Let's Politicize Subsidies Too

by publius

America's favorite Senate committee seems to be close to an actual bill.  And I have good news and bad news on that front.

First, the bad news... Suzy Khimm at TNR is reporting that the Baucus bill isn't going to raise the cap on subsidies.  It's going to remain at 300% of poverty, which is too low as a matter of both policy and politics.

The good news, however, is that other Senate Dems seem ready to fight on this critical issue.  The Hill reports that amendments are coming:

Democrats on the Senate Finance Committee are poised to demand changes to the healthcare legislation being drafted by their chairman.... 

Near the top of the list for the panel’s Democrats is worry that health insurance subsidies will not be sufficiently generous nor available to enough people despite the fact that the bill would legally require most people to obtain coverage. Beyond premiums, some Democrats are concerned that Baucus’s proposal would not do enough to protect middle-class families from high healthcare expenses.

These issues are, in my opinion, the most important battles remaining.  I support the public option 100%, and I'm glad that it's become politicized.  Given the monied interests who oppose it, politicizing the public option was the only shot it ever had.

But we should walk and chew gum at the same time.  And frankly, I think that progressive activists can get more substantive bang for their buck by fighting for both better subsidies and higher levels of coverage (i.e., % of costs individuals have to provide), than by focusing only on the public option.

Don't get me wrong -- the public option is important, but I see it as a longer-term protection.  If the Dems pass a bill that mandates coverage but provides skimpy subsidies and anemic coverage, it could be a full-blown policy disaster immediately. 

Fortunately, the Baucus bill doesn't start out at a terrible level, but it's still unacceptably low.  If subsidy levels could become as politicized as the public option, I think it liberal activism could really bear some fruit.  It would not only help middle-class families, it would ensure that health coverage reform doesn't become a serious political liability.

More broadly, a policy failure on health coverage reform could discredit the very idea that government done right can help people.  And that's not good.

Comments

[Jay Jerome]

There's another link in the New Republic article where it examines affordability.

You're not going to like the numbers...

In addition to the premiums middle class people will have to pay, there may be serious penalties in out-of-pocket expenses (money they will have to pay in addition to ordinary premiums) for serious illnesses or accidents or a chronic disease....

According the the calculations presented, a family of four earning $78,000 a year could end up owing $23,000, almost a third of its income, if one family member had high medical bills...

[CharlesWT]

"Near the top of the list for the panel’s Democrats is worry that health insurance subsidies will not be sufficiently generous nor available to enough people despite the fact that the bill would legally require most people to obtain coverage."

Federal government devolution: Bypassing state and local governments and going straight to the individual with un/underfunded mandates.

[mwfolsom]

There are other problems with the Baucus bill besides what you list.
- To keep the cost of insurance hence subsidies down the copays could hit 30% to 40% of "what they cover" and the max out of pocket is a fuzzy issue.
- Mandates are for individuals not companies
- There is zero cost control
- This bill will establish the new level of insurance coverage which is much worse that most folks have.

This is a bad bill and should be killed. The mandates will be wildly unpopular with the voting public and could cause an electorial disaster for Democrats in future elections.

[Jay Jerome]

"Federal government devolution: Bypassing state and local governments and going straight to the individual with un/underfunded mandates."

As Cuba Gooding, Jr. said to Tom Cruise :::::
Show Me The Money!!!

Where's it coming from?
Where's it going?
Who's paying what?

And how much is it really going to cost???

[Hartmut]

Show Me The Money!!!

Where's it coming from?
Where's it going?
Who's paying what?

And how much is it really going to cost???

1. From the insurance industry through their lobbyists
2. To congressbeings (all sides)
3. The public and the individual; far more than what is usual or considered ethical elsewhere
4. A lot of lifes and needless suffering.

[KCinDC]

I understand why the Republicans favor this "bipartisan" plan (though they'll no doubt vote against it if it ever actually comes up) -- they're not going to be blamed for it, and they'll benefit from the voters' reaction against the Democrats.

What I don't understand is what Baucus and other conservative Democrats are thinking. They'll be the most vulnerable in the election if the Democrats pass a bad bill, so they should be extremely interested in making sure the bill is a good one and unlikely to lead to an electoral backlash. Instead, they focus on making the bill worse and more likely to be hated.

[KCinDC]

I meant to add: Are they all planning to retire from Congress and take lucrative health care lobbying jobs?

[Hartmut]

Are they all planning to retire from Congress and take lucrative health care lobbying jobs?

I thought that was why many of them became senators in the first place. Also betting on the forgetfulness of the voter (and on the 'the other guy is even worse' factor) has paid well in the past. In my opinion there are far less true ideologues than mere greedsters in Congress and especially the Senate.

[Jay Jerome]

I find it telling that so few comments have been posted on this thread on a topic as important and immediate as health care reform has been been on this blog, while more than three times as many comments have been posted in Publius' theoretical musings about the future of cyberspace educations as opposed to brick&mortar institutions.

I guess that's what happens generally when people get bad news. They play ostrich and ignore it and turn their attention elsewhere...

Money money money makes the vorld go round, and that includes government assisted programs.
And we don't have the money to pay for them now.
Our wealth is shrinking in this country faster than the high-school graduation rates in our inner cities.

The money was here, but where has it gone...

Bye bye bucks
Bye bye happiness
Hello lower class-ness
I think I'm gonna cry...
Bye bye my standard of living, bye bye.

[Sebastian]

I read the title and thought you were talking about farm subsidies which are of course always politicized. :)

Where do you think the the subsidies should be phased out? Right now they are set at about $30,000; $43,000; and $66,000 for families of 1, 2, and 4 respectively.

I would probably put it at 400% of federal poverty line instead of 300%. Does that sound about right to you?

(This also exposes the usual serious problems with the federal poverty line. $66,000 for a family of 4 in Los Angeles definitely needs a subsidy, $66,000 for a family of 4 in Las Vegas, not so much)

[bob mcmanus]

Big Bribe Comes In ...Matt Taibibi

Although, even though those (or others like them) receiving the drug money wrote the laws, I suppose that technically we must call this fairly open quid-pro-quo of campaign help for legislation something other than bribery. Graft?

So in the end, what we’re looking at is a pair of handouts to corporate donors: tax subsidies to ease the cost of insurance for employers, and mandates to push more business to the health care industry.

On the road to trying to pull this appalling snow job off, however, the Obama administration has stumbled on opposition from both sides. Obviously it will be an enormous victory if progressives can somehow get passed a bill with a real public option and reform of drug prices. But failing that, it would be a very important achievement just to kill the bill entirely. It seldom happens that the public is awake and focused enough to have this kind of OK Corral confrontation with the DC oligarchy, and it has to take advantage.

...MT

I am so sorry for those that this very bad health bill would help, but the corporate buying of legislation at the expense of taxpayers health and security must be confronted and resisted, even at very high cost.

[liberal japonicus]

Oooh, 'all the lurkers agree'. Haven't seen that one in a while.

[bob mcmanus]

jay jerome at 11:23 has it

As Taibibi says, even with a public option, but without any power to really negotiate prices, this is a bad bill.

Now I know there is a hope that when premiums and deductibles rise, and they will rise, the people will become outraged and demand changes, but Obama has said that this will be the last time he visits healthcare. I believe him.

So when health care costs rise to 30-40% of income, and the middleclass sells its houses and moves to apartments;trades its vehicles for bicycles; sends its children to community colleges or simply puts them to work at 18; takes on second jobs; or simply slides into the working poor...

...there will no longer be enough energy or optimism to resist the new feudalism.

This is the price of meliorism, moderation, bi-partisanship and accomodation:the death of hope. It is better to lose than abandon hope; perhaps even better to die sometimes.

Obama is the hope-killer in ways George W Bush could never dream.

[liberal japonicus]

But bob, Jay thinks this would all have been avoided if we just had the sense to elect Hilary.

[jonnybutter]

Money money money makes the vorld go round, and that includes government assisted programs.
And we don't have the money to pay for them now.

Yawn. Funny that the richest country the world has ever known, these days *never* seems to have any money to spend on something which promotes the general welfare. Wonder why that is? The answer seems to be that the political powers than be love massive and unsustainable public spending - they just don't believe in public investment (nothing which needs to be rationally justified, since it's an ideological conviction, doncha know). It doesn't get a whole lot stupider than that, folks. If you're worried about the US becoming a poorer nation, just keep flogging the Reagan Revolution - keep things the way they are. Won't take that long.

[Jay Jerome]

"But bob, Jay thinks this would all have been avoided if we just had the sense to elect Hilary."

'Avoided' is the keyword.
If she learned from past experience (her previous health care fiasco) she wouldn't have tried to push health care until the economy was recovering. Then, she would have had some creds to push for a program requiring such HUGH cash commitments.

[jonnybutter]

we don't have the money to pay for them now.

The old jokes are the best jokes:

A well-to-do Gentleman is walking on the street in Las Vegas, and comes upon a guy sitting on the sidewalk, with a cup and crude sign, begging money for medical expenses.

'Please sir, I need $199.99 for my wife to get a life-saving operation! Won't you please help me?'

The rich gentleman narrows his eyes. 'If I give you the money, how do I know you won't just go gamble it away at yon casino?'

The beggar is earnest: 'Oh, no sir! I've got gamblin' money!'

[liberal japonicus]

'wouldn't have tried to push health care until the economy was recovering'

Bob's sentiments exactly, I'm sure...

[CaseyL]

'wouldn't have tried to push health care until the economy was recovering'

This overlooks the point that we can't recover economically until healthcare reform is passed. IOW, heatlhcare reform is essential to economic recovery.

Do you disagree that HCR is essential to economic recovery?

IOW, do you believe that the economy can recover and stabilize without addressing an issue that accounts for 20% of it now and will become an even larger part of it later?

(Oh, and what johhnybutter said. Funny how we always have enough money for wars and tax cuts, but never have enough for helping our fellow citizens.)

[Jay Jerome]

"This overlooks the point that we can't recover economically until healthcare reform is passed."

Well, then -- guess we won't recover economically, because whatever health care bill is passed, it's not going to solve the economic problems. (or haven't you figured that out yet?)

So by your logic, we're doomed!

Oh well, back to early morning tequila shooters...

[Sapient]

"whatever health care bill is passed, it's not going to solve the economic problems"

No one said that health care reform will solve economic problems. But it is essential to economic prosperity that reform happen. Only wealthy people, or people who are almost irresponsible in the amount of risk they're willing to assume, or people who have nothing at all to lose, can be self-employed anymore. What does that simple fact do to the economy? And that's a tiny fraction of the cost of the broken system to the economy.

People claim that high taxes are bad for the economy? What about the fact that 20% of an average family income is spent on health insurance premiums - and that's for a healthy family. People are out of their minds (or already in a government health care program) to oppose a strong health care reform package.

[Jay Jerome]

"And that's a tiny fraction of the cost of the broken system to the economy. "

I agree, the system needs to be fixed. But you're not going to be able to fix it in this economic environment.

And not in this contentious political environment.

And not with the provisions under consideration.

At best you're going to get a band-aid bill passed that's probably going to do more harm in the long run than good.

[Nate]

Jay Jerome: So, uh... How exactly do you expect things to get better, then? Letting the bill die would do nothing to make the political environment un-contentious. It would encourage that, because the lying and crazy WORKED. Economic conditions aren't going to get much better for average people without a lot of overhauls to the whole economy, that are going to be at least as contentious.

So seriously, what's your suggestion, other than give up and let everything go to pot? How is waiting supposed to improve anything?

[Turbulence]

'Avoided' is the keyword.

If she learned from past experience (her previous health care fiasco) she wouldn't have tried to push health care until the economy was recovering. Then, she would have had some creds to push for a program requiring such HUGH cash commitments.

This makes no sense. This is not the last recession we're going to face. The business cycle exists. That means that every few years the economy is going to go through booms followed by busts. Which means that ANY kind of reform (healthcare or otherwise) has to be tenable during the booms and the busts. Whether we're in a boom or bust when we pass reform is irrelevant. Whatever fiscal costs health care reform imposes are going to have to be paid during a recession, if not this recession, then the next one.

If President HRC decided to wait for the economy to recover before touching healthcare, then whatever plan she came up with would still have to be budget neutral during future recessions. That would be true even if there was no recession when she proposed her reforms.

Also, I don't recall HRC saying during the campaign that healthcare reform was important but would have to be pushed back till after the economy recovered. Your notions about what HRC would have done seem to be based on your own fantasies rather than any evidence whatsoever.

[Turbulence]

I agree, the system needs to be fixed. But you're not going to be able to fix it in this economic environment.

Why? Most of the costly provisions in the bills under consideration don't phase in until after the recession is projected to end.

[Sapient]

"At best you're going to get a band-aid bill passed that's probably going to do more harm in the long run than good."

I choose not to believe that, although I can't predict the future. How long do you suggest we wait for the miraculous moment when the economy is great, the political environment isn't contentious, and the insurance company lobby is defunct? I will be dead by then, but I would like an improvement (at least) during my lifetime, preferably before I'm covered by Medicare. (It's a weird feeling to be looking forward to being 65.)

[Derek]

The "economic environment" argument is a non-sequitur.

there is nothing about healthcare reform that hampers the current economic recovery.

[bob mcmanus]

'wouldn't have tried to push health care until the economy was recovering'

Bob's sentiments exactly, I'm sure...

That provided the best laugh I have had this morning. Thanks, lj

[Bruce Webb]

Jay Jerome's point is important, but it is important too not to lose perspective. The New Republic calculation gives us the outlier, yes it could happen to that family of $78,000 that for THAT year they are out $23,000. But that is true for almost all insurable events, if you wreck a perfectly good three year old car or have a house fire, chances are that even with some pretty good insurance you are going to be handed a hefty, unexpected bill to get your ride/house back to the pre-accident condition. On the other hand you didn't lose everything.

I got stuck in the hospital with a life-threatening condition and no health insurance. It didn't require surgery but did require some pretty expensive procedures after which they wanted to keep me in the hospital for what looked to be an indefinite period. Even though the doctors and nurses assured me the Sisters of Providence had a pretty good record of writing off care I couldn't risk it and exercised my right to self-discharge, because as I told the doctor on duty I couldn't afford a $3,000 a night hotel room. Which it turns out I under-estimated by a factor of two and a half times. My hospital bill alone, not including doctors or tests was significantly more than that $23,000 max.

Much of it was written off, but my share was a pretty big percentage of my income last year, on the other hand I am alive. So while I feel bad in theory for a family making $78,000 that maybe once or twice in their life they have the bad luck to bump up against the maximum. But then I feel bad when someone I know has their house flood, you just hope that '100 year flood event' means what it suggests.

I want universal single payer with no co-pays or deductibles. But I will take coverage that has no annual or lifetime limits but potentially sticks me with a bill in a bad year for $23,000. For most people that is way better than being dead. Or being offered the choice of being dead or bankrupt, which is where most current policies would leave you in that same circumstance.

[Jay Jerome]

Brue Webb says: But I will take coverage that has no annual or lifetime limits but potentially sticks me with a bill in a bad year for $23,000. For most people that is way better than being dead.

Sorry to hear about your life-threatening condition, Bruce, and the financial hit you had to take. But even without a federal health insurance plan, the insurance protection you're talking about already exists in the private sector: catastrophic insurance coverage policies, which have large deductibles (some up to $30,000) for hospital care, and much lower premiums.

And if you're in the middle-class, federal subsidized health insurance isn't going to provide you with lower rates for catastrophic insurance, or any other kind of health insurance. If everybody in the US is covered under the federal legislation, the medical expense pool will be much larger, and middle and upper class people will have to chip in more to finance it --a community endeavor, with some parts of the community paying little or nothing, but more expensive to those who have insurance now.

[Jay Jerome]

Turbulence says: This makes no sense.

Sense often makes no sense to the senseless.

"This is not the last recession we're going to face. The business cycle exists. That means that every few years the economy is going to go through booms followed by busts."

So you catagorize what we're going through now as an ordinary recession? My my, how very George Bush of you. Next you'll be telling us the economy is fundamentally sound.

"Also, I don't recall HRC saying during the campaign that healthcare reform was important but would have to be pushed back till after the economy recovered."

During the campaign she wasn't talking much about health care, except for schematics for what she envisioned. She didn't say how much political capital or energy she'd devote to enacting legislation for health care reform -- it was the economy again, stupid, that she featured in most of her campaign speeches, and the unraveling banking and mortgage fiasco, issues which resurrected her poll numbers.

But even if she intended to push health care reform as soon as she was elected, the economy hadn't nosedived as badly as it has now. In June through November 2008 unemployment was hovering between 6% and 7%, and there weren't 24 millions Americans without full time jobs.

But you're right, my notions are based on fantasies -- that even in this era of political bozos and blogger boobs we can luck out and elect leadership smart and flexible enough to know which way the wind is blowing, and react accordingly.

[Jay Jerome]

Nate says: So seriously, what's your suggestion, other than give up and let everything go to pot? How is waiting supposed to improve anything?

Give up, and smoke pot?

Actually, pot is part of the solution: decriminalize it, and other recreational drugs, and dismantle most of the law enforcement, legal, and penal infrastructure that absorbs so much of our resources, and put those savings into the health care pool.

Same goes for Iraq and Afghanistan. Stop frittering away our money there. Bring home all our soldiers, except for special forces and other intelligence operatives, and use those billions of wasted dollars for domestic purposes.

I have a few more money-saving ideas, but I have to walk the dogs now and feed the ducks and geese...

[Turbulence]

Sense often makes no sense to the senseless.

Look, can you please stop commenting here? This site is for people who are grown up enough that they can discuss political issues without resorting to school yard taunts. You can't do that. You're not grown up enough. You've demonstrated that repeatedly.

Senseless as I am, I still find myself shocked at your lack of self control.

So you catagorize what we're going through now as an ordinary recession? My my, how very George Bush of you. Next you'll be telling us the economy is fundamentally sound.

I never said this was an "ordinary" recession. I'm not sure what an "ordinary" recession would be. But I am very sure that the current recession is a recession. And all recessions reduce government revenues. Which means any government plan has to be able to function during recessions...just like this one. We don't know when recessions will hit or how severe they'll be in the future.

During the campaign she wasn't talking much about health care...She didn't say how much political capital or energy she'd devote to enacting legislation for health care reform...

I'm glad you agree with my original point, namely that HRC never said anything about pushing health care reform back based on the economy. Thanks for admitting that was just something you made up out of whole cloth.

[Jay Jerome]

"whatever health care bill is passed, it's not going to solve the economic problems"

No one said that health care reform will solve economic problems. But it is ...

sorry, Sapient, I left out 'health care' between economic and problems...

"What about the fact that 20% of an average family income is spent on health insurance premiums"

The average family will end up paying more than 20% of their income if anything that's being proposed now becomes law...

If you insure more people, it's going to cost more money. Where's it going to come from? From you (assuming you're middle class or higher) that's who.

[Nate]

Jay Jerome: what if the "more money" it was going to cost came out of, say, the already more than the rest of the world we pay for insurance? Maybe fire some CEOs, sure that's only a few tens of millions here, a few tens of millions there, but pretty soon, you're talking about real money. (cite) Maybe if some of the 400% increase in insurance company profits went to providing health care, instead of profits and bonuses. (cite)

Yes, I know there's little in the current health care reform stuff to deal with that, and that's because Obama and the Democrats are too @$!#ing timid.

NOT doing something now, though, will just put the insurance companies in an even better position, money, influence, and victory-wise, and leave millions of people without insurance and dying and/or going bankrupt, too. Maybe some day we'll have politicians with the guts to take on these parasites.

[jonnybutter]

Actually, Jay Jerome is absolutely right about funding health care rationalization by ending our stupid, pointless, worse-than-worthless drug war, and some of our military adventures. A lot of Paulite/Corpro-libertarians tend to think of spending in an emotional, undifferentiated way. But Jerome is totally on the right track. There are quite a few ways this country wastes vast sums of money which would more than pay for health reform. Medicare 'Advantage' is about a trillion over 10 years, I believe. So is the drug war. God knows how much Iraq and Afghan. are costing.

[liberal japonicus]

I can't remember who it was, but one libertarian made the argument that drug decriminalization/legalization should be a litmus test of libertarians. My impression here is that most of the folks here would be in favor of that as well, so I'd suggest that as a topic, especially in light of Mexico and Argentina's current moves in that regard.

[jonnybutter]

The bottom line is that rational libertarians are, well, crazy, to not ally with progressives on some issues. The dems are now the dumping ground for people who believe in rationality. That means, ultimately, all the conservatives and all the liberals. Pathetic though the Democratic party is - lord knows - there's not much of a choice these days. The Reason US libertarians don't do so is strictly emotional, sentimental. Well, I have news for you guys: liberals and progressives don't feel any better about it than you do. Libertarians could have some actual impact if they wanted that.

There seem to be two kinds of American Libertarian. Ome: the kind who not only sees no solution, but is actually threatened by resolution, since it would destroy their romantic raison d'être, and, Two: rational people with a sense of humor, who think it's worthwhile to be a little serious about politics. Obviously, I have respect for the second kind.