"The President's Proposal," as the 11-page White House document is headlined, is in one sense a notable achievement: It manages to take the worst of both the House and Senate bills and combine them into something more destructive. It includes more taxes, more subsidies and even less cost control than the Senate bill. And it purports to fix the special-interest favors in the Senate bill not by eliminating them—but by expanding them to everyone.This isn't a compromise. This is just moving the Senate bill to the left. He takes the Senate bill and spends more money and adds more regulation. Yeah, just what we needed.
The bill's one new inspiration is a powerful federal board that would regulate premiums in the individual insurance market. In all 50 states, insurers are already required to justify premium increases to insurance commissioners, who generally have the power to give a regulatory go-ahead, or not. But their primary concern is actuarial soundness and capital standards, making sure that companies have enough cash to pay claims.
The White House wants to create another layer of review that will be able to reject any rate increase that is "unreasonable or unjustified." Any insurer deemed guilty of such an infraction by this new bureaucracy "must lower premiums, provide rebates, or take other actions to make premiums affordable." In other words, de facto price controls.
Insurance premiums are rising too fast; therefore, premium increases should be illegal. Q.E.D. The result of this rate-setting board will be less competition in the individual market, as insurers flee expensive states or regions, or even a cascade of bankruptcies if premiums are frozen and the cost of the care they are expected to cover continues to rise. For all the Dickensian outrage about profiteering by WellPoint and other companies, insurance is a low-margin business even for health care, and at least 85 cents of the average premium dollar, usually more, is devoted to actual health services.
The Washington Post is just as condemnatory of the President's proposal.
The changes the administration suggests to the Senate-passed measure heap more dessert on an already calorie-laden plate; the 10-year cost would be $950 billion, the White House says, about $70 billion more than the Senate's approach. Meanwhile, the time for eating spinach would be pushed off even further.No wonder the CBO can't score the thing. Talk about buying a pig in a poke.
Mr. Obama, following the advice of nearly every economist who has examined the issue, identified a tax on high-cost insurance plans as a key mechanism for curbing the growth of health-care costs. He was right. Unfortunately, in the legislative process the tax already was whittled down several times. Now the president proposes delaying it until 2018 -- long after he leaves office -- and raising the threshold at which it applies. Meanwhile, to recoup the $120 billion lost by the delay, Mr. Obama would apply the Medicare payroll tax to unearned income for the wealthiest taxpayers -- money that should be used to shore up Medicare's shaky finances rather than subsidizing cushy insurance.
The president also would give the government power to block increases in health-care premiums. Given public concerns about a federal takeover of the health-care system, letting the government essentially dictate premiums hardly seems like a step in the right direction. More than half the states already require their insurance commissioners to approve rate increases in the individual or small-group markets; the House- and Senate-passed bills provide authority to review increases for insurers participating in the newly created exchanges. The White House argues that this power will help shield consumers in the four years before the exchanges are up and running, but its recent use of the insurance industry as a political scapegoat does not bode well for its responsible use of such authority.
....Overall, though, the president has proposed a plan whose uncertain savings are made even less certain, and whose known costs are increased. Already a trillion-dollar plan was "paid for" with hundreds of billions of dollars in promised "savings" from Medicare; already it ignored a known cost of well over $200 billion in Medicare payments to physicians; already it relegated too many reforms to pilot programs with long horizons.
Now it postpones the key savings mechanism. Administration officials argue that Mr. Obama deserves credit for not dropping the tax altogether. But when did he stand up and fight for the better approach? And what credit or credibility is due a president who endorses a tax but leaves to his successor the unpleasant task of collecting it?
It's funny. Obama was pretty much hands off as the House and Senate each prepared their own bills. Now he's trying his own hand in the game and he doesn't seem to have brought in his own party members from Congress while he did so. They're the ones who will have to join hands and jump off the cliff in ramming through a program through an unprecedented use of legislative legerdemain. Michael Barone doubts that Nancy Pelosi has the votes in the House to push this through. She won by only two votes before and one of those was a Republican who says he will vote against it now. She's also lost three more votes to death and retirement. There is no mention of abortion in Obama's proposal. How does that affect the pro-life Democrats who support Rep. Stupak's language in the original House bill. Perhaps Pelosi was holding back some votes in reserve, but are those nervous reddish district Democrats going to be more eager now to vote for what they voted against last time? And what about those Democrats who voted for it but have seen Democratic numbers decline since then? Maybe I'm just whistling past the graveyard, but I don't see that they have the votes to cram this through in the face of public disapproval.
Keith Hennessey suggests that perhaps we're seeing uncoordinated efforts by the Democrats to head for the exits on health care reform. We can but hope.
Megan McArdle is also skeptical that they have the votes to push this through.
And deadlines are yet another big problem. Reid says they'll be ready to do reconciliation within 60 days. Really? Democrats are going to pass a mongo, costly new entitlement right around tax day? The caucus might as well pass the hat for the GOP election fund. But if you delay it, you're leaving an unpopular bill very fresh in peoples' minds as they go into the 2010 elections. You're also eating up air time that senators and congressmen would presumably like to have for initiatives that are actually, y'know, popular.Toe fungus: an interesting metaphor for the President's final push on the bill.
I'm not seeing it. And neither are any of the people I know who opposed the bill. They're worried, but at about the level of worry you give toe fungus, not stage-three metastatic cancer. Mr Chait is going to have to wait a little while for his freak-out. Unless that's one hell of a health summit Obama puts on, he'll probably have to wait forever.