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House health-care bill likely to cover more, cost families less, than Senate bill

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The House of Representatives is readying itself to release three delicious flavors of health-care reform. One of the bills will have a public option trigger. Another will have a level-playing field proposal. And the third will have the Hardy's Thickburger of public options: Medicare rates plus 5 percent, national, the whole deal. They're even forming a commission of independent experts to build a new formula that addresses the concerns of rural and Pacific Coast members, both of whom feel that Medicare underpays their hospitals.

But that won't be the only difference among the plans. Because the strong public option saves more money, the bill will also be more expansive with its subsidies and generous with its coverage -- all while costing $871 billion, which is to say, less than the $900 billion marker the president laid out.

From what I'm hearing, the specifics will look something like this. The Senate Finance Bill gets to 94 percent coverage. The House bill will hit 96 percent. The Senate Finance bill spends a bit over $450 billion on subsidies to help people afford insurance. The House bill will spend more than $700 billion. The Senate Finance bill doesn't have an employer mandate. The House bill does. The Senate Finance bill funds itself by taxing family health-care benefits over $21,000. The House bill funds itself by taxing incomes over $500,000. The Senate Finance bill expands Medicaid. The House bill expands Medicaid by more. The Senate Finance bill costs $829 billion. The House bill costs $871 billion. And the rumor is that there are some other goodies in there, but I've not been able to confirm that yet.

The House bill, in other words, will cover more people at a more affordable cost to individuals. It can do this for a number of reasons, but the big one is that it saves a lot of money by including a strong public option and a real individual mandate. The combination of those two policies allows the government and individuals to pay a bit less while encouraging employers to pay a bit more. Its funding mechanism is a whole lot more popular than taxing health-care plans, but it will also do less to "bend the curve."

The end result will be to make the choices in health-care reform very stark. You can have more affordability and more coverage if you're willing to include a real public plan and an individual mandate. You can have a more popular funding mechanism that will confine itself to taxing the rich if you're willing to sacrifice a bit on cost control and deficit reduction. You can do more to help people pay for coverage if you're willing to do less to help industry stakeholders maintain their profit margins. These are not easy choices for legislators, and the politics of them are not obvious. But the fact that they are choices, and they can be made, is about to become very, very clear.

Photo credit: Brendan Hoffman/Bloomberg

By Ezra Klein  |  October 22, 2009; 5:05 PM ET
Categories:  Health Reform  
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Comments

Okay, we tax Rich to fund increased Health Care subsidies. And let us also believe for a moment costs remain within projected numbers (you know how big of 'if' that is...).

Still then we are projected to have minimum of 1 Trillion Dollar Budget deficits for next 7 years. Where do we get tax collection to fund that? We will have not anything left to tax Rich people then. Besides the problem of differential between tax increase and medical cost is still intact.

So your choice analysis did not mention that such a House Bill approach also gives the choice of 'exhausting all future tax collection avenues'.

Your analysis / presentation undermines what Senate Finance Bill achieved - not going out of the Health System for the needed resources.

Posted by: umesh409 | October 22, 2009 5:22 PM | Report abuse

I think we still need to see some more numbers to evaluate.

How many fewer/more people will be on the Exchange in the House bill than in the Finance Committee bill? If fewer people have access to the Exchange, that means the Exchange will have less bargaining power, and premiums will be higher.

How do the subsidy levels compare? Even H.R. 3200 was a bit stingy on the subsidies. Asking a family of four earning $80,000/yr. to pay 11 percent of their income for a policy having a 70 percent actuarial value is a bit much.

What are the minimum actuarial values in each plan? Did the House reduce this figure?

What is the rate hike for the millionaire tax? Does Speaker Pelosi really want to ask President Obama to raise the marginal tax rate for millionaires by 10 percent, and still leave a $1 trillion hole in the 20 year deficit? In other words, how will raising funds outside the health care system be deficit neutral in the long run?

Posted by: BradGabel2002 | October 22, 2009 5:32 PM | Report abuse

I think Nancy Pelosi is terrific. I'm a much big fan of the House version, but I like the excise taxes for their potential to destroy our employer group system.

People should embrace the benefits taxation and look to reform our tax code. I'd like to see a reintroduction of 15 or more tax brackets, a top marginal rate above 60% and and treatment of capital gains as ordinary income.

Anyone making the argument that capital gains helps encourage investment should at least favor a system where capital gains is indexed to the marginal rate of the investor.

Anyway, I'm extremely happy that Nancy Pelosi has the brass to push for what progressives want.

Posted by: bcbulger | October 22, 2009 5:39 PM | Report abuse

"So your choice analysis did not mention that such a House Bill approach also gives the choice of 'exhausting all future tax collection avenues'."

Posted by: umesh409 | October 22, 2009 5:22 PM

-----------------

You're not serious here, are you? You know that tax rates for the rich, even after this increase, are still incredibily lower than they have been at various times in out history. Right?

We could deal with the deficit pretty easily by moving income tax rates for everyone making $5M+ up to 45%, and with a sliding scale down to 40% for people making over $1M.

It's just that no one has the balls to push that rather populist plan, and show how those numbers match up with rates back in the 1950s when things were going rather well in the country.

"I like Ike's tax rates too."

Not a bad slogan.

Anyway, we haven't come remotely close to exhausting potential tax revenues. One of the key reasons out Federal, State and Local governments are broke is because we've had 30+ years of cutting tax rates and gutting government revenue.

John

Posted by: toshiaki | October 22, 2009 6:03 PM | Report abuse

Ezra, can you honestly say (with a straight face) that any of the proposed cuts in Medicare will actually happen? How about the SGR which hasn't even been allowed ONE TIME IN SEVEN YEARS?

Posted by: kingstu01 | October 22, 2009 6:23 PM | Report abuse

KID, YOU ARE DELUSIONAL

" .. You can have more affordability and more coverage if you're willing to include a real public plan and an individual mandate."

With all the documented FAILURES in U.S. government -- what proof do you have that a "real public option" will NOT be a failure?

Kid, you don't. You have as much experience in real politik as MESSIAH.

START OVER -- MESSIAH IS AN INEXPERIENCED FOOL

Posted by: russpoter | October 22, 2009 6:31 PM | Report abuse

"It's just that no one has the balls to push that rather populist plan..."

- toshiaki

But I am only talking about real people with their existing organs, not some imaginary organs for these decision makers...

Next, "popular plan of increasing taxes" - I do not believe anything like that exist in real politics.

The realistic tax increases on horizon:
- expiry of Bush Tax Cuts
- possibly treating Capital Gain Tax on par with Regular Income Tax (I support this one).

Beyond that for any tax increases, political costs start increasing. Besides many economists and policy makers are not convinced that it helps; even if we keep aside Laffer curve.

Posted by: umesh409 | October 22, 2009 6:45 PM | Report abuse

Oh! one more point, toshiaki: if you are so confident about enormous potential to keep on collecting more revenue for Fed; why not do that and then spend on more Health Care Subsidies? Why not be 'upfront' with revenue collection first so as to keep on spending additional revenue on ever increasing medical subsidies? People should love that.

What is wrong with it?

Posted by: umesh409 | October 22, 2009 6:49 PM | Report abuse

Tax the rich? tax the rich? I'm not "rich" but colored me unimpressed. There has to be another way. Why should people get healthcare by taking money out of someone else's pocket. This idea is so unoriginal -- I applaud Pelosi and other House Dems for coming up with a healthcare bill, but why is more taxes always the fallback option?

Posted by: inspired3 | October 22, 2009 9:27 PM | Report abuse

This bill won't work because it will a) cost more than it delivers, and b) will ration health care. Look at the plans in TN,MA, HI & ME. They are all costly failures.
Obama said it won't cost us a dime. No it will cost us trillions. Obama said that he's not rushing into making a decision on the war in Afghanistan because its too important and he wants to do it right the first time. Why doesn't he want to make the health care policy right the first time? Obama wants to take away 85% of Americans health care to fix a problem for %15. Just fix the 15%.

Posted by: 45upnorth | October 22, 2009 9:57 PM | Report abuse

We're not talking about more taxes, we're talking about redistribution, narrowing that widened gulf between the holders of wealth and the dispossessed.

We're talking about redressing the massive shift in equities of the last 30 years, from Reagan on.

There are reasons that the culture records a lack of progress in recent decades of that old American Dream - it stopped happening, and regresssive ideologies rolled back a lot of the well-being of ordinary people.

Every chance, every micro-opportunity arising in the legislative chamber to redress this imbalance will be taken I trust, and should be taken, by the Democrats who were elected in general principle to do this very thing.

Posted by: rosshunter | October 22, 2009 10:07 PM | Report abuse

There is no just reason why 4-6% of people legally in this country should be denied health care coverage.

Posted by: Aprogressiveindependent | October 22, 2009 10:21 PM | Report abuse

The other piece that makes the House bill work is a meaningful employer requirement. Without one, the cost of subsidies goes up significantly, as employers have less incentive to directly provide coverage rather than shifting costs onto the public. The employer responsibility in the two Senate Bills is too weak to have much of an impact.

Posted by: kjacobs2 | October 23, 2009 12:31 AM | Report abuse

The proposals in the House I feel have a better chance of raising significant revenue to pay for Health Reform:

1) Employer Mandate penalties. (most everyone agrees with).

2) Individual Mandate with teeth will keep the insurance pool more healthy, reduce premiums and raise significant revenue.

3) The Surtax on the Millionaires will also raise big time money.

Together these might actually raise enough money to pay for at least half of Health Reform when the politicians in the future refuse to cut Medicare to the bone.

The Fees and Benefit Tax in the Senate bill will be watered down very quickly by lobbyists both from Unions and the Insurance industry ... In the end the Senate bill would raise the debt much more.

Posted by: cautious | October 23, 2009 2:35 AM | Report abuse

Well let's pray that Pelosi has the votes for Med+5 because otherwise this whole undertaking will come to naught.

Everybody has to chip in or no one will. Without administered rates, health care providers are not chipping in. We're just shoveling more wheelbarrows of money their way. They public will not support this.

Posted by: bmull | October 23, 2009 6:13 AM | Report abuse

There is no just reason why 4-6% of people legally in this country should be denied health care coverage.

Posted by: Aprogressiveindependent | October 22, 2009 10:21 PM | Report abuse


you're absolutely right. There's also no reason why stimulus jobs should cost $500k per job now should they but that's what happens when government gets involved.

How about this nice little tidbit from the liberal New York times. I hope Ezra writes on this today :

http://www.nytimes.com/2009/10/23/us/politics/23housing.html?ref=us


I especially like this little tidbit:

the report found examples of claimants who already owned homes or had not yet bought one. Some 582 taxpayers were under 18 years old — as young as 4


Now I have a son who is 5 and he's really responsible for his age but I don't think he's quite ready to own a home.

Just another example that when government gets involved a feeding frenzy of fraud and abuse will take place.

I can't WAIT for the public option!!

Posted by: visionbrkr | October 23, 2009 9:09 AM | Report abuse

I am a health insurance agent in Utah and run two websites that sell insurance www.benefitsmanager.net and www.dentalinsuranceutah.com. I mention this because in Utah it would be great to have a guaranteed public option to put people that the private insurers will decline for health conditions. Plus the way Weiner discribes the public option, it will be priced competitively. So what this means in my industry (I've been at it 18 years) is that all my unhealthy clients that get charged more or declined can be put onto the public option now. All my healthy clients can stay on the private option. Hmmmmm follow me yet???? How long can the public option stay affordable?? Who is going to pay for the losses of a big sick pool of people....taxpayers?????

Posted by: mikeoliphant | October 23, 2009 9:28 AM | Report abuse

mikeoliphant,


yes but another way of looking at it is that when it becomes unaffordable the public option will (at some future date from some future congress) force provider rates down dramatically so that we don't JUST have cost issues, we have access issues. Kind of like the access issues that Medicaid is having now but much greater because IF the public option is allowed to take membership from the private plans (Employers under 25 employees FOR NOW) then providers won't be able to cost-shift their expenses to private insurance and then we'll get a lot less providers when access is already an issue.

But hey government does EVERYTHING GOOD!!!

Posted by: visionbrkr | October 23, 2009 9:54 AM | Report abuse

one thing all these "tax the rich" people don't seem to understand is that the rich don't need to work. if you raise tax rates back to 1950s levels as some would love to see happen (back then top rates were north of 75%), why would anyone who's wealthy bother working, starting a business or investing? the rich today got to be that way by being the most productive members of society, so what do you think would happen if they all said "screw this, i'm done?" and yes, the 50s were a great time for this country but only because we were the only major power who's industrial base wasn't destroyed by WW2. its one thing to pay high taxes for a short period of time to help your country through war, its vastly different to permanently raise taxes on the wealthy to obscene levels in order to subsidize the poor and unproductive. if you want a better life, learn some skills and work hard. lean on the rich too hard and they'll get out of the way.

Posted by: roo123 | October 24, 2009 2:12 PM | Report abuse

This "Public Option" is newspeak for a government option.

If this were a democracy, these issues that affect us all would be left up to each state to hold a referendum and let the people vote.

As is, we are being held hostage by "representatives" that fail to represent. We cannot recall them. We can vote them out only every two years.

I can change insurance companies without a revolution.

I do not my medications delivered by the government that sends me the mail addressed to others.

Posted by: johnlloydscharf | October 25, 2009 5:23 PM | Report abuse

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