07/30/2009 08:50 pm ET Updated May 25, 2011

Blue Dog Compromises: A War On the Middle Class?

It's hard to analyze the compromises coming from Blue Dog Democrats without concluding that, intentionally or not, they add up to a financial assault on working families. Every concession rings with the sound of middle-class Americans being dinged financially.

Ding! That's the sound of lower-income working Americans losing what remained of their subsidy for purchasing health insurance. They've raised the bar1 so that people making $31,200 will no longer get any help with their premiums. Neither will parents trying to raise a family of four on $63,000. That means families without employer-based coverage will have to come up with the money for health insurance (currently $12,000 per year) or face a government penalty.

But how many Americans will have employer-sponsored coverage? Ding! That's the sound of more people losing that chance, as Blue Dogs raise the minimum payroll requirement for employers from $500,000 to $750,000. 86% of small businesses will now be exempt from any mandate. Small businesses have been the engine of economic growth and recovery.

But wait. At least some of these uninsured folks will be able to buy into a public option, right? (That is, if the Blue Dogs' soul mates in the Senate don't kill it altogether.) Won't the public option be more affordable than those high-cost private insurance plans?

Ding! That's the sound of the Blue Dogs eviscerating the cost-cutting potential of the public plan by refusing to allow it to use Medicare rates with providers, even for the conservative three-year period contemplated by earlier drafts of the bill. What does that mean for uninsured working Americans? Their lowest-cost option is going to cost a lot more if the Blue Dogs get their way.

This particular initiative has a historical parallel. It's similar to the Republicans' refusal to let Medicare use its buying power to bargain on pharmaceutical costs.

What about the luckier middle class types, the ones that do get health insurance through their employers? Well, there's a lot of talk that they'll be facing a new financial burden when Congress starts taxing health benefits (although the income levels at which that will happen are still being debated). Why? Because supposedly some people are getting "Cadillac plans." Look a little closer, however, and you usually find that they're just priced like Cadillacs. It's not that they're generous (certainly not by Medicare or European standards). More often than not, those $40,000 plans you hear about are costly because they're covering sicker people.

Ding! Congress may begin taxing these benefits, if the Blue Dogs have their way. That's a regressive tax, one that's based on behavioral logic that seems questionable at best to me. Taxing the wealthiest Americans on truly luxurious plans (say, ones with concierge medicine features) would be reasonable ... if we could trust Congress to stop there. Sadly, we can't.

Where didn't the Blue Dogs and Rep. Waxman (my representative) compromise? Here's where: They didn't ease up on the mandate for individuals to obtain health insurance coverage. They made it easier for employers not to offer it, and they found several ways to make it more expensive, but they didn't give a break to the working people - mostly blue-collar working people - who will be hit the hardest by their much-vaunted compromises.

That would be the same blue-collar voters that proved so vital to the Democrats' electoral victories in 2008. You don't have to believe in the supernatural to believe that sometime soon Democrats could face some bad karma - the electoral kind - for their indifference to the needs of their constituents. In this debate, the progressives aren't just being idealistic. They're being pragmatic. Their plans have a greater likelihood of helping people who need it - and as a result, of helping their party in the years to come.

Ding! Ding! Ding! Hear that? It's the sound of the disaffected middle class in 2012 if the Blue Dogs have their way. Already alienated by big payouts to wealthy Wall Street bankers, they're counting up their new financial burdens ... and taking a second look at the Republican Party.

1 From 300% to 400% of the Federal poverty level.

RJ Eskow blogs when he can at:

A Night Light
The Sentinel Effect: Healthcare Blog

Website: Eskow and Associates