trick. Explaining why reform is good is hard enough, explaining why you passed a health care reform bill that has not and will not help any of your constituents for three years is a massive political disaster in the making.

Snowe War On States' Rights In Health Care

For a Republican, Olympia Snowe seems to have a real disdain for states' rights when it comes to health care reform. At every turn she has been trying to take power away from the states and give it to the federal government. She has been one of the biggest supporters of the “national plans” strongly favored by the health insurance lobby. This would allow insurance companies to sell "national plans" in any state, and these plans would be exempt by federal law from needing to meet state regulations about coverage. Effectively, Snowe wants to completely gut the health insurance consumer protections put in to place by the state legislatures.

Snowe voted against Cantwell's amendment which would allow states to create a “basic health plan” for people making between 133%-200% of FPL, if the state wanted to. The state legislatures would need to pass a law to create a “basic health plan,” and the federal government would only let them if they could prove it would provide better or equal quality care. It would also need to save both the federal government and the new enrollees money to be approved for funding. Snowe voted against letting states experiment with a plan that would save the federal government serious money. Denying the states the right to pursue a different, cheaper strategy for helping to provide health insurance seems like an insane violation of states' rights, fiscal conservatism, and basic logic.

Snowe, shockingly, also opposes the public option opt-in and the state-based public option. This is really perplexing because Snowe claims to support the idea of a national trigger. The idea if the insurance companies don't meet some criteria it would then cause the public option to be available in that state.

For all practical purposes, a national public option with a state opt-in clause is the same as a trigger. Under both scenarios, the public option will not be available on “day one.” The only difference is who is setting the criteria for the trigger. With Snowe's trigger it is the federal government telling states when the conditions are meet to justify the addition of a public option. With the opt-in, individual state legislatures have the power to set their own “trigger” criteria. The states get to decide when and if the insurance companies have failed and the market now needs a public option. Snowe does not want the states to have that right.

Secondly, her opposition to the idea of state-based public options is a massive federal government encroachment into state matters. As Sen. Bingaman has pointed out states already have the power to set up public plans if they want to. There is nothing currently stopping states from creating a public plan today. To say your are against state-based public options must mean you want to strip existing rights from the states.

It is always shocking to me how Republicans talk a good game about states' rights, but are always trying to strip states of power at the behest of powerful lobbying groups, like the health insurance industry. I guess I should not be surprised that Empress Snowe wants to use the federal government to take power away from the states. If someone else had power, it would infringe on her absolute reign.

Which Democrats Want To Steal $1,400 From You?

There has been a variety of reporting about Nancy Pelosi's ongoing efforts to whip the necessary votes for a robust public option. She is close to securing 218 votes, but is not there yet. My question is who are the roughly 40-50 Democratic House members fighting to steal $1,400 every year from hard working American families?

The robust public option favored by Nancy Pelosi would pay Medicare rates plus 5%. The CBO said a public option with this reimbursement structure would have premiums roughly 10% lower than private insurance. The CMS concluded the robust public option's premiums would be roughly 11% cheaper than private insurance. For a family of four, that would equate to roughly $1,400 saving on health care premiums this year.

If a Democratic member of Congress is going to vote to force people to buy health insurance, but deny them a robust public option which could save them $1,400 a year, that is theft, pure and simple. It is using the government to take $1,400 each year directly from the pockets of working class Americans, and place it in the coffers of the private, for-profit health care sector.

If a Democrat wants to fight against helping working class American families save roughly $1,400 a year they should be forced to do so publicly. Hiding behind anonymous whip counts is unacceptable--the time for games and posturing is over. The American people deserve to know who is fighting on their behalf, and who is fighting for the health care industry. Constituents deserve to know which of their representatives are working hard to deny them more affordable health insurance.

Will Reid Dare Defy Empress Snowe On The Public Option Opt-Out

ABC is reporting Reid is leaning towards putting a national, weak, "level playing field" public option with an opt-out provision in the merged bill. The move could be a result of real leadership, terror at the thought of losing his election, courage, profound personal conviction, incredible pressure from inside the caucus, necessity, or a combination of all of the above. Whatever the reason, Reid seems to believe he can get the 60 votes needed for cloture on a bill that includes a weak public option with an opt-out, even if the whole caucus would not end up voting for the bill itself:

Reid is now convinced that Democratic critics of the public option will support him when it counts – on the procedural motion, which requires 60 votes, to defeat a certain GOP-led filibuster of the bill. Once the filibuster is beaten, it only takes 51 votes to pass the bill.

This move would be in direct defiance of Empress Snowe's decree that the bill must not have a public option, even with an opt out:

"Would [inclusion of a public option] be enough for you to vote against the cloture motion?" a reporter asked Snowe on her way off the Senate floor Thursday afternoon.

"On the public option? I'd say I'm against a public option, so yes," Snowe said.

"But would it be enough for you to say, 'I'm not going to proceed to this bill?'" the reporter pressed. Snowe nodded on her way into the elevator.

Snowe said she also opposes the opt-out version of the public plan, which would allow individual states to remove their residents from the federal exchange. "I don't support that," she said.

Sen. Max Baucus (D-MT) has spent months wooing Snowe by integrating her terrible ideas into the Senate Finance Committee bill. Even a few days ago, Baucus was pushing to water down the bill further to make it more to her liking. It's being reported that, at the thought of losing his prized token Republican support for his bill, “Baucus went to DEFCON 1."

Would Harry Reid really defy Snowe? As with all things related to Reid, I suggest waiting until there is solid proof before casting judgment.

Update: Baucus really wants to keep Snowe on board and/or kill the public option. TPM is reporting that he went to conservative Democratic senators to try to whip them up against the public option with opt out.

This, apparently, didn't sit well with Senate Finance Committee Chairman Max Baucus, who is determined to keep Sen. Olympia Snowe's vote.

"Baucus met with moderates this morning and got them nervous." Or tried at least. Snowe clearly laid down her mark. And Sen. Ben Nelson (D-NE) didn't seem particularly pleased. But of all the Senate's conservative Democrats, none have yet rebelled.

Brown: If There Is A Trigger The Insurance Companies Win

Sen. Sherrod Brown (D-OH) was 100% correct today when he said:

"More than 50 members of the Senate are supportive of a straightforward public option, even with the opt-out," he said on ABC News's "Top Line" webcast. "The trigger is a way for the insurance companies to win."

I completely agree. A trigger will never be pulled. An army of highly paid lobbyists will make sure of that.

Now the question is: Will Brown let the insurance companies win? He has been a strong advocate for a real public option. It is time to put up or shut up. He should publicly state that he will not vote for an industry win, and that he will vote against a bill without a real public option (which means no co-ops and no triggers).

Ezra Klein Supports Exchanges On Faith Alone, It Is Time To Walk The Road To Damascus

Ezra Klein really thinks health care exchanges will work at driving down cost despite there being little to no evidence to back up his theory. In fact, today, he just admitted that there is strong evidence to the contrary:

For people, like, well, me, who think that the health insurance exchanges have a real shot at lowering health-care costs throughout the system, the graph above is difficult. For conservatives who believe that the key to constraining health-care costs is to encourage competition between insurers and give individuals the opportunity to choose, the graph above is difficult. Because what the graph above shows is that neither of those strategies has worked terribly well, at least as of yet.

To believe something in spite of evidence to the contrary is what we call blind faith. This is not the first time evidence has been published showing that exchanges will not work at reducing cost. If this new piece of evidence does not convince Ezra Klein that his theory about health care exchanges without a public option reducing cost is wrong, I don't know what will.

It seems his support for them is based on faith, and faith can't be changed with logic. I suspect the only hope there is that he will convert to acknowledging a robust public option is what is most important to controlling costs, will only come from a moment of pure blinding revelation. Someone should book him a ticket to Damascus.

On the other hand, I've never put much stock in the health care exchanges as being able to drive down cost on their own. There has never really been the evidence to support that. Whether it is the Federal Employee Health Benefits Programs, the California Public Employees' Retirement System, or state-base purchasing co-ops, health care exchanges just do not have a strong track record. When looking at the matter, exchanges just did not seem like the answer to the issue of cost.

What does have a strong record of cost control? Medicare. Medicare rates have raisen much slower than the cost of insurance or the FEHB program or for employer-provided insurance. That is the main argument for a strong public option.

The CBO stated a robust public option would have premiums roughly 10% cheaper than typical private insurance companies. The CMS concluded a robust public option could provide health insurance for 18% less than private insurance companies. It is for these reasons that I and others have concluded a robust public option similar to Medicare is critical for reducing health care costs.

There is an argument based on facts that a robust public option would bring down cost for average Americans. There is another argument based on a general faith in the markets, and contradicted by facts, that competition among private insurance companies on an exchange without a public option would bring down cost. I don't support a public option based on Medicare (and oppose creating an exchange without a public option) for ideological reasons--I support it because there is strong evidence that it would work to extend coverage to more Americans and succeed in "bending the cost curve" in a way that these other proposals would not.

Obama And Reid Maybe Leaning Towards Opt-Out

Sen. Ben Nelson (D-NE) told Poltico that he felt Harry Reid (D-NV) and the White House were leaning toward a national public option with an opt-out:

Finance Committee Chairman Max Baucus (D-Mont.) briefed Nelson and other Democratic centrists on Thursday morning.

"I keep hearing there is a lot of leaning toward some sort of national public option, unfortunately, from my standpoint," said Nelson, a key swing senator. "I still believe a state-based approach is the way in which to go. So I'm not being shy about making that point."

Sen. Chuck Schumer (D-NY) has been pushing strong for a national public option (presumably his “level playing field” plan) with a provision that would allow states to opt out if they choose. Given how closely Schumer has been working with Jay Rockefeller (D-WV) on the issue of the public option, I assume Schumer's personal push for the opt-out compromise played a large part in Rockefeller's public expression of tentative support for the opt-out.

Many important questions about the opt-out idea remain to be answered. What kind of national public option would it be (negotiated rates or rates tied to Medicare)? How would states opt-out (decree by governor, pass a bill, popular vote by state legislature, state wide referendum, etc.)? How soon could a state opt out (right away or not until 2013)? What would a state need to do to opt back in if it previously opted out? Who will pay for the added cost of states opting out?

Depending on the answer to these question only a few states might opt out, or over half the people in this country might be denied access to the public option.

Why You Might Never Get Quality Affordable Health Insurance: The Dangerous Lack Of Robust Risk Adjustment

Yesterday, I drew attention to the CMS's findings about the House's robust public option tied to Medicare rates. There were two important findings: The first was that it would be 18% cheaper to insure someone with a robust public option. The second was that premiums for people who chose the public option would only be about 11% cheaper. The problem: the lack of strong enough risk adjustment mechanisms or reinsurance program on the new exchange. People with serious medical issues are the ones most likely to be diligent shoppers on the new exchange. A good health insurance plan with lower overhead and a large provider network (like a robust public option) will attract these less healthy individuals. This shift of sicker people to better, well-run health insurance plans will drive up their premiums. The House bill does contain risk adjustment mechanisms for the exchange to protect against adverse selection, but the CMS determined that would be insufficient.

Fortunately, the robust public option tied to Medicare rates would be so much better than private insurance. It could absorb this consumer shifting and still provide insurance with substantially lower premiums. It would start with real market clout and could have an important impact.

If the exchange did not have a robust public option (or had only a very weak one), the lack of a sufficient risk adjustment becomes an even more serious concern. The result is that it would be impossible for an insurance company to ever offer high quality, low cost insurance even if they wanted to.

Let's assume some non-profit insurance company (maybe one of the new co-ops Conrad is pushing) really tried to offer a low hassle, low cost, high quality insurance package. Word would soon get around to individuals with costly medical problems. They would flock to this better plan and drive up its premiums. Every attempt to cut waste and pass on savings to consumers would be eaten up by more adverse selection.

Bad insurance companies that treated their sicker customers poorly would be the ones reaping the benefits from the good behavior of socially responsible insurance companies. The bad insurance companies with bureaucratic hassles would try to drive all their unprofitable consumers to socially responsible companies. That would leave the bad insurance companies with just high profit, healthy individuals. It is a vicious cycle that would make it nearly impossible for groups to create a large, well-functioning, socially responsible, private health insurance company, even if they wanted to.

Based on my research, none of the bills currently before Congress have robust enough risk adjustment mechanisms and/or the necessary regulations in place to discourage adverse selection. Other "market based" health care systems (Switzerland, Netherlands, Germany) in the world use a much stronger risk adjustment mechanism and have a much tighter definition of what minimum insurance every company must provide.

My worry is not just that without a public option people are unlikely to have the choice of a quality, low-cost health insurance option. I don't just think it is only improbable that insurance companies will choose to act more socially responsible, my real concern is that the new loosely regulated exchange will be a marketplace where it is simply impossible to offer a high quality, low cost, socially responsible, private insurance plan.

It is not just unlikely that current health care reform bills, without a public option, will fail to provide millions of more people with quality affordable private health insurance--I fear such reform will make it impossible to them to get quality affordable health insurance.

CMS: Public Option Would Be 11% Cheaper And Also Reduce Premiums For Private Insurance

The Centers for Medicare and Medicaid Services (CMS) just released a study of the version of the health care reform bill, H.R. 3200, reported out by the Ways and Means Committee.* The study had some positive news for the robust public option tied to Medicare rates. The public option would on average have premiums 11 percent cheaper than private insurance and the public option would end up also making private insurance cheaper.

Premiums for the public health insurance option are estimated to be 11 percent lower than those for private plans on the Exchange. This result is based on an estimate that (i) the cost of the public insurance option for a standard enrollment group would be 18 percent lower than the average for private health plans, but (ii) public plan enrollees would have costs that were 7 percent greater than average (beyond what can be accounted for through risk adjustment) as a result of antiselection. The estimated 18-percent cost differential between the public option and private plans reflects the combination of 17 percent lower prices, 10 percent lower administrative and margin costs, and 9 percent higher costs due to less strict and/or effective care coordination. The finding of 17-percent lower prices for the public plan is a function of the specification that the public plan payment rates would be Medicare rates plus 5 percent. The assumed higher average cost for public plan enrollees is based on an expectation that individuals with above-average costs would tend to prefer plans with less-restrictive utilization management practices.

What this means is that the premiums charged by the public option would be roughly 11 percent lower than private insurance, but, in reality, it would cost 18 percent less for the public option to provide health insurance. Since the public option is cheaper it would end up attracting a less healthy costumer base. Having people with more medical needs sign up for the public option would end up somewhat increasing the premiums the public option would need to charge. Conversely, because the public option would end up attracting many of the least healthy individuals, it would also drive down premiums for private insurance plans.

If Congress implemented a proper risk equalizer for the new exchange, the public option would have premiums on average 18 percent cheaper. The important point is that a robust public health insurance plan could provide health insurance with a large provider network at 18% less cost than private insurance.

*It should be noted that the current House bill is going through major changes and will be substantially different from the one reported out by Ways and Means.

Rockefeller Is Looking Into Public Option Opt-Out

The Hill is reporting that Sen. Jay Rockefeller (D-WV) is looking very carefully at the public option opt-out "compromise":

"I think there's one way that could work very well and could pick up some of the moderates," Rockefeller told reporters. "I'm looking very much now at this opt-out public option." Under the alternative proposal, the public option would be available nationwide but individual states could decline to participate.

So far, Rockefeller has been one of the strongest defenders of a real public option in the Senate, so his openness to the opt-out is clearly a disappointment. It could be a sign that the idea is gaining some traction in the Senate with Reid likely to make a decision about the public option in the coming days.

I've personally have been no fan of the opt-out and have laid out several of the problems with the idea. Primarily, it is people in red states who most need a public option and they are the ones most likely to be denied it with an opt-out.

The nicest thing I can say is Rockefeller did use the phrase "there's one way that could work very well." In theory, an opt out could be designed to make it very unlikely a state would opt out. For example, if states that opt out were required to fully reimburse the federal government for the resulting increase in cost, I doubt many would. Given what I know about Harry Reid and the Senate Democrats, however, I'm not holding my breath on that.

I suspect any opt-out compromise Reid would accept would be a weak public option with a very easy opt-out. The result would be hundreds of millions of dollars spent by the insurance industry lobbying to make sure most of the red and purple states opt-out in the next three years--before the public option is even made available. Progressives should be about helping all Americans in need, not just Americans lucky enough to live in blue states. (And even blue states may not be safe with potential Democratic governors like Creigh Deeds.)