So now all five committees having jurisdiction over health care reform have passed a bill. It's the farthest we've ever gone in universal health care, and that in itself is a remarkable accomplishment in its own right. That should bring the smell of roses to us progressives now that we are one step closer to bending the moral arc of the universe a little bit more towards justice.
Now comes the next step -- merging the bills together. At some point, Democrats are going to have to come to terms that each committee will have at least two items from their chairman's bill. Each committee chairman has accomplished the ever-difficult task of getting a majority of members on their committee to vote in favor of reporting the bill favorably out of committee, and they all ought to have some say in the bill. We ought to take the best parts each committee has passed. Now obviously the best parts depend on what you see as the central purpose of health care reform. To me, that central purpose is to create a sustainable system that prevents medical bankruptcies. This diary analyzes the strengths and weaknesses of each of the health care reform bills passed by the Senate Finance Committee, the Senate HELP Committee, and House Tri-Committee.
Let's start with the HELP Committee bill. The HELP Committee does not have jurisdiction over revenues, Medicare, or Medicaid, so it technically is an incomplete bill. The core strength of the HELP Committee bill is the required minimum level of coverage -- a minimum actuarial value, or the metric for a plan's generosity, of 76 percent, which is equivalent to that of Medicare and the average employer-provided health savings account ($1,500 deductible, 20% co-insurance, and $3,000 out-of-pocket cap). The House's bills set this figure at 70 percent ($2,000/$4,000 deductible, 20% co-insurance, and $4,000/$8,000 out-of-pocket cap). The Finance Committee bill sets this figure at a paltry 65 percent.
The biggest strength of the Senate Finance Committee bill is its CBO score of being deficit reducing over the first 20 years by financing the bill entirely through the health care system -- through Medicare cuts, reducing the tax subsidy for employer-provided health insurance (the excise tax on high-end plans), medical device fees, reducing the medical expenses deduction. The House bill, by only taxing millionaires, blows a $1 trillion hole in the deficit from 2020-2029. The HELP bill does not have jurisdiction over this issue.
There are so many weaknesses of the Finance Committee bill that I can't even begin to name all of them. The three most glaring ones are as follows:
- The level of latitude insurance companies are given to vary premiums -- allowing insurers to charge as much as four times as much to older adults as younger adults and allowing insurers to charge more for smokers
- The 65 percent minimum actuarial value
- The noxious free-rider provision in the employer mandate
Despite its inability to control costs, the House bill has a lot to like. The biggest strength of the House bill are the rules preventing insurers from cherry-picking the healthy and the Federal Exchange and its bargaining power.
The rules preventing insurance companies from cherry-picking the healthy include the insurance rating rules -- the 2:1 community rating with family structure and region being the only other factors besides age (no smoking status) -- and the rules on the Exchange requiring a healthy policyholder will have to purchase a very significant level of coverage before they can purchase items attractive to healthier policyholders -- i.e., dental benefits, eye-care, and gym membership. Also, insurance companies will have to offer a plan at all tiers if they want to offer plans with gym membership, etc. I think the Federal Exchange is pretty self-explanatory.
In all of the bills, including the House bill, I find the subsidies to be wanting. I think asking a family of four earning $80,000/yr. to pay 11 percent of their income for a policy having a $4,000 deductible, 20% co-insurance, and $8,000 out-of-pocket cap (70 percent actuarial value) is recipe for political backlash. Even the HELP bill's 12.5 percent premium cap for a policy having a 1,500 deductible, 20% co-insurance, and 3,000 out-of-pocket cap (76 percent actuarial value) is probably too stingy not to spark political backlash. So we're going to have to increase the subsidies. I think a compromise for raising the revenue for this is for the President to renege on his deal forbidding Medicare from negotiating lower drug prices, cutting the funds for prevention, and imposing a windfall profits tax on insurers. We're simply not going to get a public option at Medicare rates; the votes aren't there. We may get negotiated rates for a public option, but we won't get Medicare rates.
So that is where we stand today -- closer than we've ever been in the last 60 years to enacting health care reform. Make no mistake -- we still have a very difficult road ahead, and it's going to require compromise and sacrifice on everyone's part. I just want to be a grown-up about the bill. Too many struggling Americans who have only to the government to turn to for help have waited too long. This bill will provide relief to this people. This bill is our calling. History will not be kind to us if we fail to act on the greatest moral challenge of our time. So let's rise to the occasion because yes we can.
Update: khin makes a great point on all the bill's major defficiencies:
The biggest problem is that all of these approaches rely on the current employer based system of health insurance, which is inherently inefficient.
Plus, no one is proposing the kind of risk adjustment program that is needed to cut down administrative waste in system of competing private insurers.
There is no real evidence that any of this will reduce system wide costs much.