The Census Bureau reported Tuesday that 15.8 percent of Americans lived in poverty last year, using an alternative method to analyze their numbers provided by the National Academy of Sciences.  This is significantly higher than the 13.2 percent official poverty rate the agency released last month. Since a great deal of the estimated cost of health care reform relies on the old data, what do these numbers have to say about the final cost of the bill?

For starters, this places 7 million more Americans below the poverty line.  18.7% of these are elderly, and will receive Medicare.  The remaining 5.69 million are non elderly.  Under the Senate Finance Bill, anyone earning 133% above the poverty line or below qualifies for Medicaid.  Using the new numbers, this means that at the very least, 5.69 million more people will be eligible to receive Medicaid than Congressional Democrats and the CBO are accounting for.

The CBO estimates, “there would be roughly 14 million more enrollees in Medicaid and CHIP than is projected under current law.”  But the CBO estimate was based on the old census numbers.  If Congress adopts the new methods for rating poverty, that number will increase by at least 5.69 million people. From the report [pdf]: [Read more →]

At my other digs, I pimp out Sen. Ron Wyden and shake my head at the nonsense of Max Baucus and the Democrats.

Yglesias breaks it down: [Read more →]

Tyler Cowen wades through the Baucus proposal.  Several points:

1. CBO scoring is a very useful institution, for purposes of fiscal discipline, but you shouldn’t confuse it with true cost estimates.  Often a negative CBO score isn’t as bad as it sounds and a positive CBO score isn’t as good as it sounds.  The deadweight cost of taxation matters, and we should fear future government insolvency, but at the margin a revenue transfer is simply that — a revenue transfer and not a social cost per se.

For instance a “cheaper” bill often just means that the insurance mandate carries a higher implicit tax.  For some families — I believe in the range of 60,000 for a family of four — the mandate will consume 13% of income as it currently stands.  That’s a big tax increase — yes I will call it that — and it’s not on the super-rich.

This has been one of my concerns as well – and here’s a graph  via Yglesias which illustrates the costs for the middle and lower-middle class of the proposed plan and some comparisons: [Read more →]

The health care debate is ramping up.  We now have a bill going forward in the Senate and one in the House, and pretty soon the twain shall meet.  In the midst of all of this, Senator Ron Wyden is finally coming out swinging. In fact, he has a very smart, very important piece out in the New York Times today which I’d like to excerpt (skip ahead if you want, it’s a long excerpt):

I believe there is a way to work with the present employer-based system to guarantee that all Americans have choices, and I am proposing it in an amendment to the latest Senate health care bill. My amendment, called Free Choice, would let everyone choose his health insurance plan.

It would impose only one requirement on employers — that they offer their employees a choice of at least two insurance plans, one of them a low-cost, high-value plan. Employers could meet this requirement by offering their own choices. Or they could let their employees choose either the company plan or a voucher that could be used to buy a plan on the exchange. They could also simply insure all of their employees though the exchange, at a discounted rate.

All payments that employers would make, whether in the form of premiums or vouchers, would remain tax-deductible as a business expense. Reinsurance and risk adjustment mechanisms already in the bill would balance the costs of employers who end up with disproportionately sick pools of workers, and this would avoid any disruption to existing employer coverage. Any employers that did not offer either their own choices or insurance through the exchange would be required to pay a “fair share” fee to help support the system.

My plan would actually strengthen the employer-based system by making it possible for even more employers to afford coverage than can today. Employers who offer high-quality health insurance to attract first-rate employees could continue to do so. And employees who like the coverage they have could keep it. Those who don’t, however, would be able to shop elsewhere.

According to one estimate, injecting this kind of competition into the employer-based system would save people and businesses more than $360 billion over 10 years. At the same time, it would improve the quality of health care.

Americans could take advantage of this change, or ignore it if they like; it would not be forced on them by government mandate. Ultimately, by empowering people to select the health insurance that makes the most sense for them and their family, we could end up with a system that works better for everyone.

Turns out, also, that the President has recently met with Senator Rockefeller and with Senators Bennett and Wyden at the Whitehouse, which may be a good sign that the President is taking seriously – if not their bill – then at least Wyden’s Free Choice Proposal which he’d like to add to the  Senate bill.  This is a good idea, even though the CBO has given the current Baucus proposal a pass, and Stan Collender thinks it’s fiscally sound.  Wyden’s proposal would help make it even more fiscally sound, not just for the government, but for consumers of health care. [Read more →]

It’s taken me awhile to get to this – mostly because I’ve been (unusually) busy with real life – but I wanted to offer a few  thoughts on Mark’s post on Wyden-Bennett, and particularly his broader issue with liberals and Democrats assuming the worst of conservatives and Republicans.  Here’s Mark in his own words, if you didn’t read the post:

I’m usually one of the more cynical people when it comes to politicians, but in this case the evidence that Republicans would turn against Wyden-Bennett if it came to a vote is pretty weak.  It appears to me that liberals who assume that Republican support for Wyden-Bennett would disappear were it actually pushed are committing the cardinal sin of underestimating their opponents, attributing the worst possible motives to all of those opponents despite clear evidence to the contrary and without any supporting evidence.

I don’t think liberals are underestimating their opponents as much as they are drawing lessons from the past few years of conservative governance.  On issue after issue, conservatives (or, to be more accurate, Republicans) have regularly argued and negotiated in bad faith.  Take the stimulus, for instance.  The Obama administration’s first move in pushing for a stimulus package was to argue from the center.  Tax cuts made up a significant chunk of the stimulus package, and the administration was more than willing to cut money from various provisions, even those – like direct aid to states – which were the most useful.  In return, the administration got a nearly party-line vote against the stimulus, and the charge that Democrats were taking us on the road to fiscal irresponsibility.  Indeed, Republicans have been haranguing the administration about the deficit from the beginning, seemingly oblivious to the fact that it is, in significant part, a legacy of George W. Bush’s presidency.

Looking at the current “debate” over health care, it is abundantly clear that Republicans aren’t actually interested in constructive criticism.  As Andrew Sullivan has recently (and repeatedly) noted, far from attempting a vast overhaul of the health care sector, Democrats are proposing a series of modest reforms aimed at expanding coverage to low-income Americans and reforming the insurance industry.  And as Matt Yglesias has pointed out, there is plenty of room in those proposals for conservatives to make substantive input.  But that’s not at all what we’re seeing.  Honest efforts to reduce costs or raise revenues are met with screeching and accusations of socialism, and innocuous provisions in the bill become fodder for incredibly outlandish claims (the Democrats what to kill your grandparents!).  Republican leaders are actively spreading lies and misinformation, and encouraging their supporters to respond to Democratic outreach with quasi-violent confrontations.

For all of the Republican support that Wyden-Bennett has received, pace Mark, I don’t think the Republican response would be any different if that bill were up for serious consideration.  And I don’t necessarily blame Republicans for taking this approach; politically, it’s in their best interest.  Even a successful bipartisan bill will solidify Democrat gains for at least the next two or three election cycles, and Republicans know that their path back to relevancy is much easier if they can sink a Democratic health care bill.  It’s almost unreasonable to expect them to do anything else.  That said, Mark’s right, it is unfair of liberals to assume bad faith of Republicans.  But in an argument, you have to earn the assumption of good faith, and Republicans clearly haven’t.

TWO UPDATES, SEE BELOW:

A common refrain I keep hearing for why Wyden-Bennett would have no chance of succeeding if it ever came to a vote is that even though it has bi-partisan co-sponsorship, the Republicans co-sponsoring it are merely using their co-sponsorship as political cover since they know it has no chance of actually passing.  Were Wyden-Bennett to actually come to a vote, they argue, not only would no more Republicans vote for it than have already signed on as co-sponsors, but most of the Republican co-sponsors would actively drop off.  As such, goes the refrain, advocacy of Wyden-Bennett is the surest way to guarantee that there will be no health care reform at all. 

I have two problems with this line of thinking, which largely seems to stem from this Ezra Klein post.  When I first read that post awhile back, I thought it made sense, although I thought Klein was ignoring that any remaining Republican support whatsoever would significantly undercut the power of the Blue Dogs to water down Wyden-Bennett in the way they have watered-down HR 3200. 

My first problem with this line of argumentation is its implicit assumption that HR3200, in whatever form it finally passes, would at least be an improvement over the status quo from the point of view of anyone who actually cares about health care reform.  However, as I’ve pointed out before, there are plenty of reasons to believe that it would not be enough of an improvement over the status quo (and would in fact double-down on the single worst element of our health care system) to justify the huge expenses associated with it, particularly at a time when our national debt is already disturbingly high and accelerating by the minute. 

My second problem is that this line of argumentation goes beyond mere cynicism (which I fully support) to the point of automatically assuming the worst of one’s political enemies regardless of whether there is evidence for that assumption.  [Read more →]

I’m not sure how well Freddie and I addressed the central question of our discussion last night, to wit, how to overcome the institutional problems in our representative democracy.  But the discussion about health care alternatives and the lack of significant hope for Wyden-Bennett has gotten me thinking about the role of divided government not only in limiting government (which is a standard libertarian argument for divided government), but also, counterintuitively, in ensuring that changes (whether of the government-growing, government-limiting, or size-neutral variety) that do become law are meaningful.

In the six months that Democrats have had control of the Presidency and overwhelming control of the House and Senate, they have pushed three particularly major pieces of legislation: a stimulus package, cap-and-trade, and health care reform.  In each case, Republican/conservative opposition has been pretty much unified and, uhh, outspoken (Sens. Collins and Snowe notwithstanding).  Also in each case, the resulting legislation has been a huge letdown to liberal wonks and, really, the liberal “base” in general – at best, this group has viewed the legislation as a disappointingly inadequate (if important) step in the right direction, and in some cases has even viewed it as counterproductive (see, e.g., the reaction of various environmental groups to Waxman-Markely). 

In response, liberals have typically been blaming “Blue Dog” Democrats for insisting on watering the legislation down to a ridiculous level, although I’ve also seen attempts to blame Republicans for having no interest in negotiating in good faith such that the only way to pass legislation is to horse-trade with the Blue Dogs.

To a certain extent, I think this finger-pointing is accurate – Blue Dog Democrats with relatively conservative constituencies have very much been at the center of watering down these proposals, or at least adding on various goodies for their constituencies that have the effect of undermining the legislation’s purpose.  Similarly, there would be little need for horse-trading with the Blue Dogs if Republicans had any interest in passing legislation that would fix the problems these piece of legislation are supposed to fix – that’s not to say that the legislation would meet the liberal ideal if Republicans were serious about these problems, just that it would better reflect good faith ideas about how to correct those problems.  So, if Republicans were serious about health care, for instance, the result wouldn’t be the liberal ideal of single-payer, but it would probably be something along the lines of Wyden-Bennett, which just about everyone agrees would be a meaningful reform that would solve a lot of our system’s biggest problems. 

At the same time, though, this finger-pointing at Blue Dogs and Republicans misses something pretty important – no matter who’s in power, there are always going to be squishy centrists on the side of the majority who have constituencies that need to be bribed and/or appeased in any reform legislation.  Similarly, whenever you have single-party control of government, the opposition party will have no real reason to do anything other than be the “Party of No” – if a reform achieves its goals, the party in power will get all the credit, ensuring the party out of power falls even further out of power; if the reform fails, the party out of power will be able to heap all the blame on the party in power – but only if the party out of power almost uniformly opposes the legislation. 

[Read more →]

[N/B: See below for a significant update/clarification]

One of the criticisms levied at the alternative health care proposals discussed by E.D. and I over the last few weeks has been that these proposals, which rely heavily on vouchers and/or subsidies, are irrelevant to the debate that is actually taking place.  Yet this is not really true – in fact, as it turns out, these proposals are quite similar to Senator Wyden (D-OR)’s bipartisan proposal, which has 14 co-sponsors in the Senate.  A good summary of this proposal is here (Wyden’s proposal appears to rely on tax credits, as commenter Willybobo has advocated, rather than vouchers, but the premise is the same).  A better discussion that places Wyden’s proposal and the more-dominant “public option” proposal in context is here.

Yet this proposal, despite bi-partisan support, has exactly zero chance of going forward.  It has, so far as I can tell, been largely ignored by grassroots advocates of health care reform, who have largely jumped on the “public option” bandwagon, however flawed that legislation will be if it is to become law. 

What is so particularly strange about this is that the legislation that is most likely to actually pass will ensure that our health care system places even more emphasis on employer-based health care coverage – even though the employer-based nature of our system is the single biggest cause of that system’s problems. 

For all the comparisons between European and American health care, the employer-based nature of the American system is the one element that both sides of the higher echelons of this debate seem to ignore consistently.  Yet it is the one element that actually distinguishes the American system from just about any system in the world – and not in a good way. 

As Wyden points out in the Slate article above, the employer-based system traps people in jobs that they would otherwise leave, which reduces labor flexibility even as the capacity for employer mobility increases at breakneck speed.  Beyond that, as I’ve tried to point out on numerous occasions and as our friend Kip recently pointed out, the employer-based system ensures that the consumer and the customer are two very different entities with two very different sets of interests.  Meanwhile, the leading proposal adds ever-more complications to the already too-confusing tax code to raise money to pay for the additional expenditures – and, importantly, these complications are not just as a result of the surtax on the wealthy.

[Read more →]