Breaking Down Baucus' Useless Bill

Not entirely fair in the headline here, Baucus' proposal released today does do some good things, including subsidizing individuals at up to 300% of the poverty level to purchase insurance out of regulated health insurance exchanges.  The trouble is that in a failed effort to be "bipartison," the bill failed on the kind of cost control measures that American health care desperately needs.  It contains no public option, and institutes fees on the most expensive insurance plans, a set of fees that will be shifted to consumers.  Instead of a public option, Baucus opted for coops.

The Baucus bill instead would create of a series of private health insurance cooperatives, which Baucus and other centrist Democrats say could offer the same protections as a new government plan.

This kind of language dominates media reports on the topic and has dominated the conversation on coops ever since the idea surfaced, but the question I've always asked is "how are we going to create these things?"  The answer in the Baucus proposal, it turns out, is that we're not.  Baucus sets aside money for loans and grants for the creation of coops by anyone who wishes to, but does not actually create anything.  I don't know if anyone has actually done any studies as to why there are few health care coops, it could be start up costs, in which case the Baucus proposal would effectively lead to their creation, or it could just be that they aren't viable in the insurance market, in which case we're just throwing away money to create some things that won't be able to last past the public investment to starting them anyway.  I think the coop idea is rediculous anyway, but its not obvious that the Baucus proposal even leads to the existence of more coops.  Why the media has put so much emphasis on the Finance Committee is beyond me, it lead to a crap proposal that isn't going to get any Republican votes anyway.  I'm frankly not convinced that the finance committee will even pass this, and I would be just fine if they didn't.

Side note-The New York Times has a pretty good feature on the Baucus proposal.  To summarize, nobody likes it, liberals hate it because it doesn't have a public option, and conservatives hate it because they claim its "too much government."  A great idea we've had here, put pressure on Baucus to create a "bipartison bill," and then be surprised when everybody hates what he proposes.  Its time everyone recognize that no Republican will support any health care reform that reaches beyond ending recessions and pre-existing conditions.

A "weak public option" may be a myth

There's a recent post over at Blue Oregon about whether or not a "weak public option" is better than none and whether its worth fighting for.  The post has lead to a lot of feedback, currently 68 comments.  The thing is that I'm not convinced this is even a debate worth having.  I've made my belief that a strong public option is necessary pretty clear, but lets go back and look at what a strong public option (as opposed to a weak one) actually entails.  University of California Public Policy Professor, Jacob Hacker examined three crucial provisions (sorry, this file seems to have disappeared from the internet) that he argued make the difference between a good public plan and a not so good public plan.  Those three provisions were:

(1) a "Medicare tie-in" that allows the public plan to develop a broad national provider network with competitive payment rates quickly, (2) the creation of a national excahnge that can give a wide range of firms, as well as uninsured Americans, access to both the public plan and regulated private insurance options, and (3) providing the public plan with enough authority to reduce medical inflation through drug-price bargaining and innovations in the financing and delivery of care.

According to Hacker all three of the bills contain some elements of a "strong public option," but all have some problems.  For example the House Energy and Commerce Committee bill fails to set its imbursement rates to Medicare allowing providers to negotiate independently with the public plan under threat of opting out if they don't pay more than Medicare does, this would obviously drive up costs.

There are two things on my mind considering the question of whether a weak public option is better than no public option at all.

To begin with, health care reform does not stop with this fight, it will inevitably be tinkered with in the future.  With that in mind however, it will be extremely unlikely for a program passed now to be abandoned, once we create programs we really don't like to get rid of them.  So a weak public plan could someday become a strong public option.  I think the far greater risk comes from no public option at all where the American taxpayers end up footing the bill for subsidies that benefit insurance companies without any competitive pressure to bring costs down, I'm sure insurance companies would just love to have 50 million new customers financed by the Federal Government.  A weak public option on the other hand still has some bargaining and cost control power, just not as much as it should have.

Secondly, I don't think there's a lot to be gained by weakening a public plan.  I have a hard time imagining that the strength of a public plan as opposed to its very existence, is a deal breaker for many (or any) Democrats in Congress.  I'm sure various members have preferences on these matters, but I doubt that anyone whose vote is necessary will withhold their vote because the public plan is too strong, more likely they oppose the public option, period.  I don't know how those whip counts would look, but the scenario under which a public option is acceptable to members whose votes are needed, but a strong one is unacceptable just doesn't seem plausible to me.

The far more dangerous possibility is that a trigger will be inserted into the bill, this is merely a means of destroying the public option, the trigger will never get sprung, though I have little doubt that the conditions that allow it to be put into place will arise.  On the question of whether or not to accept a "weak public option," however, I think the answer is clearly that a strong public option should be fought for, but it can be strengthened in the future and if it must be weakened in order to pass, then that should be supported.  The worst possible outcome is no public option at all, and that's what we should be fighting to avoid.

Promising Words from Wyden

I find this extremely encouraging.  While I've worried about Wyden's position in the health care debate, specifically whether he would support a public option, I find the tone of support he takes here to be a big relief, though he doesn't actually talk about the public option, the fact that he talks in optimistic terms (both from a policy perspective and in terms of momentum in Congress) about the principles outlined in Obama's speech that are enshrined in the bills that have been passed out of committee so far, and offers criticism of particular parts without bringing up the public option, I consider a major relief.  I would still like to see him make a stronger statement in support of the public option, but after this I'm a lot less worried about where Wyden will come down in all this.  Wyden did however have some concerns that should be explored.

Wyden says, "the area that i would like to be bolder in is in this area of creating a market through choice and competition."

Wyden believes the proposal wouldn't allow nearly as many people as it should to choose to enter so-called health insurance exchanges, if they're unhappy with the insurance their employers provide.
"Only people who are unemployed and uninsured and work at very small businesses would be allowed choice and competition in the exchanges," Wyden noted "Anybody who works at a mid-size business who doesn't like what they have, a government bureaucrat steps in and says you don't have choices.

As long as we're on this topic, I'm highly skeptical of the "choice and competition" talking point that Obama and Democrats have picked up on.  Many employers offer multiple plans to their employees, and employees then choose the plan they wish to buy into.  Employers who do this are effectively creating on a very small scale something we can call an "insurance exchange," as has been proposed in every bill on a much larger scale.  Personally I have never met someone who, when given such a choice has any clue what they're choosing.  People will get a choice, and businesses purchasing plans off the exchange will have a choice, but there's no reason to believe that they will make an economically rational one given the way insurance plans are presented.  In High School my mom once changed plans at Washington State University because one of them offered better coverage for the asthma medication Advair, which our original insurance plan didn't want to cover, but was doing an incredible job of controlling my asthma.  That was an awfully narrow consideration, that if you're able to do an in depth cost benefit analysis of the two plans, might not actually be worth it.  However, since health care plans are unreadable for most people, consumers will make choices like the one my mom made rather than really figuring out which plan offers the better deal holistically.  I think we need reform badly enough that I'm willing to get behind a strong health insurance exchange, but I'm pretty skeptical that it can actually work, even educated and informed consumers are going to be unable to distinguish between plans and will choose based on pretty narrow criteria.  Wyden's other concern was related to the tax on health care companies that forms a central part of the Baucus cop out plan, and was endorsed by Obama the other night.

But Wyden was perhaps most critical of the financing scheme--enshrined in the Baucus plan, and endorsed by Obama--to raise the funds needed to pay for the bill by taxing high-end private insurance plans. That measure sells politically--who doesn't like the idea of taxing insurance companies?--but the incidence of the tax is likely to befall insurance consumers, including middle class Americans who Obama vowed not to increase taxes on.
"This financing system is not my first choice," Wyden said. "We're going to be working in the finance committee to address the concerns you describe."

Everything I've read on the topic of this type of a financing scheme agrees that the costs will just be passed on to consumers.  Given the realities of American health care that's just not a productive outcome.  I think Wyden is spot on here, and hopefully we can come up with a better way to finance this.

I was really relieved at the tone that Wyden seems to take here, he's not playing games with whether he'll support something like what Obama laid out the other night, but he is engaging seriously with the policy and looking for ways to work towards a better bill.  As far as the two points I highlighted here, I think Wyden is wrong on the first, but so is Obama, absent a single payer approach however, it makes a lot of sense.  And on the second he's spot on.  Hopefully Wyden can help improve the Senate bill (whichever one becomes the Senate bill) and cast his vote for universal health care.  Now he better not make me regret this post by working against a public option.

Thoughts on Lyndon Johnson and Medicare and Medicaid

I was listening to NPR yesterday when on whatever show I was listening to they started talking about the past attempts by President's to reform health care.  What got me thinking in this conversation was when they brought up how Lyndon Johnson decided to be incremental and fight to establish Medicare and Medicaid.  Assuming the absence of universal coverage, few Americans, and no good lefty will deny the positive impact of Medicare and Medicaid on the American health care landscape.  Imagining America without those two programs is a sorry picture even considering the long term budgetary problems that Medicaid faces, including in Oregon with its innovative Oregon Health Plan.  That budgetary challenge is a function of rising health care costs in general and is a primary reason that health care reform is necessary, but I digress, imagining America without those two programs is a sorry picture of deep poverty and very high rates of uninsured.

The question, however, is whether that situation would be so intolerable as to provide the extra momentum for Johnson, Nixon, Carter, or Clinton to pass universal health care.  My sense is that Johnson pushed through an agenda that helped a lot of people, but at the cost of a long term fix to America's health care crisis.  He created a sense of complacency, and shockingly in the recent debate, selfishness.

The biggest barrier to momentum on health care reform during the current debate (other than institutional barriers in the Senate) has been the hostility of elderly Americans who, however incorrectly, think that Democrats are trying to kill them, or cut their medicare.  The Survey USA poll cited at the top of this paragraph finds Americans over the age of 65 to be the only group in which a plurality opposed the Obama outline plan.  Now, lets pretend that Medicare didn't exist, and elderly Americans are struggling to get health care coverage.  Not only do elderly Americans without health insurance become strong supporters of universal health care, but it also builds support for the program amongst younger Americans who are tired of watching their grandparents suffer.

The moral of the story is this, while Johnson eased a lot of suffering and passed two very good programs by fighting for Medicare and Medicaid, he simultaneously took the wind out of the sails for universal health care, and made the moral case for health care reform more dubious by allowing opponents to frame the uninsured in negative terms to a greater extent than they otherwise would be able to.  Half measures do not work, they are unable to bring the costs down, and improve the position of opponents of reform in future battles.  Johnson was able to pass both Medicare and Medicaid by big margins, had he decided to fight that battle I can't imagine with most elderly Americans lacking health insurance, plus those who gained coverage through medicaid, plus everyone that was left out by the Great Society Health Care reforms all pressuring the Senate and House, that we would not have managed to pass some version of universal health care, quite possibly in a better form than Obama's proposal.  I recognize that the House and Senate are not necessarily a reflection of public opinion, but the 120 million Americans (do not put too much stock in this number, I just added the uninsured, plus 1/2 of the elderly, plus medicaid enrollment, I actually suspect that due to the economics of the matter the number would be higher, either way it wasn't a particularly scientific approach that got me there) who would be uninsured today if Medicare and Medicaid didn't exist would not be such a ho-hum affair, and it would be a lot harder for opponents to stand in opposition.  The moment to do this was 1965 and Johnson blew his chance and made it a lot harder to pass universal health care.  At the same time, he made a lot of people's lives better and reshaped America rather than fighting a battle that he wasn't sure if he could win.

health care reform and the budgetary death trap

The talk the of the day seems to be that Obama's prepared to jettison the public option.  This is an enormous mistake, to begin with, Survey USA recently found 77% of the public supporting the public option.  Even for Senators like Landrieu, whose electoral fears are understandable, the public option is not going to be electorally dangerous, support for any bill with or without a public option might be since public opposition to health care is overwhelmingly based on misconceptions about the proposals.  This is evidently driven by whip counts rather than the nature of the public debate, since no real conversation about the public option has even begun for the most part.

The deal is that I have a hard time believing either of two things, that any health care bill that achieves universal coverage has 60 votes in the Senate, and that the public option does not have 51.  Therefore, either way we're at the point of either magically and suddenly re-framing the way cloture votes are perceived (infinitely unlikely), or we get a new Senator from Massachusetts and convince all the Dems to vote to end debate regardless of their position on the legislation itself (still unlikely but a little more plausible than the first), or budget reconciliation.  In all of those scenarios we should actually only need 51 votes for the public option, which again, I have a hard time believing doesn't exist.

This is just flatly bad policy, the public option is the only force under the proposed bills that has any ability to significantly lower health care costs, by creating a strong, nonprofit competitor to insurance companies that can deliver health insurance with very low administrative costs.  Without that public option we do get improvement, but we get a budgetary mess (ironic given that the conservative Democrats opposing the public option claim to be so concerned about the budget deficit).  What we end up with without a public option is some network of subsidies and mandates within a government regulated private insurance exchange, this brings us to near universal coverage, which is good, and there is some reason to believe that it might lower costs marginally, while Hawaii's employer mandate has some major problems, it has managed to hold costs under the national average.  So its not out of the realm of possibilities that the growth in health care costs might be kept down just by dramatically reducing the number of uninsured, but there's no mechanism to force the insurance market to lower premiums and to keep administrative costs (and profits) down.


Jacob Hacker has a very good article on this in which he compares Medicare Advantage to the traditional government run medicare program, and finds that traditional medicare has far lower administrative costs.

the Congressional Budget Office (CBO) has found that administrative costs under the public Medicare plan are less than 2 percent of expenditures, compared with approximately 11 percent of spending by private plans under Medicare Advantage. This is a near perfect “apples to apples” comparison of administrative costs, because the public Medicare plan and Medicare Advantage plans are operating under similar rules and treating the same population.

Hacker's example is even in a competitive market in which the Medicare Advantage private plans have to compete with traditional Medicare, and traditional Medicare delivers much lower administrative costs.  Some studies have challenged the assertion that Medicare is far more efficient than private insurance by deducting taxes from private insurance's non-delivery (normally referred to as administrative) costs.  There's a point to be made here regarding taxes, I'll grant that one, but to give them profits misses the entire point.  How we concluded as a society that my health should be an item that other people can profit on is beyond me.  Profits are a big part of the problem, and I'm more than happy to allow them to take a hit by trying to compete with a nonprofit government provided option, that hit is a part of where savings to the public will occur.  Without that hit, and without the public option being able to take steps to lower its costs (negotiating drug prices, pegging rates to medicare...) the public is going to take a major budgetary hit somewhere down the road.  One of the reasons we're talking about this is that health care costs will force Medicare and Medicaid spending to double over the next 30 years.  We need some force in the market to force costs down significantly, and subsidizing private insurers to cover people at 400% of the poverty level will only increase Federal health care expenditures unless something forces costs down.

Reform is good, period, having nearly 50 million Americans uninsured is unacceptable, but reform that fails to really address rising costs is just begging for trouble, its a huge mistake for Obama to abandon the public option, hopefully these rumors will not turn out to be true.  Furthermore, if he announces this in front of the AFL-CIO as is rumored, he's going to get destroyed, as well he should, its a terrible idea.

I think I'm going to puke

In a recent ad, Michael Steele continues the Republican Party's scare the living crap out of seniors strategy.  As Washington Monthly points out, this on top of suggesting last week that Social Security should be privatized.

just last week, Steele said -- within a 24-hour timeframe -- that Medicare is a) a great government program that Democrats are trying to undermine and the GOP is trying to protect; and b) a terrible program that doesn't work and should probably be privatized. And this only came after Steele ran one of the all-time dumbest op-eds to ever run on health care policy.

I obviously have a different opinion of Steele than most progressives do, for me, I think he's scary because he is extremely TV savvy and comes across on TV as both reasonable and friendly.  This is a dangerous trait for someone who has absolutely no grasp of public policy.  I don't know what Steele's favorability numbers are like, but it seems to me like if they're not high its probably because of a lack of exposure, because he is very good at these scripted appearances in commercials, and I think progressives ignore that at their peril.

For anyone with a firm grasp of the health care debate, as is usually the case, Steele's ad is a piece of crap, its dishonest and as a result wholly unconvincing.  The trouble is that low information voters just get his folksy demeanor and are likely to accept the talking points.  This debate has been totally mishandled on the left side, and as a result we've got an uninformed population of seniors who think Obama's trying to kill them.  We should have been talking about Republican hostility to medicare and Social Security on day one of this debate, at this point in terms of public perceptions I fear the only way out is to have an epic battle between millennials and their grandparents.  Maybe we need to invoke the Sarah Silverman strategy over health care, it is absolutely insane that the primary group of people who get government health insurance (and like it) have been scared so thoroughly that they're the one's standing in the way of getting something for the rest of us.  This concludes my semi-pointless rant, I really had to get that out of my system, if I keep going this post may never end.

Robert Reich's incrementalist parable

Robert Reich has a good piece on the need to fight the desire to be incrementalists on health care reform.  This is great parable that I thought was worth repeating in as many places as possible.

Years ago, as the story goes, Britain's Parliament faced a difficult choice. On the European continent drivers use the right lanes, while the English remained on the left. But tunnels and fast ferries were bringing cars and drivers back and forth ever more frequently. Liberals in Parliament thought it time to change lanes. Conservatives resisted; after all, Brits had been driving on the left since William the Conquerer's charriot. Parliament's compromise was to move from the left to right lanes -- but incrementally, on a voluntary basis. Truckers first.

My attitude has long been that in terms of health care policy, incrementalism is public policy's version of Zeno's Paradox.  If we forever resist universal coverage in favor of measures to insure part of the uninsured population, we never reach the point at which everyone has access to quality health insurance.  In environmental policy by contrast there's no particular desired end point, so we can always hope to achieve better environmental outcomes, and can pursue those by increments, a small positive step here, a small positive step there and we always make progress.  In health care on the other hand all progress towards universal coverage that falls short leaves some other group still lacking in coverage, and as we cover progressively more people in reforms, those left out become ever more vulnerable to moralistic claims about the lazy poor that the United States is so prone to.

There's got to be an ad in this somewhere

The conservative strategy in opposing health care reform is clearly to scare the living crap out of the elderly.  The irony in all this being that it is Republicans who are the longstanding enemies of Medicare and social security.  As recently as the past election the Republican Nominee for President advocated cuts in Medicare to slash the federal budget deficit.  So it is really strange to see the Republicans turning seniors into their base as they oppose a centrist plan to reform health care.  So why hasn't Moveon or someone run an ad based on this quote:

"The reality of it is, this single-payer program known as Medicare is a very good example of what we should not have happen with all of our health care," said Steele. "The reality of it is, how many times have we been at the trough of bankruptcy and no money for the Medicare program, where Congress is running around like chickens with their head cut off, trying to figure out how to fix a program that they've already mismanaged? So now you want to do that, Congressman, on a larger scale? You want to include all of us. You're talking about taking our senior population, and expanding it to all of the population? Government cannot run a health care system. they've already shown that. Trust the private markets to do it the right way."

or this one.

We've had Medicare since 1965, and Medicare has never done anything to make people more healthy. If there's any opportunity for more healthy activity, it's going to be, again, a private, competitive...

There's got to be a way to counter the fear mongering, seems to me that while the Republicans are pretending that the Democrats are trying to kill Medicare we should be reminding them who passed and still supports Medicare and who opposed and still hates it.  Where are the moveon ads on this?