Health is the War of The State

The first step of any political reform, I’ve always believed, is to figure out how to achieve the desired goal with the minimum number of changes to the existing legal structure. As I’ve written before, Obama’s healthcare plan should have simply been a universal plan similar to Medicare (if not Medicare itself) that covered every American from the day they were born instead of when they turned 65. It would have been faster, cheaper, more universal (as in 100%) and more popular. It was a mistake Obama didn’t take that route and unlike Bill Clinton, he didn’t have an excuse for it.

It wasn’t until 1997 that the US Senate established the precedent that expanding healthcare under the Social Security Act (in that instance, creating Medicare Part C and CHIP) was eligible for the filibuster proof reconciliation bill process. That’s a pity, because in 1993 President Clinton wanted to use a reconciliation bill to pass healthcare reform but Senator Robert Byrd put his foot down and said it wasn’t possible. If Clinton hadn’t backed down because of Byrd, he could have had healthcare reform done by summer recess, 1993. Instead his healthcare plan got killed in the 60 vote trench warfare which is the US Senate.

Obama didn’t have that excuse since he had the 1997 precedent in his pocket (and Bobby Byrd had changed his mind). The catch was, he could use reconciliation to pass a public insurance plan — raising revenue and then spending it– but he could not use it to regulate the private insurance market (individual mandate, preexisting condition coverage, etc). Since Obama early on had promised health insurers he had their back, he gave up the chance to quickly pass universal coverage by expanding Medicare (or creating a new program similar to it, more on that shortly) that’d only need 50 senators and a tiebreaking VP. Instead, the regulatory Obamacare bill required 60 votes to pass and it became a close run thing when Sen. Ted Kennedy passed away in 2009 and was replaced by a Republican. Embarrassingly, the poorly drafted ACA had to be amended by a reconciliation bill to keep the wheels from falling off too quickly. Even then, the bill was a dog’s breakfast for reasons that everyone reading is surely familiar (most critically, in order to keep the CBO score down, comsumers were forced to pay too much in premiums and copayments). To be fair, I must give President Obama credit for tackling something that has been a major issue left unaddressed at least since 1945 when President Truman’s first major postwar Address to Congress was on the need for universal healthcare. As Martin Luther King, Jr said in 1966, “Of all the forms of inequality, injustice in health is the most shocking and the most inhuman because it often results in physical death”. I never voted for the man but but we should recognize that on this issue, President Obama left the Nation more just and humane.

Ad we discussed last time, Obamacare is clearly going to change into something else soon. The question is, to what? Before we get to what’s next, let’s look at what Obama should have done. To cut to the chase, he should have listened to Pete Stark.

Imagine a Steven King-like story about some small town (in coastal Maine or not, it’s up to you) that’s suddenly faced with a terrible disaster that no one anticipates, understands or knows what to do about… except for the one crazy old man who’s always angry, scowling and yelling at kids but who, somehow, instantly knows the score and knows exactly what to do. That, my friends, was Congressman Fortney “Pete” Stark (after getting passed over by his fellow Democrats for Ways & Means chair on account, basically, of being a crazy old man, he was primaried out of his California seat in 2012).

After his 2008 White House victory, Obama thought he could kumbaya to a bipartisan healthcare plan that everyone could support. It took him over a year to figure out that wasn’t how the world works. Pete Stark knew better, he advised Obama that he had to work with the providers (doctors, hospitals, drug companies), but he didn’t have to work with the health insurers, “You’re not going to get the insurance companies on board, I don’t think, but they are the easiest to roll because nobody likes insurance companies”.

To that end, Pete Stark came up with a plan that provided 100% universal coverage at less cost (in terms of National Health Expenditures and household expense) than other plans on the table. He called it Americare and it really should be the basis of where healthcare reform goes from here. Last year when candidate Trump announced his support for universal healthcare and promised a better, cheaper plan than Obamacare, Dylan Matthews suggested in Vox that Trump look to Stark’s Americare plan.

“You can think of the AmeriCare approach as a public option on steroids. It would create a new single-payer program called AmeriCare that would take on everyone ensured by Medicaid and SCHIP, and would automatically enroll all children at birth. It would pay the same rates to providers as Medicare, meaning it’d be considerably less generous to doctors and hospitals than private insurers.”

Alas, Donald Trump is clearly not a reader of Vox. What’s more, his Administration is a sad example of the political saying, “personnel is policy”. Instead of a team working to fulfill Trump’s promise of universal healthcare, the Administration’s two drivers of health policy are HHS Secretary Tom Price and Budget director Mick Mulvaney. They’ve been working hand on glove with their former colleagues in the House Freedom Caucus to gut Obamacare and replace it with tumbleweeds and death (to simplify the ACHA bill slightly). The Democrats should offer a better alternative– not just better than the House bill but also better than the Obamacare status quo. They could do worse than picking up Stark’s mantle by updating the Americare bill and campaigning on it.

Now as you know, many Democrats are gung ho for HR 676, John Conyers’s Medicare for All bill. Bernie Sanders has sponsored in the past a similar Senate bill (The main difference is the Sanders plan called for federal funding of state-administered universal coverage plans, in the wake of Red State refusal to expand Medicaid, that’s a bad idea). Medicare for All is a fine idea though HR 676 goes too far in the direction of the government running healthcare instead of simply financing (for example, Sect 103’s ban on for-profit hospital participation seems pretty over the top).

There are positive elements of the bill, such as adding dental, vision and long term care to Medicare (replacing what funding Medicaid provides in those areas and then some). However what makes HR 676 a political lead sled is how vague it gets at the part (Sect 201) where it should spell out which taxes are going up and by how much.

(B) Increasing personal income taxes on the top 5 percent income earners.
(C) Instituting a modest and progressive excise tax on payroll and self-employment income.
(D) Instituting a modest tax on unearned income.
(E) Instituting a small tax on stock and bond transactions

Imagine the Congressional Budget Office try to score that! Conyers and his cosponsors really need to plug in some actual numbers and details for those “modest” tax hikes. Sure the rates might have to be adjusted up or down after the CBO drills into the bill but it’s not a real plan until it has real tax numbers. The lack of details is probably because real numbers would look real scary.

Logically, it’s apparent that what employers and families pay now for premiums is a de facto healthcare tax. Politically, logic doesn’t matter. Even with insurance costs going away with HR 676, it’s a big pill for Democratic Members of Congress to swallow if asked to hike income tax or FICA rates by God knows how many points (seeing FICA go from 15.3% to 25% or even 30% is the ballpark we’re talking). What’s more, you’d never get Republican, however moderate, votes for any kind of tax hike. Stark’s Americare bill sidesteps that issue by dealing with the world as it is. There isn’t a tax hike. Instead employers keep paying premiums, likely less than they do now, but to the Americare trust fund and not to private insurers. It’s still a revenue (and not a regulation) measure, so Americare could pass the Senate with 51 votes in a reconciliation bill.

Instead of starting from scratch, it’d be easier to simply amend Obamacare law to add Americare to the state exchanges, put all employers (large and small) onto exchanges and then limit employer health premium deductions and Obamacare tax credits to only Americare premiums. It’s a free country, you have every right to buy private insurance if you want. You don’t have a right to a public subsidy to do so.

The existing Obamacare taxes plus limiting tax subsidies to only Americare premiums should be enough to fund an updated Stark plan without any tax hikes, but of course there is a great pool of untapped federal revenue to tap. One sufficient to expand Americare benefits and fund additional spending (say, Congressman Ro Khanna’s plan to expand the EITC) without raising taxes or increasing the budget deficit a penny. More on that next time.


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