Monday, September 21, 2009

Amendments That Matter

A number of Senators are out in full force to make the Finance Committee's final product suck less. Having spent quality time with almost 600 pages worth of PDF files, let me create some logical groupings of the Amendments.

Most of the important amendments in a cluster that most Democrats on the committee offered in some form or another. Most of these ought to pass.
  • The most common amendment is one to expand subsidies to 400% of FPL, and increase the level of subsidy in general. This one is a no-brainer. Baucuscare currently doesn't have enough money to make insurance affordable to anyone, and even the House bill leaves insurance close to unaffordable for millions of people it purports to help.
  • Several Democrats are offering amendments to require self-insured businesses and large markets to abide by the same reforms that will apply in the exchange. For some reason, Baucus didn't apply the insurance market regulations that he created for the individual and small group market to large businesses that self-insure. So, your employer could still offer coverage that is less generous than the bronze coverage in the exchange. Fixing this is also a no-brainer.
  • Next-most popular are amendments to scrap the co-ops in favor of a public option. This is a no-brainer, though, strictly speaking, there is such a thing as a good reform bill that doesn't have a public option.
  • Following that in popularity are amendments that replace the free-rider with pay-or-play/employer mandate. The free-rider provision is quite simply the Worst. Policy. Ever. Kill it. Kill it dead.
  • Next most popular were amendments to raise the minimum quality of insurance. Some of these limit the out-of-pocket maximums insurers can set in their products. Some of them increase the actuarial value of the plans. But in general, they force insurance plans to have less cost-shifting.
  • Less popular, but vitally important, are amendments to narrow the rating band. The Baucus proposal allowed insurers tremendous variation based on age, smoking status, regions of the country, etc. Narrowing the band is absolutely vital. Yes, it will mean young people are cross-subsidizing the insurance of old people. But some day, the young people will be old, and they will be net winners rather than losers!
  • Most Democrats want to ensure that stronger state regulations of insurance can continue to apply. The Baucus bill allows states to enter compacts to sell insurance across state lines. This sort of thing always results in a "race to the bottom" for the weakest insurance regulation, though Baucus's plan would have slowed that race. States with strong regulations could always decline to enter compacts with states that have weak insurance regulations. Still, the compact idea feels like a bad idea. But harmonizing regulations so that insurers don't have to deal with patchwork regulatory requirements might be a good idea. It seems to me that Baucus' idea could be made into some sort of grand bargain, where federal regulations preempt stronger state regulations, in exchange for which insurers accepts fairly stringent regulation, but it's not clear to me that anyone's interested in such a deal.
  • A number of amendments were offered to improve state-level exchanges or the co-ops in one way or another, but it seems to me that having a national public option would be preferable anyway.
  • It should be noted that most of the amendments offered by Ben Nelson and Blanche Lincoln tended to improve the bill. The worst amendments tended to come from Tom Carper (D-DE).
  • A number of amendments are trying to improve insurance access for legal and/or illegal immigrants. These provisions are hard to parse, because they mostly have to do with who has the burden of proof and how annoying bureaucratic the appeals process is. At the very least, anyone ought to be able to purchase unsubsidized insurance in the exchange regardless of legal status.
  • Jay Rockefeller has included amendments to restore living will counseling, which is a no-brainer and if our political system is worth four cents it will pass.
  • There's a technical question of how to deal with CHIP, but I don't know what the best answer is. Rockefeller wants it out of the exchange. Others want it in the exchange, but with stricter cost-sharing rules. The point is, CHIP works and there's a lot of concern that this bill will blow up the existing CHIP programs.
  • As far as paying for all of this, Jay Rockefeller's proposal is the best. He offsets almost all of his costs by limiting itemized deductions to 35% of income. This raises less revenue than the President's proposal (which I believe is to limit deductions to 28%), but the fact that Rockefeller says he's willing to do this means the idea isn't totally dead. Kerry wants to close corporate tax loopholes, which is also a salutary idea but of course raises the question of "whose loopholes are you gonna close?". Other ideas include increasing the tax rates on insurers drug companies, but I'm really a broad-base, low-rates kind of guy, so the Rockefeller proposal is the winner in my book.
Some other amendments of note:
  • Olympia Snowe has her "trigger" amendment. The more I think about it, the more the trigger could be made to work. The main problem is that her threshold for the trigger is too high; 13% of income at 300% if FPL isn't really affordable insurance at all, but the idea is actually pretty sound.
  • Snowe is also putting forth a collection of amendments to get this show on the road. Ezra points out that this is a very good idea; I'm going to be forty years old by the time the Baucus bill is fully implemented, which is just crazy. Massachusetts is close to full implementation within five years of passage.
  • Ron Wyden has a number of bank-shot amendments that make final the bill look a bit more like Wyden-Bennett. For the most part these amendments are good policy but may be viewed as politically risky. In the main, they tear down the walls between the exchange and employer-sponsored insurance. In the long run, this is a very good idea. In the short run, it seems likely to scare people. If somehow, passing any of these amendments would convince Bill Bennett to vote for the final bill, (1) they would absolutely be worth passing, and (2) I will eat my hat.
  • Kent Conrad cleverly offered a couple of amendments provide some immediate help in the small group/small business insurance market. This is good politics; the more immediate benefits people start to see, the happier they will be. However, Conrad, a self-proclaimed deficit hawk, couldn't be bothered to find offsets for his proposals.
  • Blanche Lincoln put forth what appear to be a number of good amendments that made small changes. The one exception was an amendment to exempt "seasonal workers" from the headcount that determines who qualifies as a small business. Insuring farm workers seems like a genuinely tricky problem, and I don't know what to do about it. But outright excluding certain types of workers or employers strikes me as a bad idea.
  • Democrats showed different degrees of enthusiasm for rolling back the tax exclusion for employer-provided health insurance or rolling back Baucus's excise tax on expensive insurance plans. Rockefeller wants the cap to be higher, so fewer health plans are hit by it (and less revenue is raised). Tom Carper wants it to be lower; in fact, he wants it to be only slightly higher than the national average cost of insurance, which is crazy low at this point in the debate. If anyone is in the right here, it's probably Rockefeller. Kerry's proposal is to set a different threshold for specific classes of businesses that are high risk (fisherman, miners, &c)
  • John Kerry wants to let states create pilot programs that abandon fee-for-service. This is a very, very good idea that may be too hot to handle, but if the Senate's up to the task, we should do it. Suffice it to say I'm not holding my breath.
There are many more amendments, and it's difficult to tell which ones are truly important for reform, and which ones are just items that have been on people's wish lists for a while.

As for Republicans not named Olympia Snowe, their amendments basically stink. Chuck Grassley (R-IA) co-sponsored one amendment for rural Medicare recipients that might have a bit of merit. The rest of them all blow, with one exception. The Baucus bill requires all insurers in the exchange to offer not just a bronze plan, but also silver and gold plans. At first blush, this requirement seems a little strange; why shouldn't we let some insurers offer only bronze plans? Might that result in more competition in at least part of the marketplace? I've had conversations with some actual health care wonks who think this is important, because otherwise the few companies that do offer silver and gold plans will get an unfairly high share of the high-cost patients. Perhaps you could fix this with risk-adjusted payments. But I don't know enough about the problem to say one way or another.

Now we'll have a week or two where we get to see which of the good ideas make it into the Finance Committee's bill. Considering this is the right-most pole of the debate, getting a bill out of committee with even a triggered public option, and something that pushes insurance into more affordable territory, would feel like a real win. It would mean that every Committee has produced something that's not particularly half-assed.


low-tech cyclist said...

Blanche Lincoln put forth what appear to be a number of good amendments that made small changes. The one exception was an amendment to exempt "seasonal workers" from the headcount that determines who qualifies as a small business. Insuring farm workers seems like a genuinely tricky problem, and I don't know what to do about it. But outright excluding certain types of workers or employers strikes me as a bad idea.

What I'd do is just pro-rate, unless there's a good reason not to. If you've got an additional 60 full-time workers for 2 months, then they should count as 60 x (2/12) = 10 more full-time, year-round workers.

On a broader but related subject, I think the time is long overdue to apply the same labor laws to agricultural workers that apply to everyone else. Separate rules may have made sense in the era of family farms, but not in the era of gigantic agribusinesses.

Nick Beaudrot said...

Maria Cantwell has an amendment that forces the fte calculation to occur every quarter. This would have roughly the same effect as what you propose.

Still it would leave farm workers uninsured during the offseason. They're not going to be able to afford COBRA. I really don't know what the answer is here at all. Maybe there should just be a separate nationwide ... co-op for farmers?

And I agree on the labor thing.

BruceMcF said...

"Strictly speaking there are good reform bills that don't have a public option".

Since a bill that limits the exchange to not-for-profit enterprises is unimaginable from the current Congress, I can only assume you mean there are reform bills that do not mandate coverage, and therefore do not need to offer a public option to have a shred of political legitimacy.

Nick Beaudrot said...

If the market is structured properly, there's no need to limit the exchange to non-profit entities. For-profit entities sell insurance in MA and things seem to go okay.

If you have the various insurance reforms (guaranteed issue, an individual mandate, and community rating, ban on lifetime caps) the individual market starts looking more and more like the large business and self-insured market. And those parts of the market are relatively efficient; large business have lots of leverage, and insurance administrative overhead is only slightly above Medicare. It's not perfect, but if we're not going all the way to single-payer, or at least a public option that insures a huge percentage of the population, the benefits of the public option aren't overwhelming. Providers still have to deal with multiple insurers/payers. Everyone will have more leverage with providers to keep costs down, but not as much as the govt in a single-payer system.