Nate Silver - he of 2008 vote-prediction fame - has written a piece called "Why Progressives Are Batshit Crazy To Oppose the Senate Bill." He says we need to stop being "polite" (who's polite these days?) and start being "real." In the spirit of impoliteness and reality (realness?), he runs some numbers and argues that the Left is nuts not to embrace the Senate health reform bill.
In that same "no-politeness" spirit, here's my response: Garbage in, garbage out. Is that "real" enough for ya? Progressives - and everyone else, for that matter - should keep fighting.
Silver's heart may be in the right place, and his math is good, but many of his assumptions are flat-out wrong. More importantly, he fails to place his work in the proper human and political context. It's like this: You can build the best model in the world for predicting the outcome of hockey games. But if you knew that sometime during the third period Rahm Emanuel was going to drive out on the ice in a Zamboni and flatten your team's entire defense, wouldn't that change your model a little? And if you knew half the hockey players would wind up bleeding and broken ... (Oh, wait - they do. Bad example.)
Progressives would be insane to do as Silver suggests. He tells us that "a picture's worth a thousand words" (and then gives us 1,795 words - but who's counting). Let's review both his analysis and his conclusions.
First, check out the graph above. What Silver's showing is the difference in medical costs for a family of four earning $54,000 (that includes premiums and out of pocket costs), and the subsidies they could expected to receive under health reform. Why $54,000? First, because it's the number Darcy Burner used in her post on the topic in OpenLeft - the post that apparently triggered Silver's ire -and secondly because it's a good income level for making his argument about the benefits of reform.
Our family of four would pay $4,000 in premiums and could expect to incur $4,000 in out of pocket costs, he says. As Silver explains, the family is receiving a subsidy of over $10,000, 72% of the premium, under the bill. But that's assuming that the family already buys health insurance today. There is every likelihood they don't, which (as he points out later) is potentially tragic. But our hypothetical family would be mandated to pay the premium under the bill or face a tax penalty. The difference between the premium cost (in this example, $4,000) and the tax penalty of $2,250 will be unaffordable for many, and it will certainly be unaffordable to families at slightly higher income levels where the subsidies don't apply. A family of four earning $75,000 in the tristate New York area, for example, will be hard-pressed to come up with $16,000 - or whatever the difference winds up being.
Silver fails to take note of the fact that many families would therefore have to take the tax penalty instead. That's a huge oversight on his part. For these families "health reform" will consist of nothing more than a new tax burden. They'll still be uninsured, and they'll be worse off financially.
He's right that these figures don't factor in the elimination of the public option, and sadly right that it won't make much of a difference. The public option had already been so watered down by the time CBO ran these numbers that it's overall impact was pretty insignificant. I would also add that I believe the CBO's numbers vastly overstated the revenue impact of the excise tax. (Note: See conflict-of-interest statement below.)
One quibble: Silver uses the insurance's industry AHIP data, which is fine. I've worked with their data sets for years and don't think they're biased (the industry uses them to set their own rates, so it would be foolish to slant them). But he uses rates for the individual insurance market, while one of the goals of the exchange was to drive those rates closer to group insurance levels. Also, he says he "shows his work" (which he mostly does), but I don't see how he got $7,925 as a premium. He may be right, but I don't know how he did it so I can't double check it. (I'm not sure he has enough data to get this figure - but again, it's just another quibble when you consider the big picture).
His next paragraph buys into some policymaker "magical thinking." He quotes the CBO as saying the benefits covered by our family's insurance "would increase by 27 to 30 percent" because of new, legally imposed requirements, which is plausible - but there's no corresponding increase in premiums. Given the lack of constraints on what insurers can charge, it seems highly unlikely that medical inflation will remain as modest as Silver estimates. After all, where will the money come from to pay for all that new coverage?
What's more, I suspect that holding insurance company margins to 10% or 15% (depending on which proposal is adopted) will - perversely - cause prices to go up even more. (If they can only make ten cents on the dollar, the only way to improve income is to charge more dollars.) I also believe that the excise tax will spur another round of cost-shifting - health benefit plan designs are subject to trends, like fashion - which will lead to higher out of pocket costs. But since I can't quantify these last two points, let's leave them out.
Assumptions
A number of Silver's assumptions are questionable. First, I think his assumed inflation is understated. And he says that money to pay for helping lower-income people comes "substantially from corporations and high-income earners, plus some efficiency gains." The first part of the statement is essentially true for the House bill, but not the Senate's - and it's the Senate bill Silver's defending. As we've shown, the Senate bill's excise tax will pretty much indiscriminately affect working people, and primarily not because they have rich benefits. (See conflict-of-interest statement below.)
What's more, all Americans are being mandated to buy into private insurance in order to make it actuarially easier to cover everyone, without a public option. That really a kind of invisible tax that's being charged to everyone in the form of premiums - premiums which are made higher by the absence of a public option. On top of that, the Senate's weak employer mandate will force more people into the costlier individual market. And "efficiency gains"? What efficiency gains? Every difficult cost containment decision has been kicked down the road in this bill.
Darcy Burner is absolutely right when she writes "affordable coverage for everyone: FAIL." Silver is absolutely wrong when he says that "we can debate whether $9,000 is 'affordable' for a family of four earning $54,000" - we can? Really? - or when he says the individual mandate penalty is "not very harsh." I'm astonished that anyone grounded in the real world could believe that these numbers (and those for higher middle-class earners) are not "harsh," unaffordable, and even potentially devastating for middle-class people trying to get by in this economy. That's craziness of the flying-rodent-feces variety.
It's all about context
Silver is most off-base in the area that arguably matter most in the long run: political context, strategy and tactic. He falls right into the trap that the Democratic leadership has set for progressives - the belief that, even with weeks to go in the process, it's either this bill or nothing. That's simply not the case. Yes, I saw a previous post where he argued that this outcome was inevitable given Senate math. But it's only inevitable if you assume a) no targeted use of reconciliation, and b) that the "centrist" Senators were inevitably going to be opposed to a bill with better provisions. To believe that, you also have to assume continued lack of strong leadership from Reid and the White House, together with continued lack of progressive pressure on them to step up.
Sounds like a self-fulfilling prophecy to me.
The Senate bill Silver so admires places enormous burdens on
middle-class families, while going easy on high-earners and employers.
The overall combination of mandates and weak cost controls shapes up to
be political suicide for Democrats. It will hurt Democratic candidates
in precisely those parts of the country where they can least afford the
damage, like the Midwest. (This survey offers a preview.) And it's not too late to fix it.
That gets us to strategy. The day may come when the Silver argument needs to be deployed - namely, when a decision must be made on whether the final bill being voted onbetter than nothing. But that day isn't here yet. There's still time to change it, either in the Senate or House. Instead of accepting this bill as the best they can get, progressives should keep the heat on the Democratic leadership to fix it. That means eliminating the excise tax in favor of the House high-earner proposal, pressing for a robust public option, and pushing for stronger subsidies.
Doing anything else would be crazy.
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(Disclaimer: I'm currently campaigning to ensure that the excise tax does not become law, which could fairly be considered a conflict of interest. I would point out, however, that I'm campaigning because I think the tax a bad idea;I don't think it's a bad idea because I'm campaigning. To think otherwise is to confuse cause and effect - which happens a lot in the health care debate.)
It would be nice but probably unlikely, if the whole thing died a quick death and we started over with open competition amongst insurance companies, elimination of government mandates and vigorous tort reform. If not, we conservatives have a huge target to shoot at with an small but possible chance of a rollback of this monstrosity after a 1994 like takeover by not just Republicans, but conservative Republicans.
Posted by: j.mckenna42@yahoo.com | December 15, 2009 at 04:13 PM