Health Care Moving to the Front Burner

After all the talk this Spring about health care reform, it looks as if the battle will be joined early next month and contrary to conventional wisdom they appear to be going for broke.

Senator Ted Kennedy is leading the charge. Reports are that the plan closely resembles the health care reforms initiated in Massachusetts three years ago. From the WaPo here are some brief elements:

In many respects it adopts the most liberal approaches to health reform being discussed in Washington. Kennedy, for example, embraces a proposal to create a government-sponsored insurance program to compete directly with existing private insurance plans, according to one senior adviser who was not authorized to talk to reporters.

The draft summary also calls for opening Medicaid to those whose incomes are 500 percent of the federal poverty level, or $110,250 a year for a family of four.

Meanwhile, President Obama is mobilizing a grass roots lobbying effort. From Politico:

President Obama exhorted his supporters on a conferencecallThursday to help lobby for hishealth careplan,warning, “If we don’t get it done this year, we’re not going to get it done.”

Obama, speaking from Air Force One en route from California to Washington, thanked his volunteers but echoed a procession of aides in saying that their work last year only provided the opportunity to effect change.

And passing health care, he said, would be critical to his success.

“This is our big chance to prove that the movement that started during the campaign isn’t over,” Obama told members of “Organizing for America,” the political organization devoted to advancing his agenda. “We’re just getting started.”

All well and good but so far no indication of how they intend to pay for all of this. It’s pretty obvious that the money they intended to raise via cap-and-trade in not going to materialize. It’s far from certain that any bill is going to make it through this year and even if it does revenues are going to be minimal as the allocations will not be auctioned.

The other pot of money that could be tapped is the employer health tax exclusion. This is the tax deduction that your employer gets to take for paying for your health insurance. Estimates of potential revenues that could be derived from eliminating the exclusion run up to $300 billion per year. The problem is that any reform involves taking money away from current recipients. Perversely, Obama’s union supporters adamantly oppose any changes in the exclusion that would alter their health care benefits. They all want health care reform but nobody want to pay for it. (Ezra KIein has an excellent analysis of the exclusion. Here’s the link).

This topic is going to dominate the summer. It’s probable that Kennedy’s plan gets pulled back towards the center but I also think it’s equally probable that something gets done and that it’s more comprehensive than most suspected it would be. The opposition seems to be AWOL or at best bereft of any meaningful counter proposals.

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About Tom Lindmark 401 Articles

I’m not sure that credentials mean much when it comes to writing about things but people seem to want to see them, so briefly here are mine. I have an undergraduate degree in economics from an undistinguished Midwestern university and masters in international business from an equally undistinguished Southwestern University. I spent a number of years working for large banks lending to lots of different industries. For the past few years, I’ve been engaged in real estate finance – primarily for commercial projects. Like a lot of other finance guys, I’m looking for a job at this point in time.

Given all of that, I suggest that you take what I write with the appropriate grain of salt. I try and figure out what’s behind the news but suspect that I’m often delusional. Nevertheless, I keep throwing things out there and occasionally it sticks. I do read the comments that readers leave and to the extent I can reply to them. I also reply to all emails so feel free to contact me if you want to discuss something at more length. Oh, I also have a very thick skin, so if you disagree feel free to say so.

Enjoy what I write and let me know when I’m off base – I probably won’t agree with you but don’t be shy.

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