• Obamacare on the negotiating table

    From today’s POLITICO Pulse:*

    BOEHNER WANTS OBAMACARE COMPONENTS ON THE NEGOTIATING TABLE - Any moves to chip away at the law during fiscal cliff negotiations could have a game-changing effect on coverage rates, the law’s impact on the deficit, premiums and small business costs. Whether Senate Democrats would permit changes to the health law as part of a larger bargain is unclear, but House Speaker John Boehner also admitted that the law is likely here to stay. It’s both a concession and a statement of the obvious: The numbers just aren’t there for Republicans to eliminate the law. “I think there are parts of the healthcare law that are going to be very difficult to implement, and very expensive. And [at] the time when we’re trying to find a way to create a path toward a balanced budget everything has to be on the table,” Boehner told ABC News. “There certainly may be parts of it that we believe need to be changed. We may do that. No decisions at this point.”

    I bet most people read this and think that Obamacare can only be used to decrease the deficit if its expenditures are raided, e.g., reducing the subsidies for coverage expansion. However, it could also be used as the basis for increased revenue. One such way is to accelerate or otherwise modify the Cadillac tax so that the employer-sponsored health insurance subsidy is more swiftly or more completely reversed. If you can find any health (or more general) economist who wouldn’t favor that, let me know.

    My broader point here is that Obamacare is a mix of spending, revenue, and cuts (most prominently to Medicare). If and when it hits the negotiating table will all of those parts be in play or just the parts that Speaker Boehner doesn’t like?

    * This is not a permalink. I don’t think there is one.

    @afrakt 

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    • A lot of people have been saying that the Cadillac tax comes in too late and the rate is too low. John McCain proposed capping the health insurance tax exclusion, and a number of conservative economists are behind him. This would be a much, MUCH better compromise than raising the Medicare age.

      I would only say that you can’t make the Cadillac tax too fast. It will destabilize the employer-sponsored insurance market. That market deserves to be phased out imo, but we need the insurance exchanges to be stable, running, and for the risk adjustment kinks to be worked out, and for the plans to have stable enrollment and sufficient experience.

      Of course, doing this would raise taxes, so the Tea Party wing will resist this with maniacal fervor. Unfortunately, the unions and a number of more left-wing Dems will also resist this.

    • One concern about “[modifying] the Cadillac tax so that the employer-sponsored health insurance subsidy is more swiftly or more completely reversed” is that it would disproportionately harm family coverage subsidies. Check out http://www.firstfocus.net/library/reports/how-capping-tax-exclusion-may-disproportiantley-burden-children-families by Elise Gould for First Focus.