Tax Analysts Blog

Healthcare Takes Center Stage

Posted on Jun 8, 2009

Forget Sotomayor. Forget global warming. Forget the rising public debt. Even forget the recession. For at least the next two months, healthcare reform will dominate U.S. national politics. "Obama has told Congressional leaders that his top priority is to get a health care bill signed into law," reports Matt Bai in the Sunday New York Times Magazine. "It’s a necessity we cannot postpone any longer," Obama said in his weekly radio address. It would be the culmination of a lifelong effort for Sen. Ted Kennedy. And Senate Finance Committee Chairman Max Baucus also says that passage of healthcare reform is his number one objective.

The plan is to get the House and Senate to pass their respective versions before the August recess ("an incredibly ambitious schedule") and then hammer out a grand compromise in September with the President mediating. There is agreement that healthcare costs generally should be lowered and that individuals and small employers should be able to purchase private insurance through a government-sponsored insurance exchange. But after that, everything gets murky. The emerging consensus among Democrats is that individuals should be required to purchase, and employers should be required to offer, health insurance. The pain of these individual and employer mandates would be deadened with massive subsidies targeted at low-income workers and small businesses. Two huge sticking points are: how to pay for the subsidies and whether or not a government-plan would be an option to private insurance.

Republicans don't like the mandates, the new taxes to pay for subsidies, and especially the idea of a government insurance plan competing with private insurance. "Our caucus is very, very much against a public option," Finance Committee Ranking Member Republican Charles Grassley told Politico.

Although everybody, including the president, is making nice and talking about historic unity and how this is different than the HillaryCare debacle of 1993-94, no concrete plan from either the House or Senate or the administration has been floated except a partial draft from the Kennedy camp. As veteran Washington Post columnist David Broder writes in his column today, revelation of details could kill the Kumbaya spirit: "Once there is specific legislation . . . each of these groups will start bargaining hard to protects its own interests."

The best article I've come across on the politics of healthcare is from Julie Appleby and Mary Agnes Carey of Kaiser Health News called "Big, Small, or Nothing at All? Three Scenarios for Health Reform." They point out in their June 1 piece that "action is about to accelerate." Because so many egos in Washington have so much on the line my guess is that in the face of enormous opposition Congress will enact some version of healthcare reform but it will be messy and limited in scope (surely Obama will call it a "down payment"). Appleby and Carey describe this "half-a-loaf, or less" scenario this way:

Fall is in the air and next year’s congressional elections suddenly seem a lot closer as the Democrats and Republicans each declare victory in the battle over remaking the health care system. Sure, the Democrats didn’t get universal coverage or a public plan. But the legislation Obama signs extends coverage to several million Americans who lack it, takes a stab at making the system more efficient and creates a framework for future changes – if and when Congress and the president are ready for them. Republicans, meanwhile, boast that they stopped government-run health care in its tracks while providing modest tax credits for small businesses.

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