House Bill Comes In At $1 Trillion, Undermines GOP Talking Points
House Bill Comes In At $1 Trillion, Undermines GOP Talking Points
Today, three separate House committees — Ways and Means Committee, Energy and Commerce Committee, Education and Labor Committee — released a single health care reform bill, the American Affordable Healthy Choices Act. The bill establishes “a mandate for most legal residents to obtain insurance, significantly expand eligibility for Medicaid, and set[s] up insurance “exchanges” through which certain individuals and families could receive federal subsidies to substantially reduce the cost of purchasing that coverage.” According to an analysis by the Congressional Budget Office, the legislation would cost $1 trillion over 10 years and cover 94 percent of Americans (97% if you don’t count the undocumented).
As Jonathan Cohn reports, “between savings and a new surtax on the wealthy, the bill pays for itself. In other words, it won’t inflate the deficit.” Five hundred billion comes from savings in Medicare and Medicaid and “the rest comes from a surtax on the richest 1.5 percent.”
Most importantly, the CBO coverage tables undermine the conservative claim that a public option would eliminate private insurance and erode employer-sponsored coverage. The House bill actually increases the number of people who receive coverage through their employer by 2 million (in 2019) and shifts most of the uninsured into private coverage. By 2019, 30 million individuals would also purchase coverage from the Exchange, but only 9-10 million Americans (or approximately 1/3) would enroll in the public option, the rest would enroll in private coverage.
A more detailed discussion will soon follow, but here is a table of provisions and the estimated savings:
| Provisions | Sexy Facts | CBO Score Over 10 Years | |
| Individual Mandate | Individuals who don’t purchase coverage would pay tax equal to 2.5% of modified adjusted gross income. | Exceptions: dependents, nonresident aliens, living outside of US, prisoners, religious conscience objectors | will bring in $29 billion |
| Large Employer Mandate | Provide coverage or pay fee equal to 8% of the average wages. | Part-time employees can receive benefits from employer, or can seek coverage in Exchange, which will be partly financed by Employer. | will bring in $163 billion |
| Small Employers | Businesses with payrolls that do not exceed $250,000 exempt from employer responsibility. | > $250,000, payroll penalty @ 2%. Rises to 8% for firms with payrolls > $400,000. Small business tax credit available. | will cost $53 billion (tax credits) |
| Medicaid Expansion | 133% FPL | Medicaid reimbursement rates for primary care providers grow to 100% of Medicare rates by 2012. | will cost $438 billion |
| Subsidies | between 133 – 400% FPL on sliding scale | In the first two years, an affordable credit eligible individual may use an affordability credit only with respect to a basic plan. | will cost $773 billion |
| Public Option | Medicare rates for 3 years w/ 5% bonus for physicians that participate in Medicare and the public plan. | The Secretary will loan the public plan $2,000,000,000 for start-up funds. The public plan can negotiate drug prices from the start. Provider participation is voluntary – Medicare providers are presumed to be participating unless they opt out. | 10% cheaper and would enroll 9-10 million people |
| Insurance Regs | Guarantee issue, modified community rating (2:1), no rescissions | Cap of annual out-of-pocket spending, $5,000 for individuals, $10,000 for families | – |
| Financing | About half will come from savings within the system, the other half will be financed through a surtax on the rich. | $350,000 – $500,000: 1% tax on modified adjusted gross income. $500,000 – $1,000,000: 1.5% tax on modified adjusted gross income. $1,000,000 plus: 5.4% of modified gross income | – |
5 Responses to “House Bill Comes In At $1 Trillion, Undermines GOP Talking Points”
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Despite phony protests from Republicans, the U.S. health insurance market exhibits two characteristics of a market failure: 1) certain markets (elderly and poor) are neither profitable nor well-served and 2) the market lacks sufficient competition.
To Republicans alarming the public about the imminent rationing of health care, I submit that any health care system rations care. The U.S. just does it indiscriminately and insufficiently. It’s irrefutable that we prescribe and pay for too much unnecessary health care. Let’s move beyond the debate about whether we need a public insurance option. We do. Let’s debate the most relevant and most difficult question: how should we pay for comprehensive health reform?
http://axisofreason.com/2009/07/13/us-private-health-insurance-classic-market-failure/
July 14th, 2009 at 8:38 pmSo it looks like the public health insurance plan won’t necessarily be open to all. In 2015 the Commissioner would have the ability to expand it but would not be required to. I’m not loving that.
July 14th, 2009 at 11:19 pmI am writing to express my concern over a government-operated insurance program, or “public plan,” that is being considered as part of comprehensive health reform legislation. With nearly 90 million people – about one-third of the population below age 65 in this country – accessing their health insurance coverage through their employer, it is important that the employer-based system not be undermined. I urge you to oppose the creation of a public health insurance plan and focus on reducing costs by facilitating true competition among insurance providers.
Certainly, comprehensive health reform is needed to control costs and cover the uninsured, and I am pleased that the Administration and congressional leaders have attempted to achieve a bipartisan consensus to that end. There are many worthwhile and far-reaching reforms that should be achievable this year. But I am convinced that a public plan will create an un-level system, undermining what works about the existing employer-provided group health insurance marketplace.
Public plans historically reimburse providers at a lower rate and account for administrative costs differently than private plans. Current public plans like Medicare and Medicaid pay healthcare providers a reduced rate to control costs causing providers to shift their unreimbursed public plan expenses onto private payers which only exacerbates coverage and cost issues. Expanding a public program or offering a buy-in option would only increase the amount of costs being shifted to the privately insured. In the current economic climate, more cost-shifting would only further burden employers and employees that are struggling to afford health care coverage.
The debate over the growing number of uninsured in this country has failed to take into account the enormous impact of immigration on the nation’s health insurance crisis. We cannot hope to contain health care costs or reduce the number of uninsured in the U.S. without addressing the role of immigration policy too. By dramatically increasing the size of the uninsured population, immigration strains the resources of health care providers who provide services to the uninsured. Americans with insurance have to pay higher premiums as health care providers pass along some of the costs of treating the uninsured to paying customers. If we are to deal effectively with the health insurance problem in this country, part of the solution must address immigration policy.
To conclude, please know how strongly I oppose a “public plan option” for consumers. I hope that regular order and bipartisanship will prevail in this debate, and we stand willing to assist you and your staff in any way to help identify the multitude of ways to improve health care for Americans.
July 15th, 2009 at 11:47 ameBob,
You made some good points about your concern of the changing of the healthcare status quo. I do not agree with your concerns, but you have them none the less.
However, your points on immigration healthcare costs as being some how a major factor in the problems of healthcare are a red herring and really suggest that your agenda is not only to stop healthcare reform, but to also shout uninformed rhetoric about immigration.
Can you cite one credible study that says immigrant healthcare costs are responsible for the problems with the healthcare system (40 mm uninsured, personal bankrupcies, 17% of GDP, low performance vs other countries, rationing by insurance companies, etc.)?
I have looked and I cannot find any. But, here is a report on the issue that seems to suggest that immigrants have very limited to no impact on the healthcare system.
http://udallcenter.arizona.edu/immigration/publications/fact_sheet_no_2_health_care_costs.pdf
A few facts: immigrants are mostly young, they do not tend to be as unhealthy as the old; immigrants use healthcare far less than other citizens; some actually do have health insurance; many pay taxes; etc. etc.
July 15th, 2009 at 12:57 pmThe Republican canard of rationing is balloon of a lie.
It seems they are saying that each American must have their own MRI machine, each American must hire three nurses, so that round the clock care can be assured, from birth, for each member of the family.
A short TV ad, showing MRI’s being delivered to every suburban home in a neighbourhood, huge white heavy machines, smashing door frames and collapsing floors, as a woman asks the delivery people to “stop, please stop, every home doesn’t need one. Just install a few of these in hospitals” while a suited old guy shoves forward to scream “That… that’s RATIONING!!!!” and the woman says, “Look I’m a nurse, we need to deliver health care just for health reasons, the health needs of this city are a few MRI’s in a few hospitals not this silliness.”
July 15th, 2009 at 3:44 pm