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On Health Reform, Three Cheers For Kucinich (And Ann Coulter's Still Alive! Who Knew?)

The CBO now says health reform will cut the Federal deficit by $138 billion That's a win for the bill's backers, and should make it tougher for self-described 'fiscal conservatives' in the Democratic Party to vote against this bill. (No, let's re-frame that as a positive statement: It will make it easier for Conservadems to embrace this bill.) Now what's left is a battle between two clear political philosophies on the left and right: The principled but pragmatic progressivism embodied by Dennis Kucinich, or the nihilistic fury and self-interest that's best represented by Ann Coulter. Since both Coulder and Kucinich had a lot to say about health reform this week, it's worth taking a moment to compare and contrast their philosophies.

Let's start by offering three cheers for Kucinich. Cheer #1 is for his principled stand in favor of single-payer solutions, either at the national or state level. While I see a lot of economic and administrative problems with this large a transformation of our trillion-dollar health economy - problems not yet sufficiently addressed by single-payer advocates - Medicare For All is ethical, humane, moral, and fair. It was never going to pass, but Kucinich kept the flame alive and laid the groundwork for further progress toward a goal that may be achievable someday..

Cheer #2 is for Kucinich's tenacity in fighting for a meaningful public option, and for some other fair and meaningful ideas cut from this bill. A progressive's job is not to make things easy for those in power, but to fight to make every bill as good as it can possibly be. Someday we may have something to say about progressives who became cheerleaders for the Senate bill way too early, undercutting efforts to make it better and fairer. The Left needs to learn from errors like these - but that's a discussion for another time.

Cheer #3 come from Kucinich's reluctant yet heartfelt decision to vote for the bill as it currently stands. Like many other progressives, I've watched in frustration and dismay as leaders in the White House and Congress fumbled one opportunity after another to come up with a better (and more popular) bill. Democrats need to do some serious soul-searching about backroom deals and corporatist politics. But Kucinich doesn't have the luxury of criticizing from the sidelines. His only choice is to vote "yes" or "no." He struggled with his decision, just as many of us have struggled privately with our own feelings.

Kucinich made the right decision. By voting for this bill, he'll be ensuring that nobody will ever be denied needed health insurance for pre-existing conditions. He'll be providing help to get coverage for people who can't afford to pay for it. He ... well, you probably know what this bill accomplishes by now. And, if you're reading this, you probably also know that major bills like Medicare and the Civil Rights Act began as compromised reforms and were strengthened later.

It's easy to empathize with progressives who are frustrated with this bill, but the fighting's all done:  What was false before is true now: it's this bill or nothing. The new progressive challenge is to pass it, then keep fighting to make it better. That can only happen if members of the Congress are open to persuasion, which won't happen if the Right sweeps the next election.
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Which gets us to Ann Coulter. (Yes, she's still alive. I'm a surprised as anyone. I guess her star's faded quite a bit now that Glenn Beck's the new popular kid in the mean-yet-wealthy corridors of Crazytown High.) Coulter put out her own "health reform plan" this weekend, andI I've got to had it to her. It neatly summarizes the program and philosophy we're likely to get if Dems lose power in Congress, namely:

No.

No, no, no, no, no, to every single meaningful policy or propposal.

Well, actually Coulter does propose "a one-page bill creating a free market in health insurance.." What's a "free market" to Ms. Coulter? First and foremost, she wants to "allow interstate competition." As one of the commentators who serve as the GOP's unfettered Id, she freely admits the reality that her party's pols  continue to deny: "Every insurance company in the country would incorporate in the state with the fewest government mandates, just as most corporations are based in Delaware today." That's exactly what would happen under the GOP's health care "proposal."

Why do credit card companies rip you off? Because until recently we regulated credit cards the way Republicans want to regulate health insurance.  They're all based in South Dakota (where politicians are cheaper to buy because political campaigns are cheaper to run). Here's what you'd get for health insurance under the GOP's Coulteresque proposals: State regulators for sale to the highest bidder, followed by an insurance market where every abuse you've ever heard about happens over and over again ... to everybody. Will they take your premiums and then drop you when you get sick? Check. Deny your claims even for covered services? Check. Deceptive advertising? Check. Horrible stuff they haven't even thought of yet? Check. And check and check and check and ....

That's the political struggle before us now: Pass the bill and work to improve it, or return to the Party of No and the Politics of the Corporate Ripoff.

Since Coulter's from the personal-attack school of political discourse, her piece naturally includes a few quease-inducing insults - about Harry Reid's age and sexuality, Obama and dying medical patients, and "hypochondriac liberals." But on the principle that a stopped clock's right twice a day, Coulter makes a good point too. She wants to remove the antitrust exemption for insurance companies, which is a very good idea.

Now we know that if Dennis Kucinich introduces a bill ending antitrust exemptions for insurance companies, he can count on Ms. Coulter's enthusiastic support.

MESOTHELIOMA AS METAPHOR

Ship-breaking in Bangladesh

Researchers are reporting impressive results in testing a vaccine for mesothelioma, a cancer that attacks the lining which protects the body's internal organs.  Mesothelioma is almost always caused by exposure to asbestos, which means that it's almost always industrial and occupational in origin.  Asbestos miners and millworkers are at high risk for the disease, as are shipyard workers and the family members of people who work with asbestos. 

Technology created the disease.  Science may have found a new way to treat it.  But the worldwide path of the disease and the likely arc of its treatment offer reason for reflection.  125 million people are exposed to asbestos every year, and lower-income people are far more likely to be at risk.  The World Health Organization (WHO 2006) and others have noted that the best way to eliminate mesothelioma and other asbestos-related disease is to eliminate exposure, but we don't.  And nanotechnology, the latest technological breakthrough, may bring the risk of another mesothelioma outbreak.

The success of the vaccine approach is worth celebrating.  But, as with so many diseases, it seems we're more likely to celebrate the cure than we're willing to eliminate the cause.  Should the cure be validated by future testing, the financial structure of modern medicine suggests it will be distributed as unequally and unfairly as the disease's causes have been.  Economics. as much as biology, has shaped this disease's story.  And economics will probably paint its future arc.

Numbers Don't Lie, but Politicians Do - or, Kent Conrad and EJ Dionne Get It Right

Robert Byrd just came out in favor of using reconciliation in health reform. Since reconciliation's also known as the "Byrd rule," that's a definitive a confirmation of its legitimacy as you can get. It's like having Chuck Berry saying "that's a good Chuck Berry lick," or having Mary propose a "Hail Mary pass."

And the stars realigned themselves this week for progressives, who found forceful new allies and advocates in unexpected quarters. Sen. Kent Conrad became the new spokesperson for Truth, Justice, and the American Way on health reform, and E. J. Dionne used the right word for those assertions that the health reform bill is being "rammed" through in an unprecedented way.

The word was "lies."

Supporters of the public option give Conrad a great deal of the blame for its demise, and not without reason. But after his comments on Senate procedure were widely distorted in the press this week, Conrad had strong words on two subjects close to their hearts: Journalistic incompetence, and the appropriateness of reconciliation as a path to enacting health reform.

Conrad's comments were made in a phone interview with Greg Sargent of the Plum Line. "Reporters don't seem to be able to get this straight," Conrad told Sargent. "Comprehensivehealth reform will not work through reconciliation." (Emphasis mine.) "But if the House passes the Senate bill, and wants certain things improved on ... that is something that could be done through reconciliation."

Conrad's anger at what he called "misreporting" is certainly justifiable. With all the coverage we've had about Senate procedure and this "arcane" rule, it makes sense to ask how much they covered the Republican use of reconciliation in 2003? As Jamison Foser reports, they didn't.

Conrad expanded on his remarks in a talk with Ezra Klein. Conrad explained that his widely-reported comment that "comprehensive" health reform couldn't be passed through reconciliation was taken out of context, since it has already passed with a 60-vote margin. Changes to a bill that affect spending and revenue are appropriate for the reconciliation process. That's what reconciliation is designed to do -- to "reconcile" budgetary differences between House and Senate legislation. "A sidecar would be a good candidate for reconciliation," added Conrad, "depending on what's in it." The term "sidecar, " as used by Senators like Judd Gregg last year, refers to any bill that changes previously-passed legislation.

Abortion and immigration fixes would not be candidates for reconciliation, according to Conrad's interpretation, because they do not primarily affect the budget. But the level and type of taxes, Medicaid provisions, the percentage of Medicaid paid by the Federal government, and affordability would all qualify for reconciliation fixes.

Dionne made the same procedural points that Conrad did, and rightfully singled out Orrin Hatch's mendacious op-ed in the Post as an example of the hypocritical talk about reconciliation.

How about Hatch's claim that Senators are using "an arcane budget procedure to ram through the Senate a multitrillion-dollar health-care bill that raises taxes, increases costs and cuts Medicare"? Leaving aside the lie about "cutting Medicare," Hatch's figures are off ... by, oh, a few trillion or so.

The fact is, an $871 billion bill has already passed the Senate. The president's proposal, which splits the difference on a number of discrepancies between the House and Senate bills, weighs in at a total estimated cost of $950 billion. So Senators would be asked to vote for a reconciliation bill that spends less than $80 billion.

How does Hatch's current outrage compare to his position in 2003, when a round of Bush tax cuts was passed using reconciliation (and Dick Cheney's tie-breaker vote as Senate president pro tem)? Numbers don't lie, even when Senators do. The Joint Committee on Taxationestimated the ten-year cost of that bill (not all the Bush tax cuts, just the one passed that year through reconciliation) at $415 billion. Do the math: The reconciliation process Hatch calls "unprecedented in scope" would cost about one-sixth as much as the 2003 reconciliation tax bill.

Needless to say, Hatch voted for the tax cut.

The president's proposal makes only minor changes on the revenue side, making the tax burden fairer than it was under the original Senate bill. And the President spends more money to make premiums affordable. While the Presidential proposal costs more than the Senate's proposal, it costs less than the House bill, which originally priced out at just over $1 trillion for the same time period (according to the CBO's estimate).

The president's proposal reconciles the cost difference between the two bills. And now that he's gone on record as favoring "an up-or-down vote" on the bill (a little rhetorical jujitsu against Republicans), the strong implication is that he's pushing reconciliation as the preferred procedure, despite his reluctance to use the word. But since his objective is to reconcile the two bills, it's the right process, whatever word you choose.

As for the reform bill itself, it's still suffering politically from the nonstop battering its been receiving for the last few months. But it's on the comeback trail in the polls, although it's still got a way to go. As Jonathan Chait notes, centrist Democrats are beginning to understand that the political penalty for passing no bill may be greater than the penalty for passing thisbill.

Know what else would be a perfect policy to pass through reconciliation -- one that would reduce the Federal deficit? The public option. And 34 Senators are on record saying they want to try. But with or without the public option, reconciliation is the appropriate process for completing the health reform process. Anyone who says otherwise - and yet voted for that 2003 reconciliation bill -- is a hypocrite. And, though it's not polite to say it in the Senate, anybody who says that reconciliation's being used for an "unprecedented," "multitrillion dollar" initiative is, well, lying.

If guess if E. J. Dionne says it, it's not just rude-blogger talk. Besides, we've got the numbers to prove it.

The White House Weighs In On Health Reform -- What's Next?

The White House has just released "The President's Proposal" on health reform. It must be considered in context, and the context is this: The House and Senate have each passed a bill and they're deadlocked on the differences between them. The President is outlining what he considers a reasonable resolution of the two bills, with the expectation that it will be used to guide the remaining negotiations.

Will it work? Consider this: The alternative is no legislation at all.

The President is using the Senate bill as the template for the final legislation. But that bill will need to be amended, using reconciliation, in order to be acceptable to the House. So the only way to pass this legislation is by designing a reconciliation bill that will be acceptable to both chambers. Success will depend on the extent to which the President's proposal meets the House's biggest objections, which can then form the basis for a reconciliation bill that will pass in the Senate.

There were four major areas of difference between the House and Senate bills that caused problems for House progressives. The House members wanted to close the "donut hole" on Medicare drug costs, eliminate the excise tax on high-cost health plans, make coverage more affordable for lower and middle-income Americans, and have the Federal government pick up more of the increase in Medicaid spending. How successfully does the President's Proposal address these four issues?

The President's draft unequivocally closes the "donut hole," which is estimated to cost $38 billion over 10 years. Score one for the White House. It will be very difficult for the Senate to push back on this change, which is politically popular, so hopefully this is a done deal.

What about the excise tax? The White House proposal says that reform will "make insurance more affordable by providing the largest middle class tax cut for health care in history." They're no doubt referring to the proposed tax credits for health premiums, but the effects of those credits are likely to be heavily diluted by Obama's proposal to retain the excise tax on so-called "Cadillac" health plans, which will fall most heavily on the middle class (and, as was demonstrated in a new report last week, not on union members.)

The excise tax is still in the President's Proposal. So are the improvements to the tax negotiated by unions, from the look of things. The Proposal appears to retain adjustments for geography and for retired workers between the ages of 55 and 65 (although we're still awaiting confirmation of that.) The negotiated five-year delay until 2018 for applying the tax to union-negotiated health plans is still there, but broadened out to cover all plans, not just collectively-bargained ones. So the net result of the labor/White House agreement is that unions scored a victory for every worker who receives health benefits through their job, protecting them from the risk of having their benefits cut due to forces beyond their control.

The White House Proposal also says that it "increas(es) the threshold ... on the most expensive health plans from $23,000 for a family plan to $27,500." But that's just salesmanship: The original plan had the tax beginning in 2013 - the delay of the tax to 2018 puts the threshold at which the tax applies at virtually the same level as that already negotiated with labor.

The good news on the excise tax, then, is that it has been delayed and its effects have been moderated. The bad news is that it's still a bad idea. Rep. Joe Courtney is already pushing for a delay, saying in a statement today that "the excise tax issue should be set aside and studied rather than imposing a tax eight years in the future. Delaying the tax by nearly a decade and hoping that it doesn't hurt working families is like throwing a dart in the dark."

So at least some members of the House are likely to push back on this aspect of the President's draft.

What about affordability? The jury's still out on this one. Through a combination of tax credits, assistance, and costs borne by insurers, families making less than $44,000 and more than $66,000 per year would pay less in premiums under Obama's plan than they would under the Senate bill.

Families making less than $55,000 would still fare better under the House bill, but those earning more than $55,000 appear to benefit more under the President's plan (according toIgor Volsky). The impact on lower-income families may create some difficulties in the House, but that remains to be seen.

The White House appears eager to eliminate any proposals which suggest there's been horse-trading or deals with "special interests." That's probably why the excise tax has been delayed for all workers until 2018, and it is certainly why the special Medicaid deal with Sen. Ben Nelson - the so-called "Cornhusker Compromise" - is gone. Instead there are stronger and fairer subsidies for Medicaid nationwide, and that's a good thing. Specifically, the President's proposal provides uniform Federal support for Medicaid enrollees (the Senate's support levels varied by state) at higher initial levels than the Senate bill.

There are other improvements and other problems too. On the plus side, the President's draft broadens the Medicare Hospital Insurance (HI) tax above the Senate's, so that it applies to unearned income (right now it only applies to wages) above certain income levels. Although he exempted capital gains from this new tax - apparently in deference to his friends on Wall Street. It also increases Community Health Center funding to $11 billion over five years, which is nearly at the House's $12 billion level.

On the minus side, there's still not nearly enough genuine cost containment. Paramount among the missing cost containment measures is the public option - and not a restricted public option, but a robust one. The White House clearly doesn't intend to act on it unless its hand is forced by progressives. Other negatives: The Health Insurance Rate Authority appears to have less genuine regulatory power than it should. And mandates are still too employer-friendly and too tough on individuals.

Can all of these changes be included in reconciliation, which according to Senate tradition must address only issues that affect the Federal deficit? Arguably yes, since each of these changes has an impact on the Federal deficit. While there are no official cost estimates available, it appears that each of them would increase the deficit compared to the Senate bill but decrease it compared to the House bill. That would arguably qualify the proposal as a deficit reduction measure.

The House will no doubt push back on the excise tax and several other points - and it should. But if you believe that this is our only chance to enact health reform, and that a flawed bill can be fixed after it has been passed, then the President's Proposal will look pretty good to you. With the introduction of its proposal, which will probably be used as a discussion draft on Capitol Hill, the White House has clearly increased the likelihood that a bill will be passed this yea

Will This Study Finally End Democrats' Magical Thinking About the 'Cadillac Tax'?

It's been a fascinating anthropological exercise to watch the health excise tax concept (the so-called "Cadillac tax") keep its popularity among Democratic and liberals, even as one study after another discredits the assumptions behind it. It's the Democratic equivalent of trickle-down economics - an idea that doesn't seem to die no matter how much it's contradicted by the facts.

The Senate health reform bill places a 40% tax on all employer health benefit costs above a certain threshold. This tax came with a set of assumptions which have been disproven one by one. We were told that the tax would target health plans with especially 'rich' or 'generous' benefits, for example, but a comprehensive analysis showed that wasn't the case. We were told that employers would cut benefits as a result of the tax and give the money saved back to employees as wages, but surveys showed that they plan to do no such thing (more here).

Then we learned that the tax would disproportionately affect plans with lots of older people, or more women, or people who live in higher-cost parts of the country. Who could support an unfair-sounding idea like that? Barack Obama, for one. After months of silence as the Senate eviscerated one of his campaign promises after another, he finally spoke up ... in favor of the tax which he had lambasted during the election.

A lot of bloggers and commentators continue to agree with him, too,as do his top economic advisors. Why? In part, it's because they oppose the idea of using employers to provide health care coverage. I do, too -- but I don't think you fix that problem by reducing people's current coverage, especially in such a discriminatory way. After all, there's no other option available for these employees. It's like trying to solve the problems of public housing by throwing people out into the street.

Proponents also imagine that the employees affected will somehow become "smarter health shoppers," despite the fact that doctors - who are not taxed by the bill - make the decisions that drive health care costs. So there's also a heavy dose of Cato Institute-style free-market ideology in the idea (although its proponents would be shocked at the comparison.)

Finally the unions stepped in and negotiated a compromise deal with the White House. By this time the tax's proponents were insisting this was a merely tax on "union benefits," and that the unions were a "special interest" acting selfishly. Now a new study from UC Berkeleypunctures this final Cadillac-tax myth. Research conducted by Ken Jacobs and his colleagues at the Center for Labor Research and Education suggests that the vast majority of employees affected by the tax (at least 80%) would not be in a union.

It looks like the unions did everyone a favor by mitigating the effects of this tax. They've managed to reduce (though not necessarily eliminate) some of its more discriminatory effects. Yes, in some ways their negotiations would benefit union members slightly more, but only temporarily. And most of the people who benefit by the concessions they've won arenot in unions.

The unions managed to raise the tax's thresholds, and they got agreement in principle to adjusting the threshold for age, gender, and residence in 17 high-cost states. Yet major problems remain: The increase in threshold levels is less than one year's medical inflation. There's no adjustment for active workers over 55, who are an especially costly group. The potential adjustments for state and gender haven't been spelled out yet, but political experience raises doubts about whether those adjustments will fully account for cost differences.

The tax's proponents have embraced the CBO's conclusion that it will raise $149 billion in revenue over ten years, mostly by taxing those extra wages workers will supposedly get (but employers say they don't plan to give). Fact is, you can't collect taxes on wages that aren't paid - and if benefits are cut back, which is likely, you can't collect taxes on people's lack of health care coverage, either.

Jacobs et al. have other reasons to doubt the CBO's figure, too. They believe that the total number of employees affected by the plan is less than that the CBO projected. That, plus a lower estimated per-employee revenue figure, gives them a top number of $90 billion even without the union-won agreements.

So here's the likeliest scenario under the "Cadillac tax": A number of employees, mostly non-union, will find that their health benefits are either being taxed or (as is more likely) cut back. Their out-of-pocket costs (copayments and deductibles) will be raised, leading them to see the doctor less often. And their overall health costs may stay the same or even go up!

Oh ... and one more thing about the tax: The public hates it. Yet despite all that, if a health reform bill passes this year Democrats are expected to keep the Cadillac tax in it.

Why isn't this idea dead? Why doesn't somebody put it out of our misery? There are four reasons: The first nobody thinks the Senate can be talked out of it. The second is that it's one of the few remaining measures in the bill that even looks like cost containment, even though it isn't, and Dems want to be able to say they're cutting costs. The third is that the House's alternative is to tax high earners, and for whatever reason some Democrats are reluctant to do that.

The last reason is the most potent of all: Zombie ideas like the Cadillac tax and trickle-down economics are hard to kill. If they're "intuitive" - that is, if they sound good to you the first time you hear them - then you fall in love with them. And if the idea you love one day leaves millions of employees without the coverage they need? Well, then I guess it's like the old saying goes: Love means never having to say you're sorry.

Will the 'Don't-Blame-Me' Dems Take Responsibility and Fix Health Reform?

It hurts to lose a Senate seat but, hey - setbacks happen in politics. What's really discouraging is the sight of Democrats, from the White House on down, refusing to accept responsibility for their own part in this loss. That, more than the loss itself, is reason for grave concern about health reform - and the party's future.

I thought people involved in failure were supposed to look at their part in the problem, then step up and take responsibility for it. Watching the Democrats, those thoughts feel like relics from an archaic age. In old Britain, chivalric values required a Lady or Gentleman who let their side down to go into their study with a pistol and "do the right thing." Not these folks: They're too busy taking pot shots at each other.

It is, as Daffy Duck might observe, "an exathperatin' development."

There's plenty of blame to go around. Nate Silver's conclusions about what went wrong are smart and incisive. His back-of-the-envelope appraisal suggests that the seat would have remained Democratic if not for either one of two factors: Martha Coakley's terrible campaign, and a national environment that's turned toxic for Democrats. That means that the Coakley campaign and those responsible for the national environment (i.e. the Party leadership) are both responsible.

Forget the Coakley people for now, since they've had their shot: What are party leaders saying? Everybody's grandstanding, pushing their own agendas. Evan Bayh, for example, insists the problem is that Democrats haven't followed his centrist agenda. And let's review Joe Lieberman's recent comments ... Ah, let's not. The guy already gets too much press.

Both Lieberman and Bayh are wrong, anyway. Here are the first results from after-vote polling in Massachusetts: By a 3 to 2 margin, Obama voters who voted for Brown thought that Obama's reform bill "doesn't go far enough." And those Obama voters who didn't bother voting felt that way by a 6 to 1 margin. 82% of Obama voters who went for Brown (and 86% of those who stayed home) support a public option. And 57% of Brown voters said that Obama is "not delivering enough" on change.

Are you listening, Democrats? Or do the voices of the Lieberman/Bayh do-nothing caucus ring louder in your ears? We hear what we want to hear, after all. Case in point: Before the first vote was even cast, Rahm Emanuel was already blaming Coakley - and Coakley alone - for the loss of the seat. And David Axelrod was insisting that the unpopularity of the health reform bill was due the "caricature" its opponents had painted. Is the problem only caricature, and even a little content ? Besides, who's responsible for messaging around there?

Bill Scher asks a logical question: How could Massachusetts voters who like their own reform (58% are in favor) oppose a national health initiative that looks so similar? One answer is clear from the polling: 61% believe the government can't afford to pay for it, even though reform could reduce the deficit. Another sign comes from the same poll that showed 58% support: People who have been directly affected by the law like it less.

The unpopularity of national reform in Massachusetts wouldn't have been a surprise if Democrats had been more willing to look at the data there: While a whopping 79% of Massachusetts residents wanted to keep their reform, according to a Boston Globe/Harvard School of Public Health poll from last September, they "were nearly evenly split on whether Massachusetts could afford to continue with the law." Why? Because that state's reform hasn't done enough to contain costs - and neither would the President's. That poll was an overlooked warning sign.

Obama's let-Congress-do-it process also hurt. It cast a spotlight on the Senate, giving the public a front-row seat as concession after concession was made to the insurance industry. Even if the end result resembles Massachusetts', the unseemly spectacle tainted it - and its architects.

As Massachusetts voters cried out for meaningful cost containment, the White House decided to emphasize the "Cadillac tax" as its solution. But that tax unfairly targets people based on demographics and won't contain costs. (More info here.) And polls show that it's wildly unpopular. So after remaining passive while the popular public option died, the Administration finally weighed in - by pushing an ineffective and essentially indiscriminate tax based on widely-challenged, right-leaning economic theory.

And Dems seem to have forgotten that Massachusetts is more liberal than the country overall. 58% support there could translate to much less support nationwide. Even in that progressive state, a majority of people want reform improved - and that's with no organized resistance from the Right! Replicate that law in Red States, with Republicans in full revolt and tea-partiers parading in the streets, and you could be facing disaster. Throw in a regressive middle-class tax and the public perception that special interests drove the process, and the picture gets downright ugly.

Sadly, there's no sign that Democratic leaders are paying attention. Sure, they can pass the Senate bill as is, but that could hurt them - unless they immediately pass an amendment which creates a public option. The reconciliation process would be entirely appropriate, since a public option would decrease the Federal deficit. They could pass some genuine cost-containment measures that way, too, and jettison the neo-right-wing rain dance that is the Cadillac tax.

We only can hope that Democrats eventually learn from this experience, that they'll stop placing blame and start taking responsibility. There's a word for that:

Leadership.

What Would Dr. King Have Thought of Health Reform?

This year's commemoration of Martin Luther King comes as the nation struggles with the issue of health reform. What would Dr. King have thought of the current proposal? While nobody would presume to speak for him, his writings and speeches leave us plenty of clues. How better to honor his memory than to apply his thinking to such an important issue?

We can be sure that Dr. King would demand action.  "Of all the forms of inequality," he said, "injustice in health care is the most shocking and inhumane."  It's disgraceful to allow 45,000 people to die each year because they don't have health insurance, and we can assume he would support any effort to lower that number.  But those deaths won't disappear altogether under the current proposal.  The CBO estimates that 9 million people will remain uninsured, and they're awfully optimistic about the number of people who can pay staggeringly high premiums.    The latest figures show that there are 46.3 million uninsured Americans.  That means that even if the CBO is right, more than 8,600 people will still die each year from lack of insurance.   The actual number could be much greater.

Nor will we have equal health care for all.  The infant mortality rate for African American babies in the US is 2.5 times greater than it is for non-Hispanic whites, according to data from the National Center for Health Statistics.  That figure is likely to improve under reform, but not nearly enough.  African-Americans die years earlier than whites at all income levels because, according to one study:

"... elderly black and Hispanic patients often received substandard care for common but serious conditions like heart attacks, congestive heart failure and pneumonia. Researchers say their data suggests that the nation's healthcare system is racially and ethnically segregated, not just for the elderly, but across the board."

These elderly patients have Medicare, and many higher-income minorities have employer coverage, so this is not an insurance issue.  It's the product of an ongoing system - call it "healthcare apartheid" - that treats minority patients differently and less effectively than whites.  In 2010, American healthcare is still "separate and unequal."

It's also worth considering what Dr. King might have thought of health reform that has jettisoned the public option, leaving for-profit insurance companies in sole command of most Americans' healthcare.  We can't know his reaction, but we do know that he said "traditional capitalism" has "created conditions permitting necessities to be taken from the many to give luxuries to the few, and has encouraged smallhearted men to become cold and conscienceless ..."

Added Dr. King:  "The profit motive, when it is the sole basis of an economic system, encourages a cutthroat competition and selfish ambition ..."

Will the coverage people receive tomorrow protect them in time of need?  Reform will provide many people with health insurance - and will require many others to purchase it. But our current private-insurance system still leaves actual medical treatment out of many people's economic grasp, and often fails to protect them from financial ruin caused by illness or injury.  

The problem's getting worse:  “Insured people in poor or fair health experienced more than a 5 percentage point increase in unmet need (9.0% in 2003 vs. 14.2% in 2007)," a recent study concluded.  These findings are consistent with a Gallup poll showing that three out of ten Americans, the vast majority of whom had health insurance, said they were forced to put off needed care. 

People will have insurance, but not assurance, after reform passes.  They will receive coverage but may not always receive care.

It's hard to imagine that Dr. King would be satisfied with mandating Americans to purchase inadequate insurance from for-profit companies, or with the Senate bill's harsh treatment of some Americans at the lowest end of the income scale. A family of three making $25,000 per year would pay $1,025 each year in premiums under the Senate bill, while under the House bill they would be covered by Medicaid with no premiums at all.

What about the so-called "Cadillac tax"?  It's hard to believe Dr. King would support taxing costlier benefits, especially when "rich" benefits have very little influence on whether a benefit plan falls under the tax or not.  The discriminatory effect of the tax , which cuts benefits because of forces outside people's control, seems hard to reconcile with Dr. King's philosophy.

Dr. King would probably be gratified that health reform will benefit many lower-income people.  But it's hard to picture him supporting provisions which place heavy burdens on those who can ill afford it.  Reform accomplishes some worthwhile things, but only at the cost of a massive transfer of wealth from the middle class to for-profit insurers.

Many people on the Left have been cheering for the Senate bill for weeks.  They say that thosenoisy activists pressing for a better bill are too abrasive and too demanding, that they're making life too difficult for the President and Congress.  For guidance on that, we'll have to turn to Dr. King's famous Letter From a Birmingham Jail:

"I must confess I am not afraid of the word 'tension.'  I have earnestly opposed violent tension, but there is a type of constructive, nonviolent tension which is necessary for growth."

On this Martin Luther King Day, the struggle isn't over.  There's still time to fight for the most just, wise, and equitable bill possible.  And if there's a signing ceremony, the time to fight won't be over then either.  The work, in fact, will have just begun.

The Washington Post: Always Fighting the Wrong War

The Washington Post has an uncanny knack for being in the wrong place at the wrong time, pushing the wrong policies and making the wrong moves. That's four wrongs in once sentence, and four wrongs don't make a "right" - unless you're talking about "right"-wing bias. But here's the good news: They've given me an idea that'll make a million bucks.

It's not just their opinions or their reporting that are off-base. It's their timing, too. Two of their latest moves - outsourcing their financial reporting to a wealthy conservative ideologue and endorsing an unpopular policy - could leave the paper struggling to retain its credibility.

The Post's December 31 edition ran a "news article" about the Federal deficit that was actually written by an external organization called the Fiscal Times. They plan to use this outside group for all their financial reporting. The "Fiscal Times" is owned and operated by billionaire Pete Peterson, an antitax conservative ideologically opposed to government spending. And guess what? The "Fiscal Times" reporters found nobody who supports continued government spending - although more than forty organizations do - and a whole lot of people who want it cut.

In fairness, those anti-spending types weren't hard to find: They were already on Pete Peterson's Rolodex. He gives money to support most of them. Economist and veteran press watcher Dean Baker said he considered this outsourcing a signal that the Post "is no longer a serious newspaper." (Roger Hickey provides more details on this venture here.)

You'd think the Post would have learned its lesson by now. Back in July it was widely condemned for its plan to hosts "salons" where patrons would pay up to $25,000 for the right to hobnob with government decision-makers and Post staff. That gave the appearance of letting people pay to influence both policy and Post coverage, which is why its own ombudsman called the move "an ethical lapse of monumental proportions."

So, rather than sell influence, the Post simply outsourced an entire segment of its newsroom to an ideologically-driven third party. (Aren't readers entitled to know the terms of that deal?) But look on the bright side: The good news is that you can't pay to influence Peterson's coverage: He doesn't need the money, and he can't be influenced because he's already made up his mind.

The Post's newsroom has also been accused of downplaying stories that contradicted its editorial support for the invasion of Iraq - support so extreme and jingoistic that the paper was compelled to respond to the backlash in print back in 2003. But they were still at it in 2004, 2006, 2007, and 2008.

Are we seeing the same sad conflation of editorial policy and newsroom behavior on health reform? They've already demonstrated bias in their reporting on this issue, as when the paper incorrectly reported that activist Adam Green supporting the public option couldn't muster a single argument in favor of his position (a statement Green called "ridiculous"). And this week, using its customary combination of incomplete information and bad timing, the paper published an editorial on a subject close to my heart: the so-called Cadillac tax on high cost health plans.

The article is entitled "Will President Obama Defend the 'Cadillac Tax' To Cut Costs." Writers, take note: It's a well-crafted title, especially because all of Washington knew that the President was negotiating to ease the burden of the tax even as the editorial went to press. The use of the word "defend" suggests that it would be "surrender" - that is to say, "weak" - for him to show flexibility. Likewise, their use of the phrase "cut costs" implies that, despite the lack of any supporting data, it is a cost-cutting measure.

The editors rehash the same tired arguments that have been refuted so many times already - that it "reduce the over-consumption of health care," that a 13% difference for older workers is fair (then why does the Senate bill allow insurance companies to charge three times as much for the same people?), yada yada yada. (For more detailed rebuttal of these empty positions, see "Jonathan Chait's Endless Love" and other pieces at No Middle Class Health Tax).

The Post is highly selective and misleading in its use of information here, and not for the first time. It has has allowed George Will to print falsehoods in his editorials, and has often ignored refuting information when presenting its opinions. They've always defended this behavior by saying editorials are opinions, not journalism. But readers don't expect papers to twist the truth anywhere in their pages, and they deserve be told of the many studies (originally 18, now more) contradicting the Post's assertions about the tax.

But what's most striking about this editorial is it's bad timing. Once again, the editors are chasing a train that's already left the station. There's very little disagreement left about the fact that the age and gender impact of the bill would be discriminatory, so why defend them now? Just to give the President another headache? It's certainly not to provide new insights on health policy, because they offer none.

"When life gives you lemons," the old saying goes, "make lemonade." So here's my million-dollar idea: If the Post will outsource financial reporting to an anti-spending conservative, why wouldn't they outsource their health reform reporting to ... insurance companies? I figure I can get ten big insurers on board for a million each - hey, they're spending that much every day on lobbying - and then become the Washington Post's bureau chief for health reform reporting. I think I'll call it "Insurance Times."

But I better act fast: Once this bill gets passed I'll have to find another industry to back my venture, which could change journalism forever. Oh, I forgot - there's always the war. Does anybody have the phone number for Halliburton's CEO?

Jonathan Chait's Endless Love

The New Republic's Jonathan Chait has penned an ode to the excise tax on health benefits. He says his "faith in the Cadillac tax remains ardent," even after being led astray by a faulty graph.  We hate to dim his ardor, but it's a love gone wrong.  You should know in advance that it's not a typical love story, though: there will be some math.

Chait sought to rebut criticisms of the tax from Allen Sloan and Bob Herbert.  He's especially angry at Herbert for saying that "the dirty little secret behind this onerous tax is that no one expects many people to pay it."  He's so angry, in fact, that he uses an entire paragraph - 98 words -  just to object to the phrase "dirty little secret."  (That's a word ratio of more than 36:1; we told you there would be math.)

Then he turns his ire on Sloan for doubting that employers would return the money they save (by cutting benefits) to their employees.  He takes particular exception to this statement from Sloan:  "I ... find it hard to believe that employers can work any harder than they already do to hold down health care costs."  Chait responds as follows:

First, Sloan doesn't believe that employers could do any more to hold down health care costs than they already are? What exactly are they doing right now? And even if you think they are doing a lot already, surely scaling back a tax break that encourages lavish spending would encourage them to step up their efforts, right?

Let's start with that "lavish spending" piece.  A definitive study published in Health Affairs analyzed actual employer health plans and discovered that benefits design (the allegedly "lavish" part) accounted for less than 4% of the cost difference.  Plans won't be taxed because employers are spending lavishly.  They'll be taxed because employees are older, sicker, work in the wrong industry, or live in the wrong part of the country.  The typical benefits given to people in these categories accounts for 96.3% of what makes a plan costly (or, to use  Chait's word, "lavish.") 

Singling these people out for demographic reasons isn't a matter of identifying health system abusers:  it's discriminatory.

Employers have experienced annual cost increases of 131% over the last ten years (Kaiser Family Foundation), and have increased employee premium contributions by 128% - and that's not counting all the benefit cuts that have increased out of pocket costs for employees.  That's how they react to cost increases. Since they can't reduce them, they pass more of them on to their workers.

That's not cost-reduction.  It's cost-shifting.  That's not "bending the curve."  It's passing a bigger portion of the curve on to the middle class. Yes, they'll "step up their efforts" - but their efforts only hit the family pocketbook.

Chait goes on to argue that, despite objections from many analysts and economists, the money saved will be passed on to the affected employees in the form of increased wages.  What he doesn't tell you is that in two recent surveys, employers - real employers, not extrapolations from statistics - indicated overwhelmingly that they would not do that.  No way, no how. (Mercer, Towers-Perrin)

He then cites "a shelf of studies" on the wage/benefit connection, and quotes at length from Austin Frakt's review of the literature .  (Frakt actually only lists eight, which is a pretty short shelf, and two are from one source, Jonathan Gruber.)  Frakt quotes two researchers (Baicker and Chandra) as saying that a 10% increase in health premiums reduces the likelihood of being employed by 1.2%, reduces hours worked by 2.4%, and has other effects. 

Frakt goes on to say that "we don't have to take just (their) word for it," naming seven more studies on wages and price (plus an aggregation of all of them).  But the other studies don't confirm Baicker and Chandra!  They just indicate that there is a relationship between wages and health care costs - a fact which few deny. 

Furthermore, I did what Chait presumably did not do, and actually read their paper.  (Frakt may not have read it either; he only quotes the publicly-available abstract. I, sparing no expense for the public good, sprang five bucks for the whole thing.)  The authors used an interesting but unorthodox methodology involving medical malpractice rates  - but their malpractice database excluded dentists, and dental care would be disproportionately affected by the excise tax.

Assuming their methodology is essentially sound, however, it's worth noting that the authors found their correlation to be especially strong in manufacturing, a shrinking industry.  And they also found that much of wage/benefit shifting occurred with married workers who already had health coverage.  We could debate the merits of this intriguing study endlessly, except for the fact that ...

... it's all moot where the excise tax is concerned.  The excise tax is not designed to find wasteful or excessive spending.  It's just designed to reduce what health insurance spends.  Heck, you could reduce that to zero tomorrow.  Just outlaw health insurance!  The remaining costs would be covered by people out of their own pockets - to the extent they could afford care.

That's what the excise tax does:  it shifts cost back to individuals.  So if Baicker and Chandra are right, some employees will work 2.4% more hours.  But that income will be taxed.  Instead of receiving a dollar's worth of coverage, they'll work to earn that $1 and only have seventy cents or so left after taxes.  That's a net loss of roughly 30%, and they'll have to work more hours to get it.

Such a deal.

And the excise tax will target only a tiny part of the overall cost curve.  We need reform that goes where the big dollars are - areas like overtreatment, chronic disease, and hospital care - not more marginal tinkering at the expense of the American middle class.

I'm glad somebody's feeling "ardent' about this tax, since I noted yesterday that most of its other supporters aren't feeling the earth move.  But with the impact this tax is going to have, it's worth asking:  What's love got to do with it?

A Tax Even Its Defenders Can't Love

People are saying that the so-called Cadillac tax "might fall flat" and "has real problems."  And those are its defenders.  I can't remember any new policy in recent history whose own advocates had so many complaints with its design.

Not that we're  "Ezra Klein Watch" around here, but Ezra's become the locus and the spokesman for the pro-tax contingent. He's mounted a yeoman's defense, using a broad (if what occasionally seems to be shifting) array of arguments.  Not that all of his points are without merit, by any means.  He and other tax proponents have raised compelling arguments that merit serious discussion.  Unfortunately, they don't have much to do with this tax. 

The debate shifted after studies (by Gabel et al. and the Milliman actuarial firm) showed that "richness of benefits" is not what would place most health plans into the tax.   It mainly targets benefits for older, sicker people, those than live in the wrong part of the country, or those in the wrong industry.  Then we learned that yes, employers will cut benefits if the tax is passed, but no, workers won't get the money their employers save as wages.  Two consulting firms (Towers-Perrin and Mercer) confirmed overwhelmingly that companies intended to keep the money instead.

Sure, reducing overall health costs would free up more money for wages in the future.  But nobody's explained how this tax would reduce overall costs. All we know is that these workers, whose coverage would be cut now, would  get nothing in return.  Meanwhile there would be a lot of unfair suffering - suffering to which the tax's defenders seem uncharacteristically indifferent.  "No one should be under the illusion that this tax will not cause some pain," writes Ezra.  "Everything has losers."

So if your coverage gets cut because your co-workers are too old or too sick, take comfort:  Everything has losers.

Ezra acknowledged the problems during an online exchange we had recently.  "My argument is not that the excise tax is without problems, or sure to work," he said then, "(a)nd I don't deny that (it) might fall flat."  But he's still pushing for it.

 "The excise tax is a tax that's meant to change behavior," he writes, "much like a cigarette tax." But a cigarette tax taxes cigarettes.  This tax doesn't target inappropriate or excessive use of health services.  It taxes everything.  It's like cutting working families' grocery budget with the rationale that "some of them might buy cigarettes with that money."   It's a blunt instrument where we need a  scalpel.

A "cigarette tax" approach to benefits would require a national discussion of "basic" vs. "optional" coverage  - ie, is vision coverage obsolete? - or some other creative ideas.  Maybe we should tax services that fall outside of accepted medical practice standards, or tax providers if they deviate too often from best practices.  (I'm not endorsing these ideas, merely listing some alternatives.)

Ezra also voices an argument I've heard privately from some health economists: "(A)ll employer-based insurance, right now, is exempt from taxes -- a regressive and cost-increasing decision that this barely begins to redress.This is a tax that should already exist, and it should exist on every dollar of health benefits, not just every dollar above $23,000."

It's a legitimate point.  Our employer-based system is an historical anomaly, one that treats some forms of employee compensation differently from others.  That's inherently unfair.  But the wage levels we have today are the product of this system.   They've grown up together with these  benefits, like tangled vines.  If we were to make a national decision to tax health coverage - an idea that was  mocked when Republicans suggested it - we would need to have a well-thought-out transition plan.  Otherwise we'd have an enormous de facto wage cut for our already-beleaguered middle class.

If we're not willing or able to do that for the country as a whole, why select a portion of the insured workforce - on a discriminatory basis, no less - and do it to them? 

Paul Krugman reluctantly endorsed the tax while simultaneously criticizing it:  "A flat dollar limit to tax deductibility has real problems. At the very least, the limit should reflect the same factors insurers will be allowed to take into account in setting premiums: age and region."  There's a genuine imbalance here:  The Senate bill allows insurers to charge up to three times as much for older people's coverage, but raises the tax's trigger point by only 13% for workers over 55. (And, to clarify, that's for retired workers.  An active workforce with a a higher percentage of older employees will still be unfairly hit.)

Prof. Krugman insisted that "the final bill should address the criticisms."  Amen.  That goes beyond Prof. Krugman's proposed modifications to the tax design. WHile they would relieve the most egregious discriminatory effects of the bill, they still wouldn't address the fundamental problem:  This tax doesn't target excessive care.

That gets us to the last line of defense:  that this tax, however flawed, is a first step toward genuine cost containment.  But nobody's explained how it would contain costs, and insurers have always responded to increased expense by shifting costs back to patients - not by getting smarter.  Why does anyone think a badly designed tax that causes indiscriminate pain will evolve into something better?  The most likely outcome is a backlash that makes genuine cost containment impossible for a generation.

There are good proposals, there are bad proposals, and there is the proposal on the table today.  The tax's defenders have come up with some interesting ideas - or at least the germ of some interesting ideas.  But those ideas aren't the table: this tax is.  Let's not settle for a  flawed idea.  Let's implement something that works.