The Wonk Room

What Does The Blue Dog Compromise On Health Care Say About The Blue Dogs?

After arguing that the House health care bill did not do enough to lower long term health care spending, Blue Dog Democrats hijacked the House Energy and Commerce Committee and promised to vote down the bill unless Chairman Henry Waxman (D-CA) heeded their concerns.

Today, the Dogs and the Dems reached a compromise:

- Reimbursement rates for public plan should be no higher than market rates: Rather than reimbursing at five percent above Medicare rates, the new public option will now directly negotiate rates with providers.

- States can offer an insurance co-op alongside public plan: Presumably this state-based cooperative would act like any other not-for-profit insurer and will lack the market clout to drive bargains and lower costs.

- Premium cap goes from 11% of income to 12%: Loosening the affordability measures is certainly one way to bring down the cost of health reform, but it does little to help families purchase coverage.

- States must pay 7% of cost of additional Medicaid enrollments: States are already worried that the plan to expand Medicaid would leave them on the hook for financing the expansion after the five year grace period (for the first five years, the federal government funds the expansion, after that, the states would gradually assume half the cost.) This will likely stoke their concerns.

- Small business exemption for payroll up to $500,000; phases out at $750,000: The original language exempt businesses with a payroll of less than $250,000 and charged a penalty on a sliding scale.

- Cost of bill must come in at under $1 trillion: Most health reform advocates believe that is nearly impossible to provide everyone with affordable health care coverage under $1 trillion.

On the whole, these tweaks are rather minor. Most observers interpreted the hoopla surrounding the negotiations as a sign of serious trouble. If the outline above is correct, then the dogs came back with their tail somewhat between their legs.

Secondly, the agreement only reinforces the notion that Blue Dogs are more interested in ideological politics than lowering long-term health care spending. After all, if they really wanted to lower costs, they would support reform that includes a robust public option and generous affordability measures so that every American is part of the health care system and has access to needed care. After all, if the public plan pays bloated market rates (as this agreement states) it will fail to offer lower premiums within the Exchange, and would cause the government to spend more money on subsidies. Unfortunately, the Blue Dogs are trying to lower the costs by making insurance less affordable and undercutting a meaningful public option.