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Max Baucus's framework includes this opening disclaimer: "This is not a final product, should not be construed as a Chairman’s Mark and does not include everything that might be in a Mark. Members may suggest individual modifications or offer whole or partial counters to specific provisions. As discussed, suggestions to reduce the cost of the package are welcome. If, however, a modification will increase the cost of the package, then the member making that suggestion should offer offsets to keep the package budget neutral."

As Shailagh Murray reports, the members are indeed making comments. And one of the members making comments is Olympia Snowe, who can pretty much have whatever she wants. In this case, what she wants is -- wait for it -- more subsidies:

One area of dispute the group will attempt to resolve Tuesday is where to set the federal subsidy cap for uninsured families. Baucus has proposed 300 percent of the federal poverty level, the equivalent of about $66,000 per year for a family of four. But some other members of the group -- including moderate GOP Sen. Olympia J. Snowe (Maine) -- want to push the level to 400 percent, or about $88,000 per year for a family of four. The lawmakers may compromise at 350 percent, said one individual familiar with the talks. The higher threshold would increase the bill's cost.

My understanding of the "Gang of Six" talks is that Snowe and Bingaman have been the two members in the room arguing for more affordability measures. The problem is that Snowe, in particular, isn't big on new financing measures. Which leaves the group in a bit of a pickle. But moving subsidies to 400 percent of poverty would be a huge improvement, and even 350 percent would help a lot of people.

By Ezra Klein  |  September 8, 2009; 3:00 PM ET
Categories:  Health Reform  
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Comments

Better than trying to figure out just how much subsidies to use to help even middle class families afford relatively high health insurance premiums...is...wait for it....

Thinking about the meaning of "basic."

Most people would accept the idea that a "basic" policy would be a *managed* care policy.

But a managed care policy does not need such a high subsidy level as 400% of poverty.

See?

More thinking, more clarity. Part of the challenge of trying to do anything from government is exactly that you have to do a *lot* of thinking, not a modest amount, in order to begin to approach the level of complexity that a good system would require.

In other words, keep working, and let's not stop making an effort only a few feet from the finish line.

Posted by: HalHorvath | September 8, 2009 4:05 PM | Report abuse

"Managed care" in my previous comment refers to HMOs, which in fact deliver both lower cost and about-as-good health outcomes.

Therefore any definition in a good health care reform of a minimum policy will allow for an HMO type policy as its most basic policy.

This in turn will make the basic policy more affordable, and lessen the amount of subsidy needed, thus lessen the total 10-yr cost, and...even bend the curve some, since HMOs inherently are networks, and networks or cooperative care, like Mayo Clinic, are a key cost-inflation control.

Posted by: HalHorvath | September 8, 2009 4:15 PM | Report abuse

Agree on HMOs. It would be really good if the bill would reward efficient HMOs like (non-profit) Kaiser Permanente so that more people would gravitate towards them. That would help keep costs down. The bill isn't hopeless, but there changes that need to be made to make it scalable and more flexible.

Posted by: Mimikatz | September 8, 2009 4:31 PM | Report abuse

If the income cutoff is $88,000 per year for a family of four, that's well above the median income in most states. This means that over half of recipients will be subsidized. Will that play politically, when higher-income taxpayers realize how much of the cost they will be bearing?

Posted by: tomtildrum | September 8, 2009 6:25 PM | Report abuse

Particularly in light of the cost increases most people will face from guaranteed issue and community rating.

Posted by: tomtildrum | September 8, 2009 6:28 PM | Report abuse

Mimikatz- If we could open a Kaiser Permanente in every state our health care problems would be solved. State regulations have been set up to discourage and hamstring these high-efficiency HMO plans. For example they have to meet access to care requirements that fee-for-service providers don't have to meet. What the federal government could do with a public plan is to break down barriers to getting these types of plans established.

We actually do have an HMO plan, which is admittedly comprehensive due to our health needs, and our family income is close to 400% FPL. I pay $14,000/year and I can tell you it's not easy. If premiums keep rising, I'm screwed.

Posted by: bmull | September 8, 2009 7:55 PM | Report abuse

I'm a big supporter of reform. And of the current House bill. And I may be displaying my ignorance here. But tell me if this is wrong:

-- In a normal for-profit market, giving poor people subsidies to buy a good drives its price higher.
-- This effect is limited by elasticity of demand, as non-subsidized richer people will stop buying if the price rises too much.
-- Unless you make demand completely inelastic. Say, by requiring everyone to buy the good.
-- Subsidizing the poor to buy insurance, and mandating that everyone buy insurance, will drive insurance prices higher by a large fraction of the amount of the subsidies. This higher price will all go into insurance company profits.
-- Unless you institute insurance price controls, or ban for-profit insurance. Like Minnesota does. Which would be a good idea.

Am I wrong here? What am I missing? Isn't this why we need a public plan?

Posted by: mattsteinglass | September 9, 2009 5:06 AM | Report abuse

mattsteinglass -- that's a good point, which I've mulled over a few times since we recently lived in Massachusetts (until mid-2008). Massachusetts, you may know, instituted an insurance reform very similar to what is on the table, but with lower subsidies. Nonetheless, Mass has an insurance requirement, and has very high compliance. You can read various articles on the effects in the state.

Perhaps this question of significant subsidies is indeed a reason to phase in gradually. I've not liked the idea of waiting so long for reform to phase in, as many people will feel reform happened, and now it's 2010 or 2011, and this is reform, the final result -- higher prices (the normal health care inflation continuing).

Posted by: HalHorvath | September 9, 2009 1:28 PM | Report abuse

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