First, Obama gets booed by the doctors at the AMA conference. Then the Congressional Budget Office prices the Kennedy-Dood healthcare bill at $1 trillion over ten years but only covers an additional 16 million people. The analysis does not include an expansion of Medicaid — which, of course, would mean more people would be covered but at a higher cost. Drip, drip, drip …
Politics and policy from inside Washington
Obama today, in front of the AMA: “What are not legitimate concerns are those being put forward claiming a public option is somehow a Trojan horse for a single-payer system. ”
Some Democrats want the costs of healthcare reform to be judged by the White House Office of Management and Budget, not the nonpartisan Congressional Budget Office. As The Hill explains: “This unusual option could give Democratic leaders hundreds of billions of additional dollars to work with as they draft their plans. But Republicans would call it an accounting gimmick and a huge spending loophole.” It doesn’t need to be said, but I will say it: If the Bush White House would have tried a stunt like this, the Dems and the MSM media would have screamed.
Capitol Hill watcher Pete Davis gives the breakdown:
Health care reform financing options estimated by JCT. Yesterday, June 2 Joint Committee on Taxation “very preliminary” revenue estimates were obtained by the Bureau of National Affairs showing the following 10 year revenue increases:
- Cap the employer health exclusion at the FEHBP, index to CMS $418.5 b.
- Cap, but only for singles (joint) over $100,000 ($200,000) $161.9 b.
- Limit exclusion to 50% of premium amount $1,173.1 b.
- Repeal medical itemized deduction over 7.5% of AGI $180.7 b.
- Repeal Flexible Savings and Health Reimbursement Accounts $68.6 b.
- 3¢ per 12 oz. sugar-sweetened beverage $51.6 b.
Raise alcohol excise tax to $16 per proof gallon $61.5 b.
This from Robert Reich: “I’ve poked around Washington today, talking with friends on the Hill who confirm the worst: Big Pharma and Big Insurance are gaining ground in their campaign to kill the public option in the emerging health care bill …”
Me: Reich also thinks that talk about a public option that would only kick in if healthcare costs failed to come down is a back-handed way of killing the public option. But GOPers I talk to worry about just the opposite, that with Dems as the trigger pullers, the trigger for a public option would definitely get pulled.
Howard Gleckman over at TaxVox blogs that Obama seems to be moving toward capping the $246 billion employer-sponsored insurance tax exlcusion, an idea he ripped McCain for during the presidential campaign:
All of this will result in a few weeks of serious inside-the-Beltway reading of entrails. But my own sense is that Obama will inevitably accept a curb on the exclusion. He’ll do so reluctantly, at least in public, to placate unions and others who insist the exclusion is untouchable. But, as we’ve seen, Obama, unlike the most recent President Bush, is not a my-way-or-the-highway kind of guy. His governing style appears to tilt much more in the direction of my way…or your way.
Even before Obama’s trip the Hill, OMB Director Peter Orszag drew his own line in the sand. In his blog (does Peter never sleep?), Orszag wrote, “We are insisting that health reform be deficit neutral even over the next five to 10 years, through scoreable offsets such as savings within Medicare and Medicaid and (as necessary) additional revenue.”
This means one of two things: Either health reform will be slowly phased-in over the next decade or more—a step that will allow lawmakers to finesse the offsetting tax hikes as well. Or Obama will have to swallow an exclusion cap. Once Congress is through, the kind of Medicare and Medicaid savings Orszag is thinking about will not add up to a lot of money—at least not in the context of a $1.5 trillion reform plan. And there just is no other politically-acceptable place to go to raise the kind of tax revenue the President will need.
I just attended a healthcare symposium at the American Enterprise Institute where Prof. Stephen Parente of the University of Minnesota revealed the results of a complex healthcare cost simulation model. What did the number crunching show? The Democratic healthcare plan under consideration by the Senate Finance Committee would cost $300 billion a year if it wanted to reduce the number of uninsured Americans by three quarters. (Hello VAT!) And just to show how hard it is to do healthcare reform within current parameters of public policy, a conservative Republican alternative plan would cost $150 billion a year, though it would achieve the same results. Or America could try this approach.
The White House released an economic analysis of the economic benefits of healthcare reform. After skimming it, I am reminded of this classic scene from 1987 film “Moonstruck” where the economics of plumbing are explained:
There are three kinds of pipe. There is what you have, which is garbage and you can see where that’s gotten you. Then there’s bronze, which is very good unless something goes wrong. And something always goes wrong. And then there’s copper, which is the only pipe I use. It costs money. It costs money because it saves money.
Or as Team Obama might put it:
There are three kinds of healthcare systems. There is what you have, which is garbage and you can see where that’s gotten you. Then there’s the GOP free market system, which is very good unless something goes wrong. And something always goes wrong. And then there’s Obamacare, which is the system America should use. It costs money. It costs money because it saves money.
Me: The White House says healthcare reform is a bundle of goodies: a) 500,000 new jobs a year, b) an average increase of $2,600 in income for a family of four in 2020 and $10,000 by 2030, c) $100 billion in economic gain by insuring the currently uninsured. Oh, and lower long-term budget deficits. And here is where my movie analogy breaks down: the White House never actually says healthcare reform is going to require new spending.
Scat VAT! Rasmussen reports that while Democrats would go for a national sales tax to pay for universal healthcare, no so the rest of the country:
Democrats strongly support a national sales tax to provide universal health insurance coverage. Republicans are opposed by a three-to-one margin, and those not affiliated with either major party are opposed two-to-one.
Healthcare reform is gaining momentum. (“If we don’t get it done this year, we’re not going to get it done,” Obama said yesterday.) Ted Kennedy’s bill is beginning to be unwrapped, says the WaPo:
In many respects it adopts the most liberal approaches to health reform being discussed in Washington. Kennedy, for example, embraces a proposal to create a government-sponsored insurance program to compete directly with existing private insurance plans, according to one senior adviser who was not authorized to talk to reporters. The draft summary also calls for opening Medicaid to those whose incomes are 500 percent of the federal poverty level, or $110,250 a year for a family of four.