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The Conference Issues: A Partial List

Paul Waldman’s piece about the differences to be worked out in the House-Senate conference committee on health care is a pretty nice recitation of the issues we’ve been discussing for several weeks. He offers ten specific issues:

1) Funding (House surtax v. Senate “Cadillac” excise tax)
2) The insurance exchange (House nationwide exchange v. Senate state exchanges)
3) The almost-public option (House’s public option v. Senate OPM-managed plans)
4) The start date (House 2013 v. Senate 2014)
5) Insurance subsidies (House more generous subsidies v. Senate stingier subsidies)
6) Medicaid expansion (House 150% of poverty v. Senate 133% of poverty)
7) Insurance vouchers (House has nothing, Senate has a sliver of Ron Wyden’s Free Choice Act)
8) Immigrants (House’s allowance of undocumented access to exchange v. Senate banning access)
9) Individual mandate enforcement (House’s stronger enforcement v. Senate’s weaker enforcement)
10) The Medicare commission (House has none, Senate has one)

These are not the only issues to be reconciled, of course. The medical loss ratio provisions, the Stupak amendment and Maria Cantwell’s Basic Health Plan are just a few off the top of my head. But these are among the most important issues.

Of them, I would say that #1, the funding, will cause the most controversy. Bob Herbert has a column out today calling the excise tax “a less than honest policy” which is designed to get employers to reduce the quality of their health insurance plans, and which has been sold on the belief that money saved on insurance will go directly into wage increases for workers.

We all remember learning in school about the suspension of disbelief. This part of the Senate’s health benefits taxation scheme requires a monumental suspension of disbelief. According to the Joint Committee on Taxation, less than 18 percent of the revenue will come from the tax itself. The rest of the $150 billion, more than 82 percent of it, will come from the income taxes paid by workers who have been given pay raises by employers who will have voluntarily handed over the money they saved by offering their employees less valuable health insurance plans.

Can you believe it?

I asked Richard Trumka, president of the A.F.L.-C.I.O., about this. (Labor unions are outraged at the very thought of a health benefits tax.) I had to wait for him to stop laughing to get his answer. “If you believe that,” he said, “I have some oceanfront property in southwestern Pennsylvania that I will sell you at a great price.”

I would expect some blend of the House and Senate financing to shield the middle class from the excise tax while keeping its structure in place, because the White House has used it as an example of cost-cutting provisions in the bill. The same with #10, the Medicare commission, which if anything will get stronger in conference.

The House will probably push the strongest for #4, the start date, but they should add #2, the exchanges, to their to-do list. The House exchanges have the economy of scale that might actually create some downward pressure on insurance prices, in ways that state-based exchanges simply cannot. In addition, #5, the subsidies, could be a major issue.

Anyway, this is a good blueprint for what to watch in the weeks ahead.

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David Dayen

David Dayen