OK. It's been a hell of a week.
Wednesday morning, I met with Rep. Jim Cooper (yes, the guy himself). Had a productive 30-minute one-on-one meeting with him. Cooper says he's not currently supporting HR 3200 because it doesn't adequately control costs and it's not affordable. (That's not new - he wrote that in a newspaper editorial before our meeting.) Cooper has also said (and reaffirmed to me) he's open to a public option, provided we have a way to pay for it. Cooper said that the argument over the public option misses the main point, which is that we're hemorrhaging cash with huge deficits and unfunded entitlement spending. We are currently $33 trillion (yes, with a T) in the red paying for Medicare (i.e., benefits that are projected in the future but are not yet paid for under the current tax system).
So, our conversation turned to alternative means of payment. Repeal the Obama tax cuts for those making less than $250K a year? Follow Cooper's preferred plan (Healthy Americans Act - Wyden-Bennett) and tax the employer-based health insurance premiums? (These corporate tax deductions cost us about $250 billion a year - should easily cover a public option.)
More after the jump...
In my conversation with Cooper, it became very clear to me that he's not in the pockets of the insurance or drug companies. He is one of those guys who votes his conscience, isn't afraid to piss people off, and knows his stuff. As I've mentioned previously, Cooper teaches the healthcare economics course at Vanderbilt Owen Business School. And he talks quite a bit about ethics - the fact that when we put profits ahead of patients, we're walking down a very dangerous path.
Cooper and I talked a bit about Pope Benedict's recent encyclical (he brought it up, not me) in which Benedict reminded Catholics that "ethical business" can be conducted in a way that serves unjust ends. If profitability does not serve the development of all people, then it is not seeking the good even if it is conducted in an "ethical" manner. Cooper, similarly, has argued that if business school graduates see their job as "creating more suckers" who depend on the product they market, they are not promoting the good, no matter how much people like the product.
Which brings us to healthcare reform. Cooper lamented the fact that misinformation and sensationalism is distracting us from the real debate we need to have. The real debate in healthcare reform is not just about access (we could easily mandate that insurance companies cover everyone and be done with it). The real debate is about how to pay for it in a way that maximizes quality/access while minimizing costs.
Part of the problem that Cooper reminded me of (and Obama repeated the statement yesterday in Grand Junction) is that our pay raises in the U.S. are going to pay for increased healthcare costs. Real wages haven't grown to keep up with inflation. Employer costs for healthcare have increased, but their employees are getting less care for their dollars.
When I asked Cooper for a solution, he pointed to the same thing he's wanted for over two years: a repeal of the post-WW II, employer-based, tax-deductible insurance system. Cooper thinks that we should tax all insurance premiums (small business owners and the self-employed already have to - why not make it equal for everyone?), and then give a tax rebate to the individual taxpayer/household in an amount equal to $15,000 per year in premiums (the average annual premium for a family of four is $12K, so this covers more-than-average). The $15,000 number is negotiable, but you get the idea. The amount of the household income tax write-off would offset the tax you have to pay.
Of course, since we can assume insurance premiums will go up, Cooper suggests that we grow the soft cap to keep up with inflation. He was very careful to point out that he does NOT want to support "Inflation plus 2.5%," which is what the insurance companies want to do. (Insurance companies argue that healthcare costs are going up faster than the rest of the economy. Cooper thinks that costs will stay within the cap, and providers and insurance companies will have an incentive to control costs in order to deliver a product that remains under the cap.)
Cooper and I agreed on the behavioral economics of this. If employees FEEL the costs more (i.e., if they see that their insurance premiums are coming out of their check and are NOT "pre-tax income"), they're going to work to limit them. Consumers typically think that they're getting a bargain if you put a "SALE" tag on an item. But what insurance companies have done is put a "Pre-tax SALE" tag on premiums while continuing to mark-up the cost as they maximize profits.
If you legislate a cap - an amount at which benefits are taxed - then you create an incentive to keep the premiums low. It's in the interest of the insurance company (better product if it's not taxed!), the providers (more people in the insurance plan if premiums aren't taxed), and the consumer (lower premium costs, plus a tax rebate).
I did ask Cooper why he didn't support single payer - the best way to control costs. Cooper argued that too many people will push back against single-payer because it's "government-run", and also said that he supported competition and choice. In response to the "Give me insurance as good as the insurance you have from Congress" statement, Cooper said, "Honestly, I don't use the government system. I just have plain old Blue Cross Blue Shield."
In thinking about ways to pay for the public option, I've thought of another option - why not get rid of the Obama tax cuts that we got with the stimulus plan? I mean, they're nice to have, but isn't it worth paying a little more in taxes to save more money in healthcare costs?
There are ways to pay for this. I appreciate the efforts of Rangel, Pelosi, Waxman, and others (including President Obama) to make sure that the wealthy are paying their fair share. I also think that we should clamp down on the "Cadillac plans" of folks at Gold-in-Sacks (Goldman Sachs) who have $40K in tax-deductible employer-based insurance premiums. ($25K of those Cadillac plans would be taxable - they can still buy them if they want to, but they can't hide behind the antiquated tax code anymore.) But I'm willing to sacrifice a little in order to have a public plan that keeps insurance companies honest and gives me more leverage/bargaining power/options.
Everyone agrees that we should work to eliminate fraud, empower consumers, stop recission, etc. (I even heard Tom Coburn of Oklahoma talking about this today on Meet the Press!) There is broad bipartisan consensus on many of these issues. But if we're serious about the public option, what are we willing to give up for it? What skin are we willing to put in the game?