Max Baucus’ Revenge
I think that’s the right way to think of Doug Elmendorf’s damaging testimony about how the HELP and House health reform bills would fail to achieve the goal of “bending the curve” on health spending. Lately some of Baucus’ key ideas have been getting sidelined and Elmendorf’s words will now help Baucus, the Finance Committee, and taxing health benefits all get back in the game.
Meanwhile, it would be nice if the Washington Post’s reporters would take their blogger’s advice about this:
I would also like to propose a related rule: any reporters who receive a quote from a politician on this CBO score should be required to ask the politician which of these policies — or which alternative cost-saving policies — they support. And that should be on the record. I think it’s perfectly legitimate to criticize health-care reform for not saving enough money. But it’s not legitimate to do that if you also oppose any and all measures for saving money.
Here’s some good ideas from CAP colleagues:
— David Cutler and Judy Feder “Financing Health Care Reform”.
— Todd Park and Peter Basch “A Historic Opportunity: Wedding Health Information Technology to Care Delivery Innovation and Provider Payment Reform”
— Ellen-Marie Whelan and Judy Feder “Payment Reform to Improve Health Care”
— Melinda Beeuwkes Buntin and David M. Cutler “The Two Trillion Dollar Solution: Saving Money by Modernizing the Health Care System”
Something I’ll note. In his testimony, Elmendorf seems very certain that eliminating the employer-provided health care tax exclusion would help to bend the curve on health costs. It’s not immediately clear to me or to the folks I’ve briefly canvassed that that’s right. In Elmendorf’s terms, the curbing the exclusion would pretty clearly lower the curve, but I’m not sure it would change its trajectory. That said, for these purposes CBO scores matter more than reality, so if the CBO is willing to score exclusion-curbing as curve-bending, that constitutes a reason to take the idea seriously.
5 Responses to “Max Baucus’ Revenge”
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July 16th, 2009 at 3:49 pm
F the CBO. If out of pocket health care spending goes down something like $800 per capita and government spending goes up by $600 per capita because of new taxes and programs the curve doesn’t ben for the CBO but everybody is still $200 in the black on average. That’s fiscal progress. And then there’s the, you know, health care that is portable, reliable, and humane.
It could be that Democrats are losing the wind in their sails on health care but the easy fix is to SAIL WITH THE WIND. The provisions in the HELP and Tri-committee bills are popular.
July 16th, 2009 at 4:10 pm
The article says Obama favors a rationing board:
“Ideas under consideration include health-care delivery system reform; health insurance market reform; and empowering an independent agency to set Medicare reimbursement rates, an idea the White House is shopping aggressively on Capitol Hill. ”
Thouhg Yglesias will change definitions to pretend it not so.
Also the article says:
“But Senate Finance Chairman Max Baucus (D-Mont.) expressed frustration that the tax on employer-funded benefits had fallen out of favor, in part because the White House opposes the idea.”
Here we have Obama favoring special interests over the public option. It seems to me that Obama and Yglesias have some significant difference. Obama wants to ration the public option and subsidize the private option. Add to this the 8% tax on employers who do not offer health benefits and one gets that Obama is definitely in favor of the private option over the public option.
Who are Obama’s special interests that he favors?
July 16th, 2009 at 4:29 pm
If you look at how the exclusion works, it would act as Elmendorf says, though I can’t say if it is to a significant extent.
To attract workers, a company offers salary and health care. Adding to the healthcare benefit is tax deductible, so you can get more bang for the buck. You can give your employee with a 30% marginal tax rate $1 worth of health insurance instead of 70 cents. At some point, the health insurance experiences diminishing returns. The employee doesn’t value $1 worth of insurance more than he values that 70 cents you could pay him. This is the magic number for how much insurance the company provides.
This magic amount of employer provided healthcare is not the optimum amount of insurance for this person to have. It will tend to increase consumption of unnecessary healthcare services. The question is, does this just shift the curve up a little, or does it cause the curve to bend upward.
I think there is a feedback loop. There is incentive for companies to overinsure their workers. There is incentive for workers to overuse health care services. There is incentive for providers to provide those services. That causes costs to increase. That makes insurance prices go up. Now the diminishing returns of that gold-plated insurance policy aren’t so diminished anymore. The empoloyee will accept a little more insurance in lieu of a little pay. Lather, rinse, repeat.
I don’t know if the amounts involved in this feedback loop are meaningful. That would require very accurate data, a lot of work in modeling, and inclusion of other factors, like insuranc ecompany performance in investing etc.
July 16th, 2009 at 6:07 pm
I blame progressive bloggers for this mess. You people gave up before the battle was even joined -and settled for wonkery. The politicians dictated to you, told you the battle would be joined over whether a weak public option could possibly survive the vicious and complicated political process. Only nuanced arguments on mostly fabricated and needlessly complex policy initiatives would be allowed. And you bought it. Why not. Simplistic single-payer is for stups, whereas the oncoming complex policy debate would undoubtedly prove to be a wonks delight. And it most certainly has.
Our beloved progressive bloggers are supposed to represent, I think, the collective progressive voice, but you allowed yourselves -and in so doing, the progressive movement- to be marginalized on the key issue of our time. Now you are relegated to mud-wrestling in the current and apparently, perpetual political center, left only with the possibility of moving the health care agenda just a teensy tad to the left.
And I wonder -I will always wonder- what would have happened if every progressive blogger out there had clamored and agitated from the very beginning for single-payer only and not relented? If bloggers had refused to be neither budged nor bullied and instead had remained strong and steadfast -aligned and united against the forces of lunacy. Unfortunately, we will never know because it did not happened, and now health care policy is fated to only wriggle and squirm -stuck in endless ungodly morass.
To me, the reason for the existence of progressive bloggers is to DEMAND that progressive ideas and values come to occupy -for all time- the political center of this country. But you guys, our supposedly intrepid leaders, decided, in this instance, that this was an impossibility, and in order to be considered a serious “player” in this particular game, you needed to accept invitations to play ball on fields far from home.
July 17th, 2009 at 12:17 am
To attract workers, a company offers salary and health care. Adding to the healthcare benefit is tax deductible, so you can get more bang for the buck.
Are you looking at the monthly job loss totals? We are getting to the point where to attract workers, companies will need to give them a place to hang out during the day.
This is why getting non-employer based healthcare is important. Its conceivable that in two years, the way the economy is going, a majority of adults in the country won’t be in the workforce.