• The Senate health care reform bill

    I had not one, but two school functions for my kids this morning.  I just got to work.  This means, of course, that everyone has beaten me to the punch in describing the highlights of the Senate Health Care bill.  So I’m going to brazenly steal from them (and give you the links, of course).

    Knowing that the bills have more similarities than differences, I’m going to stick to the ways in which they are different.

    The numbers:

    The health care bill–which includes an opt-out public option–will require $849 billion over 10 years in new spending, to be paid for with cuts to Medicare, while reducing the deficit by $127 billion.

    In that time it will extend coverage to 31 million Americans–94 percent of citizens will be covered by 2019.

    Over the second 10 years, CBO projects even greater cost savings–up to $650 billion, with the caveat that after 10 years, their analyses become highly uncertain.

    The subsidies appear to me more generous (which is a surprise to me):

    That, at least, is the early impression of most wonks I’ve talked to. The subsidies hold steady or are very slightly reduced on the low end, but they become more generous than the Finance Committee’s proposal as you travel up the income ladder.

    There are two main reasons for this. First, the bill spends a bit more on subsidies than the Finance Committee spent. For instance, in 2019, the Senate Finance bill spent $98 billion on subsidies, while the Senate bill spends $106 billion. That doesn’t sound like much in one year, but extended to the 10-year window where we normally talk about health care and it’s a difference of $80 billion.

    The second piece gets to that 10-year window more directly: The bill shifted implementation to 2014, as opposed to 2013, which means its money only has to stretch from 2014 to 2019, not from 2013 to 2019. That means the bill has a bit more money to play with once it does get off the ground.

    It has an excise tax on “Cadillac” plans, which I still think may be better than an income tax.

    Reid’s bill has an excise tax that lays down a 40 percent charge on premium dollars beyond $23,000 for families and $8,500 for individuals. The threshold is higher for people in high-risk jobs, people who are older than 55, or people who are in high-cost states, though the allowance for states ratchets back after three years. It raises about $150 billion, as opposed to the $200 billion raised by Finance’s proposal.

    The CBO thinks it may actually do more to contain costs:

    One actual surprise is that the Senate bill doesn’t just pay for itself. It balances itself out. That is to say, the bill is not deficit neutral because it costs a billion dollars and then the government raises a billion more dollars in taxes. In that scenario, the government is spending more, but paying for it. Rather, “CBO expects that, during the decade following the 10-year budget window, the increases and decreases in the federal budgetary commitment to health care stemming from this legislation would roughly balance out, so that there would be no significant change in that commitment.”

    In the first 10 years, in other words, the bill improves the deficit a bit, but the government is spending $160 billion more on health care than it otherwise would have. In the second decade, however, that ends: The savings from Medicare and Medicaid, paired with the excise tax (which CBO says “is effectively a reduction in the existing tax expenditure for health insurance premiums”) and a handful of other changes, leaves the government spending no more on health care than it otherwise planned to. That’s impressive stuff given that some 94 percent of the country has health insurance. And it implies, of course, that in the third decade, the federal commitment actually goes down relative to expectations. The curve, as they say, is bent.

    I’m going to have to think about that and read the whole bill before I totally buy into that.

    There’s an exchange and an opt-out public option:

    The public option will serve three or four million people and have slightly higher premiums than private insurance. The co-ops will have such an insignificant effect that the CBO didn’t both to estimate their impact. The exchanges will serve 25 million people in 2019, and Medicaid and CHIP will see a 15 million-member increase.

    I still can’t see what all the hooplah’s about on that one.  Weak sauce.

    Overall, though, I think you’re going to see people who are pleasantly surprised by what’s in the bill; that is if they supported health care reform as such.  Others will, of course, be horrified.

    Now we have to see if Senator Reid has 60 votes.

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