THE TREATMENT MARCH 18, 2010
Democrats have submitted the final draft of health care reform. It should get a good grade.
After weeks of negotiation, they have agreed upon a set of amendments to the Senate health care bill. The changes mean the package as a whole will cover more people, and save more money, than the Senate bill would have originally. House Democratic leaders are saying enactment would produce biggest deficit reduction act in 17 years. House Majority Whip James Clyburn described himself as "giddy."
The Democrats had to confront some tough trade-offs, too. And the amendments reflect that. In order to satisfy Congressional Budget Office accounting standards for projections after 2020, they had to accelerate a tax on benefits and pull back on financial assistance for middle- and low-income Americans for later years. Still, those sacrifices have to be weighed against the other improvements the amendments make, not to mention the lawmaking opportunity it creates.
The amendments should satisfy the parliamentary requirements of reconciliation, ease the anxieties of nervous Democrats, and clear the way for a decisive House vote this Sunday--possibly at high noon.
If the House votes yes, health care reform will be ready for presidential signature. That is, it will become a reality.
Here is how the amendments would alter the Senate bill, based on multiple sources and a reading of the just-released CBO report:
- Produce more deficit reduction, so that the package as a whole saves government $130 billion in the first ten years and $1.2 trillion in the second ten years.
- Provide more generous subsidies to middle-income Americans, at least for the first few years of implementation.
- Provide health insurance to an additional 1 million people, so that 95 percent of the population would have coverage by the time the bill is fully implemented
- Close the donut hole in the Medicare drug benefit, so that seniors get more assistance buying prescription drugs.
- Delay imposition of the benefits tax for all workers, rather than just those with collective bargaining agreements.
- Apply consumer safeguards and higher standards for financial protection to more private plans; the Senate plan had a "grandfathering" clause that would have effectively exempted many insurance policies from some regulation.
- Eliminate the Cornhusker kickback, so that all states get the same assistance on Medicaid
- Require the wealthiest Americans to pay Medicare taxes on non-wage income
- Boost Medicaid payments to primary care physicians
So what were the difficult trade-offs? Democrats dropped a proposal to give the federal government power to review insurance rates, because the Senate parliamentarian indicated he would rule such a proposal outside the bounds of the reconciliation process. It's a popular idea, though, and Democrats could always introduce it as a stand-alone measure.
Of more significance, perhaps, are additional changes to the benefits tax and subsidies. The Democrats had hoped that, by tapping other revenue sources, they'd have enough money to offer middle- and low-income people even more financial assistance when they buy insurance. But parliamentary rules and accounting conventions for the CBO got in the way. In order to live within those constraints, Democrats made changes in the second decade of the plan. The tax on benefits will grow faster than they had hoped, while the subsidies will grow more slowly.
Settling this issue was among the most difficult part of negotiations over the last few weeks. But fiscal hawks should be pleased with the outcome. CBO basically told the Democrats to make worst-case assumptions about government spending and plan accordingly. They did. Liberals, in turn, can be pleased that the new plan offers more assistance in the early years. And while the later years are another story, there's time to adjust for that. Besides, this bill actually covers more people than the Senate bill did on its own.
So how will this play out with the Democratic caucus? To follow progress, as undecided members indicate how they vote, I highly recommend David Dayen's whip counts at FireDogLake. It's by far the best accounting you'll find on the web, although it's worth noting that both administration and congressional sources say House Democrats are just five to ten votes short of the 216 majority they need.
* Why did the parliamentarian and CBO requirements force Democrats to make these changes? The Democrats are passing these amendments through the budget reconciliation process and, under the rules, such bills cannot raise the deficit in any year of implementation, for two decades. And the baseline for that comparison isn't what government spending would be under today's law. It's what government spending would be if the Senate bill becomes law. Or, to put it more simply, with the amendments reform would have to save even more money than it would without them. But CBO projections for the second decade aren't very accurate; the models just aren't that good. In order to certify that the amendments don't inflate the deficit, CBO said the projections must show savings that are larger its margin of error--i.e., a lot of money.
Update: My original draft said "passing grade" in the first paragraph. Apparently people took that to mean I feel ambivalent. I don't. I simply meant passing as opposed to failing. To clarify things, I've revised it to say "good grade." Also, I've added some other details of the bill, including the boost in Medicaid payments to primary care doctors.
Finally, we're likely to learn a lot more about the bill in the next twenty-four hours, as analysts, lobbyists, and journalists go through it line-by-line. There will be surprises and, undoubtedly, some of them won't be good. So this is not the final word on the plan, although it should be pretty close to it.