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Why aren't the subsidies getting more attention?

Kevin Drum:

I sure wish that overall subsidy levels in the current healthcare bills produced the same kind of uproar as abortion and the public option. In terms of real-world effect on real-world people, subsidies are the biggest issue by a mile. But not a very sexy issue, apparently. That's too bad.

I agree with that, of course. And it goes for payment reforms, too. But I don't think the problem is that the issues lack sex appeal. It's that they're not one issue. The public option debate has been about public option, yes or no, not about Medicare rates or networks. The abortion debate is about Stupak, yes or no. The subsidy debate is about subsidy levels, which are hard to communicate. It's become granular.

In part, that's because it is granular. Whether the subsidies are good enough or not depends on whether they reach high enough on the income ladder, do enough to offset premium costs and do enough to protect against out-of-pocket costs. That makes them complicated. A subsidy scheme that reaches 500 percent of the poverty line but only offsets 5 percent of premium costs is not a good scheme.

In retrospect, progressives probably should have settled on a final number that would have been sufficient to do health-care reform right. The problem is that that number -- $1.2 trillion, probably -- was high, and people were scared of it, even though the difference was only about $30 billion a year, which isn't a lot for the government, but would have meant a lot for individuals. And now, with $900 billion sitting out there as the apparent limit, there's not a lot that can be done on subsidies.

By Ezra Klein  |  November 13, 2009; 3:58 PM ET
Categories:  Health Reform  
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Comments

We only have trillions and trillions of unquestioned dollars for wars and military spending. The rest is all WASTE! The government SUCKS!

Posted by: AZProgressive | November 13, 2009 4:28 PM | Report abuse

Just out of curiosity, do you think people currently have a good idea for what they will be paying out of pocket under the new system for healthcare? I think if people actually understood what was going on they would be fighting far more for subsidies.

Posted by: spotatl | November 13, 2009 4:41 PM | Report abuse

Actually progressives did decide on subsidies which would be adequate, and all of the proposals on the table fall far short.

Premiums <8% of AGI and out of pocket caps 2.5% of AGI would be affordable. A variation of the 8% limit (not properly indexed to inflation) was incorporated into the SFC bill as the affordability exemption. The 2.5% cost-sharing cap was proposed by Conyers and rejected.

Posted by: bmull | November 13, 2009 8:51 PM | Report abuse

Do you think, though, that Obama would be willing to compromise on that limit at the last minute, and go for like $1.2 trillion? and we could get that through?

During the campaign Obama again and again said he opposed an individual mandate, and far more clearly and forcefully than he's pushed the $900 trillion limit, and yet he very easily changed his position on that.

Posted by: RichardHSerlin | November 13, 2009 8:57 PM | Report abuse

I think we're at a strange place psycho-politically. People attach significance to big round numbers; a large irrational and well documented amount of significance.

This is why things get priced at 99 cents rather than $1. Our economy has finally grown to the point where we're needing policies in the trillion dollar range. Maybe this economic crisis has even pushed us towards it sooner than the public is comfortable and because of human irrationality towards round numbers we're not getting the policies that sound theory recommends.

In a few years, people will get used to government numbers quoted in the trillion dollar range. We'll be debating $1.4 trillion versus $1.7 trillion and people won't care. In the same way that billion dollar policies aren't a big deal anymore. Of course, that isn't very helpful for policies that need to be passed this year...

Posted by: zosima | November 14, 2009 4:28 AM | Report abuse

Actually, I'm thriller the subsidies aren't getting much attention, because it means they can be pulled to the left without much notice. If subsidies were the issue, you can bet Nelson and Lieberman would be vigorously working to cut them down to kick in only when a plan costs 50% of income for a family making $44,000.

Posted by: eleander | November 14, 2009 7:36 AM | Report abuse

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