Post-Election Analysis–Expect Few Changes in Reform Legislation

Today, unemployment threatens the hopes and lives of millions of Americans. Recent graduates can’t find jobs. Families that need two paychecks are living on one. Households that depended on one paycheck have none. More than nine million Americans who need a full time job are working part-time.  Many who have jobs are “working scared.”  They haven’t had a raise for years, and don’t dare ask for one.  They live with the constant fear that, without warning, they will join the ranks of the unemployed. The economy remains sluggish; there is little hope that the private sector will begin to generate the jobs this country needs.

Over the past two years, many of us pinned our hopes on healthcare reform. If we could just manage that, it would be a sign that we, as a nation, were ready for the “transformative” change that President Obama promised. And, to the amazement of the chattering classes (a.k.a. “the pundits”), Congress did, in fact, pass the Patient Protection and Affordable Care Act (ACA)

Nevertheless, many remain wary.  Reform’s opponents claim that the legislation will lead to a loss of benefits for seniors, combined with sky-high premiums for everyone else. Deficit hawks argue that the pilot projects will never work, and that Medicare will push the nation into bankruptcy. And even those who embraced the legislation fear that as conservatives take over the House, a new Congress will dismantle the ACA by refusing to fund it.

None of this is true.

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Highlights from the Reconciliation Bill, and Maggie’s Comments on the Changes

Overall, the changes in the reconciliation bill will make the Senate
bill more progressive—and fairer.

My prediction: the bill will
pass
. Those who oppose universal coverage are becoming
angrier, louder, more abusive, and more frantic. This is because they realize
that they are losing
, and now they are just flailing about.

This
evening (Thursday) I heard Bart Stupak acknowledge, on “Hardball
with Chris Matthews”, that while the Democrats may not have the
votes today, by Sunday, they could well have them.
On this, I agree
with Stupak.

Below, the details of the new bill, and my comments
in red.

Under the new reconciliation bill:

  • Low-income and middle-income families will have an easier time
    affording premiums.
    The tax credits for health insurance premiums
    are more generous for individuals and families with incomes between 250%
    and 400% of the federal poverty level (FPL)—i.e.  individuals earning
    less than $41,500,  or a family of three earning less than $70,400. When
    compared to the Senate bill, the legislation also cuts cost-sharing for
    individuals and families with incomes between 100% and 250% FPL.

Comment:  Research shows  that when a low-income
family of four (for instance a family earning less than $22,000) is
required to share in health care costs, too often they delay needed
care.  For these families, even a $15 co-pay can be a barrier. Fifteen
dollars will buy groceries for two dinners for a family of four (e.g.
spaghetti with tomato sauce and bread).  Middle-income families who
don’t have help from an employer also need the higher subsidies that the
new bill provides.

  • Six months after the bill is enacted, all existing health
    insurance plans are prohibited from imposing life-time limits on payouts
    or refusing to cover children suffering from pre-existing conditions.
      
    Excessive waiting periods before insurance kicks in also will be
    banned, and insurers will be required to provide coverage for
    non-dependent children up to age 26 on their parent’s polices.  (Parents
    will pay extra for the coverage, but adult children will get better
    deals than many would on their own.) Beginning in 2014, group health
    plans will no longer be able to exclude adults based on pre-existing
    conditions. Annual limits on how much an insurer will pay out will be
    restricted beginning six months after enactment, and prohibited starting
    in 2014.

Comment: Limits on how much insurers will pay out
annually or over a lifetime can condemn individuals to death. If you
have the bad luck to be diagnosed with a very expensive disease that
might require years of pricey treatments (MS for example, or childhood
cancers) your insurance can easily “max out”—even though treatment that
might cure you (in the case of some childhood cancers where we have been
making great progress)– or at least give you many additional years of
life.

  • The “Cadillac Tax” on expensive health insurance plans has been
    pushed back five years and won’t go into effect until 2018.
    The
    thresholds also have been raised: the tax will apply only to individual
    plans that cost $10,200 or more (up from $8,500) or family plans that
    fetch $25,500 (up from $23,000). Dental and vision plans would not be
    included.  Under the new bill, there is no special deal for unions.

Comment:  In my view, this is a positive change.
As I have argued in the past, the Cadillac tax could hit middle-income
families.

  • While the Cadillac tax is rolled back, the Medicare tax for
    wealthy individuals earning over $200,000 and married couples who earn
    over $250,000 rises.
      Today, they pay a 1.45% payroll tax on wages.
    The Senate bill would raise that tax to 2.35%. The reconciliation bill
    expands the tax to include investment income (dividends, capital gains,
    etc.) as well as earned income. It still applies only to individuals who
    show income over $200,000 and couples who report income over $250,000.

Comment:  This tax makes up for the cut-back and
push-back on the Cadillac tax. In contrast to the Cadillac tax , this
tax is limited to those at the very top of the income ladder. Unlike the
middle-class, those earning over $200,000  have  enjoyed significant
tax breaks and income hikes in recent years. They are in a much better
position to afford the increase. It’s worth noting that other countries
tax investment income to help fund healthcare.

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Pelosi Watch: The Final Mile

Today House Speaker Nancy Pelosi confirmed that Congressional Democrats are inching "closer" to final votes on health care reform. She declared that Democrats will take   "whatever time is required" to get it finished.  “It won't be very long,” she said, “and we'll be making a real difference in the life of the American people.”

Pelosi has also made it clear that the public option will not be in the final legislation, adding “I’m quite sad that the public option is not in there.” Pelosi also noted that she has been for single payer for many years, long before many of the reporters in the room were born. 

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