OurFuture.org Blogs: Jonathan Walker

Death By Hissy Fits Continues

Jonathan Walker — Tue, 15 Sep 2009 20:32:50 -0700

A month ago I wrote about how Grassley and the rest of the Republican party were trying to kill reform one childish hissy fit at a time. It has proven surprisingly successful, since Chairman Baucus has been rewarding them with surrender each time.

The pattern has continued with Rep. Wilson's rude outburst being rewarded with a provision to bar illegal immigrants from buying health insurance even if they are willing to fully pay for it. This policy is just not cruel and expensive (we all end up paying for illegal immigrants going to emergency rooms because we don't allow them to pay for their own care by buying health insurance), but it is also terrible political optics. Working class Americans will be forced to buy insurance or pay huge fines but illegal immigrants will not.

With a Finance Committee bill expected tomorrow, Senator Grassley and Enzi have moved the goal post again. The New York Time is reporting that Grassley is now opposing an individual mandate that he has previously supported for months,

The committee documents show that Mr. Grassley has reservations about this approach. He believes that “the individual responsibility to have health coverage should be reconsidered and replaced with a reinsurance policy to ensure that affordable health coverage is available to everyone in a voluntary system, with a lower overall cost for the package,” one document says.

Hoping to capitalize on Obama's and Baucus' willingness to give in on anything in order to pass something labeled “health care reform,” the AHIP is going for the double jackpot. No sooner than did prominent Democrats signal they might forgo their only idea which could rein in health insurance company profits (a strong public option), the AHIP switched to fighting to protect their favorite cash cow, Medicare Advantage. Our current Medicare Advantage program may have the dubious distinction of being the biggest and most wasteful form of corporate welfare in the country.

Even with all but maybe two Republican senators likely to oppose Baucus' bill, he has decided to still include all the terrible compromises he made to win their support. Grassley has proven himself to be maybe the greatest negotiator in Senate history. He convinced Democrats to waste valuable months and adopt many ill-conceived compromises, without needing to risk voting for the final product.

What is at stake here is even more important than health care reform. If Obama and the Democrats allow themselves to be rolled, they will never be feared or respected by congressional Republicans or the special interest groups. Obama should demand that 48 hours after the Baucus' bill is released that a majority of Senate Republicans publicly endorse it, or it will be revamped to reflect his original uncompromised proposal.

Negotiation requires both carrots and sticks. If Democrats pass a bill containing all the awful Republican demands with almost zero Republican support, they will doom any hope of future good faith dealing and real political discourse. The Republicans and special interests will know that if they throw a loud enough hissy fit Democrats will accept their demands without Republicans needing to risk anything by voting for compromise. Giving in now assures “death panels” and “you lie” will become the modis operandi of the Republicans party. If Obama does not stand up to declare a willingness to pass a good, Democrat-only bill, it is going to be dark, loud, shrill, and depressing next three years.

Crossposted on The Walker Report

Why Do Republicans Want Illegal Immigrants To Get Jobs Instead Of Americans

Jonathan Walker — Mon, 14 Sep 2009 19:24:51 -0700

To make the current health care reform proposals work there must be some form of an employer mandate to provide health insurance. If there is not one, companies would have a strong incentive to drop coverage knowing the government will help their employees get insurance.

The easiest, best, and simplest way to create an employer mandate is to charge companies a flat fee if they don't offer health insurance. The fee could be some percent of payroll or a set fine multiplied by the number of employees at the firm.

The Republicans don't want a simple employer mandate and instead are demanding it take the form an extremely complex and dysfunctional “free rider” provision. Senator Baucus has given in to their demands and is promoting a byzantine free rider provision. Instead of penalizing companies for not offering health insurance, it would only penalize companies for each employee they have that gets tax credits to help afford insurance on the new exchange. Not only would this idea be a bureaucratic nightmare to enforce, it would provide a powerful financial incentive to only hire people who don't get tax credits to buy individual insurance. This group includes spouses whose partners get good employer health insurance and, of course, illegal immigrants.

Baucus has made it clear that legislation is not going to allow undocumented workers to get tax credits to help afford health insurance. Since they can't get tax credits to buy insurance, employers who hire illegal immigrants won't face any penalty for not offering health insurance. The free rider provision championed by Republicans will provide another large financial incentive to hire illegal immigrants instead of American citizens.

After years of demagoguery from Republicans on the issue of illegal immigration, I'm left wondering: Why are Republicans (and Max Baucus) fighting so hard to encourage employers to hire illegal immigrants instead of working class Americans? The other important question is, of course, are Democrats so afraid of passing a bill without a few Republican votes that they would embrace such a clearly dangerous and stupid idea?

[Another Note: The Republican backed free rider provision would only penalize employers if their employees get tax credits on the exchange, but not if they are on Medicaid (according the the current framework). Medicaid would cover everyone making under 133% of the federal poverty level ($14,404 a year for individuals). Paying an employee one dollar more than $14,404 could increase the cost of employing them by thousands of dollars. The Republican/Baucus free rider provision not only encourages the hiring of illegal immigrants, but also encourages businesses not to pay Americans more than $14,404 a year.]

Crossposted on The Walker Report

CBO: Public Option Would Reduce Premiums Across The Board

Jonathan Walker — Sat, 12 Sep 2009 10:38:46 -0700

The CBO recently published a new letter on health care reform. They were asked to evaluate the impact of the weak (level playing field) public option in the Senate HELP committee's bill. Their conclusion was that the competitive pressure from the public option “would probably lower private premiums in the insurance exchanges to a small degree,” and with a public plan in the exchange “the costs and premiums of competing private plans would, on average, be slightly lower than if no public plan was available.” By reduce the cost of buying private insurance on the exchange, a public plan, “would tend to lower federal subsidy payments through the exchanges.”

It is important to remember that the premimums for an average health insurance plan for a family of four is $13,000 a year. Even reducing the cost by a very small 4% would saving a family $520.

The benefits of the public option would not be restricted to just the minority of people who choose to sign up for it. The public option would also reduce premiums for those choosing private plans. The public option would also reduce the overall government cost of health care reform.

Progressives are not fighting for a public option for some purely ideological reason. They are fighting for it because Congress' own budget office concluded that even a weak public option would reduce the cost of health care reform and would save millions of Americans billions of dollars on their health insurance premiums, regardless if they select a private or public plan. A public option is both a smart and a very popular idea.

Crossposted on The Walker Report

Conrad's Co-ops Are No Compromise Because They Are Designed To Fail

Jonathan Walker — Fri, 11 Sep 2009 04:57:40 -0700

The problem with Conrad/Ross' state based co-ops idea is not just that co-ops have proven to be a mostly unsuccessful model for health insurance. The real problem is that they are purposely designed to fail. Conrad wants there to be 51 co-ops (50 states plus DC), and he would restrict the co-ops to only offering plans to the individuals and small businesses using the new health care exchange (roughly 10% of the population). According to Conrad's own admission a health insurance co-op needs a minimum of 500,000 members to be able to negotiate competitive rates.

Using Conrad's own 500,000 member threshold, even if every single person using the new exchange joined a new state based co-op, over half the states in the country would not have a sufficient population to create a competitive co-op. Using a more reasonable assumption that as many as one fourth of individuals on the new exchange would choose to join a new state based co-op, only four states (CA, TX, NY, FL) might have enough people sign up for their state's co-op to barely reach the important 500,000 membership mark.

The restrictions placed on the new health insurance co-ops would make it financially impossible to create 51 new co-ops. With the restrictions, it seems that creating even 15 viable co-ops nationwide would probably be impossible. From what information I have, I suspect that between 4-8 is the maximum number of viable competitive co-ops that could be created nationwide. That would only be possible with a massive capital investment, focus on creating national not state based co-ops, and serious start up help from the government.

If the legislative restrictions were not bad enough to kill the co-ops, the absurd way they are set up should. According to Baucus' framework,

Grants and loans will be awarded by the Secretary of HHS based on recommendations made by an advisory board. The advisory board will be chaired by the Secretary (or a delegate) with other members appointed by the Majority Leader of the Senate (4 members), the Minority Leader of the Senate (3 members), the Speaker of the House of Representatives (4 members) and the Minority Leader of the House of Representatives (3 members).

This means that Senator Mitch McConnell and Congressman John Boehner would likely appoint half the board who decides which groups receive help establishing co-ops. Both have been highly skeptical of the whole idea of co-ops and health care reform. They have a strong political reason to make sure the co-ops fail. Giving them this power is like hiring a butcher to start a vegan restaurant.

I've previously explained how the trigger idea can very easily be made worthless with only a minor change. Robert Reich has done a great job explaining how Washington is filled with highly paid lobbyists whose job is to make sure things like a trigger are never pulled.

Neither Conrad's co-ops or Snowe's trigger are a compromise on the issue of a public option. They are fig leaves designed to fail. Their only purpose is to be a face saving measure to pretend that Obama did not break another campaign promise. A real “compromise” would be something (or group of things) that could fulfill the many goals of a public option in another manner. Small state based co-ops and triggers are not compromises, they are surrender.

Note: None of the Gang of Six represent a state large enough to support a state based co-op. In fact even if there was only one co-op for all six states it would still lack sufficient membership to be able to be competitive.

Crossposted on The Walker Report

Baucus Asks Democrats To Commit Political Suicide

Jonathan Walker — Tue, 08 Sep 2009 05:36:53 -0700

The New York Times ran a story that outlines Baucus' health care proposal. According to the story:

Mr. Baucus’s plan, expected to cost $850 billion to $900 billion over 10 years, would tax insurance companies on their most expensive health care policies. The hope is that employers would buy cheaper, less generous coverage for employees, thereby reducing the overuse of medical services.

Now that sounds like two big political winners right there. $850 billion is a few hundred billion short of the amount you would need to provide every American with decent, somewhat affordable health insurance. This means Baucus' plan will either leave tens of million of Americans uninsured and/or force tens of millions of Americans to be under insured with very expensive policies. But reducing the cost of reform is a super smart political move. All the rowdy townhall teabaggers were super pissed at a $1.2 trillion health care plan, but I'm sure with only a $900 billion price tag they will calm down and take an open-minded look at the proposal.

Encouraging employers to switch to less generous health care package should also go over very well. Not only does it break Obama's promise, “that if you like what you have you can keep it,” but it means that reform will result in many Americans' health insurance getting worse.

Another section of Mr. Baucus’s proposal would help pay insurance premiums, co-payments and deductibles for people with incomes less than 300 percent of the poverty level ($66,150 for a family of four). It would also provide some protection for people with incomes from 300 percent to 400 percent of the poverty level (up to $88,200 for a family of four), so they would generally not have to pay more than 13 percent of their income in premiums...

Mr. Baucus would impose limits on out-of-pocket medical costs — the co-payments, deductibles and similar charges for covered items and services. The limits would be $11,900 a year for a family and $5,950 for an individual. The comparable numbers in the House bill are $10,000 and $5,000.

Forcing people to buy expensive junk insurance will definitely make reform (and Democrats) popular when implemented. If you are a couple in your 40's that runs your own business together making around $45,000, Baucus' plan would force you pay around $6,000 in health insurance premiums for a super bare minimum insurance plan. If you have any serious health care problem your additional out of pocket fees could quickly hit that $11,900 cap. With total health care bills around $18,000 I can just picture the couple thanking Democrats that health care reform made it so that they are only paying 40% of their income on health care.

Of course, Baucus' plan does not contain the very popular public option so there is nothing keeping for-profit health insurance companies from continually increasing their rates.

Millions uninsured, millions more extremely underinsured, employers strongly encouraged to provide millions of Americans with less generous insurance benefits, health care eating up 40% of a family's total income, millions still going bankrupt because of health care, millions forced to pay junk insurance by the IRS. It sounds like a instant success.

Democrats would definitely be making the right move going with what Baucus is proposing. Spending that extra $200-300 billion and including a robust public option so that reform would mean every American will be guaranteed affordable decent health insurance would definitely be a huge political mistake.

Crossposted on The Walker Report

You Want To Go Through This Again?

Jonathan Walker — Sun, 06 Sep 2009 10:07:40 -0700

To all the incrementalists out there, I have one simple question for you: Do you want to go through this again?

If Democrats settle for a half loaf or a third of a loaf or whatever you call this lame plan to slash reform down to non universal coverage plan in hopes of winning one Republican vote, they are dooming themselves to fight this insane battle once again. Eventually Democrats are going to need to fix the mess they left for themselves this time. At some point they are going to need to fight this battle over again when they do go for a full loaf (real universal health insurance coverage).

We have tried the half loaf before. Medicare and Medicaid were a half loaf, COBRA was a half loaf, The Children Health Insurance Program was a half loaf, expanding CHIP was a half loaf. Accepting a half loaf has never made the fight easier next time. The forces against reform always come up in full force looking for blood.

The party has already suffered this time through the lies, the angry town halls, the million dollar insurance company smear campaign. Democrats need to seize the opportunity to fulfill their decades old party promise of passing quality universal coverage. If they settle for some lame half loaf, they will dishearten their base, discredit the party when this half loaf fails, and force themselves to fight this knockdown drag out fight when ever they try this again.

Accepting this terrible half loaf will not only doom millions of more Americans to suffer without insurance, it will doom the Democratic party to reliving this health care fight all over again, except next time the insurance companies will have even more money and more power.

Crossposted on The Walker Report

Why The Trigger Is So Dangerous

Jonathan Walker — Thu, 03 Sep 2009 04:40:14 -0700

It appears that Obama is trying to convince Republican senator Olympia Snowe to support health care reform by offering to support a trigger for a public option instead of a public option available from day one. The trigger option is incredibly dangerous and should make progressives very nervous. It is theoretically possible to get a “good” trigger that might help control cost, but even the smallest modifications could make it worse than useless. A bad trigger could actually do more harm than having nothing at all.

I have previously explained the many variables involved in a public option and will explain how a very small change could make a trigger useless.

What
A good (or one that might at least do something positive) trigger would need to trigger a public option based directly on Medicare. It would need to be either a Medicare buy in public option or Medicare rates plus public option. (a public option which pays providers Medicare rates plus some percentage.) Anything short of that would not work. A Medicare buy in public option would also save a lot of money and could be scored by the CBO. The CBO should be able to score a robust public option that could be triggered as saving money.

How to ruin it - Allowing Medicare providers to opt out or creating a “level playing field” plan cannot work with a trigger. Less robust public options could work only because they would be large national plans able to use their market share to keep rates low. Since the trigger might create a public option only in states where the private insurance companies failed it must piggyback on Medicare to be effective.

When
The trigger would not be able to be pulled very soon. It would not be able to be triggered, at most, until 2-3 years after the reform system goes into effect.

How to ruin it – If the time line for the trigger is too long it could result in higher, not lower, premiums. If the public option could only be triggered, say, eight years after reform started, it would create a strong incentive to dramatically raise premiums in the years leading up to the possible trigger date. Dramatically raising premiums before the trigger could be pulled would give the insurance industry large profit margins/cash reserves/waste/fat to whittle down for years while they keep premiums just below the level that could trigger the public option

Why
The public option must be a growth in premiums trigger. My preferred trigger mechanism would be if average insurance premiums for any insurance grade, in any area, for any year, grow at a rate faster than rate of growth in Medicare or 140% faster than the rate of increase in the consumer price index.

How to ruin it – Setting the growth in premium rates too high would make the trigger worthless. Making the trigger a lack of competition trigger would make it counterproductive. By triggering a public option if an area had too few companies, it would create strong incentive for insurers to not reduce premiums in an attempt to drive less efficient companies out of business.

Where
The insurance market should be monitored nationwide, state wide, region wide, or city wide to see if premiums grow too fast in any area that has more than 100,000 people. If premiums grow too fast in any area the public option must be triggered for that market.

How to ruin it – By making the size of the areas being monitored too large it could result in millions of Americans being ruined with out of control premiums. If the public option was only triggered if premiums grow too fast on a state wide average, people in Los Angeles could still face no relief from out of control cost if premiums in northern California were being held steady.

How
The trigger must be automatic. If conditions are met the robust public option must be available right away.

How to ruin it – One of the easiest ways to make trigger useless is by requiring an up or down congressional vote or a vote by the effected state legislature if the trigger is pulled before starting the public option. This congressional pre-approval provision would ensure the public option would never go into effect. It would also create a strong incentive to increase premiums dramatically while Republicans control one chamber in Congress.

Is it possible to create a useful trigger? Technically, yes. It would need to be a two year automatic trigger for a Medicare buy in public option if premiums grow faster than Medicare in any area for any one year.

What is so dangerous is that it is incredibly easy to make the trigger worthless or even harmful. Changing a few words in the legislation could strip the trigger of all its power. Understanding the difference between a good trigger and a terrible trigger is not easy. Don't expect the mainstream media ever acknowledge or even notice the difference.

The trigger would become the target of a quiet multi-million dollar all out lobbying assault and could be ruined at the last minute behind closed door with almost zero media coverage. Explaining how the smallest last minute change to the trigger had ruined the whole health care bill would be nearly impossible for progressives.

The trigger is so dangerous because it is so malleable. Progressive would need to guard it like a hawk and there would still be no guarantee that they would not be stabbed in the back at the last minute without media fanfare. If the Congressional progressives embrace a well designed trigger they are setting themselves up for a swift, subtle, and complete betrayal. The trigger could quickly go from a real tool to control cost to a fig leaf, or even a leaf poison ivy.

Crossposted on The Walker Report

Washington Post Publishes Lies About Health Care Reform

Jonathan Walker — Sun, 30 Aug 2009 11:22:56 -0700

The Washington Post has recently taken to publishing straight up lies. The article states:

Obama would like, but doesn't need, Republican votes to achieve his goal. But seven conservative Democratic senators -- led by Max Baucus (Mont.) and including Blanche Lincoln (Ark.), Kent Conrad (N.D.), Jeff Bingaman (N.M.), Ben Nelson (Neb.), Mary Landrieu (La.) and Arlen Specter (Pa.) -- oppose the public option as well. So by shilling for the insurance industry, they've made it thus far impossible for Obama to take advantage of the Democrats' majority in the Senate.

This statement is simply false. It is true that Mary Landrieu and Ben Nelson have said they are likely to oppose a public option (although Nelson is technically open to the idea). Reporting also indicates that Kent Conrad does not like the idea. But Max Baucus, Jeff Bingaman, and Arlen Specter have all publicly and repeatedly stated that they support a public option.

Max Baucus's original health care reform proposal that he wrote earlier this year included a robust public option. Even a few weeks ago he told Montanan Democrats that he supported a public option.

Jeff Bingaman has repeatedly said that he supports a public option. He even voted for Senate HELP committee bill which includes a public option.

Arlen Specter has been promoting his support for a public option every chance he can get now that he faces a Democratic primary challenger.

Baucus, Bingaman, and Specter have not drawn a line in the sand on the issue of the public option. All three would not vote against health care reform simply because it doesn't include public option. They would all being willing to negotiate on the issue of a public option in exchange for the broad support needed to pass health care reform through regular order.

Being willing to vote for reform without a public option is completely different than opposing a public option. Either the three senators told the Washington Post that they have been repeatedly lying to their constituents, or the Washington Post should print a retraction.

Crossposted on The Walker Report

The Many Possible Public Options

Jonathan Walker — Fri, 28 Aug 2009 10:16:35 -0700

In the heated debate over the public option what is often overlooked is that there is not any one “public option.” There are in fact several different public options being proposed. They run the gambit from the very robust to the weak and nearly useless. I'm going to try and explain the different configurations of the public option proposals and place them on a rough robust-to-weak continuum. The continuum does not just represent a left/right divide on the issue, but also a divide on their potential cost savings. The more robust public option the more money it will save the government and the consumer.

Medicare Buy In

The strongest and most robust public option proposed is the straight “Medicare buy in.” It would simply allow individuals under the age of 65 to buy Medicare at an actuarially sound premium level. The option would provide the greatest cost savings to the government and the consumer. Senator Rockefeller's “Consumers Choice Health Plan” would be a Medicare buy in for the first few years. After that establishment period, the plan would progressively become weaker in several ways.

Medicare Rates Plus

A slightly less robust way to construct a public option is some form of a “Medicare rates plus” option. Doctors who accept Medicare would need to accept the public option, but it would pay Medicare rates plus anywhere between an additional 1%-20%. The higher the additional reimbursement rates, the less robust (and more expensive to consumers) the option would be.

Medicare Rates Plus With Opt Out

The next step down is a “Medicare rates plus with opt out” configuration. This is very similar to a “Medicare rates plus” option but providers who accept Medicare would not need to accept the public option. This configuration becomes less robust depending on the additional reimbursements and how easy it is for doctors to opt out. The original public option in the House bill which passed the House Ways and Means Committee and the House Education and Labor Committee include this style of public option. It would pay Medicare rates plus 5% and allow doctors who accept Medicare to opt out of the program.

Level Playing Field

A “level playing field” option was first proposed by Chuck Schumer in an attempt to win over moderates. The government would create a new government run insurance company. It would behave like private insurers and directly negotiate payments with providers. It would not be allowed to piggy back on Medicare's rates. Depending on the details, it would either allow providers accepting Medicare to opt out or require the plan to create a new network from scratch. The public option compromise in the House Energy and Commerce Committee and the public option in the Senate HELP Committee bill are both “level playing field” style public plans.

National Semi-Independent Non-Profit

The absolute minimum that I would classify as a public option is a national semi-independent non-profit. The government would provide money and expertise to establish a new national non-profit health insurance company. It would not be a government entity and its employees would not be federal employees. It would be highly regulated and have direct government oversight. The top level of the organization (top management, CEO, and/or board members) would be appointed by the federal government. They would be appointed by either Congress, the president, the secretary of HHS or some combination of all three. The single national cooperative compromise Schumer offered Grassley and Conrad would be an example.

I left off the continuum Conrad's idea of small regional co-ops. In no way, shape, or form are they a public option or would they fulfill the goals of a public option. Not only would they fail to fulfill the goals of a public option, but the severe restrictions placed on them means they would be unlikely to ever even get off the ground. An issue I did not deal with is whether the public option would be open to all businesses or only offered on the new exchange. Opening the public option to all would make it more robust, but it seems the overwhelming political consensus is to make it only available on the new exchange.

There is currently no one public option. There is not even one robust public option and one weak public option. There dozens of ways to configure a public option in discussion. Each change effects a plan's relative “robustness.” Some options would even start off robust then become weak. Beyond the buzzwords of “public option” and “robust” there is an ocean of nuance.

Crossposted on The Walker Report

Public Option: Reconciliation Protection, Part 1

Jonathan Walker — Wed, 26 Aug 2009 15:05:35 -0700

It is becoming more and more clear that efforts to find a bipartisan bill are falling apart. I think the only way that health care reform will be passed is using reconciliation. The strange rules of reconciliation mean that some parts of the bill could be stripped out by the Byrd Rule. The Byrd Rule basically says that anything in a reconciliation bill must cost or save money. This is part one of a series where I provide ideas on how to protect the many parts of reform from the Byrd Rule.

It is possible that any public option can pass using reconciliation. Even though the public option is meant to be revenue neutral, it will take in large amounts of money (in the form of premiums) and spend large amounts of money (in the form of reimbursements for procedures). This alone might protect a public option from the Byrd Rule. If not, things get a bit more difficult.

We know for a fact that the the original House robust public option has been scored by the CBO as saving billions. Since the size of subsidies are based on the three cheapest plans, offering a cheaper public plan reduces the size and cost of the subsidies. For that reason a robust public option based on Medicare payment rates should be protected.

A very robust public option does not seem to have the votes in the Senate or the House. Chuck Schumer's “level playing field” public option, found in the Senate HELP Committee bill and House Energy and Commerce Committee bill, seems the most likely to pass. Unfortunately the CBO says it does not save a substantial amount of money. I can think of four politically acceptable ways to protect the “level playing field” public option:

1) It would need a large $10 billion loan and/or seed money fund to start with. The cost of that loan or start up fund might be big enough to save it.

2) The plan could be written to pay the government a profit for a few years or pay back a high interest loan. The revenue this would bring in might protect it.

3) Subsidies are currently based on the average of the premiums of the three cheapest plans. The bill could be rewritten to base the size of the subsidies on only the cost of the public option's premiums. This would not only save money, but would make the public option an essential part of scoring the overall bill.

4) Finally, the public option could be robust for only a very brief period of time. It would pay Medicare rates for only the first year or even a few months. This time period could be adjusted so that it is just long enough to save just enough money to make the “level playing field” public option safe from the Byrd Rule.

Crossposted on The Walker Report