Not quite a year after he first started pushing Congress to pass something, The One finally puts his own plan on the table. Here’s the overview, the newsiest bit of which is a new federal Health Insurance Rate Authority to oversee “unreasonable” premium increases. And with that, it’s suddenly clear why there’s no public option in the package: As Tom Maguire notes, if things work out as badly as expected, America will come begging for a public plan soon enough.
The long run effects won’t be helpful for the insurance industry but they will be good for advancing the interests of the Democratic Party. A key Democratic goal of health reform (as was kicked around during the HillaryCare debacle) is to create a new middle-class entitlement. If this plays out like Social Security it will tie the middle class to their benefactors in the Democratic Party, which will forever position itself as the party of more generous benefits paid for by Someone Else.
A price control board can advance that same goal, since the Democrats can position themselves as the champions of lower prices for all. In the not-so-long run insurer won’t be able to make a reasonable profit and will exit the industry, and coverage will be scarce (but cheap!). At that point the collapse of the private market will be offered as further evidence of the desirability of a full government take-over of health care, or at least, the adoption of a stalking-goat “public option”.
They’re going to starve the beast, to borrow a line that’s suddenly back in vogue on the NYT op-ed page, and then replace it. That’s one easy point for the GOP to make at the summit on Thursday; another, anticipated last night by the Times and already in full swing this morning among GOP aides, is that having a price-control mechanism in place even before O-Care’s up and running tells you a lot about what the Dems expect will happen to premiums once this debacle passes. But those are big-picture long-term critiques whereas The One’s thinking short-term, i.e. whom does he need to demagogue to kick up just enough popular support to finally get this thing through Congress and off the table. The boss emeritus saw this coming two weeks ago after the uproar in California over the Anthem rate hikes and now here it is, just in time for the 60-day push. It’d be lovely to think the GOP will challenge him on this come Thursday, but let’s face it: Defending free-market insurance rate-setting while anti-Anthem populist outrage is roiling is a poison pill, particularly given their wariness of carrying the “party of big business” label into November. Expect them to challenge him on cost instead — estimated pricetag: $1 trillion over 10 years — and of course on unintended consequences to Medicare. We are, after all, the party of AARP now.
But maybe I’m worried for nothing. A big part of our new “bipartisan” White House’s strategy going forward is to create high-profile political theater that puts the “party of no” in a position of having to say no, so maybe this is all just a means to that end, with the price-control board to mysteriously drop out before final passage. Same with the emphasis this week on “transparency”: The One put his bill online this morning, he’s having a televised summit later this week, and, why look — he’s even stripped out Ben Nelson’s Cornhusker Kickback to prove what a stalwart opponent he is of backroom deals. Transparency! (The backroom deal with unions to raise the tax threshold on “Cadillac” plans remains intact, natch, albeit extended to everyone now, not just labor.) The perpetual campaign is indeed perpetual, my friends.
Stand by for updates as the punditocracy reacts. Exit question: According to the Times, Obama’s plan doesn’t include the Stupak amendment on abortion. What happens now in the House?
Update: Philip Klein runs the numbers and proclaims it essentially a more expensive version of Reid’s bill. Can’t wait.
To finance the changes, President Obama proposes raising taxes even more than the Senate plan does. Under Obama’s proposal, higher income workers would see their portion of the Medicare payroll tax double, to 2.9 percent. The tax would create a marriage penalty by applying to individuals earning over $200,000 and couples earning over $250,000. When the original version of the Senate health care bill was produced, the Medicare tax on those earning over $200,000 was supposed to be 0.5 percent. In the version that passed in December, the tax had been raised to 0.9 percent. And though it hasn’t even been made law yet, Obama is raising the payroll tax for the third time, to 1.45 percent (that’s on top of the 1.45 percent all workers already pay). This follows the historical pattern of payroll taxes, which have increased 20 times since first introduced in 1935, going from a combined total of 2 percent (including employer/employee contributions) to 12.4 percent today. When adding the new Obama tax, the rate would be almost 14 percent on higher incomes.
Update: Philip Klein updates to say that he’s tweaked his math. Turns out that The One’s actually doing a 2.9 percent capital gains tax on top of the Senate bill’s tax.
Update: Another reason why Thursday’s O-Care summit is useless: The new bill that’s supposed to provide a starting point for negotiations will come without any pricetag attached.
This morning the Obama Administration released a description of its health care proposal, and CBO has already received several requests to provide a cost estimate for that proposal. We had not previously received the proposal, and we have just begun the process of reviewing it—a process that will take some time, given the complexity of the issues involved. Although the proposal reflects many elements that were included in the health care bills passed by the House and the Senate last year, it modifies many of those elements and also includes new ones. Moreover, preparing a cost estimate requires very detailed specifications of numerous provisions, and the materials that were released this morning do not provide sufficient detail on all of the provisions. Therefore, CBO cannot provide a cost estimate for the proposal without additional detail, and, even if such detail were provided, analyzing the proposal would be a time-consuming process that could not be completed this week.