Thursday, February 11, 2010

“W/o reform, it's entirely possible that more & more employers will be dropping coverage, leaving more & more individuals to buy it on their own."

By TalkLeft's Big Tent Democrat TL

Despite my counsel to the Villagers that there is no political return in selling the regulations contained in the Senate health bill, Jon Cohn tries here, using the Anthem Blue Cross 39% rate health insurance rate hike story. Cohn writes:

[T]he best way to avoid adverse selection, as I've argued many times, is to create one giant insurance pool--in which everybody, healthy and sick, gets coverage at the same rates. And, roughly speaking, that's what the Democratic health care bills would do, by creating insurance exchanges through which all individuals in a given state would buy coverage.

This paragraph does not even make internal sense. In what way is the creation of 50 state based exchanges "creat[ing] one giant insurance pool[?]" (Unlike the Senate bill, the House bill creates a national exchange.) But even that is deceptive. The exchanges will involve only a small part of the national health insurance pool. Most are covered through employer based plans. Cohn's argument is filled with holes.

In reality, Cohn's argument is aspirational - it is about what the exchanges might become in some magical future. Consider this:

Of course, only a relatively small portion of Americans carry individual insurance coverage. The majority of people with private coverage get it through their employers, where such stark rate increases are rare. But, without reform, it's entirely possible--some would say likely--that more and more employers will be dropping coverage, leaving more and more individuals to buy it on their own. That's why the California Anthem story should get everybody's attention.

Is it true that without reform, employers will be more likely to drop employee health insurance? What is the basis for this statement? The reality I believe is different. The Senate bill makes it more likely to see a reduction in employer based health insurance. And that is not a bad thing policy wise so long as there is a real safe harbor for people.

But here is why arguing for the regulatory components of the Senate health bill is a political loser - you basically have to tell people they are going to lose their employer based insurance, and indeed, the Senate health bill is intended to forward that process (that is what the excise tax is all about.) That is a political loser.

Politics is not so complicated in my opinion. Policy is. I am not going to rehash my disbelief in the power of the state based exchanges and the regulatory reform framework that the Village wonks are so convinced about. Instead i want to address the political flaws in the selling of the Senate health bill.

Here is the problem - they are selling something no one wants to buy. The Senate health bill is a political loser. It has no political constituency, except for the Village Wonks. It has numerous political foes - the most important right now being the unions - whose opposition to the excise tax is what will keep the House from passing the Senate Stand Alone health bill.

Again, leave aside the policy disagreements on the Senate health bill, the biggest problem now for its proponents is political. There is no selling the "Pass The Damn Bill" mantra. Because no political constituency really cares about passing THAT bill.

In attempting to defuse the opposition to a health bill, Rahm Emanuel has led the Obama Administration to strip the bill of any supporters. But the process has left one critical constituency in opposition to a component of the Senate health bill - yes, the excise tax and the unions are what I am talking about.

If the excise tax was not in the Senate bill, I imagine the Obama Administration could herd the Dem cats necessary to pass the bill. No one would be really excited about it. It would not have much positive impact politically. But it could be done.

But the excise tax stands in the way of the Obama Administration's game plan for passage. The Anthem Blue Cross story provides a small opportunity to present the need for a health bill in a general sense. But it will not move any of the key players necessary for passage of the Senate bill.

At this point, narratives are helpful on the margins, but without a solution to the union/excise tax problem, it is all for nothing.

Until the Obama Administration and the Senate Dems come to grips with the fact that the Senate bill's excise tax is a bill killer, nothing will be accomplished.

That is the political reality that the Villagers and the Obama Administration seem unwilling to accept.