Health Care Reform: No, Wait! This is What I Really Want!

I try not to comment on purely political issues, but sometimes they are just too infuriating.

Over the last few days, Max Baucus has been leaking “his” health care proposal, which should be made public. Regular readers will know I’m no fan of Max Baucus, whose main goals seem to be killing the public option (I know, it’s not as big deal as it’s made out to be, but it isn’t irrelevant) and cutting subsidies to poor people. But supposedly, the whole point of the Baucus/Group of Six approach was that it would result in a bipartisan bill that could clear the Senate. The tradeoff was very simple; a plan that isn’t as good as it could be, but one that could pass.

Yesterday, The New York Times reported two of the three Republicans in the Group of Six, Charles Grassley and Michael Enzi, are against the Baucus proposal, and even Olympia Snowe wants changes.

The Republican demands:

  • Not shifting some of the increased Medicaid costs onto states. To be clear, the federal contribution to the new Medicaid costs will be higher than the federal contribution to existing Medicaid costs; Medicaid is already jointly funded. Still, though, this seems like a reasonable objection to me, since it is just hiding part of the cost of the bill by shifting it to the states.
  • No (or lower) new fees and taxes on “health insurance companies, clinical laboratories and manufacturers of medical devices,” which are part of Baucus’s plan to pay for subsidies (which he has already cut relative to the other bills). Again, this is reasonable as long as the Republicans have some other way of paying for the subsidies; if they just want to cut the subsidies, that sounds like a tactic to kill the bill altogether, because without significant subsidies health care is simply unaffordable for the middle class and the whole thing breaks down.
  • A prohibition on using federal subsidy money for abortions. This is a clear revival of the culture wars. The only way I could see to implement it would be to say that anyone who gets a subsidy cannot get an insurance-funded abortion – which means that poor and middle-class people can get abortions if they have employer-based coverage (which is subsidized by the employer health insurance tax exemption), but not if they have subsidized individual coverage (which is subsidized directly). How that is a good policy outcome escapes me.
  • A five-year waiting period before legal immigrants can receive subsidies. More culture wars. We should want legal immigrants. Legal immigration is one reason we do not have the looming demographic problems of Japan and Western Europe. A large and increasing proportion of the graduate students at American universities are foreign citizens; we should want them to stay here. My parents are immigrants. Simon is an immigrant.
  • No individual mandate, according to Grassley. Where has Grassley been the last three months? An individual mandate is the glue that holds all of reform together – because if private insurers can’t charge higher premiums to the old and sick, they need the young and healthy to come into the market. A health care system has to have a redistributive component, or it will be simply unaffordable to the people who need it.
  • Olympia Snowe also has an idea about allowing private insurers to offer national plans.

Sorry that took so many words. Because my main point isn’t that these are stupid objections – only some of them are – but this: what were you doing for the last two months? These are not new issues, or they shouldn’t be. Grassley is criticizing Baucus for pushing forward according to some “Democratic” timetable when they need more time. Time for what? It’s not like there is new information coming in.* Grassley is really using one of the oldest negotiating tactics in the book – drag things out, pretend to go along, wait until the other side is running up against time pressure, and then escalate your demands. And now Baucus has nothing to show for his supposed third way of bipartisan negotiations.

Either Grassley is using Baucus to (a) pretend he is interested in a bipartisan bill so he can (b) blame the breakdown on Democrats, forcing them to (c) try to pass the bill on their own, which is more difficult than it would have been in July. Or Baucus … Baucus has some trick up his sleeve that I can’t see that will make him come out of this looking good. (I’m no expert on Congressional politics, so he very well might.) Or the entire Group of Six is being played for fools by the rest of the Republicans. Check this out, also from The New York Times:

“Most Republicans have been deeply unhappy with the Democratic health care proposals so far, and Republicans on the Finance Committee were said to be bracing for two possibilities: a partisan proposal that they were going to oppose, or a bipartisan proposal that they were going to oppose.

“The Republican leader, Senator Mitch McConnell of Kentucky, said he would be surprised if any Republicans ended up backing the proposal by Mr. Baucus.”

Well, there you have it. The one thing that makes me hopeful is that Baucus’s reputation rests on his getting something out of his committee, so I expect he will do it one way or another, whether it is with zero or one Republican vote. But a massive raft of concessions to get Olympia Snowe’s vote (and maybe lose some liberal Democrats) doesn’t sound to me like a brilliant legislative tactic.

* Actually, there is new information, and it isn’t good. There were the Census figures on the uninsured and the decline in employer-based coverage, and now there is the new Kaiser Family Foundation study showing that, once again, insurance costs rose much faster than inflation overall. (We wrote about the previous version of that study here.)

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About James Kwak 133 Articles

James Kwak is a former McKinsey consultant, a co-founder of Guidewire Software, and currently a student at the Yale Law School. He is a co-founder of The Baseline Scenario.

Visit: The Baseline Scenario

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