Legal Commentary

Paying For The Health Bill

By Big Tent Democrat

One of the more interesting conundrums of the health bill negotiations is the desire to increase the affordability provisions of the bill (in essence, the subsidies, the Medicaid eligibility will almost certainly remain at 133% of FPL as set by the Senate bill) while at the same time cutting the reach of the excise tax (without replacing it with with the House surtax on the wealthy.) E.J. Dionne writes:

Almost everyone in both houses wants to find ways of making insurance more affordable. Steps in this direction would include more generous subsidies for the purchase of insurance than those in the Senate bill and expanding its Medicaid provisions. The bill's price tag will grow from the Senate's $871 billion over a decade, probably to somewhere between $930 billion and $950 billion.

Expanding Medicaid eligibility would actually make the bill cheaper, because Mediciad will be less expensive than subsidizing the purchase of private insurance. Of course, it will not happen because that takes away market share from the insurance companies. The question then is how would the expanded subsidies be paid for? The excise tax is under assault:

The tax on "Cadillac" insurance plans, opposed by both organized labor and the insurance industry, is likely to be scaled back but not eliminated. Currently, the Senate bill includes a 40 percent excise tax on high-end health insurance plans -- those at or above $23,000 for families and $8,500 for individuals. Many opponents would settle for raising that ceiling to $28,000 for families, with a comparable increase for individuals. That would reduce the number of policyholders covered by the levy.

(Emphasis supplied.) It would indeed. And of course it would reduce the revenue from the excise tax. so where's the money going to come from? We have an increase in the subsidies and a decrease in the revenue from the excise tax.

In addition, Ben Nelson's deal has been such a headache, that the negotiators are looking to extend that deal to all the states:

negotiators are looking to extend to all states a version of the special deal that saved Sen. Ben Nelson's home state of Nebraska from the bill's increased Medicaid costs. Nelson himself is pushing for this change, which would cost $25 billion to $30 billion over 10 years. One solution: somewhat more modest across-the-board Medicaid relief to all states.

Huh? "More modest across-the board Medicaid relief" to all states sounds like the OPPOSITE of the Nelson deal. What's Dionne talking about?

This sounds like mostly malarkey to me. I expect we'll get the Senate bill, and Nelson will probably have to give up the deal for Nebraska. It is possible however that a trade off of the reach of the excise tax for expansion of the Senate Medicare tax on income over $200,000 a year will happen. Other than that, I expect the Senate bill.

Speaking for me only

Full post as published by TalkLeft on January 11, 2010 (boomark / email).