Reid Releases Health-Care-Reform Bill     Permalink

After nearly a year of deliberations, majority leader Harry Reid released the full text of the Senate's health-care bill, which consists of the Finance Committee Bill merged with the HELP Committee bill and some new twists. Here are some key features of the 2074-page (doubled-spaced) bill:

• Insurance exchanges will be set up in 2014 to help the uninsured get coverage.
• A public option will be available on these exchanges.
• Anyone below 133% of the federal poverty line will be eligible for Medicaid.
• Anyone between 133% and 300% of the poverty line will get subsidies to buy insurance.
• Insurance companies will be required to accept all new customers, even with preexisting conditions.
• Annual and lifetime limits on coverage will be prohibited.
• Insurance companies will be forbidden from canceling policies when a person got sick.
• Insurance companies will not be allowed to charge sick people more than healthy people.
• Employers with more than 50 employees will be fined for not providing health insurance.
• Small businesses will receive tax credits to help them buy insurance for their employees.
• Uninsured individuals will be fined $750 per year.
• The size of the Medicare donut hole will be reduced by $500.
• Children will be allowed to stay on their parents' policies until age 26.
• Policies will have to explain their benefits in a standardized form in simple English.
• An appeals process will be created so patients can fight back when coverage is denied.
• There are many provisions encouraging preventive medicine.

The bill will result in 31 million additional Americans getting insurance and will cost the government $848 billion over 10 years but this amount is more than covered by new taxes, resulting in a net reduction of the federal debt by $130 billion over this period. In the second decade, the savings will reach $650 billion. President Obama insisted that the bill come in below $900 billion simply for political reasons--then the Republicans would have to talk about an $848-billion-dollar boondoggle instead of a trillion-dollar boondoggle, which sounds much worse. There are new taxes on gold-plated health-care plans, medical devices, and elective surgery. Medicare payroll taxes for high earners will be increased and growth of Medicare expenditures will be curtailed. The new taxes proposed are one of the major areas where the Senate and House bills differ so there will be much haggling in the conference.

Many People Have Wrong Expectations about the Health-Reform Bill     Permalink

Except for people who have really been following the health-reform debate in detail, many people have do not have a good idea of what it will really mean. Politico has a round-up of some common misconceptions a lot of people have about the bill Given all the screaming and yelling about it, it is not surprising that even if a bill passes, it will not be what many people expect. Here are some of the most common misconceptions.

• Everyone can choose the public option (No: only about 30 million will be allowed to).
• Everyone can use the new exchanges (No: only the self-employed and the poor can).
• The new choices take effect immediately (No: they start in 2013).
• There is a big fine if you don't have insurance (No: zero until 2014; $750 in 2017).

For the vast majority of people, who get insurance via their employer, nothing at all changes. They cannot choose any of the new alternative forms of insurance and are stuck with whatever their employer offers them, good or bad. President Obama sees this as a feature, not a bug, because it provides the minimum possible disruption to the current system--and look how much opposition it generated. Sen. Ron Wyden (D-OR) never tires of telling people that if you don't like your car insurance company, you can get a new one but if you don't like the health plan your company picked, well, tough luck--but nobody is listening (Wyden wants to force companies to offer at least two plans). Of course, some of this could change in the conference bill or come 2015 or so, Congress could allow more people to use the exchanges once they are operating, but any attempt to expand eligibility will meet fierce resistance from the insurance companies and the Republicans. On the other hand, once the exchanges are operating and it is clear to everyone that the world as we know if has not come to an end, it will be harder to oppose expanding the pool of people allowed to use the exchanges.

If the public option is included in the final bill and passes, it is likely that the insurance companies will quickly see its value. They will try very hard to annoy sick customers in hopes they will voluntarily leave and use the public option. This will (1) get rid of expensive customers and (2) burden the public plan with expensive people, making it impossible for it to offer low premiums. How might the insurance companies annoy people they don't like? They could make them wait on hold endlessly when they call for information and then give them a run-around when they finally get through, be slow making payments, make "mistakes" all the time, and so on. Conversely, they could give excellent service to young, healthy customers.

Preview of the Top 2010 Senate Races     Permalink

While the Senate is gradually moving towards a health care bill, let's look at the top 2010 Senate races, that is, the seats most likely to change party. First we look at the Democratic seats that might switch (in alphabetical order) then the Republican-held seats, again in alphabetical order. At this point in time, it is much too hard to guess which ones will be the toughest battles. In many cases the two candidates aren't even known yet.

Virginia and New Jersey Follow Historical Pattern     Permalink

Republicans Bob McDonnell and Chris Christie won their gubernatorial races in Virginia and New Jersey, respectively. With stories spinning in all directions about the predictive value of yesterday's elections, perhaps a look at the historical record of the Virginia and New Jersey off-year elections will prove of interest. In all eight gubernatorial elections since Ronald Reagan's first term, Virginia has given the party of the incumbent President a loss. In New Jersey, the President's party has lost six gubernatorial elections in a row`. Here are the data.

House Health-Care Bill Unveiled     Permalink

Yesterday House Speaker Nancy Pelosi rolled out a $896 billion dollar health-care reform bill (HR 3962) that will go to the House floor for an up-or-down vote within 2 weeks. A summary has been posted online. Some of the key features include:

• People who like their current plan may keep it.
• Individuals not covered and some small business may buy insurance at new exchanges.
• One of the offerings at these exchanges will be a nonprofit public plan.
• A committee chaired by the Surgeon General will draw up a list of benefits all plans must include.
• Insurance companies will no longer be allowed to discriminate against sick people.
• Annual and lifetime limits on payments will be forbidden.
• Children may be covered by their parents' plans until age 27.
• All plans will have to offer preventative medicine for free.
• About 96% of the population will be covered; most of the rest are illegal aliens (not covered)

• Families making up to 4x the poverty level ($88,000) will get federal subsidies.
• The Medicaid income limit will be raised 50%, making more people eligible.
• Patient out-of-pocket expenditures for health care will be capped at $10,000 per family.
• Part of the Medicare "donut hole" will be plugged.
• Medicare will be allowed to negotiate prices with drug companies.
• Insurance companies will have to spend 85% of their premium income on medical care.

• Anyone who does not have insurance must pay a fine of 2.5% of their income.
• Any large company not offering a health plan will be taxed at 8% of its payroll.
• Insurance companies will no longer be exempt from the nation's antitrust laws.

Senate Bill Will Contain a Public Option     Permalink

Reversing his position of only three weeks ago and despite some foot dragging on the part of the White House, majority leader Harry Reid announced yesterday that the merged bill he will bring to the Senate floor will contain a "public option," that is, a government-run health insurance system analogous to medicare. The bill will allow states that don't want to participate to opt out. The "opt out" part is an idea due to Sen. Tom Carper (D-DE) and pushed hard by Sen. Chuck Schumer (D-NY). It provides cover for red-state Democrats who feel their voters may punish them for such a plan.

In reality, the opt-out means little to nothing, as Schumer well knows. To opt out, a state will have to pass a law opting out. In states with a Democratic governor or at least one chamber of the state legislature under Democratic control, opting out is not going to happen. So, depending on the results of the 2010 elections, only a dozen or so states, where the Republicans control the entire state government, might opt out. But what will gubernatorial or legislative candidates say in these states? Maybe: "If elected, I promise to make sure you won't be able to choose cheap insurance from the blankety-blank federal government?" Probably not a winning slogan, even in the reddest states (which on the whole, are also the poorest states).

Republican Split in NY-23 Becomes a Chasm     Permalink

An otherwise sleepy special election in the sprawling NY-23 congressional district hard by the Canadian border has become the main event in next week's election, overshadowing the gubernatorial races in New Jersey and Virginia. The battle to capture the seat that opened up when John McHugh (R) resigned to become Secretary of the Army has fractured the Republican party badly. The Republican nominee, assemblywoman Deirdre "Dede" Scozzafava, was chosen by the 11 Republican county chairman in the district with an eye to winning the election in this swing (R+1) district. She is pro choice and pro gay marriage, something many area conservatives cannot stomach so they are supporting the Conservative Party's candidate, local businessman, Doug Hoffman. But now many high-profile Republicans are now also supporting Hoffman against the NRCC and the Republican establishment. These include former Alaska governor Sarah Palin, former House majority leader Dick Armey, former senators Rick Santorum and Fred Thompson, Rep. Michelle Bachmann (R-MN), and former Ohio Secretary of State Ken Blackwell. Numerous conservative organizations including the Club for Growth and the Wall Street Journal also support Hoffman.

If this split results in newbie businessman Bill Owens (D) winning, an increasingly likely possibility given a recent poll showing Owens leading Scozzafava 35% to 30% (with Hoffman at 23%), all hell will break out within the Republican party. Conservatives will see this as a victory and say to the party establishment: "If you nominate moderates, we will make sure that you lose" to which the party establishment will reply: "If we run only true-blue conservatives, we will be a minority forever." It would be as if Ralph Nader's supporters tried to blackmail the Democrats with: "If you don't run extreme left candidates like Nader, we will see to it that you lose." But with Florida 2000 still fresh in Democrats' minds, nothing like this has happened.