Posts Tagged ‘President Obama’

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$900 Billion is $900 Billion–or is it?

Monday, December 28th, 2009

In his speech on September 9th, President Obama surprised listeners by declaring that health reform would not cost more than $900 billion. The President also committed to ensuring that the reform was fully paid for and would not add to the deficit. Prior to this speech, many independent analysts estimated the cost of reform at $1.2 trillion or higher. It was not clear then, nor is it clear now, how the administration arrived at the $900 billion figure. Nonetheless, it quickly became the spending ceiling for both the House and Senate as they worked to craft legislation.

Now as passage of Senate legislation approaches, differences in how the House and Senate calculate that $900 billion loom large and could have a dramatic affect on how much financial protection a final bill provides to low- and moderate-income families. The House calculated $900 billion as the “net cost” of the coverage provisions, while the Senate calculated $900 billion as the “gross cost.” The gross cost is the total cost of Medicaid and CHIP expansions, subsidies for individuals, and small business tax credits. Subtracting revenue inherent in reform (i.e. the revenue generated by the employer and individual responsibility payments) produces the net cost.

To illustrate the difference between net and gross, imagine that you are shopping for a jacket and you have decided it cannot cost more than $100. You go to the store and see a jacket that has a price tag of $120 (gross cost). There is also an in-store coupon for $20 off. According to the Senate, you could not buy the jacket because its price exceeds your $100 limit. According to the House, you could buy the jacket because with the coupon you would not spend more than $100 (net cost).

Why does it matter?
Bringing it back to health reform, according to the Congressional Budget Office, measured on a net basis the House bill provides $891 billion in coverage expansion while the Senate bill provides only $614 billion. On a gross basis the House bill costs $1,052 billion while the Senate bill costs $871 billion. In more human terms, the House bill provides greater premium assistance, especially for low-wage workers who make up the bulk of the uninsured; better benefits for nearly everyone who is eligible for a subsidy; and starts expanding coverage a full year earlier than the Senate bill. If it is agreed that $900 billion refers to the net cost of the bill, there is plenty of room under the $900 billion ceiling to improve the affordability provisions offered in the Senate (see table). But, if $900 billion refers to the gross cost as in the Senate version, then there is very little room for additional improvements even though many in the Senate agree that improvements are needed.

Gross and Net Spending: House vs Senate

Gross Spending
(in billions)

Room for improvement under $900 billion cap

Net Spending (in billions)

Room for improvement under $900 billion cap
House

$1,052

-$152 billion

$891

$9 billion
Senate

$871

$29 billion

$614

$286 billion

Who can resolve the difference?
Only President Obama knows for sure what he meant when he laid out the number $900 billion. His endorsement of the House legislation appears to suggest that he finds the House approach acceptable, but whether that approach prevails in conference remains to be seen. Low- and moderate-income families have a lot riding on the outcome.

p.s. The Health Reform Insider is taking a much-needed break this week. We’ll be back next Monday with post-Senate passage/House-Senate merger news and analysis. Happy New Year!

- Michael Miller, director of strategic policy

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Posted in Health Reform Insider, national health reform, Uncategorized | No Comments »

The New Nattering Nabobs of Negativity

Thursday, December 17th, 2009

So Howard Dean has joined the ranks of liberals piling on health reform and encouraging lawmakers to toss in the towel. (See Kos and Firedoglake for more reform-flogging from the left.)

Health reform does not succeed or fail by the public option, despite what Dean and others seem to suggest. This is not to say that the public option wasn’t important—at least as it was originally imagined (see Michael’s post here.) But we and others like Jonathan Cohn have pointed out the success of reform ultimately depends on strong subsidies, insurance reform and improvements in care delivery—things that are still in the bill.

Perhaps it’s because they hitched their wagons so closely to the Obama’s Technicolor campaign and the ’08 election that Dean, Kos and Co. feel such betrayal in the real-world policy give and take happening in the final stretch of health care reform.  And I’ll admit, it’s easy to see how eight years under the Bush administration could lead one to believe that everything is a black-white issue.

But that kind of thinking—a rugby-like mentality in which health reform is a game with a scoreboard—fails both the spirit of reform and the work that’s been done.  By dismissing health reform with such invective, Dean, Kos and the choir of liberals singing their tune haven fallen to the very same faulty syllogistic thinking they shun the “teabaggers” for: Giving any ground is akin to surrender and defeat, and the yield of such defeat must therefore be waste.

But it’s not.  It’s important to see how far health reform has come, within a year of an administration for whom reform was nearly always a dirty word. If, under the Bush Administration, we could have gotten any one of the things that are in the reform packages now – federal matching funds for all low-income people, say, or a ban on pre-existing conditions exclusions – the champagne would have flowed on the Left bank.  But now, the public option is out and folks are headed for the hills.

Far from the “so-called reform” Kos rolls his eyes at, the improvements this bill will make are real: Expanded coverage to hundreds of thousands of people who now go uninsured, critical insurance reforms that will protect American families from losing coverage and medical debt, subsidies to help people buy coverage who can’t afford to now, and innovations in the way the systems delivers and assesses care. Yes, it’s flawed. It doesn’t give low-wage workers help and health security fast enough, for instance. But it gets people help, and binning the whole thing and starting over leaves those people stranded.

Health care reform may have been a presidential campaign promise of Obama’s, but it wasn’t by bashing insurers that the candidates won support for health reform – it was because they were offering to help people who desperately need it.  Health care, despite what some of the news networks insist, is not a Democratic or Republican issue. It’s about helping people. It is about starting to mend a really broken system, and beginning to re-imagine how a country takes care of it’s sick and frail. To try things out and see what works. And it’s sure not a panacea. But when was it ever going to be?

All victories are partial. The Voting Rights Act was a victory by any standard, but it didn’t stop racial discrimination in the U.S. – it made way for a succession of other, smaller victories that helped turn back systemic racism. Passing Medicare was a victory – but not all at once. Coverage for the disabled, and the drug benefit, came later, and this bill continues those efforts to make the program work better. Despite the suggestions of these critics, it’s near impossible to get a project as complex and all-encompassing as reform right on the first try. But we need to make a first try, and the Congress recognizes that.

The flaws and compromises in the health reform proposals are not reason to dismiss them but to instead commit to the process of reform and the act of helping people. We should enact the best bill possible, then start working to make it better. Those bent on merely measuring the gap between Perfect Health Reform and what the Congress is working on now are selling their country short.

–Kate Petersen, Health Policy Hub

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Posted in national health reform, prescription drugs | 1 Comment »

Harry Reid’s Flying Circus

Monday, December 7th, 2009

Oops! Read the Public Option Post-Mortem and Dec. 14 Health Reform Insider here.

And now for something completely different, Senator McCain proclaims himself a defender of Medicare

The first week of Senate debate has seemed, at times, more like Monty Python satire than serious debate. Like when Sen. John McCain took the Senate floor to decry proposed Medicare savings in the bill. Apparently, McCain forgot his own proposal as a presidential candidate to make much deeper cuts. The Medicare debate highlights the extent to which the reform debate has become much less about health care and much more about partisan positioning. The main purpose of the McCain amendment appears to have been to afford Sen. McCain the opportunity to record a “robo-call” message casting Democratic politically vulnerable Senators as opponents of Medicare.

Perhaps as a sign of the significance Politico attaches to the floor proceedings, the Capitol Hill online news rag’s weekend health reform coverage focused more on President Obama’s meeting with the Democratic caucus and whether Sen. Baucus did something inappropriate by recommending his girlfriend for a job as a U.S. Attorney than on anything happening on the Senate floor.

Health Reform Punching Bag
It’s a good thing Democratic Majority Leader Harry Reid is a former boxer. He’s going to need everything he learned in the ring to keep health reform from becoming a giant punching bag for opponents while he works to corral 60 votes. The Republican strategy seems to be to throw everything but the kitchen sink up against health reform and hope some of it sticks.

The Democrats’ counterstrategy is to file and debate their own “message amendments” meant to shape the news coverage and allow members, especially those facing difficult reelection fights, to champion popular causes. Examples include an amendment sponsored by Sen. Michael Bennet (D-CO) to ensure that there would be no cuts to Medicare benefits (passed 100-0), and an amendment by Sen. Blanche Lincoln (D-AR) to cap the tax deductibility of pay for insurance company executives (which fell short of passage by four votes, 56-42).

About those 60 votes
We’ll see a short break from these posturing and “message amendments” today as the Senate tackles abortion, one of the two main issues that appears to be hampering its ability to lock down 60 votes for reform (the other being the public option). Senator Ben Nelson (D-NE) has said that he would not support reform legislation unless it included language restricting abortion similar to the language inserted in the House by Michigan Congressman Bart Stupak. But the Senate does not seem likely to approve an amendment that mirrors the House provision.

If Reid loses Nelson’s vote, he will need to rely on the pro-choice but anti-public option Republican Senators from Maine in order to get the 60 votes he needs. In the process, he could possibly pick up the vote of Sen. Lieberman, who has said he would support a filibuster if the public option was included in the Senate bill, but Reid risks losing support from progressives who feel that the “state opt-out” provision in the Reid bill is already too weak. A new public option proposal could emerge from negotiations between liberal supporters, conservative opponents and the White House sometime this week.

Two issues that divide the Democratic caucus but are not likely to get resolved in the Manager’s Amendment are: How far to push the drug industry for savings, and how best to structure health coverage for children.

On the drug issue, many Democrats believe that the deal Senate Finance Chair Max Baucus and the White House struck with PhRMA lets the industry off too easily. They want to wring additional savings from the drug companies and use the money to close the Medicare Part D “donut hole.” Other Democrats fear, though, that if they push the drug industry too hard, the major investment the industry has been making in supporting reform will flip to opposition and could sink the bill. Even if the Senate decides to continue the kid-glove treatment for the drug companies, they will have to wrestle with the issue again because the House takes a more aggressive approach.

The children’s issue mirrors the long-running debate on affordability in that it is not so much about principle as about cash. Both Senators Casey and Rockefeller plan to file amendments aimed at making sure that kids don’t lose benefits they have now. While the Senate supports enhancing coverage for children, the amendments have not yet been scored by CBO, and it is unclear if they are budget neutral or will require an additional revenue source.

As soon as Reid gets 60 votes worth of support on these two issues, watch for a rapid increase in the pace of Senate debate, with many of the Senate Democrats’ main concerns getting wrapped into a final Manager’s Amendment.

Assuming all goes according to plan…
The Senate will conclude their debate prior to Christmas, leaving the House, Senate and White House to work through the many differences in the respective versions. Here are the key ones to watch:

Financing
The House relies largely on progressive income taxes to finance health reform, while the Senate proposal taxes health benefits. Interestingly, this chasm may be the hardest one to bridge, though it hasn’t attracted nearly the press coverage of other tough issues.

Affordability
The House does much better for low-income people, while the Senate, at least on premiums, does better for moderate-income folks—though in general, the House provides better benefits. The obvious solution is to take the best of both worlds, but the challenge goes back to the financing debate: Where will the money come from?

Exchanges and Insurance Regulation
In most ways, the House bill establishes tighter oversight and more consumer-friendly regulation of the insurance industry, including less scope for discrimination against older subscribers, or opportunities for the back-door reintroduction of the practice of charging people more when they are sick. The House also gives the exchange more power to negotiate with insurers and exclude plans from the exchange if they do not offer good value.

Abortion
As of this writing, we don’t know the outcome of the Senate debate, but odds are against the Senate adopting the House language. The question for conferees is whether there is anything in the middle that both sides can live with.

Public Option
After the Senate gets through wrangling over the public option, members will have to take the matter up again in the House, where support for a public plan runs much deeper. A number of  progressive members of Congress are on record saying they won’t vote for a bill without a public option, and advocates are working to hold them to their word.

Employer Responsibility
The House includes a “pay or play” provision, while the Senate charges employers penalties only if their employees actually access subsidized coverage.

Undocumented immigrants
Though relatively few undocumented immigrants could actually afford to pay the full cost of an insurance policy, the Senate bill prohibits them from buying insurance through the exchange, even with their own funds. During the House debate, members of the Congressional Hispanic Caucus told Speaker Pelosi that they would not vote for a bill that contained such a restriction. If the same holds true for a conference report, the Senate may have to back down.

–Michael Miller, director of strategic policy

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Posted in Health Reform Insider, national health reform | 2 Comments »

Worth the Wait

Thursday, September 10th, 2009

For days, the tension has been mounting over what President Obama would say when he addressed the nation on health care.  Last night, with an eloquent prime time address to a joint session of Congress, the President powerfully rebooted the debate on health care.

The President challenged critics to engage in a more civil and fact-based discourse – a challenge that many Republican Congressmen failed to meet.  In an unusual breach of protocol, Republicans sometimes booed the President, and one Republican Congressman even shouted out “you lie!”  In his response to the President’s speech, Congressman Boustany reiterated unsubstantiated charges of “government takeover” and “rationing” that the president had refuted just moments before.  The net effect of all of this was to make Obama seem more reasonable and unflappable – utterly Presidential – in the presence of some of his more vociferous (and less self-possessed) critics.

Coming into the evening, the President had to achieve several big goals.  He needed to reassure a nervous public, explain what he was proposing, and reenergize his base both in Congress and in the nation.

President Obama did that and more. He came across as both passionate and calmly reasoned – again, a sharp and welcome contrast to the wilder critics that have dominated the cable news media.  At same time, the President staked out the high ground in the debate by reaching out and embracing ideas from Republicans.

He also successfully navigated the treacherous political waters around the “public option.”  While he made a clear case for a public option and took on the scare-mongers directly, he also strongly cautioned the left against making the public plan a litmus test for reform.

President Obama did not shy away from engaging with opponents.  He directly addressed the most common charges made against reform, giving special attention to issues affecting seniors.  He clearly restated his commitment to allow people to keep the coverage they have, to protect the Medicare program and to make sure health care reform does not add to the deficit.

Recent polls show that most Americans are confused by the debate. After last night’s speech, the key elements of reform–including insurance reforms, individual and employer responsibility and sliding scale subsidies—should be much clearer to the public. The President also reiterated the need for an exemption for those who still could not afford coverage. However, he did not engage on a crucial question for many low- and moderate-income households: Just what constitutes affordable coverage?

The President’s closing words speak for themselves:

That large-heartedness — that concern and regard for the plight of others — is not a partisan feeling.  It’s not a Republican or a Democratic feeling.  It, too, is part of the American character — our ability to stand in other people’s shoes; a recognition that we are all in this together, and when fortune turns against one of us, others are there to lend a helping hand; a belief that in this country, hard work and responsibility should be rewarded by some measure of security and fair play; and an acknowledgment that sometimes government has to step in to help deliver on that promise….

I understand that the politically safe move would be to kick the can further down the road — to defer reform one more year, or one more election, or one more term.

But that is not what the moment calls for.  That’s not what we came here to do.  We did not come to fear the future.  We came here to shape it.

(You can read the full remarks here.)

–Michael Miller, Director of Strategic Policy

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