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The Three Compromises

There are three major compromises still to be struck on health-care reform. The first is what to do about the public option. The second is affordability. And the third is financing.

Increasingly, I'm seeing the glimmers of a rough consensus on affordability and financing. The excise tax will also be defanged a little bit -- primarily for older workers, or workers in risky jobs. That will lose you a bit of money. But like Jon Cohn, I'm hearing that there's support for Sen. Jay Rockefeller's proposal to cap itemized deduction for the richest Americans at 35 percent (they would otherwise be at 39 percent). That nets you about $100 billion, which should more than make up for any changes to the excise tax, and should put you pretty close to raising subsidies to 350 percent of poverty, if not 400 percent of poverty. Add in a couple odds and ends -- maybe a small soda tax? -- and you can make it those final yards.

One note on this: Obama's original proposal on the itemized deduction brought it down to 28 percent and raised a bit more than $300 billion. That would literally solve all of health-care reform's remaining money problems -- while still ensuring a generous and affordable bill. And the only difference would be that people making more than $250,000 would only get 28 cents off each dollar of itemized deductions, as opposed to 35 cents. The average American gets 10 to 15 cents, because they're in a lower tax bracket. More to the point, the average American itemizes very few deductions, if any. So though there's a compromise taking shape, there's also a much better solution available.

The public plan is trickier. The co-op proposal generated all the good vibes of a BLT at an Orthodox Bar Mitzvah. Olympia Snowe's trigger is raising some eyebrows, but it's conceivable that some form of a trigger could attract enough votes for a compromise. The White House is going to put a lot of muscle behind securing her support.

But that's really what's left. A relatively small increase in subsidies. A relatively small increase in funding. And some way to crack the question of the public option.

By Ezra Klein  |  September 21, 2009; 3:23 PM ET
Categories:  Health Reform  
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I disagree. I think Obama's plan is in real political trouble. The public option is still popular, yet apparently being ditched. The financial part is too complex for most people to feel comfortable.

I strongly advise resurrecting the Public Option. Otherwise this legislation is going to be downsized into a regulatory revision that is widely viewed as a failure.

Posted by: bmull | September 21, 2009 3:40 PM | Report abuse

As things stands now, without the public option, Obama's supporters will flame him, the right will flame him anyway, and even if he'll sign a decent bill that will be vast improvement of the current situation - it'll be cast as a failure.

Posted by: impikk | September 21, 2009 3:52 PM | Report abuse

So what is the time line are we looking here? Couple of weeks and the game is over? Or this baby is yet months away to come out?

Besides will it keep the CBO score which the Baucus bill has? I suspect yes since richer always gets richer and if economy comes back reasonably well then Sen. Rockefeller's proposal of raising money by taxing rich will still keep up the pace with Medical cost increase.

Most people forget this 'differential' to get the CBO score. For example, look even Tom Friedman in his column advocating 45% of gas tax to fund to Health Care Reform. Again that tax will hardly keep up the pace with Medicare expenses. Hence we always need to find funding within Health Care and if not then at least those sources which can keep the pace with Medical cost increases.

Posted by: umesh409 | September 21, 2009 4:00 PM | Report abuse

Instead of a public option, why not just let those who would qualify for a public option buy into Medicare?

This may actually be better than a public option because the infrastructure is already there, there would be no need for a new bureaucracy, and we wouldn't have to worry about a public option being emasculated by not being allowed to negotiate low enough rates.

It also seems like a much easier sell, since it's a program that has already proven to be both very popular and very effective.

Why is no one proposing this?

Posted by: jeppollcat75 | September 21, 2009 4:07 PM | Report abuse

I agree with the general tenor of the comments here. I've been around a lot longer than you, Ezra, and my gut tells me that there's more fire and brimstone ahead than you realize. Plus, you have a huge number of progressives in the House who have publicly declared they will vote against legislation without a public option (including my representative, Yvette Clark). Do you honestly think Jerry Nadler and Anthony Wiener will renege? Or Chuck Schumer, for that matter?

The fight over the public option could kill reform altogether so it's a tad premature to pop the champagne corks.

Posted by: scarlota | September 21, 2009 4:22 PM | Report abuse

Ezra continues to carry water for the White House.

I agree with scarlota: I've been in DC for 25+ years and it's amazing to me that you're ready to declare victory with a trigger that is clearly poor policy.

Posted by: cab91 | September 21, 2009 4:27 PM | Report abuse

Klein just LOVES playing with other people's money.

Posted by: msoja | September 21, 2009 4:30 PM | Report abuse

"But that's really what's left. "

That is what's left from a policy/legislative standpoint. I think there's more left to do politically:

1. Are Republicans really going to oppose a bill that most Americans support?

2. Assuming no, what parts of the bill will get highlighted to ensure Americans don't support the bill? e.g. mandates = middle-class tax = broken campaign pledge. There are a good 5 to 10 of these we could come up with. Most around taxes and degree of government control. (What percentage of Americans will be in plans governed by the Exchange in 10 years?)

3. Assuming 2 is successful, is Obama going to push a Dems-only bill?

TBD. But there's more left to do.

Posted by: wisewon | September 21, 2009 5:19 PM | Report abuse

" what parts of the bill will get highlighted to ensure Americans don't support the bill? e.g. mandates = middle-class tax = broken campaign pledge. "

The Chamber of Commerce is already running TAX TAX TAX ads, which are brain-dead, but presumably play well with low-information voters. What they actually want, other than the idiot status quo, who knows?

Posted by: pseudonymousinnc | September 21, 2009 5:40 PM | Report abuse

It's pretty clear to anyone outside the Beltway that the president simply does not negotiate in good faith. He goes on TV to cheer for the public option but gets back home and doesn't do a damned thing to make that happen.

He tells people in private to forget about the public option. President Obama clearly places the insurance companies and his political position over the pressing health care needs of Americans.

Face it, Dems. We bought a lemon. Time to figure out who to back in a primary challenge.

Posted by: uberblonde1 | September 21, 2009 6:12 PM | Report abuse

A trigger is worthless unless it triggers automatically -- if some measure is reached then HHS is required to set up a system. Otherwise, we'll have the whole argument again down the road but this time without any leverage.

Posted by: pj_camp | September 21, 2009 6:57 PM | Report abuse

what a scam. on the taxpayers and the poor. Pretty soon there won't be enough money from us to pay for all the schemes The Villagers have.

to watch Pundits play along with the scam shows how important being in Versailles is. no integrity, no truth, just word games and deceptions.

it will be interesting to watch what the Beltway imposes upon the peasantry this time, though. the Villagers/Beltway seem to think they can continue this indefinitely.

The real question is how much profit will the insurance companies get this time. how many donut holes will be created to please the masters of the Game in this version.

Idiot America in all its' glory!!

Posted by: BernardEckholdt | September 21, 2009 8:53 PM | Report abuse


First of all, thanks for posting my dad's (Jon Gabel) column on the CBO's long history of understimating health care costs savings and overestimating expenditures.

I'm an associate to the Society of Actuaries myself. I do think Baucus still has a problem even at an 11 percent premium cap if it's for a plan that has 65 percent actuarial value. That's still asking a family of four earning $75,000/yr. to spend an awful lot of their income on health care -- particularly if they have a diabetic child. I think the 13 percent premium cap could work at 75 percent minimum actuarial value, and the 65 percent minimum actuarial value could work at 8 percent premium cap, but not 11 percent premium cap at 65 percent actuarial value. That's just my take.

Posted by: BradGabel2002 | September 21, 2009 9:45 PM | Report abuse

--"I think the 13 percent premium cap could work at 75 percent minimum actuarial value, and the 65 percent minimum actuarial value could work at 8 percent premium cap, but not 11 percent premium cap at 65 percent actuarial value."--

Why don't you try it with your own money and let us know how it goes?

Why do you only "think" it could work? Wouldn't you really rather want to *know* what you're doing before you start (as if half a century of tinkering has led us to a "start") pushing people's lives around? Why *shouldn't* someone with a sick kid pay a lot because of it? Why *should* people without sick kids have to pay for everyone else's sick kids? I'm not rich; how come my neighbors aren't forced to come pay for some of *my* stuff? How much freedom, exactly, are you willing to do away with in order to run your little actuarial experiments?

Posted by: msoja | September 21, 2009 10:28 PM | Report abuse

I sure hope that you (Ezra Klein) are wrong, because you didn't mention the terrible, awful no good version of the employer mandate -- requiring employers to pay the subsidies for their employees if they don't provide health insurance. Thus they would have to pay more to hire people from poor large families than people from already rich families.

This is a terrible idea. Worse it is Snowe's terrible idea, so it might survive.
Please tell me one of the 547 amendments does away with it.

Posted by: rjw88 | September 22, 2009 12:08 AM | Report abuse

OK I see that is a Kerry Schumer amendment. I see no room for compromise on this and sure hope that the amendment passes (or the conference committee does it).

Posted by: rjw88 | September 22, 2009 12:11 AM | Report abuse

When your opponents are about to shoot themselves in the foot ... it's best to keep quite.

I will be fun to see what this bill looks like on the final vote.

Posted by: cautious | September 22, 2009 1:52 AM | Report abuse

"Why is no one proposing this?"

There were a few liberals pushing "Medicare-for-All" (i.e., single-payer) but Obama took it off the table at the outset. The public option was itself a compromise, a narrow, weak version of that was supposed to be less alarming to the insurance companies and their lobbyists.

uberblonde1, I don't disagree with your sentiment, but get real. There will be no primary challenge, nor should there be -- regardless of the outcome, the Dem nominee would go into the general election severely crippled. We either go with what we've got, flaws and all, or just stay home and sulk.

Posted by: Janine1 | September 22, 2009 10:35 AM | Report abuse


Congratulations, "progressives"! You've managed to frame universal health care as a welfare program. It's a surefire political winner!

Posted by: lambert_strether | September 23, 2009 10:52 AM | Report abuse

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