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Loading...Combining the House and Senate Health Care Bills
While the House and Senate health care reform bills are nearly identical, they differ in a couple of important ways — and this can potentially make the final bill much better than what has so far been contemplated. Comparisons: Bloomberg & New York Times.
The just-passed Senate bill partially funds health care insurance for those who cannot afford it by taxing luxurious insurance plans. (I see it as ending a subsidy, not a tax at all — as I explain here) This is not only a source of revenue, but crucially the tax will create an incentive for insurance companies to create cost-savings plans, “bending the cost curve,” of the entire system by reducing excess health care services. Decreasing the unneccessary care lowers demand, cutting prices for insurers and eventually for businesses and individuals. See Atul Gawande, New Yorker, Dec. 14 — a must-read on costs (and also June 1, New Yorker).
However, the House bill takes a different tack. It raises taxes on high-income Americans, under the theory that they can afford to pay more without cutting into food, shelter or health care. At some point, increasing taxes on wealthy Americans does lower their overall investment in new businesses — a drag on the economy — but such taxes are at a relative low point and the proposed tax is not so dramatic as to significantly damage investment potential.
The conventional wisdom is that the conference committee, which will meet in the new year to create one final health care bill, will choose between House and Senate options. On many provisions, the Senate bill will prevail, because it is more cost-conscious, as already noted, and there is less support for the House provisions in the Senate, where the Democrats have no margin of error on the final vote. Senate legislation has already been CBO (Congressional Budget Office) scored to reduce the deficit at ten- and twenty-year projections. This does require doctors to take less payment from Medicare patients than they have in the past and requires individuals to buy insurance or pay a fine, which will be unpopular for some people who niether have insurance nor want to pay for it. On the other hand, projected cost savings of the Senate legislation do not entirely factor in other cost-containment approaches, which are being tested, from malpractice reform to replacing the fee-for-service model, and which will likely bear fruit over the next decade.
Deficit Reduction and Health Care Cost Containment
The conference committee should take both the Senate tax on high value insurance plans and the House tax on wealth in the final form of the bill. This would lower the deficit even further. It might upset a moderate Democrat or two and it might not induce any Republicans to vote for health care reform, so Harry Reid needs to shepherd his flock and ask Olympia Snowe and Susan Collins where they stand on the idea, but it has the distinct advantage of creating universal health care legislation that is strongly positive on deficit reduction and still stepping in the right direction by changing health care incentives.
Currently incentives in the profit-driven system reward over-testing and overuse of resources by those who have, and tolerate underuse by those who have not. The Senate legislation, as it stands, gives the have-nots a chance to participate in the health-care marketplace. While taxing wealth must be done cautiously so as not to damage investment and new business potential, here the benefit of lowering the deficit in the process of providing the opportunity for basic health care for all Americans is a worthy purpose for a moderate wealth tax. Control of the deficit will return rewards to many who pay the tax by improving confidence in the economy and raising prospects for investments. This could be a win-win in the long run, provided that the economy was emerging from the current recession before tax increases were imposed.
The Senate’s health care legislation is a monumental accomplishment in the direction of universal coverage. It also begins to tackle cost issues by taxing luxurious insurance plans and pointing towards other models of care that will lower demand and drive down costs. We could add substantial deficit reduction to the legislation — an unplanned bonus — by including the House’s moderate tax on wealth in addition to the Senate bill’s revenue measures.
What are your priorities? If this sounds appealing, please spread the word.
Following me on Twitter; listen to care2.com blogger Jessica Pieklo and I discuss health care and more on our weekly podcasts.
January 4, 2009 UPDATE: Hendrik Hertzberg at the New Yorker on support and opposition to the health care bill. An outspoken liberal, Mr. Hertzberg is in favor of the current legislation.
On the White House blog, a comparison of President Obama’s Transition period positions on health care reform compared with the near final product.
January 7, 2009, UPDATE: Obama pushing for tax on high-end insurance plans. New York Times story; excellent discussion on PBS Newshour, January 11, 2009
January 13, 2009, UPDATE: Early reports of compromise on the high-end insurance tax. New York Times
Read more: health care, health insurance, health policy, legislation
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52 comments
+ add your ownBruce,
This should be a very interesting political year. On the one hand, the public is uncomfortable with health care reform that the Democrats will champion. On the other hand, the public are in support of many of the specific reform measures contained in the Democrat's HCR legislation. Therefore, from now until November there will be a battle of education and communication. I don't know how it will go. The Republicans have shifted the momentum, turning not just conservatives against reform. But after the brilliant election campaign of Mr. Obama and a first year illustrating reason, resolve and control, I wouldn't bet against the President.
Dear Mr. Reese: nothing in the Constitution or constitutional law requires a conference committee between the 2 houses, let alone requires that members of all political parties have representation on that committee. Further, the conference committee is a very recent invention; the so-called 'ping-pong' method now being discussed WAS the method used by the House and Senate to reconcile their different versions of bills until the middle of the last century.
Further, the Republicans have made it quite clear that they do not have any ideas or constructive additions to healthcare reform. They have made it equally clear that they DO intend to torpedo this legislation to 'win' against President Obama and to use the defeat of the legislation against Democrats in upcoming elective races.
So, let's recap: there is NOTHING unconstitutional about what is being done, AND the Republicans have come right out and said they will do everything in their power to defeat it and to humiliate our president.
Tell me again why the Democrats need to keep bending over backwards and forwards to include the Republicans as they have done for AN ENTIRE YEAR?
Oh, I get it. The Republicans want the Democrats to keep bending over to cater to the Republican's obstructionism so the Republicans can keep screwing them and all the American people who want this. Even with all the gun-toting tea-baggers and Republican lying/fear-mongering, upwards of 65% and as many as 77% of us know we need and want refor
If this bill get signed, the only good thing to come from it will be the removal many Senators and congressmen. We will have change, and it will be real change not this fake change see with the unknown Obama. The Supreme court should declare any bill coming out of the joint compromise will not be constitutional as there is no Republicans allow to participate.
The fact is 84% of Americans have Health Insurance of some form, This includes currently Working, Recently Laidoff workers with COBRA, Retired pre Medicare paying for coverage and Retired on Medicare. Each Individual paying varing amounts of premiums to have their services. The problem is the Retired on Medicare numbers are rising as expected,(and deserve their benifits) and the number of working are declining due to Corprate America not rehiring because of their "Bottom Dollar" logic, that less employees reflect higher reportable earnings, which is "Bonus" for the CEO's and just continues the downward spiral of our Great Country. The politicans are funded by Coprate America and the cylcle continues. Welfare is growing faster than the GNP because it is available and easier to get than a job. The Small Business owners also need to Step up to the Plate and STOP paying CASH only vendors , Contractors, Day Labor, Yard Keepers, any persons that are Legal or Not Legal Citizens working in this country and not paying their Taxes or Medicare taxes, this trend will rise if the Health Care Reform is passed and thats a Gurantee! There are Millions of Taxable dollars leaving this USA every year thru this means which further Erodes our Nation.
Priorities, people! It's evident that saving money takes priority over saving lives. 80% of people already are insured, have jobs, and are young or healthy. Thoughts about death are far. But consider the person who is un-, under- or self employed, between age 45 and 65, with an undiagnosed, underlying, potentially lethal health condition, who must decide between being forced to buy private insurance to feed the already rich, greedy Great Corporate and go hungry because s/he can no longer afford food, or do without insurance, forgo that check-up, pay a fine, and perhaps die. What happened to the Heart America used to have? To all those who still have one and have not yet pledged their allegiance to the Great God of $$, congratulations, and may the Real God bless you! Perhaps your neighbor is uninsured and has an income too great to qualify for medicaid and too small to be able to afford to Feed the Greed without starving themselves. Setting priorities can be tough when one is faced with a choice of the Devil or the deep blue sea!
HOW CAN YOU PAY FOR HEALTH INSURANCE IF YOU DON'T HAVE A JOB? HUH? and then....
How will you pay the penalty for not having health insurance OR will "not paying" be considered a "pre exisiting condition"? ....JOBS FIRST....THEN HEALTH REFORM SECOND! >>>>>>>> HELLO?
As a person already on medicare and having problems with it and having changed my provider as of tomorrow I am quitwe concend about what it will mean to me. Also I have friends not old enough for medicae who can not afford any health care program yet they say you must join one.
nice article. thanks
Congress has sold out to the insurance companies again.
Well said Pa.
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