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Why, Oh Why, Do They Never Listen?

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Why, oh why, do they never listen? I've been warning the Democrats since 2005 (not that I'm anybody special) that an individual mandate without meaningful out-of-pockets limits would be a hardship for working Americans -- and that eventually Republicans would figure out how to call it a tax hike and run against it.

Now Politico writes:

... Questions about tax increases are part of an emerging Republican line of attack. Senate Republican leader Mitch McConnell on Sunday said "... We don't think it's a good idea to raise taxes on small businesses and on individuals in the heart of a recession."

Democrats: They have ears, Lord, but they hear not. It was especially disappointing to see the President defend himself from these charges by claiming they're not new taxes ...

Obama's New Taxes

... when they are. It's bad enough that the Baucus bill says "the consequence for not maintaining insurance would be an excise tax" and the House bill requires a "tax on individuals without acceptable health care coverage." I could defend these provisions if there were a strong public option and other cost containment measures. That might make this mandated insurance affordable to middle-class Americans.

But those things aren't there.

Now PresidentSenator Olympia Snowe is reiterating the position that 13% of income is an acceptable maximum out-of-pocket cost for health premiums. That is financially devastating for families at 400%-700% of the Federal Poverty Level (and many at higher levels). Since the President has ceded extraordinary power to her (as Robert Reich explains), this is likely to become law if she so chooses. It's a windfall to the insurers and a body blow to working Americans (what should they sacrifice? That savings account for their kids' college education?)

The President also spoke up in favor of the tax on "Cadillac benefits," which is becoming his other new tax. This idea might have some merit if a) it prevented insurers from passing on these new taxes to their customers and b) the tax was actually based on the benefits being offered. If most Americans pay deductibles and copays, the portion of a deluxe plan that covers 100% of these out-of-pocket costs might legitimately be considered taxable income. (Although even then union plans should be excluded, since many workers gave up wages for their benefits.)

But this new Democratic tax is based on plan cost, not benefit design. So plans with lots of older, costlier Americans will be more highly taxed than others. That means it will hurt aging workers financially while encouraging businesses to discriminate against them in hiring. It's also indexed to general inflation, which rises much more slowly than healthcare costs. That means more and more plans will be taxed every year. As the law is currently designed, those costs are likely to go straight back to the consumer.

Let's not pretend Democratic health reform doesn't include new taxes -- and mandated fee payments to highly profitable private companies. If their bill passes in this form they'll pay a heavy political price for it. And they'll deserve it.

We're Not Swiss

While we're at it, let's stop defending this proposal by using Switzerland as an example, as Paul Krugman and a number of others do. We're not Switzerland. First or all, Switzerland is a wealthier country: OECD figures show that the median household income there in 2007 was $60,288, versus $50,233 in this country. Despite their greater prosperity, roughly one-third of its citizens receive government assistance paying premiums. (Granted, they don't have an employer health insurance system and we do - but that system is eroding quickly.)

All insurance companies in Switzerland are non-profit. What's more, the Swiss system includes rigorous price controls that would never pass ideological muster in the US. And to top that off, the Swiss system includes strong managed care components that Americans would find unacceptable. The Swiss can't "choose their own doctor," to use the President's catchphrase.

Needless to say, the Swiss pay much less in healthcare costs than we do, and their costs are rising much more slowly. But our leaders don't intend to do things the Swiss way. You can't impose a Swiss-style mandate on a system that is more expensive, has less control, and is profit-based.

Next topic.

Reverse Triggers

Sen. Snowe (sorry about that "President" crack - "Czar" might be more appropriate) is bringing up triggers again, reportedly with the help of Rahm Emanuel. So, apparently to woo her, the President is opening the door to the idea that a public option would be "triggered" in states where "affordable" healthcare isn't available through the private market.

This is very bad, in two ways: First, it's a state-by-state solution, not a national one. A state-specific public option will be costlier to maintain and run. That means it will cost the rest of us more money. Secondly, what's Sen. Snowe's definition of "affordable"?

Thirteen percent of income!

They have ears, Lord, but they hear not. Fortunately for our sanity, we have the satirical (also politically incorrect and pretty foul-mouthed - but funny) blogger Bobblespeak. Bobble posted this "tweet" yesterday: "Reverse trigger: public option is created, to be taken away from the people if the insurance industry completely fix US health care by 2012."

Now that makes sense! But wait ... a public option is optional by definition. If the insurance industry fixes US health care, nobody will join the public plan. That means that it will die (or "sunset," as lawmakers like to say.) That's a good enough "reverse trigger" for me.

It should be good enough for Olympia Snowe, too.

RJ Eskow blogs when he can at:

A Night Light
The Sentinel Effect: Healthcare Blog

Eskow and Associates

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