Editore"s Note
Tilting at Windmills

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February 26, 2009

HE'S GOING FOR IT.... In his address to Congress this week, President Obama said, "Health care reform cannot wait, it must not wait, and it will not wait another year." Apparently, he meant it.

President Obama is proposing to begin a vast expansion of the U.S. health-care system by creating a $634 billion reserve fund over the next decade, launching an overhaul that most experts project will ultimately cost at least $1 trillion.

The "reserve fund" in the budget proposal being released today is Obama's attempt to demonstrate how the country could extend health insurance to millions more Americans and at the same time begin to control escalating medical bills that threaten the solvency of families, businesses and the government.

Obama aims to make a "very substantial down payment" toward universal coverage by trimming tax breaks for the wealthy and squeezing payments to insurers, hospitals, doctors and drug manufacturers, a senior administration official said yesterday.

Embedded in the budget figures are key policy changes that the administration argues would improve the quality of care and bring much-needed efficiency to a health system that costs $2.3 trillion a year.

The White House first step doesn't include the details of a reform proposal, and that's a deliberate part of the broader strategy -- the president intends to move forward with the down payment on a plan, while working cooperatively with Congress to shape the plan itself.

Paying for the investment is, of course, the tricky part (at least, one of the tricky parts). The administration has sketched out a proposal that would "reduce the value of itemized tax deductions for everyone in the top income tax bracket, 35 percent, and many of those in the 33 percent bracket -- roughly speaking, starting at $250,000 in annual income for a married couple." This would cover about half of the healthcare fund, with the other half coming from "proposed cost savings in Medicare, Medicaid and other health programs."

The administration seems well aware of the fact that a $634 billion over 10 years would not cover literally everyone. Neera Tanden, a top Obama health adviser, acknowledged, "We know that this is not enough to achieve our overall goal of getting health care for every American, but it is a significant down payment."

It is, indeed. And while the down payment may only be the first step, this isn't incrementalism -- it's a significant step forward. Jonathan Cohn noted, "How big an investment is that? It's pretty big -- more, I believe, than any president has proposed setting aside for coverage expansions to the non-elderly since Clinton tried for universal health insurance in the 1990s. And it confirms that Obama is serious about pursuing health care reform, beyond small incremental steps."

Igor Volsky emphasized how different this approach is from the early '90s: "Overall, the fund is a good start, but it's certainly not enough to reach universal coverage. Still, the Obama administration has learned from the mistakes of past reform efforts. Unlike the Clinton strategy, which didn't include any money for health reform in the budget, and left Congress to digest a 700+ page health plan, Obama and Congress will fill in the details of reform."

And publius highlighted the broader significance: "Obama is pushing for national health care reform -- the crown jewel of the progressive legislative agenda -- while simultaneously trying to break down the modern political coalitions that Nixon and Reagan built. This guy is swinging for the fences -- and swinging hard."

Steve Benen 8:35 AM Permalink | Trackbacks | Comments (19)

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It makes sense to me that as part of any bailout, that the government create a health care system that would cover all the workers for that affected business. For example, if the government took over the health care costs for GM, that would be a substantial savings right there. It would also get the government into the health care business one step at a time, a sensible approach. Health care is necessary for people and expensive for business. Removing the cost of health care for business would provide a tremendous economic boost.

Posted by: tom bisson on February 26, 2009 at 8:42 AM | PERMALINK

I love the fact that the White House addresses the fact that a deduction for a person in a high marginal tax bracket is essentially getting something cheaper than someone in a lower bracket. For example if two people give $1000 to charity, someone in a 35% bracket ends up losing only $650 after his tax reduction, while someone in the 28% bracket pays a net of $720.

Posted by: Danp on February 26, 2009 at 8:58 AM | PERMALINK

I eat right, work out and face down potential illness with a steely macho glare. Why should I have to subsidize weaker people who are always getting sick?

Posted by: dead weight mike on February 26, 2009 at 9:19 AM | PERMALINK

Yes, good for Obama on HC reform, but: wasn't almost everyone, even supporters, saying just weeks ago that we can't afford to get heavily involved right now - the crunch is too awful, too much money already spent, etc? What changed?

Posted by: Neil B ◙ on February 26, 2009 at 9:21 AM | PERMALINK

"I eat right, work out and face down potential illness with a steely macho glare. Why should I have to subsidize weaker people who are always getting sick?"

dwm, unless you're a non-smoking, non-drinking, vegan that doesn't eat junk food and eats organically (BTW, Are you 'overweight' by any standard?), living in an area that has little or no pollution, who doesn't speed on the highway or take any unnecessary risks with your health or safety (there are probably other things we could add to this list) then you might be able to claim that ANY sickness/injury that might happen is most likely by chance and not by your own lifestyle and therefore making a stronger argument that anyone who doesn't live up to your standards shouldn't be 'subsidized' for their poor behavior.

Where do you draw the line?

I don't accept your standard for healthy living unless you are doing those things as a minimum. So I hope we don't subsidize your poor lifestyle and overweight body with my taxpayer money.

Posted by: QuestionEverything on February 26, 2009 at 9:48 AM | PERMALINK
Where do you draw the line?
Umm, maybe at recognizing a parody troll when you see one? Posted by: Steve LaBonne on February 26, 2009 at 9:56 AM | PERMALINK

The stimulus was a bipartisan lovefest compared to the looming battle on health care reform and universal coverage--because if and when it passes, the GOP is finished forever.

Posted by: Allan Snyder on February 26, 2009 at 10:03 AM | PERMALINK

Worth noting too that, as Al Giordano has pointed out at The Field, including Health Care Reform in the Budget (as opposed to its own bill) puts the kibosh on any republican plans to filibuster it. Apparently, the filibuster Rules do not allow the F-word on budgets.
The R-Rump has apparently been outmaneuvered yet again.

Posted by: mak on February 26, 2009 at 10:07 AM | PERMALINK

Dwm, anyone with insurance, whether private or government provided, who is "lucky" and doesn't draw on it much subsidizes the others who do need it, that's the way the distribution of risk works and it's the whole point. Can we charge more to the overweight, etc? I'm OK with that ...

Posted by: Neil B ↑ on February 26, 2009 at 10:26 AM | PERMALINK

Oh. That's pretty funny. Why doesn't dwm just label his blog "PARODY TROLL BLOG" for those who are satirically challenged?

Posted by: QuestonEverything on February 26, 2009 at 10:28 AM | PERMALINK

Apparently, the filibuster Rules do not allow the F-word on budgets.

Senator Byrd's office tells me that the omnibus bill is subject to both cloture and Budget Act point of order, meaning that Republicans have two ways to force a 60 vote majority to pass it.

Posted by: Danp on February 26, 2009 at 10:47 AM | PERMALINK

My feel is that Obama's plan is going to be significantly helped by a probable death spiral in the health insurance industry. We've got less people insured every day from layoffs and underemployment, whose insurers end up paying more for their care since the health care providers pass on the costs of the uninsured who don't pay their bills. Which means that premiums go up and therefore more insured people will drop coverage, and lather rinse repeat.

Currently, insurers are getting hammered from their investment funds going down the toilet like everyone else's, and that doesn't help. My read is that the whole stupid pseudosystem is going to implode sooner rather than later, and Congress is going to have to pass universal healthcare or see the entire healtcare industry collapse.

Posted by: ericblair on February 26, 2009 at 11:09 AM | PERMALINK

Swinging for the fences isn't national healthcare reform, it's nationalized healthcare like they have in Canada and Europe. Until we have that, we have incremental change that will not get the job done and will cost too much, unfortunately.

Posted by: Frak on February 26, 2009 at 11:56 AM | PERMALINK

I'm all for more care for people, but as a doctor, I find it a little troubling that we will make up for the expansion of services by, among other things, squeezing payments to doctors, hospitals, insurers, etc. What will happen is more and more people are going to enter the system than ever before, offices will be crowded, etc and yet payments will still go down. We almost saw last year what will happen if payments are squeezed. When the 10.1% cut in Medicare payments to physicians almost happened, many practices out there realized that at that reimbursement level, their profit margin, which is often razor thin, shrunk to where they would be losing money to see Medicare patients.

Parody trolls aside, I hope there is some kind of incentive for obese, alcohol-abusing chain smokers that will soak up most of the services to be more responsible with their health.

Posted by: Steve on February 26, 2009 at 12:39 PM | PERMALINK

Meaningful healthcare reform is going to be a drawn-out, costly and painful procedure. There will be a lot of confusion and uncertainty. Frankly, it scares the hell out of me.

But not doing something now will only guarantee worse consequences in the not too distant future.

The one comfort I get out of this is that we have, at last, the most competent team available to get the ball rolling and not some ideological puppet whose only goal was to get more money into the hands of the already wealthy while the rest of us died in the streets.

So buckle up and keep your fingers crossed. It's going to be one heck of a ride.

Posted by: Curmudgeon on February 26, 2009 at 1:04 PM | PERMALINK

Until the government eliminates the profiteer from health care and makes the plan a NOT FOR PROFIT single payer national health care plan then his actions are self defeating...eventually. He just lessens the amount the profiteers get...for awhile.

He could expand Medicare for all and solve the health care problem. Then a billion dollar private industry would no longer be able to bleed us dry.

Posted by: bjobotts on February 26, 2009 at 1:23 PM | PERMALINK

And national healthcare can't come soon enough...

From a memo by our County Manager

"As you know, the County has always allowed County retirees of pre-Medicare age to continue
with County-provided health insurance provided they pay the full premium. This practice has
increased our healthcare insurance premiums overall. Hence, it should be discontinued with
the new health insurance plan year for those employees who retire after July 1, 2009. ...

"Based on state and County health insurance premiums, it would appear that the average
monthly savings to a County retiree retaining the County's insurance plans for medical and
dental coverage saves the retiring employee over $3,000 per year. ... "

In otherwords they want people to retire so they can save expenses... Not a bad thing in itself.

As for future retirees they will go to the state health care system plus Medicare which is markedly inferior to the one the county provides....

Posted by: Xertruk on February 26, 2009 at 1:38 PM | PERMALINK

Frak, "nationalized healthcare" is not what they have in Canada and Europe, or at least it is not that simple.

Canada has single-payer, which is nationalized health insurance. However, most hospitals and clinics are not run by the government.

Britain does have nationalized healthcare. Hospitals are run by the government and doctors are employees of the government healthcare system. Even in Britain, however, doctors can take private patients outside the government system.

The Netherlands uses private insurance companies with every insurance company required to offer a core package with identical coverage. The system is paid 50% by payroll taxes, 5% from other government funds and 45% from premiums. Insurance companies are allowed to compete on price and to negotiate payment levels with hospitals, but they are required to charge the same price for everyone they insure. The level of payments from the regulators fund is adjusted based on their payouts in order to remove the incentive to screen out the elderly or sick. Premiums for children under 18 and subsidies for low income residents are also paid from the regulators fund.

It may not be the best option, but the Netherlands plan is one that we could reach here in the U.S. through a series of incremental steps.

Universal health care is also much more widespread than most people realize. It is currently offered in some form in 10 countries here in the Americas, 15 in Asia as well as almost all of the countries in Europe. Given that India, China and most of Europe are on that list, about half of the world's population is in countries with universal coverage.

Posted by: tanstaafl on February 26, 2009 at 2:47 PM | PERMALINK


"Parody trolls aside, I hope there is some kind of incentive for obese, alcohol-abusing chain smokers that will soak up most of the services to be more responsible with their health."

I agree that we need to find better ways than are currently available to help obese people lose weight, and smokers and alcohol abusers to quit, and that if you have all three risk factors, you probably will use a disproportionate share of health resources. HOWEVER.

A close friend of mine is currently undergoing chemo for Hodgin's disease. He was caught in Stage IIA so his prognosis is excellent. But this is a 52-year-old man, vegetarian since sometime in his 20s, never a smoker, drinks socially from time to time, never been overweight, walks everywhere. He's not in quite as good a physical shape as he was roughly 10 years ago when he jogged the rim-to-rim, which means starting out at the North Rim of the Grand Canyon, jogging down, jogging back up to the South Rim, and reversing the process, all within a 24-hour period. Now that's being SERIOUSLY fit.

Bottom line: he's a poster boy for doing everything "right" health-wise, and yet he still has to deal with a life-threatening illness. And yes, he is currently using a "disproportionate" share of healthcare resources.

I am certainly not advocating that we should therefore all go out, gain weight, and smoke our little lungs and drink our little livers out. But health is more of a crapshoot, at current knowledge levels, than many people would like to admit.

Posted by: Wolfdaughter on February 26, 2009 at 2:54 PM | PERMALINK



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