james debate
james debate

Saturday, 19 September 2009

Until now, the heated health care reform debate has been a bit of a non starter. The House Tri-Committee have proposed a bill, which has already been 'passed' in principle, but unfortunately the Republicans, and conservative Democrats in the senate, refuse to endorse it, and yet have not submitted any proposal of their own so far, and thus very few developments have been made.

But now the Senate Finance Committee has finalised the details of their own bill, described as a 'more centrist' and moderate bill with more conservative backing. But how good is this bill actually? And how does it compare to the House bill?

health care can't wait

Public Option vs. Nonprofit Cooperatives

The new bill, submitted by Chairman Max Baucus (D-Montana) costs around $850 Billion, and drops the much discussed public option. Instead, it calls for the creation of nonprofit health cooperatives, which are basically organisations that go about providing cheap health insurance, or in some cases, private plans at cheaper prices.

On the surface, the difference between this and the Public Option, which will essentially be a government funded insurance company, is little, but there are key differences.

The Public Option is essentially a government funded health insurance firm, which will offer cheap health insurance to Americans. The difference is that with the Public Option, the government can set mandates, for example forcing prices to stay at a low, fixed rate.

Now, for many this seems to be a positive thing. Keeping Public Option prices low will create competition against the private insurance firms and force them to keep their prices low and competitive. So while the Cooperatives are useful tools for providing insurance for the uninsured, the Public Option will do the same job, but with the added bonus of keeping private insurance prices low, reducing premiums for the rest of us and potentially saving billions of dollars.

This sounds like a good thing, but there are a lot of people who worry that this might amount to a government takeover of healthcare. While there is nothing in the bill itself that forces people to switch to the Public plan, as long as they are already insured, a lot of people wonder if this might just be the first step towards an entirely public healthcare system.

These concerns would appear to be groundless, however. Just look at education, where public and private institutions seem to coexist happily, and indeed the most successful universities are privately owned. Similarly look at the delivery companies, where the Postal Service coexists with the likes of DHL and UPS. Heck, just look at the healthcare systems of every other developed nation in the world, where public healthcare has not led to the downfall of the private sector. And remember these are countries with actual public healthcare, not just public insurance, a much lesser intrusion on the private sector.

No, the real concern here is that this inevitably means that less money will be flowing into the healthcare industry. The Insurance companies will have smaller profits, and doctors will be earning less, so it is no surprise to see many people connected to these industries opposing any Public Option.

But in the end, cooperatives will do at least half the job that is required, giving insurance to the uninsured. What it won't do, then, is reign in the absurdly escalating insurance costs that are bankrupting the nation.

Preventing Escalation of Insurance Premiums

As mentioned, the Public Option can do this simply by mandate, and by introducing competition into the industry. The new Senate bill will attempt to make up for this loss by introducing billions of new fees on insurance companies.

On top of this, the bill will impose restrictions on what insurance companies can consider a 'pre existing condition' and prevent caps and limits on coverage. Again these are things that would indirectly be enforced by the creation of a government controlled Public Option which can set its own rules.

Ultimately It feels as though this bill is finding different way to phrase essentially the same reform package. Instead of a big scary government plan that will do everything that is required, they're going to bring in lots of different reforms to try to accomplish the same trick, but with less government control, because clearly this economic crisis has shown us that we can trust money hungry corporations much more than nonprofit government initiatives.

The natural instinct for most people is to go with the option with less government, but that's because they haven't looked at the finer detail of the Baucus bill.


The House Tri-Committee bill with the Public Option has been shown to be deficit neutral by the Congressional Budget Office, costing about a trillion dollars, paying for the majority of the package through spending reductions in things like Medicare and by ways and means.

The Baucus bill costs a bit less, $850 billion, but will pay for the majority through tax increases. You see, the key differences with this bill is that Baucus wants to win over conservative voters by removing words like 'government' and by paying for the reform out of the pocket of everyday Americans, and less from the pockets of insurance companies.

But in the end, both of these are budget neutral, since the Public Option will lead to increased revenue.


Other than this, these bills have pretty much the exact same idea on reducing malpractice costs, on restricting coverage only to people with proof of citizenship, thereby preventing illegals from signing up (though this guy clearly missed that bit) and both are leaving abortion laws untouched, acquiescing to local state laws on the matter.


There's really nothing at all that you gain from this Baucus bill. Both are budget neutral, both will give similar levels of coverage, and both will lead to a short term reduction in healthcare costs. The only (theoretical) benefit is that conservatives will get on board, being that it involves smaller government.

The problem is that cooperatives don't have as much power as a public option will have to keep the industry under control, and the increased volume of legislation involved in the Baucus bill presents greater opportunity for loop holes and wastage. The end result of this is that while short term improvements are assured, in ten years time we will likely just find ourselves right back where we are now. All things being considered, it can not be denied that the Public Option is the best long term bet, especially in terms of cost.

The problem with this house bill, and why it has taken so long to pass is all politics, and pretty much nothing to do with economics or healthcare. You have to remember that this Public Option is already a watered down compromise from what progressives really want, a truly universal, single payer healthcare system.

But Republicans simply will not vote on any reform bill. It will be to their advantage if they can point back and say that nothing useful got done during the Democrat's time in charge, no one will remember that it was their fault, they'll just look at the results (yes as usual the Republican strategy is to bank on the stupidity of Americans, you should be used to that by now).

Similarly conservative Democrats are shying away from the bill now because of all the hubbub that is being generated in their states. It's not because they actually believe any of the bullshit the Republicans are saying, it's because they want to get reelected next year above all else and are being careful not to alienate their constituents.

In retrospect, it probably would have been better for the Democrats to initially come out with the most liberal plan imaginable, so that they could a few months later 'compromise' to what we have on the table now. This way the conservatives could vote in favor and not lose face, which is exactly what Baucus is hoping for now with this new Senate bill.

But even this new Baucus bill has not got one single vote of support from Republicans. I think by now it must surely be abundantly clear to all Democrats that what I said earlier is true, that no Republican will ever vote for any reform, no matter how good it is or how much it falls in line with their ideology.

So instead, they must be hoping that the new Baucus bill will entice enough blue dog Democrats to vote for it. But frankly, without any Republican votes, without Kennedy's vote, without the votes of certain "Democrats" like Lieberman, I don't think there's much chance of even this bill passing the Senate, and it's becoming clearer and clearer that Obama should just do what Democrats have been urging for weeks, push the House bill through with a slim majority and to hell with the conservatives.

At the end of the day, they can bitch and moan all they like but they did the exact same thing for 8 years, and when it comes time for the election, it will look better for the Democrats if a good bill gets passed with no Republican support than if a bad one gets passed with it.

Signs are already showing economic improvement, despite the Republican opposition to the stimulus. Now let's pull the same trick with healthcare and frankly they won't have a leg to stand on in the future.

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