As soon as the House passed its health care reform bill Saturday night, two things became predictable: (1) The President would praise Nancy Pelosi and the House for moving the effort further than ever before and (2) an "anonymous" senior White House official would plant stories about how the House bill wasn’t as good as the Senate Finance bill.
We’ve seen this before, via the New York Times. When Obama gave his health reform speech to Congress in September, David Brooks obligingly relayed the White House message that Obama had signaled the three House committee bills were beyond the fiscal pale and only the Senate Finance bill met Obama’s "about $900 billion" budget limit:
[Obama] was flexible about many things, but not this: “I will not sign a plan that adds one dime to our deficits — either now or in the future. Period.”
This sound bite kills the House health care bill. That bill would add $220 billion (that’s 2.2 trillion dimes) to the deficit over the first 10 years and another $1 trillion (10 trillion dimes) to the deficit over the next 10 years.
There is no way to get from the House bill to deficit neutrality. The president’s speech guarantees that the more moderate Senate Finance Committee bill will be the basis for the negotiations to come.
That was then. The media has since become wise to the fact the earlier House bills went over budget because they paid for the "doc fix" for ten years while Baucus/Conrad’s Finance fix was only for one year. Pelosi promptly stripped the "doc fix" out and let Harry Reid fall on that sword.
When CBO declared Pelosi’s final House bill to be better than budget neutral, producing $100 billion in net savings, the White House needed another cudgel.
[That may have come from] the Times David Leonhardt, whose column criticized the House bill for "Falling Far Short of Reform." I don’t think David’s heart was in this one, though, because he focused solely on whether the House bill will reduce health care costs as much as the Senate Finance bill. Even there, the House and Senate bills are roughly comparable on 3 of the 6 big issues Leonhardt scores, and he ignores other measures that are at least equally important.
Leonhardt especially praises the Senate for allowing an independent Medicare advisory group to recommend and implement efficiency and cost-saving measures unless overridden by Congress. The House bill calls for pilot efforts to control costs and studies of regional differences and cost-saving measures. On the other hand, The House bill authorizes Medicare to negotiate with drug makers and demands further cuts from PhRMa than the White House deal.
Both bills fall short in broadening access to the insurance exchange(s), but at least the House bill gives the Secretary of HHS authority to open its exchange to larger employers by the third year.
Along with many economists, Leonhardt loves the Senate Finance tax on high-end insurance plans, but the argument this will significantly reduce the actual cost of health care has always been suspect. I don’t question that if you tax insurance, people will buy less of it, and if you tax care directly, they’ll likely demand less of that too. But the argument takes a leap in assuming that the people most likely to be adversely affected — those with higher health costs — are getting too much care now and that giving up that extra care has no cost to them. If they need that care, such as extra treatment associated with work-related illnesses, there is a cost, but no one is counting that.
The more telling problem is that it’s unclear that inducing people with high-end insurance to purchase less insurance/care will materially reduce the actual cost of providing care for anyone else. If this is the approach we’re relying on to "bend the curve," we better think again.
Reducing health care costs means we have to pay doctors, hospitals, insurers and drug makers less for what they do and provide. But we’re dealing with increasingly concentrated entities, with no efficient markets and insufficient regulation. Neither Congress nor the White House seems willing to confront that.
Leonhardt doesn’t mention that the White House, whose cost-cutting efforts he praises, has already diminished MedPAC’s future by capping "savings" via its secret deals with PhRMa and hospitals. And Rahm Emanuel has never stopped trying to ensure the public option does nothing except trigger Olympia Snowe’s vote.
If we’re seriously counting "costs," Leonhardt needs to account for the fact CBO scores the House bill as covering 36 million more people, compared to the Senate’s 29 million or so. And the House does so by providing far more generous subsidies for meeting the insurance mandate (and more expanded access to Medicaid). I don’t see how you can make a credible cost comparison while ignoring the real human costs of leaving an additional 7 million people uninsured.
Oh, and that budget neutral advantage in the Senate bill? It seems Harry Reid is considering an additional payroll tax in the Senate bill. Looks like Harry has realized that Max Baucus handed him a bill with a weakened mandate for unaffordable insurance and insufficient subsidies, so Harry has to fix that explosive problem, just as he’s had to fix the lack of a public option for saving money in the exchange(s).
Remember, the whole point of wasting those four months waiting for Baucus/Conrad/Grassley/Snowe et al was because we needed them to produce a bipartisan method to pay for health reform. We could have saved the four months and just let Harry do it.
[Edited 8:30 a.m. pst to remove the suggestion Leonhardt based his article on a WH leak. My misreading; my mistake.]