Monday, October 5, 2009

Will We Get a Health Care Bill in 2009? We Are About to See the Convergence of Three Powerful Forces

It’s decision time. The Congress will or won’t pass a major health care bill during the next few weeks.

Will we get health care reform in 2009?

Almost certainly not. As I have been saying for months, if we get a bill it will be more a trillion dollar entitlement expansion funded by relatively minor provider cuts and about $500 billion in tax increases. That is not health care reform.

Will we get that trillion-dollar entitlement expansion health care bill?

That outcome lies in the coming convergence on Capitol Hill of three extraordinarily powerful, and contradictory, forces.

The Democrats Are Absolutely Committed to Producing a Health Care Bill
After more than 60 years of trying they have never been closer to adding a third leg to their domestic policy legacy of Social Security and Medicare. Leaders in the party are cognizant that this is their chance to do what both Roosevelt and Johnson accomplished and join them in their place in history.

The leadership and the White House will do anything they can to get any bill that qualifies as a breakthrough. If they can get this to within a handful of votes in the House and one or two Senate votes they will drag this thing across the line.

Can you imagine a Senator or House member trying to deflect the pressure they will be under if they turn out to be that last vote the Democrats need? “Senator, the party has been trying to do this for 60 years. If this fails it will not be the President’s fault or the leadership’s fault. It will be on your head to explain to the Democratic Party why, after all of these years and getting so close, you alone chose to give the President and the Party what could be a crippling legislative defeat instead of a generational victory.” Sort of like becoming the Billy Buckner of the Democratic Party!

The Public Has a Great Deal of Anxiety Over the Democratic Health Care Effort
The polls are at best split about down the middle. The Rasmussen Health Care Tracking Poll has consistently showed support for the President’s efforts on health care—really a proxy for the entire Democratic effort—in the low 40s and opposition in the mid-50s.

It is now clear that the town meetings were more than just the far right making a lot of noise.

Just how do you pass something as far reaching as a health care bill with an approval rating in the 40s?

The Democrats Don’t Yet Have a Health Care Bill That Can Become Law
While a bill is highly likely to clear the Senate Finance Committee in the next few days, the real negotiations will first be in each house as both Reed and Pelosi try to draft something they can pass on their own. If that happens, then the most critical negotiation will begin as the House and Senate reconcile their bills and the tendency of the House to move farther left and the Senate to expect something more moderate.

They still don’t have a way to pay for it. Every time they have put a tax on the table it has come off that table in just a few days. The current taxes aren’t so much agreed to as just the last generation of unpopular proposals that are serving more as placeholders than final decisions.

The House has a tax on the “rich” the Senate doesn’t like while the Senate has a tax on “Cadillac” health care plans that the unions can’t wait to kill once it emerges from under Baucus’ control.

While most of the special interests have been bought off with the deals they cut to limit their contributions to paying for the bill, the American Medical Association (AMA) stands out as a critical player that has not yet been satisfied. While the House bills spend more than $200 billion to fix the Medicare fee cut issue (which is yet unpaid for), the Senate Finance Committee has ignored the problem with just a one-year patch and a “trust us.”

There is also a real unease over the combination of middleclass premium support subsidies, the bare bones character of the health insurance policies people would get, and the fines they would pay if they did not comply with the individual mandate. Republicans are going to continue hammering on the new “taxes” this would create. If Democrats increase the subsidies they have to find more money to pay for it. If they exempt the middleclass from the mandate what good have they done for what are a lot of swing voters already anxious about all of this?

If millions are exempted from the mandate, the insurance industry will have a problem covering everyone and eliminating pre-existing conditions and medical underwriting provisions.

Then the states are almost unanimously balking at more Medicaid unfunded mandates in the out years of the bill.

Add to that the debate over an employer mandate, a MedPAC with policy powers, and growing criticism of Medicare Advantage cuts. And, that is before the thousand-page bill sees the light of day and who knows how many more “death panel” scares.

On top of all of this there is the public option issue. As I have been saying since spring, there won’t be a Medicare-like public option. But just how will the Democrats finally compromise this issue. Co-ops are fizzling and there is one big devil in the details for any kind of trigger. Recent suggestions for the states running the insurance market for the near poor and proposals to give states the flexibility to create their own public plan would add an almost byzantine complexity to what is already a complex bill.

If you take the “Cadillac” tax out of the Senate Finance bill and add in the more than $200 billion for a Medicare doc fix, you’ve created an almost $500 billion gap to fill.
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So, there are these three powerful, and contradictory, forces about to converge on Capitol Hill. Just how will they finally sort-out?

That will make for the most fascinating domestic political battle in recent history.
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