Matt Yglesias

Climate Optimism From Key Democrats

I don’t really think anyone quite knows what to make of this, but Max Baucus is seeming surprisingly bullish on the prospects of climate legislation: “There’s no doubt that this Congress is going to pass climate change legislation. I don’t know if it’s going to be this year. Probably next year.” I would have thought that one major reason to be skeptical about a climate bill’s prospects is that it doesn’t seem like the kind of thing that key senators like Max Baucus would be enthusiastic about. But there you have it.

Meanwhile, here’s Joe Lieberman making a lot of sense on climate. Environmental issues have long been the topic on which Lieberman is most progressive, but it had seemed to me that he’d drifted away from that commitment over the past couple of years.

Nobody Knows Who Max Baucus Is

I’m actually a bit surprised that the public is this well-informed since I always have low expectations:

The news quiz, which was conducted by the Pew Research Center, asked respondents to identify, from a list of public officials, the chairman of the Senate Finance Committee tasked with writing healthcare reform legislation. Fifty-six percent of respondents said they did not know and 18 percent chose Baucus.

Sens. Dianne Feinstein (D-Calif.) and John McCain (R-Ariz.) were chosen by 11 and 7 percent of respondents, respectively, while 1 percent selected Department of Health and Human Services Secretary Kathleen Sebelius. Feinstein and McCain do not sit on the Finance panel.

By comparison, 40 percent of Americans know that the controversial Glenn Beck is a television and radio talk show host.

Of course on some level it doesn’t matter whether people know who Max Baucus is or not. Far less than one percent of the population actually lives in Montana and thus has some ability to hold Baucus accountable. The rest of us just live here.

Native Americans in Baucuscare

Montana has a large Native American population, and Max Baucus seems to be looking out for them in his draft legislation. The exciting Title G, Part X of his bill offers American Indians and Alaska Natives a number of juicy benefits. For example

— “The Chairman‘s Mark would prohibit cost-sharing (including premiums, deductibles, copayments, co-insurance, etc.) for all American Indians and Alaska Natives (AI/ANs) with incomes at or below 300 percent of FPL for state exchange plans and public programs.”

— For individuals who are eligible for multiple kinds of public programs, Baucus would switch it away from Medicaid being “the payer of last resort” to a scenario in which “Indian tribes, tribal organizations, and urban Indian organizations (I/T/Us) are the payers of last resort.”

— What’s more “Indian tribes, tribal organizations, and urban Indian organizations would be added to the definition of an Express Lane Agency” for the purposes of determining CHIP and Medicaid eligibility, making it easier for Native Americans to claim benefits.

— One of the concessions Baucus got out of the Bush administration in exchange for backing the 2003 Medicare bill was that he “instituted a five-year expansion of the items and services covered under Medicare Part B when furnished in Indian hospitals and ambulatory care clinics, applying to items and services on or after January 1, 2005.” The new law would make sure that doesn’t sunset.

— Last, “The Chairman‘s Mark would subject AI/ANs to the responsibility to obtain insurance, but exempt them from the penalty for failing to do so.

Not the sort of thing likely to get much attention, but interesting nonetheless.

Baucus Gets . . . Nothing

Heck of a job:

Baucus tailored his proposal to win the backing of some Republicans, hoping to keep alive the possibility that Congress would pass a bipartisan bill.

But after months of closed-door talks, none of the three Republicans involved the bipartisan Gang of Six is expected to declare support for the bill Wednesday.

In addition to the substantive concessions Baucus made in order to get nothing, it’s worth noting that Baucus made huge procedural concessions in order to get nothing. If he’d just stuck to the schedule, we would have been at this point in the process at a time when Barack Obama’s approval rating was considerably higher. And at the end of the day, politics is largely about politics and winning bipartisan support for proposals has at least as much to do with the popularity of the proposer.

Baucus, Conrad Team Up to Surrender to Joe Wilson

Everyone’s had a good time making fun of Joe Wilson, but it’s worth observing that Senators Kent Conrad (D-ND) and Max Baucus (D-MT) are going to make sure that Wilson’s outburst lets him win the substantive policy fight:

The controversy over Republican Rep. Joe Wilson’s shouting out “You Lie!” at the President over his claim that illegal immigrants wouldn’t benefit from health-care reform apparently sparked some reconsideration of the relevant language. “We really thought we’d resolved this question of people who are here illegally, but as we reflected on the President’s speech last night we wanted to go back and drill down again,” said Senator Kent Conrad, one of the Democrats in the talks after a meeting Thursday morning. Baucus later that afternoon said the group would put in a proof of citizenship requirement to participate in the new health exchange — a move likely to inflame the left.

The policy rationale for declining to provide subsidies to people who are in the country illegally is fairly clear. But the new Wilson-Baucus line is really nuts. They’re saying that people should be required to provide proof of citizenship before they buy health insurance on the individual market with their own money. This will have a direct cost to taxpayers since some verification mechanism will need to be put into place. It will also have an indirect cost to you and me and everyone we know—the vast majority of people, after all, aren’t undocumented immigrants but we’re all going to need to go through a citizenship check hassle before we buy health insurance. It will probably also make average premiums higher, since the exchanges will be left with a smaller risk pool and there’s no real reason to believe that the subset of undocumented immigrants who are capable of affording an unsubsidized insurance policy are below-average health risks. Last, of course, this will make the undocumented immigrant population sicker with negative public health consequences for their coworkers, friends, family, and the customers of the businesses they walk at.

That’s a mighty high price to ask U.S. citizens and legal residents to pay all for what amounts to spite. As I said yesterday, we could implement citizenship checks before you buy ibuprofen at CVS or before you get on the highway, but we don’t—it would be cruel and pointless, an inconvenience to everyone that accomplishes nothing. A person who wants to be deliberately tendentious could characterize SAFETEA-LU as a plan to “give highways and mass transit to illegal immigrants” but that would be an extremely strange way to look at it.

Health Insurers Like it When They Get More Customers

Liz Fowler is senior counselor to Senator Max Baucus with a focus on health care policy, so I’m not sure it should be judged a huge scoop that it’s her name that’s on the metadata of Baucus’ health care outline. Marcy Wheeler further comments:

What neither Politico nor Bad Max himself want you to know, though, is that in the two years before she came back to the Senate to help Max craft the Max Tax plan, she worked as VP for Public Policy and External Affairs at WellPoint.

So to the extent that Liz Fowler is the Author of this document, we might as well consider WellPoint its author as well.

I think that’s a pretty good way of thinking about this—Baucus has given us the kind of universal health care plan that the VP for Public Policy at a health insurance company could love. The question is how bad is that?

To try to think this through, consider a plan to improve bus service in New York City. Well, for starters you would want the buses to run more frequently. That would require, among other things, additional buses and additional bus drivers. That’s something the union representing bus drivers would like, and also something that companies that build buses would like. You could even imagine such a plan being hatched in close collaboration with the Transit Worker’s Union and the insidious forces of Big Bus. That, however, wouldn’t make the plan bad for New York City bus riders. It would be good for New York City bus riders. The city would be using tax dollars to give more buses to bus riders—it’s win-win for bus riders and bus drivers and bus makers all.

Now think about health care. The Center for American Progress offers me some pretty good health insurance through CareFirst BlueCross BlueShield. That’s pretty good for CareFirst. If CAP dropped its health plan, CareFirst would lose money. We’d be sticking it to the insurance industry. On the other hand, I’d also lose my health insurance. Which would be kind of unfortunate for me. But say CAP did decide to stick it to CareFirst by dropping my insurance. Now as an uninsured American, I can live in one of two universes. In one universe, the one we live in, it’s just not feasible to buy comprehensive health insurance on the individual market. That’s bad for me. In another universe, the one Max Baucus wants us to live in, the government will regulate the individual insurance market in a way that ensures that purchasing comprehensive individual health insurance is possible. He’s also going to make sure that many people (I make too much money though, so not me) get financial assistance from the government in order to make it more possible to afford insurance.

This Baucusverse is, I would say, better for me than the current reality. It’s also better for CareFirst. CareFirst is basically getting a new customer. So good for them. But I’m also getting a new health insurer, so good for me. Now we could stick it to CareFirst by just enrolling me in a government plan and giving me coverage directly. Bad for CareFirst, but great for me. Alternatively, we could stick it to CareFirst by making it the case that I go uninsured and they lose a customer. That’s bad for CareFirst, but also pretty bad for me.

Context for the Baucus Plan

I hope that my bona fides as a Max Baucus detractor are not seriously in doubt. And as a Max Baucus detractor, I certainly have my criticisms of the plan he put out. A plan that’s relatively stingy to working Americans would be more forgivable were it not also so friendly to industry. Deficit concerns would be easier to take seriously if not for Baucus’ willingness to cast such worries aside in order to pass conservative bills in the past. It’s not a flawless piece of legislation and its flaws aren’t in there for good reason.

That said, I think a lot of the blog response to this proposal is overblown. There’s just no reason to think that the system envisioned by Baucus would be either a political or a substantive disaster. Instead, it would create something comparable to the situation that currently prevails in Switzerland or Massachusetts. Is that great? No, it’s not. Health care in Massachusetts is substantial worse than health care in any number of foreign countries. That said, the Massachusetts health care system is better than the health care system that exists in any other American state. Similarly, if it were up to me Switzerland is about the last country I would choose to emulate. In terms of excessive costs—spending that lines the pockets of medical providers with little real medical benefit—it’s worse that everyone except . . . the United States of America.

And there’s the rub. The status quo in the United States is really bad. Baucus’ plan would make it better. There are people right now who could use health insurance, but they’re too poor. Baucus would make many of them eligible for Medicaid and more of them eligible for subsidies to let them afford private insurance. Hopefully something better than this plan can be worked out between the merger of the Finance bill and the HELP bill and the conference committee and all the rest. But even in its meager Baucusish form, the health reform currently on the table would be the biggest piece of progressive social policy in decades.

What Happened to the Baucus Plan?

I’ve mentioned this before, but as Marcy Wheeler reminds us in the wake of Barack Obama’s election the main reason to be hopeful about the prospects for universal health care wasn’t so much the election of a new progressive president as the fact that Max Baucus, one of the most conservative members of the Democratic caucus and also Chairman of the Finance Committee, had essentially adopted the main outline of Hillary Clinton’s universal health care plan.

One natural question to wonder is what happened to this? Does Baucus still think those were good ideas? If he does, I would be eager to see him write them up as legislation and see what kind of support they can garner. Maybe 60 votes aren’t there. But I’d like to see. Nobody can accuse Baucus of being a wild-eyed liberal or a member of the “left of the left.” It seems to me that we’re stuck in a dysfunctional dynamic where you have a powerful centrist senator lay some ideas out (including, for example, a public option), which leads progressives to embrace them as a realistic path to reform, which leads the centrist ideas to be rebranded as left-wing ideas which, in turn, leads to the ideas being abandoned by centrists. Very hard to accomplish anything that way.

Max Baucus’ Flip-Flops

Jon Chait notes that the arbitrary deadline on completely a health reform bill that Max Baucus is now deriding is a deadline that Baucus himself set. That said, in the annals of Baucus health reform flip-flops this is pretty small beer. Comprehensive health reform is hard, and the United States Senate is not all that friendly to progressive policy. But one of the big reasons—in many ways the single most important reason—to have been optimistic about progressive health care policy is the stuff Max Baucus was saying during the transition.

To grasp the significance of this you have to understand that Baucus is not very liberal. In the 110th Senate nine Democrats were to his right. In the 109th Senate and the 108th Senate, just two Democrats were to his right. So in general, Baucus saying something isn’t like Ted Kennedy or Pat Leahy saying it. Bills Baucus is prepared to vote for are bills that have a very good chance of becoming law. And in November of 2008 he unveiled a sketch of principles for health reform. And what did it say? Well, as Ezra Klein summarized at the time:

The plan sets up a Health Insurance Exchange — similar to the exchange envisioned by Obama — where the government would set up a market pitting regulated private and public insurance options against each other. The plan specifically says that individuals and small businesses could buy into the market. As for midsize and large businesses, more on that in a moment. Importantly, the Exchange is not the only space where insurers will find themselves subject to new regulation. “Under the Baucus plan, insurance companies could not deny coverage to any individual nor discriminate against individuals with pre-existing conditions…[this] would apply in the Exchange as well as the private non-group and small group markets.” In other words, everywhere. An important addendum to the exchange is that while the Exchange is being set-up, Medicare is opened to anyone between 55 and 64 who doesn’t have employer based health coverage. After that point, no new applicants in that age range are accepted, but those who bought into Medicare can stay in the program, or move to the Health Insurance Exchange.

The plan aims for something close to universality through an employer mandate. “Once affordable, high-quality, and meaningful health insurance options are available to all Americans, it will be each individual’s responsibility to have coverage.” To aid in this, the plan subsidies the cost of health insurance for folks making up to 400 percent of the poverty line (85 percent of the uninsured are below 400 percent of the poverty line).

In other words, on the points that are now in contention between Baucus’ Finance Committee and the HELP and House bills, Baucus used to be on the other side. Baucus’ sketch includes a public option. It involves subsidies of up to 400 percent of the federal poverty line. It features an employer mandate. What’s more, in crucial respects Baucus’ sketch was to the left of what’s currently in the House and HELP bills. It includes Medicare expansion, and envisions a bolder role for “exchanges” and therefore for government regulation and the public plan.

If Henry Waxman’s staff had floated this plan and Baucus had said he didn’t think it was going to fly, then people would have said to themselves “well, it’s hard to pass ambitious health reform in the Senate.” But when you have an extremely powerful centrist Democrat saying he wants to do this stuff then people start expecting it to happen. And Baucus hasn’t, as far as I’m aware, given any sort of explanation as to why he’s started to have such serious doubts about the approach he spent last year developing.

Baucus Continues Slow-Walking Health Reform

Since late July, it’s been clear that the strategy for killing health care reform is to delay it first. And it’s clear that killing health care reform is the top priority of the Republican Party leadership. And Max Baucus has been working hand-in-glove with GOP leaders throughout the process to join them in their delaying tactics, even while presenting himself as the man leading the charge for reform. It’s odd. And it’s continuing:

The senators rejected the idea of imposing a deadline on their negotiations, and they agreed to talk again Sept. 4 — four days before lawmakers are scheduled to return to Washington from their August break. The consensus, one participant said, was “to take your time to get it right.”

Why talk against September 4? Why not talk again on Monday? Are there more important policy issues they’re working on? As Chris Bowers says:

Of course, taking another fifteen days off is already a huge victory for Republicans and others opposing health care reform. The longer the bill takes, the lower President Obama’s approval ratings will drop. Approval for the overall health care effort will also probably continue to slide.

As such, it is clear that by “take your time to get it right,” what the committee actually meant was kill health care reform altogether.

To get a sense of the bogusness of the idea that they need more time, take a gander at Ezra Klein’s November 12, 2008 writeup of Max Baucus’ white paper on health care. He sketched a vision of health reform that’s very similar to what the Senate HELP Committee and the House of Representatives finalized about a month ago. Baucus liked the idea then just fine. And if he wanted to talk to Olympia Snowe about her concerns and see if there were some small modifications to make, he had six months to sound her out before the health reform debate really started in earnest.

Grassley Says He Would Sabotage A Health Care Bill Whose Provisions He Favors in Order to Advance Partisan Agenda

As you can read here and here Chuck Grassley was on MSNBC earlier today explaining that he might vote “no” on a health care bill even if he thinks it’s a good piece of legislation if that bill doesn’t get support for other Republicans besides Grassley:

In an interview today on MSNBC’s “Morning Meeting with Dylan Ratigan,” Senate Finance Committee ranking member Chuck Grassley (R) said he’d vote against any health-care reform bill coming out of the committee unless it has wide support from Republicans — even if the legislation contains EVERYTHING Grassley wants.

“I am negotiating for Republicans,” he said. “If I can’t negotiate something that gets more than four Republicans, I’m not a good negotiator.”

When NBC’s Chuck Todd, in a follow-up question on the show, asked the Iowa Republican if he’d vote against what Grassley might consider to be a “good deal” — i.e., gets everything he asks for from Senate Finance Chairman Max Baucus (D) — Grassley replied, “It isn’t a good deal if I can’t sell my product to more Republicans.”

Grassley’s being a jerk, in other words. But what on earth is Max Baucus doing? He’s chairman of the committee. There are 60 Democratic Senators. He should write a bill and bring it to the floor. In fact, he should have done so a month ago. Instead, he’s given veto power over both the substantive and procedural aspects of reform to a man who’s not even pretending to be negotiating in good faith. If we assume that Baucus actually wants to see reform happen, he’s going about it in a very strange way. If you want to see reform enacted, Baucus needs to just write a bill he likes, talk to Susan Collins and Olympia Snowe about what kind of special lobster subsidies they’d like to see in it, and then you pass the thing. This isn’t brain surgery.

The Guns of August

Jon Cohn says he’s “been obsessing over the lack of passion and organization on the left,” though now feeling slightly better. I agree, but it is worth saying that this is almost 100 percent the fault of Max Baucus.

There’s a reason, after all, why the President wanted the process to be much further along at this point. And I think a big part of that reason is that it’d be much easier to get people engaged and mobilized if there was a thing “the health care bill” that people were supposed to be getting engaged and mobilized about. By contrast, those most full of passionate intensity on the other side are basically prepared to oppose reform sight unseen. But without knowing much about what the content of “reform” is or who it is who’s backing “reform” it’s hard to know what to say about it. At the moment, progressives are simultaneously trying to impact the shape of “reform” (reasonable public option, reasonably generous subsidies and minimum benefits packages) while also trying to push for “reform” to win out against the opponents of “reform.” If the various congressional leaders ever work out what “reform” is, then no matter how disappointed folks may be with some aspects of it, I’m pretty sure just about everyone will find themselves pushing for it.

But by dragging out the process of defining what the proposal is this long, congress in general—but mostly Baucus in particular—have guaranteed a sort of asymmetrical summer.

Baucus to Unveil Magical Health Care Bill?

Max Baucus is making some big claims on his own behalf, according to Jeff Young:

A draft bipartisan healthcare reform bill being negotiated in the Senate would extend insurance coverage to 95 percent of legal U.S. residents, cost less than $900 billion and actually reduce the federal budget deficit over 10 years, Senate Finance Committee Max Baucus (D-Mont.) said Wednesday. [...] “The current draft of the bill scores below $900 billion over 10 years, covers 95 percent of all Americans by 2015 and is fully offset,” Baucus said. “In fact, according to the preliminary CBO report, the bill would actually reduce the federal deficit in the 10th year by several billion dollars.”

Is this possible? I can envision two scenarios. One is that the Finance Committee is defining “covers” in a pretty stingy way. A lot of reformers are going to have a big problem with that, if that proves to be the case, though I’m a bit more open-minded about the possible virtues of a bare-bones minimum benefits package. The other, which the artful phrase “scores below $900 billion over 10 years” makes me suspect, is that he’s basically accomplishing this through accounting gimmicks. If you phase a plan in slowly enough, you can get the 10 year score as low as you like.

In Defense of CBO Stodginess

CBO Director Doug Elmendorf

As the Congressional Budget Office has proven increasingly unhelpful to the Obama administration’s health reform drive, people are increasingly looking to take hits at the CBO itself. And with some good reason. Here’s Bruce Vladeck, who ran Medicaid and Medicare during the Clinton years, drawing some blood:

Put most simply, the CBO’s track record in predicting the effects of health legislation is abysmal. Over the last two decades, the CBO has routinely overestimated the costs of expanded government health care benefits and underestimated the savings from program changes designed to reduce expenditures. Most recently, it overestimated the five-year cost of Medicare Part D — the prescription drug benefit -— by more than 35%. Even more dramatically, the CBO’s estimates of the Medicare savings from the Balanced Budget Act of 1997 underestimated the impact, on average, by a full 100%. That’s right: In the BBA’s first three years, Medicare spending fell fully twice as fast as the CBO had projected.

Noam Scheiber piles on. I’ll say, though, that I don’t really think the CBO should change its methods. You need the CBO do be methodologically conservative in terms of what it’ll score or else all kinds of monkeybusiness can start flying through congress. Instead, let me join Ezra Klein in saying we should leave the CBO as it is and just discourage people from wildly misrepresenting the significance of CBO findings.

What you actually need is for politicians to step up and make independent judgments about what they want to do. Doug Elmendorf has decent reason for not wanting to promise that MedPAC reform will lead to vast savings. But members of congress actually serve in congress, and it would be eminently reasonable for them to reach the conclusion that the CBO is underrating how dramatically the proposed reforms would alter congressional behavior. The point is just that if members of congress want to reach that conclusion, they ought to do so under the banner of their own names and own judgment about the politics and policy.

Congress is also allowed to throw caution about medium-term fiscal issues to the wind if they want to. The CBO doesn’t have coercive authority over Senators. Max Baucus was instrumental in passing a gigantic, budget-busting tax cut for rich people eight years ago. If he decides he cares as much about the uninsured as he does about multi-millionaires, he can do what he wants. Insofar as he cares more about multi-millionaires than about the uninsured, the problem is with Baucus not the CBO.

That said, I think Brad DeLong makes a sound distinction here “I think Doug should have drawn a distinction between ‘we score this, and the savings are zero’ and ‘we can’t score this.’”

Growing Frustration With Baucus Health Talks

He's got the beet sugar.

What’s going on with the Senate Finance Committee’s efforts to write a health care bill? Turns out, nobody knows:

Senate Democrats are increasingly frustrated by the secrecy and duration of Finance Chairman Max Baucus’ (D-Mont.) bipartisan talks on health care reform, with some saying it could undermine Democratic support for the bill.

Democrats both on and off the Finance Committee said the briefings they get about the six negotiators’ progress are too vague. Plus, they say, without a bill in hand, they cannot defend or sell the package to a wary media and public.

No, wait, turns out it’s not that nobody knows. It’s just Democrats who don’t know:

However, the level of consultation with Democrats stands in contrast with how Republican negotiators are briefing their Members. Senators said Enzi, who is the ranking member on the Health, Education, Labor and Pensions Committee, briefs leaders every day on the talks. And all three of the GOP negotiators have agreed to brief the entire GOP Conference before they sign on to any deal with Baucus.

But Democrats said Baucus is unlikely to run any deal by his caucus before he shakes hands on an agreement with Republicans.

So you have two broad factions. On the one hand, there’s a block of Senate Democrats trying to achieve comprehensive health care reform. On the other hand, there’s a block of Senate Republicans trying to block comprehensive health care reform. And in the middle, there’s a bipartisan group on the Senate Finance Committee led by Max Baucus. And this group is keeping the blockers in the loop and reform proponents out of it. I have a bad feeling about this.

Reid Tells Max Baucus to Hurry Up

Harry Reid's getting impatient (official photo)

Senator Max Baucus (D-MT) has been searching far and wide for some Republican support for a health reform initiative. That’s involved big-picture structural ideas like dropping a public option from the bill, and also small stuff like throwing reproductive rights under the bus. That would be frustrating if it was working, but at least if it was working you could say it was working. But thus far, there are no Republicans singing Baucus’ praises. And Senator Chuck Grassley (R-IA) with whom Baucus typically prefers to work has said things like “I take pride with being an obstructionist” in terms of killing a public option while offering no constructive ideas.

And now Roll Call reports that Harry Reid (D-NV) is telling Baucus to wrap it up:

Senate Majority Leader Harry Reid (D-Nev.) on Tuesday strongly urged Finance Chairman Max Baucus (D-Mont.) to drop a proposal to tax health benefits and stop chasing Republican votes on a massive health care reform bill. [...] According to Democratic sources, Reid told Baucus that taxing health benefits and failing to include a strong government-run insurance option of some sort in his bill would cost 10 to 15 Democratic votes; Reid told Baucus it wasn’t worth securing the support of Grassley and at best a few additional Republicans.

This strikes me as a major vindication of Chris Bowers’ “progressive block” theory. By building a critical mass of progressive legislators who are prepared to walk away from a deal that doesn’t include a public option, the leadership either needs to find a big block of Republican support for a more moderate measure, or else include the public option.

Telling Max Baucus What He Already Knows

Arc de Triomphe, Paris (wikimedia)

Kevin Drum thinks someone should tell Max Baucus the truth about foreign health care:

Now, the fact that the French spend about half what we do doesn’t mean that we’d cut our costs in half if we adopted a French-style system. We wouldn’t. There’s too much path dependence and too many cultural differences for that. But what it does mean is that if we adopted something close to their system, we could certainly achieve high-quality 100% basic coverage — with the ability to purchase extra coverage for anyone who wants it — for no more than we spend now and possibly a bit less.

We won’t, of course, because too many people are still convinced that healthcare in the United States is better than it is in France — or anywhere else. It’s not. It’s worse and more expensive. Somebody tell Max Baucus.

The trouble is that as I’ve had occasion to note before the evidence suggests that Baucus already knows this:

Afterward, Sen. Ken Salazar, D-Colo., who has since become interior secretary, noted that other countries saw a conflict between profits and health. How could the United States possibly persuade insurance companies to give up profits? [Author T.R.] Reid answered that Switzerland, home to many powerful insurance companies, had done it in 1994 when it adopted the Bismarck model. The insurers fought it tooth and nail, of course, but now they compete energetically to sign up people for basic care on a nonprofit basis because they constitute a customer base for supplemental insurance that they’re allowed to sell on a for-profit basis. This answer didn’t satisfy Baucus. “Perhaps you don’t know how much money [U.S. insurers] have,” he told Reid.

As I’ve said before, it’s as if Baucus doesn’t realize that he’s the single most important person in Congress on this issue. He could just decide not to listen to the insurers no matter how much money they have. Instead we get things like Rahm Emannuel floating compromises about introducing a public insurance option only after a “trigger” test has been passed. This really only makes sense if you think protecting the profits of insurance firms is an independently desirable policy goal. You’re open to the possibility of a public plan, but you want to err on the side of avoiding its introduction because . . . well . . . because . . . it’s not really clear.

Sausage Recipes from the Near Past

Kevin Drum reminds us of the right’s approach to financing health care legislation:

When Republicans passed the Medicare prescription drug bill in 2003, they didn’t really need to worry much about how to finance it. Their plan was straightforward: first, have the administration lie repeatedly about the cost of the bill and make sure Congress never knew about it. Second, don’t worry about financing it anyway. Just blow another hole in the deficit and move on.

That helps put things in perspective. But it is worth saying that in addition to “Republicans,” one Max Baucus (D-MT) also supported the bill, which is worth keeping in mind when you hear about how he’s insisting that health reform’s cost be limited to an arbitrary $1 trillion over ten years limit.

That said, even though it would be totally hypocritical for Republicans to complain about an un-paid-for health care bill, it’s genuinely important that the final bill be paid for so it’s a good thing that Democratic leaders are insisting on it.

A Cheaper Health Reform Bill is a Worse Health Reform Bill

He's got the beet sugar

When you think about costs and health care reform, I think it’s useful to distinguish between cost per person and overall cost. If you want to say that controlling health care cost increases is important, which I think it is, you ought to be talking about cost per person. If health care costs go up because the population grows, that’s not a bad thing. And if you save money by simply having people go without health care, that’s not a good thing. The kind of cost controls you’re looking for are the kind that deliver care to people more efficiently, not the kind that just deprive people of health care.

All versions of health reform currently before congress achieve some of the good kind of cost controls. But it looks as if the Finance Committee’s quest to cut its $1.6 trillion health reform bill down to a $1 trillion health reform bill overwhelmingly involves the bad kind of cost controls:

Senate Budget Committee Chairman Kent Conrad (D-N.D.) said the Finance Committee had reduced the overall cost of its bill by cutting subsidy levels for uninsured people.

Now if you really think that “passing bills that involve round numbers” should be a top policy priority for the Senate, this is a great deal. And, conveniently, zero members of the United States Senate will be adversely impacted by these subsidy cuts. But that’s a substantial amount of human welfare being sacrificed for no real reason. To pay for more subsidies, what you would need is more taxes, and again some sound revenue ideas appear to be getting rejected for not-very-good reasons:

The Joint Committee on Taxation calculated that a 3-cent tax on each 12-ounce sugared soda would raise $51.6 billion over a decade. But opposition is not limited to the bottling industry. Major sources of sweeteners include Montana, which has a large sugar beet industry, and Iowa, which produces high-fructose corn syrup — the home states of Senators Baucus and Grassley.

Ezra Klein reminds us that the Senate also seems determined to leave $300 billion in revenue to be gained by curbing reductions for rich people on the table. Economically struggling Americans looking to pay for health care will pay the price for that decision.

Baucus Regrets Not Including Single-Payer in the Health Care Mix

Regrets? He's got a few.

I think you rarely see a sitting Senator be as reflective about the legislative process as Max Baucus is here when he says he regrets that the idea of a single-payer health care system was left out of the mix:

He conceded that it was a mistake to rule out a fully government-run health system, or a “single-payer plan,” not because he supports it but because doing so alienated a large, vocal constituency and left Mr. Obama’s proposal of a public health plan to compete with private insurers as the most liberal position.

I thin that’s right. Framing effects are important in politics. The public-private competition is supposed to be a compromise between the pristine vision of single-payer and the desire of private insurers not to be put out of business. It creates a situation in which insurers are challenged to prove that single-payer advocates are wrong, rather than simply assert it. But with no single-payer plan in the mix, this gets lost, and the compromise becomes the leftmost anchor of the debate. A single-payer plan couldn’t possibly have passed, but I think having hearings on single-payer and having one committee draft a serious single-payer bill that gets a serious CBO score would have been a useful exercise. In particular, it would have focused the mind on the costs involved in rejecting this option.

Meanwhile, it would be nice if David Herszenhorn, who wrote the article, understood the difference between a “single-payer plan” for health insurance and “a fully government-run health system.” The concepts are quite distinct and correspond to the difference between a health-insurance company and a hospital. Single-payer means the government is the insurance company, government-run health system means that the government would actually run the health system. Both exist abroad (Canada is single-payer, the UK is government-run) and at home (Medicare is single-payer, the VHA is government-run) and they’re very different.

Senators Have Agency

The Ironist

In today’s column, Paul Krugman lamented the circular arguments you sometimes see presented as a reason for watering-down reform:

And Senator Kent Conrad of North Dakota offers a perfectly circular argument: we can’t have the public option, because if we do, health care reform won’t get the votes of senators like him. “In a 60-vote environment,” he says (implicitly rejecting the idea, embraced by President Obama, of bypassing the filibuster if necessary), “you’ve got to attract some Republicans as well as holding virtually all the Democrats together, and that, I don’t believe, is possible with a pure public option.”

Timothy Noah had a great example of this near the end of a recent column offering a tour of health care systems around the world:

Afterward, Sen. Ken Salazar, D-Colo., who has since become interior secretary, noted that other countries saw a conflict between profits and health. How could the United States possibly persuade insurance companies to give up profits? [Author T.R.] Reid answered that Switzerland, home to many powerful insurance companies, had done it in 1994 when it adopted the Bismarck model. The insurers fought it tooth and nail, of course, but now they compete energetically to sign up people for basic care on a nonprofit basis because they constitute a customer base for supplemental insurance that they’re allowed to sell on a for-profit basis. This answer didn’t satisfy Baucus. “Perhaps you don’t know how much money [U.S. insurers] have,” he told Reid.

Which would be an amusing and apposite remark from Baucus were it not for the small part that Max Baucus is the most powerful legislative voice on health care policy in the country. It makes sense for Tim Noah or Paul Krugman or Matt Yglesias or TR Reid to ironically step outside the debate and start talking about the political obstacles to really hitting the insurance companies where it hurts. But Max Baucus chairs the Senate Finance Committee! “Political reality” is something pundits and activists need to adjust to, it’s something powerful Senators create.

Finance Committee Offers Scaled-Back Proposal

Max Baucus (D-MT)

The Finance Committee turned out to be able to move admirably quickly toward drafting a pared-down version of their initial proposal, reaching a result that they hope the CBO will score as costing $1 trillion over ten years rather than $1.6 trillion over ten years. Ezra Klein was given an outline of their thinking. Basically, it looks like the $1.6 trillion proposal but scaled back. Instead of subsidies for people earning up to 400 percent of the poverty line, they’ll subsidize people up to 300 percent of the poverty line. And concurrent with that, the minimum level of insurance is being watered down. Medicaid will be expanded, but by less than was initially contemplated.

These kind of compromises strike me as fairly reasonable. There’s a case to be made that the CBO is scoring these health bills in an unduly unfavorable way. But that means that if we go with something cheaper, and the CBO turns out to have been unduly pessimistic there’ll be more money around than we thought to revisit this stuff and beef up subsidies and so forth. Alternatively, if the CBO turns out to have been right this means we’ll have a bill we can afford.

What’s really missing here is the public plan. As Ezra says “For all the concerns about cost, there is no strong public plan able to negotiate low rates and implement aggressive reforms.” This is too bad, and not just as a token of socialistic goodness. The cost savings implied by a robust public plan would do a lot to resolve some of the financial issues that are making it difficult for Finance to offer coverage that’s as generous as they initially intended. Thus far, unfortunately, cost conscious centrist senators haven’t tended to look at the public plan in that light. But since any legislation will go through several rounds of ping-pong with more liberal outfits—HELP Committee, the House of Representatives—I hope there’s still some time to turn their thinking around.

Curing What Ails Health Reform With More Reform

Max Baucus (D-MT) likes round numbers.

Max Baucus, chair of the crucial Senate Finance Committee, wrote a health reform plan. Apparently he was expecting it to carry a price tag of around $1 trillion. Instead, the CBO says it’ll cost $1.6 trillion. Baucus could have responded to this by insisting that the CBO is mistaken and he intends to pass his bill with $1 trillion in offsets and prove the world wrong. Or he could have responded with a determination to find $600 billion in additional money. Or a mixture of those two. But instead, he’s promised to cut the bill down to a $1 trillion bill—setting a fairly arbitrary constraint around what happens. That said, you could actually do a perfectly good health care overhaul for not that much money. As Ezra Klein explains:

This CBO estimate could be the first step towards making health reform better rather than worse. Rather than capping the employer tax exclusion, the Finance Committee could end it entirely and convert it, as Ron Wyden does, to a progressive standard deduction. Wyden’s plan, incidentally, was scored by CBO as being revenue neutral in two years and revenue positive in four. Rather than protecting the private insurance system, the Finance Committee could include a public plan with the ability to bargain to Medicare rates, thus saving, according to the Commonwealth Fund, 20 percent to 30 percent against traditional private insurance. Ezekiel Emmanuel, brother to Rahm and health-care adviser to Peter Orszag, has a proposal for a universal voucher system funded by a value-added tax. All these ideas would make health reform better, cheaper, and more sustainable.

The kicker comes in the very next sentence, however, when Ezra observes that “None of them, so far as I know, are under serious consideration.” I complained about this phenomenon this morning already, so I won’t bore you again. But it makes me mad! This is important stuff. Americans are going to have a substantially lower standard of living in the future than we could have in an alternate reality in which more radical health reforms were on the table.

Public Plan “Trigger” Mechanism: Half a Loaf for No Reason

Progressive health care reform advocates want a robust public option in any health insurance exchange. Insurance companies don’t like that idea. And Senators love compromises. So it’s not surprising to learn that Senator Max Baucus (D-MT) is trying to find a compromise approach. In particular, the Finance Committee is reportedly looking at a “trigger mechanism” for a public plan: “Under this proposal, the public plan would be created only if private insurance companies had not made meaningful, affordable coverage available to all Americans within several years.”

In the sense that there’s disagreement about this issue and it would be convenient to find a compromise, it’s clear enough why this is appealing. But as Igor Volsky argues, it’s not clear what the merits of this proposal are supposed to be. As he says “Health reform isn’t about protecting private industry.” If a public plan would be brought in after a “trigger,” presumably that’s out of a belief that introducing a public plan would succeed in helping to bring affordable coverage to all. But if a public plan is likely to succeed, then why not just bring it into play? There’s no legitimate need to balance the public interest against the parochial interests of for-profit insurers.

As far as compromises go, this one doesn’t strike me as too horrible. But a really good compromise balances two legitimate considerations. This is just lopping off half the loaf for no real reason.