City of Brass

City of Brass

Baucus bill follies: the public option is anti-progressive

I’ve been reading Tyler Cowen, Ezra Klein, and the League on the matter of the Baucus bill and am frankly bothered by the way in which progressives seem to be losing sight of the main goal of health care: to bring affordable coverage to 100% of all Americans. This is a goal that the vaunted public options does exactly zero to achieve, and it strikes me might actually be undermining these basic principles instead.


It should be noted, again, that the public option would only be available to a small fraction of citizens who are either ineligible or unable to afford private insurance. So the scope of the public option is limited to begin with, and certainly will be constrained so heavily that it will never, ever be the stealth road to single-payer that most of the progressives who are intent on making it a litmus test seem to think it will.

The problem is that the bipartisanship-obsessed reformers like Baucus are trying to trim the overall bill’s cost below arbitrary limits as a guiding principle, rather than trying to craft the best policy to achieve the primary goals and then simply determining the cost. What difference does it really make if the final bill costs $800b or $1200b over the next decade? We just spent $800b on bank bailouts! But when it comes to blue-collar industries like the automobile workers, or something as critical as universal health care, suddenly we are being penny wise and pound foolish.


The foolishness is laid out quite starkly in this graph of the cost of the insurance mandate on lower-income middle class families:


Republicans are calling this a middle-class tax increase, and they are right. The solution is not to scrap the bill but to spend more money so that the impact on the middle class is ameliorated via subsidies. Inclusion of a public option would actually suck up even more of the reform budget and cause these effective tax burdens to increase; if progressives really want a progressive policy, then they should concentrate their energy on increasing the overall budget for the reform bill so that the main goals: universal and afffordable coverage, are met.


And let’s not forget that Baucus only gets us to 97%. “Universal coverage” still leaves 3% – 9 million people – out in the cold.

Reform won’t come cheaply. By trying to play the “cost savings” game, progressives are validating the conservative framing that for some reason, health care reform must be uniquely held to absolute fiscal standards, none of which were required for other reforms in other sectors of the economy (not coincidentally, the ones that cater to upper class and corporate interests). Liberals should be making a forceful argument for spending the money we need to get the job done, not mooning over a fanciful and frankly emasculated “single payer lite” pipe dream.


Not to say that fiscal responsibility isn’t important. But instead of jumping through hoops to force the funding in, why not think outside the box for revenue? I am on record as supporting a VAT, coupled with a reduction in corporate income taxes. What if we further specified that all VAT revenue would first be applied to finding health care reform to make up the difference in case of cost overrun? Further, surplus from the VAT could be applied to pay into the Social Security trust fund, and after that pay down the national debt. There’s a lot of ways we could tweak the details, but the point is, where are the forceful progressive voices advocating for some manner of VAT to help achieve the goal? Yes, VAT taxes are regressive, but that can be partly ameliorated via subsidies, and let’s face it, paying a VAT will cost an individual less than having no insurance, especially if you are poor.


And one more thing – given that Baucus’ plan would hurt Medicare Part D to the tune of $174 billion, liberals should also be making a forceful case for drug price negotiation, as well. These are the real lines in the sand. Or at least, where they should be.

Let me reiterate: liberals should be arguing for more spending on the reform bill, new taxes like a VAT (coupled with other measures to make it palatable), and drug pricing negotiation, so as to ensure that we reach the 100% coverage mark and we do not raise taxes on the middle class. Instead, they remain obsessed about the public option. It’s a tragedy, and if and when reform dies and we are stuck with the status quo, the progressives’ ideological purity won’t mean a thing to the family who still doesn’t have a way to pay their medical bills for Timmy’s cancer.

UPDATE: 543 amendments to Baucus’s bill by Democrats alone. Good.

  • Al-Muhajabah

    I agree with you that the obsession many progressives have with the public option is misplaced and may even be wrong-headed. I’ve learned a great deal by reading Ezra Klein in particular and I wish more progressives would really pay attention to what he says. Good post!

  • La Ventanita

    The article says “543 in all, from both Democrats and Republicans.”
    So, the amendments are not all Democrats as you state. I think you need to revise your update.

  • Thomas Nephew

    As one of those progressives seeking to make the public option a litmus test, I’ll try to respond with a number of brief points.
    1. Perhaps obviously, as near as I can tell from following the link, the burden depicted in the chart are gross burdens for previously uninsured families of these income levels. These burdens might well be too onerous, and I support reducing that burden if possible. But to call the premiums a “middle class tax increase” is baloney, because only a fraction of the middle class is involved.
    2. I say “might well” because Beaudrot’s update to the post implies the original chart is inaccurate: it overestimated the costs of ‘Baucuscare’ by underestimating the subsidies it provides.
    3. At a more fundamental level, I’m nonplussed by holding out the shortcomings of Baucus’s proposal as an argument against a public option, since his proposal doesn’t include one, and I’m nonplussed by your assertion that a public option does “zero” to achieve full health care, because its point isn’t just to “mop up” uninsured people, but to provide (indirect) competitive pressure on private companies by example: if the combination of premiums, copays, and service by a nonprofit public insuror makes people wish they could join it, private insurors will have to follow suit or see “public option” be made available by choice to any American (as I think it should have been in the first place).
    4. “the scope of the public option is limited to begin with,” — agreed “..and certainly will be constrained” — agreed — “so heavily that it will never, ever be the stealth road to single-payer that most of the progressives who are intent on making it a litmus test seem to think it will.” That’s a very, very strong statement — where can I buy your brand of crystal ball? :) The only way it “never, ever” would is if it’s “never, ever” passed.
    5. I present some of these arguments and some others at my blog.

  • dblhelix

    I’m stopping by here to give you props for your diary at dailykos, even though it wasn’t well received.
    The ‘public option’ on offer as of today is, of course, anti-progressive. The problem is that most people are not aware that most states already have a form of guaranteed issue. For a number of states, like MA, NJ, NY, to name a few, it works in the same way we’d expect an exchange to work: higher-income, high-risk (medically uninsurable) will get their “choice” in the exchange, where all policies are subject to guaranteed issue, subject to some limitations (quotas). Low-income and low-income high-risk generally have a limited set of products to choose from. In MA, for example, the difference is the Commonwealth Choice vs Commonwealth Care.
    A small number of states have guaranteed issue open enrollment once a year — subject to quotas.
    The majority of states (34) have established a high-risk pool that is segregated from the private individual market. Some have low-income subsidies, like MD, up to 300% FPL. Naturally, the products offered are limited as compared to the private individual market. Almost all of them operate at a loss — the few exceptions usually have very high deductibles coupled with very high premiums and low enrollment.
    What people are missing is that in the 19-64 range, around 75% of covered services are due to chronic care. The chronic care market is disproportionately medically uninsurable/low-income.
    Note that in the Baucus bill, per Obama’s recent speech, a high-risk pool is set up, to be dissolved in 2013. This means that either the high-risk pool is dispersed in the exchange or segregated in a ‘public plan,’ per restrictions detailed by Obama himself and the legislation that’s out there — open only to the uninsurable. I find his constraint of “must be sustained by premiums” to be unrealistic.
    If you look at the CBO’s comments for the Senate HELP’s “public option,” there is a clear statement that yes, “our” premiums would be held a bit lower, but that’s because the CBO expects the “unhealthy” to dominate the “public option.”
    It can never be competitive. You will not find a single state where the high-risk pool is in any way desirable as a vehicle for competition. In my state, MD, for FY08, about 13% of its members accounted for 77% of the costs — premiums covered about 42% of this.
    I was amused that you were accused of representing AHIP. In fact, I’m sure AHIP would be quite pleased with the continuation of state-level high-risk pools where new customers, even if unhealthy, are subsidized. My opinion is that when the volume was turned up on “public option” earlier this summer, our politicians crafted these restrictions to maintain the status quo.
    Either public option advocates or politicians in favor of what is in legislation need to show how the concept “scales up.” My suspicion is that it doesn’t scale up very well — putting the uninsurable into their own pool is a form of adverse selection, of course. It’s far too late to claim that it’s a mini-form of Medicare-for-All. To grow into a competitive structure, it would have to be seeded with the healthy in proportion to the general population.
    Feel free to email if you have any questions — I’ve been researching this quite a bit lately as much that I hear about the argumetns have never made any sense.
    Olympia Snowe today put in a trigger amendment for what she calls a “safety net.” She is correct. That’s what it is.

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