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Can Reconciliation Work for Health-Care Reform?

I've argued before that reconciliation will not work for comprehensive health-care reform. Today, Kevin Drum comes to the same conclusion. Stan Collender, a budget expert, backs him up. I go into the reasons in more detail here, but the Health Insurance Exchanges would probably be thrown out. The insurance market reforms would probably be thrown out. Prevention and wellness, modernization, delivery system reforms, and much else would likely be out the window. And we can't even quite predict what would be lost, so it's hard to know what would actually work at the end of the day. We could end up with a bill that simply doesn't work, much as a car doesn't function without a transmission system.

But the 2004 Dean proposal, which I've been talking about lately, offers a good example of the sort of bill you could pass. Dean basically folds the Children's Health Insurance Program and Medicaid into one program called the Families and Children Health Insurance Program and makes everyone up to 185 percent of the poverty line eligible for it. He also allows people between the ages of 55 and 65 to buy into Medicare. He creates a tax credit for people in the middle.

Those changes alone would be a lot less than what we're looking at in health-care reform. They would cover, and help, many millions fewer than the House bill. But they would nevertheless help a lot of people. And they are directly related to federal programs and directly reliant on federal expenditures. Fund them through Medicare and Medicaid changes, alongside a small surtax on the wealthy, and it's tough to see anything that would give the Senate parliamentarian cause to object.

That's not a great outcome, but that's probably the best you can get in reconciliation, and it would be a step forward. And as a conceptual matter, that's probably the best way to think about reconciliation: as a place where you can aggressively expand public programs, rather than a place where you can reform the American health-care system. Depending on how you look at it, it's second, or third, or fifth-best. But it's better than nothing.

By Ezra Klein  |  August 18, 2009; 5:05 PM ET
Categories:  Health Reform  
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In other words, by not engaging in the process the Republicans put us on the path to Medicare for all.

Maybe not a bad outcome.

Posted by: luko | August 18, 2009 5:29 PM | Report abuse

Ezra, are you saying there aren't 60 votes for cloture? That Dems will actually vote to *filibuster* health care?

Posted by: AZProgressive | August 18, 2009 5:30 PM | Report abuse

Why not Medicare For All, or some form of it, through reconciliation?

Other than the obvious of trying to get votes for it.

If you can expand Medicare to 55, why not expand it to *everyone* who wants to "buy into it"? Or drop the "buy in" aspect, since no one over 65 "buys in" and come up with a different fashion of making it available to everyone who doesn't want to stick with their existing coverage?

Exactly what are the limits of what one can do under cover of "reform" of existing programs such as Medicare, SCHIP and Medicaid?

Again, setting the end game question of "will it get the votes" and instead on the technical side: what limits are there to changing those programs to create universal coverage through them?


Posted by: toshiaki | August 18, 2009 5:34 PM | Report abuse

Why do you limit the parameters to Dean's 2004 formula?

Here is what you could do if you wanted something better than "second, third or fifth-based."

You can expand Medicaid and SCHIP to 300% of the Federal Poverty level, basically what's being proposed now.

And give everyone - yes everyone - the right to buy into Medicare.

Actually, wait a second. That sounds better than ANYTHING I've seen, including versions from the House, HELP or Finance.

And it is only "expanding existing programs."

Posted by: ArininSF | August 18, 2009 5:38 PM | Report abuse

I see everyone else beat me to it, but yes, it appears Medicare For All, a.k.a. single payer, could actually be passed through reconciliation.

If nothing else, that should be used as a threat.

Posted by: ImMark | August 18, 2009 5:40 PM | Report abuse

Moreover, it denies the health insurers their big subsidized market of new consumers.

Employers and insurers would begin to dump people in the 55-65, but there would be a constituenmcy for more reofrm and for cost containment.

I think it's worth calling the insurers' bluff. No public option, no mandate. We try something different. And it makes it harder to trash the public option if it is just called Medicare.

Posted by: Mimikatz | August 18, 2009 5:48 PM | Report abuse

One does wish that Ezra interacted a bit more in the comments section with his readers. ;)


Posted by: toshiaki | August 18, 2009 5:49 PM | Report abuse

This sentence here:

I go into the reasons in more detail here, but the Health Insurance Exchanges would probably be thrown out.

does not make any sense.

Posted by: piminnowcheez | August 18, 2009 5:53 PM | Report abuse

Nice work, both now and back in March. Short of thoughtful nonpartisan action by patriotic Senators, I agree that we will "end up with a bill that simply doesn't work, much as a car doesn't function without a transmission system." That would be politics as usual, but with terrible ramifications for the "victorious" party.

On a lighter note, Cokie Roberts does a great impression of Sen. Byrd explaining that the Senate works either through unanimity or through exhaustion.

Posted by: rmgregory | August 18, 2009 5:56 PM | Report abuse

Ezra you are ignoring that you need to vote to remove things like the exchange and the regulations. Do you think there is really 41 members of the Senate that want to face re-election after voting on record to allow insurance companies drop sick people?

There is a big difference between what can be removed by a point of order and what will be removed because it can't get 60 votes to keep it in.

Posted by: JonWa | August 18, 2009 6:10 PM | Report abuse

"Or drop the "buy in" aspect, since no one over 65 "buys in""

People over 65 do buy in to Part B and Part D, both of which have premiums. As of now, the premiums for Part B, which covers doctors fees and other charges besides hospital costs, can cost from $95 to $250 a month per person ($1150 to $3000 a year,) depending on personal income. That's between $2300 and $6000 for a couple.

Part A is financed by the Medicare payroll tax, which will become insufficient in a few years if something isn't done about it.

Because of gaps in coverage, co-pays, and deductibles many seniors buy private "Medigap" insurance in addition to Medicare.

Trying to run a Medicare for All program would require, in the estimate of its own sponsors, a new tax of 5% on wages and additional taxes on higher earners and on stock transactions, as well as absorbing all the savings from dropping the Bush tax cuts for high earners and non-specific "closing of corporate tax loopholes." This assumes very large cuts in health care costs, since currently health care besides Medicare costs about 13% of GDP, and those numbers add up to less than 10% of GDP.

I am not arguing that this would all be a bad idea, but would argue that it might be hard to get 50% of senators and 50% plus one of House members to back this, assuming that Biden would break a senate tie in its favor. The necessary added taxes would be a hard pull for many "Blue Dogs", and even for some not so doggish Democrats. Right now, we can't even pull together enough votes to pass the taxes needed to insure 50 million extra people. Reconciliation avoids the filibuster, but still has to pass by a majority.

The Dean/Klein program is much more modest, with a less aggressive expansion of SCHIPP and Medicaid and with the buy in to Medicare self financed, and might be a lot easier to sell.

Posted by: PatS2 | August 18, 2009 6:14 PM | Report abuse

This just proves that Congress must pass something similar to the bills being discussed, or the whole effort will fail. And I can't see any Democrats supporting a filibuster.

Posted by: bmull | August 18, 2009 6:15 PM | Report abuse

Before 65 there would have to be a premium for Medicare Part A, but it would be dropped when one hits 65. It would be a buy-in. Maybe when the Grassleys and Baucuses die off we could move to single payer.

Posted by: Mimikatz | August 18, 2009 6:23 PM | Report abuse

Ezra -

Matt Y is correct. You, Drum, and Collendar really need to read your Wittgenstein on rules.

51 votes in the Senate is sufficient to remove every single last parliamentary rule currently in place. Indeed, 51 votes could enjoin the sergeant at arms to forcibly bar the remaining 49 from even entering the chamber.

Posted by: AnanSudanomos | August 18, 2009 6:25 PM | Report abuse

OATs2 - Your cost analysis for Medicare for All seems to omit the fact that nobody would be payng insurance premiums and employers would not be paying for health care.

Furthermore there would be no need to keep the current complicated tax structure (Part B & D).

And we would save $400 Billion each year from the elimination of the high overhead and compliance costs of private insurance. There is another $100 Billion we could pick up in curtailing drug company marketing. A half a Trillion each year would go a long way.

Posted by: lensch | August 18, 2009 7:20 PM | Report abuse

Ezra, I still think that you, Kevin, and Stan are quite wrong on this. I have yet to see any rule or law that vests the authority to make Byrd Rule determinations with the Senate parliamentarian. Here is my response:

Posted by: JonathanZasloff | August 18, 2009 7:21 PM | Report abuse

51 votes in the Senate is sufficient to remove every single last parliamentary rule currently in place. Indeed, 51 votes could enjoin the sergeant at arms to forcibly bar the remaining 49 from even entering the chamber.

Actually, that depends on the sergeant at arms. 1 senator could theoretically do it if the sergeant obeyed.

Ultimately everything is run via culture, convention and agreement. Laws and rules are just pieces of paper without that.

Matt is correct, but he is even more correct than he realizes. There is a reason why we respect these norms.

Posted by: ImMark | August 18, 2009 7:26 PM | Report abuse

Ezra - Do you understand the implications of letting people aged 55-64 buy into Medicare? Every group who opposes a public plan would oppose this as well.

It means that hospitals and doctors would be forced to accept Medicare level reimbursement for a big chunk of their (currently) most profitable customers. It would also raise the spectre of future (or imminent) cuts to Medicare benefits for the post-65 group (based on the premise that adding more peoplke to a program that has a huge unfunded liability would increase the chance of benefit cuts). Why would seniors support this? Why would doctors, hospitals, insurers, pharma, etc support this? why would people aged 55-64 who currently receive employer coverage support this? They know their employers would drop coverage and put them on a government program.

All the arguments (both valid and fear-mongering) used to oppose the public plan and government control would be equally effective against this idea. I believe you need significant public support for this idea to gain traction and i don't think it will get anything close to significant support once it is fleshed out.

Because of this, i think that 55-64 buy-in, while theoretically possible through reconciliation, has about a 0% chance of actually happening.

Your thoughts?

Posted by: mbp3 | August 18, 2009 8:19 PM | Report abuse

Can we have all 60 Senators vote to stop a filibuster and then just have an up or down vote which is 50 votes?

Posted by: maritza1 | August 18, 2009 8:32 PM | Report abuse

Can we just get 60 votes for cloture and then vote the final bill with 50 votes?

Posted by: maritza1 | August 18, 2009 8:33 PM | Report abuse

Yes, but by the same logic, Medicare for All could be put in reconciliation.

Could we get 50 votes for that? And I mean if Obama were (probably justifiably because the return from great gratitude will be enormous and last for generations) willing to use every ounce of political capital, not save any, make any enemies, go LBJ to the max, using all of his power as President and leader of the Democrats.

If not could we get 50 votes for Medicare for all children, higher education students, and people over 50 (who are most at risk)?

Posted by: RichardHSerlin | August 18, 2009 8:44 PM | Report abuse

Ezra, why are you talking about Dr. Howard Dean's health care proposal from 2004? This is 2009. Stick with what's being currently discussed in Congress and by the president, and not what was debated five years ago. Dr. Dean himself has noted that in far too many ways, we're a far different country now.

Posted by: drkoelper | August 18, 2009 11:04 PM | Report abuse

Here is what I think is an important point:

What is the biggest reason the Democrats don't employ the nuclear option – full bore, and strike down the filibuster, as well as all retaliatory parliamentary obstructing measures to immediately stop a shut down of the Senate in response (for details see my previous long comment)?

It may be that the Democrats are worried that in a fair, majority rules Senate, then if sometime in the future the Republicans don't self destruct, and retake over 50 seats, they will be able to turn the tables and steamroll through what they want.

Why is this far less of a worry than it seems, and worth countenancing?

Because the things the Democrats want to push through, like universal health care, much better student aid (How about universal free four-year college. The amount of free public schooling has been stuck at high school for over 100 years, while the amount of education necessary to be highly productive has skyrocketed in that time), etc., are things that once the public actually experiences them, and sees how false the Republican propaganda was, they are wildly popular, and the Republicans would never dare get rid of them – even though they fought them tooth and nail before they were enacted, like Medicare, old age Social Security, unemployment insurance, and the whole New Deal.

By contrast, the things the Republicans would push through in a majoritarian Senate are things that they lie about and say will be great, mythical, but will actually do great harm, and once people experience this first hand, they will not last long. The Republicans will be voted out, and these things will be overturned.

So, over time we will get much more, and much faster, positive change from a fair majority rules Senate (no suffering generations as the only advanced country without universal healthcare), and these positive advances will never be able to be taken away once the public experiences firsthand how much better life is with them. But, by contrast, the negative done by the Republicans won't last very long. It won't because people will quickly see firsthand that the propaganda was false – that this only helped the very rich and hurt everyone else. Then, the Republicans will quickly be voted out of control of the Senate, and the harm will be reversed – and lessons will be learned on top of that, lies and misleading will be exposed.

Posted by: RichardHSerlin | August 18, 2009 11:27 PM | Report abuse

The real hope to getting meaningful health reform passed in the Senate lies not in reconciliation, but in party-line discipline on cloture. If all Democrats vote to end the expected Republican filibuster of consideration of health reform on the Senate floor, assuring the 60 votes for cloture, they can then vote their preferences or consciences on the bill itself. Press for an up-or-down vote on the merits of the bill. The American people deserve an up-or-down vote on the merits of health reform. End the filibuster on a party line vote. Then everyone can go their own way on the substance of the bill itself. Health Reform would then likely pass with 52-55 votes. This is going to require the party leadership and the White House getting tough, but that's the route to achieving real health reform.

Posted by: OHIOCITIZEN | August 19, 2009 3:38 AM | Report abuse

Perhaps Ezra could justify his assumption somewhere for somebody that a Democratic Senator is going to vote to filibuster the signature legislation of Barack Obama's 1st term.

Which senator, Ezra?

Frankly, by spouting off about how the public option is dead and pretending this is the time to start dreaming about Howard Dean's 04 proposal, you're doing your own part to obfuscate discussion over healthcare reform.

Thank God for Howard Dean. That's how you make a positive contribution to the political conversation. You don't even have a compelling objective analysis to offer.

Posted by: timmyfuller2 | August 19, 2009 4:03 AM | Report abuse

Ezra, are you saying there aren't 60 votes for cloture? That Dems will actually vote to *filibuster* health care?

Sorry I thought this question was so good I wanted to repeat it.

Posted by: cautious | August 19, 2009 5:23 AM | Report abuse

An interesting article on the 60 vote question:

Posted by: cautious | August 19, 2009 5:52 AM | Report abuse

Ezra, what about the idea that MattY floated yesterday: Step 1) Pass a bill that includes the things most legislators agree on (insurance reforms, health exchanges, etc.) then Step 2) shove a purely expenditure related bill, like the one you suggest above, through reconciliation?

Posted by: MosBen | August 19, 2009 7:59 AM | Report abuse

The filibuster problem probably is that Sen. Kennedy may not be able to return to vote for cloture. Of course, if he did, it is hard to believe that any other Dem would vote against cloture after that dramatic event. But if he doesn't, then there are just 59 votes. Thus, if it comes to that, it seems to me we should focus on passing that which cannot be passed through reconciliation this year, such as the exchanges, insurance reforms re pre-existing illness, etc. and pay for the necessary subsidies, and then just pursue what might be a better form of public option in the future anyway, such as just buying into Medicare.

Posted by: gregspolitics | August 19, 2009 11:42 AM | Report abuse

lensch --

I assume I am “OATs2.”

Let me start by saying the Medicare for All is an excellent approach to health care, if it could be enacted.

Let me also say that it is true that the tax costs of a national single payer plan would be offset by the savings to individuals and businesses from not having to pay for insurance and health care.

My point was not that that is bad idea. My point is that it is unlikely to be able to pass congress, even if it only requires a simple majority.

Let me also point out that the potential savings from operating Medicare for All are already incorporated in the calculations of the sponsors of HR676, and they still require the tax structure I outlined.

As long as I am at it, the figure of $400 billion savings in overhead expenses is probably inflated by quite a bit. That number is derived from calculating overhead numbers for private insurance plans based on the standard group and individual market, then applying those numbers, mathematically, to the entire health care budget of the US.

That is an incorrect approach. First of all, Medicare, Medicaid, the VA, the Indian Health Service, the Public Health Service, and the military health systems account for almost 40% of health care costs in the US. The savings imagined would not apply to those programs, so that “only” about $1.5 trillion would be considered.

Second, about half the private insurance market is “self-insured” programs run by large companies. While overhead for those programs is higher than Medicare, it is quite a bit lower than standard private insurance.

In the end, a more realistic figure for savings on overhead would be about $150-$200 billion. Not hay, but not $400 billion. There are knowledgeable non-partisans who argue that that number is too high, and that $100 billion is more reasonable.

I am not happy playing the devil’s advocate on this issue, since as I have said I think the plan is a good one. I just don’t like overstated positions, whether right or left wing.

Posted by: PatS2 | August 19, 2009 12:55 PM | Report abuse

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