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November 13, 2007

The Wyden Bill

So I'm not going to pretend that I understand exactly how senators decide to vote for legislation. But Ron Wyden's health care bill, which is solid, impressively comprehensive, reform legislation, now has 11 Senate cosponsors, including six Republicans. And these are powerful, conservative, Republicans -- Grassley, Judd, Gregg, Alexander, Coleman, Crapo, and Bennett (not to mention Lieberman). Grassley, for one, is actually the ranking Republican on the Finance Committee, which is the relevant committee. Crapo's on the committee as well.

So, assuming three more Republicans could be persuaded to eschew a filibuster -- say. Warner, McCain, and Graham -- couldn't this bill be passed, like, tomorrow? Bush would veto it, of course. But in theory -- and that "in theory" is where this all breaks down -- a Democratic president could come into office, send this to the floor, and sign it a week later. The world doesn't work like that, but it's very hard for me to imagine why Grassley and Crapo and Bennett are jumping onto this bill if it's only to jump off when its passage approaches reality. This is the sort of congressional coalition building around concrete legislation that didn't precede the Clinton reforms, and which many feel were the missing ingredient for their success. That it's happening organically, among the relevant players, without executive leadership, seems quite meaningful.

November 13, 2007 in Health Care | Permalink

Comments

I don't understand why his plan isn't getting more media or health wonk attention. It's still the best plan to come out of anybody, including all the Presidential candidates, but I guess because he's not running for President, or because it makes too much sense, or something, nobody wants to talk about it.

Posted by: spike | Nov 13, 2007 3:13:00 PM

Crapo's on the committee as well.

You don't list him among the co-sponsors, did you mean to?

(thanks, this *is* interesting and a bit puzzling. Maybe you could say a bit more about the bill itself?)

Posted by: djw | Nov 13, 2007 3:32:32 PM

Jon Cohn had a piece on Bob Bennett a few months ago discussing some of this. The upshot was that Republicans like Bennett, Gregg, and Alexander had a lot of reservations about Wyden's bill, but agreed to co-sponsor it as a way of showing that they took health care "seriously."

If you read the whole article, though, it becomes clear that their objections are massive—Gregg, for instance, doesn't like the "imposition of mandates," which is a major part of Wyden's proposal. So I don't think any of these folks are guaranteed "yea" votes.

Posted by: brad plumer | Nov 13, 2007 3:46:44 PM

Is this kind of like when Bob Dole introduced his own health care bill in response to the Clinton plan, only to vote against it later?

Posted by: Neil the Ethical Werewolf | Nov 13, 2007 4:06:50 PM

Ezra,

So Wyden's bill is a much more robust version of Giuliani and McCain's proposal to encourage individuals to switch from employer-based coverage to an individual insurance market. (Wyden mandates the switch along with universal coverage)

Yet you tag your posts on Republican health care plans in the Consumer Directed Health Care category, but don't with the Wyden plan-- one that does much more in enabling consumer choice in the individual insurance market.

Its possible this is

-- a simple oversight
-- loose use of language, equating Republican plans as CDHC generally and "univeral coverage" for leftish plans (i.e. your/Cohn's incorrect use of the term "universal coverage" in yesterday's post)
-- you are still thinking about consumer-directed health care in partisan terms rather than in policy/non-partisan terms

In any case, Wyden's plan is clearly a consumer-oriented approach to health care reform.

Posted by: wisewon | Nov 13, 2007 7:47:24 PM

Also, doesn't your rationale above counter your satisfaction with the Dems proposals, none of which delink employer coverage, under the auspices of what is "politically feasible" for health care reform?

If you think we're this close to delinking employers from insurance coverage, shouldn't this be seen as a major gap cited in the proposals from the big 3 Dems?

You already know I think so...

Posted by: wisewon | Nov 13, 2007 7:52:07 PM

Also, doesn't your rationale above counter your satisfaction with the Dems proposals, none of which delink employer coverage, under the auspices of what is "politically feasible" for health care reform?

If you think we're this close to delinking employers from insurance coverage, shouldn't this be seen as a major gap cited in the proposals from the big 3 Dems?

You already know I think so...

Posted by: wisewon | Nov 13, 2007 7:53:43 PM

I just read some of the details of Wyden's plan -- and I like it a lot. Especially the part about eliminating the role of employers as purchasing agents of health insurance on behalf of their employees (according to the Weisberg piece in Slate I just perused, under Wyden's plan employer money that now goes to pay health insurance premiums would be converted into extra salary). I've been thinking along these lines myself for some time. If anyone happens to know -- I can't force myself to wade through 164 pages of proposed legislation tonight -- how would Wyden's legislation accomplish this feat? Would it simply forbid companies from offering a payment-in-kind (health insurance) to their employees and require them to switch to cash? Surely there would be constitutional issues with such an approach. I'm guessing it uses the tax code for this end, but I'd sure be obliged if somebody has a handle on these details.

Anyway, it sounds like a great piece of legislation, though my guess is it will be fought tooth and nail by the insurance industry. There's also the problem of jettisoning the non-taxability of employer-paid insurance premiums. It's a great idea -- but I can't imagine tax-phobic America will stand for a huge ($100 billion?) tax increase, so, if Wyden's legislation doesn't already call for this, I'd recommend combining this provision with, say, an increase in the standard exemption, to cancel out (or at least partially cancel out) said tax increase.

Posted by: Jasper | Nov 13, 2007 8:09:07 PM

Would it simply forbid companies from offering a payment-in-kind (health insurance) to their employees and require them to switch to cash? Surely there would be constitutional issues with such an approach. I'm guessing it uses the tax code for this end, but I'd sure be obliged if somebody has a handle on these details.

My understanding is both of the above. Along with an offsetting personal income tax deduction similar to your thoughts above.

In case the obvious needs to be said-- while the Dem big 3 plans have a number of elements that the Wyden bill doesn't cover, if you could only have one of the four plans, its a clear choice in my book. Wyden's is the best plan of the bunch.

Posted by: wisewon | Nov 13, 2007 8:23:54 PM

From what I've read, there is a lot I like in the Wyden plan, but I wonder about the following:

1. Would the wage increase that comes from substituting cash salary for what the employer currently spends to provide health insurance be subject to FICA taxes even if income taxes (at the population level) are offset by some combination of a higher standard deduction, lower income tax rates, and a higher Earned Income Tax Credit (EITC)?

2. What would be the impact on the insurance industry's administrative costs from selling policies one at a time instead of thousands at a time (to large employers) even if underwriting is eliminated due to community rating, guaranteed issue and mandatory participation?

3. Once the employer's prior spending for health insurance is converted to cash salary and presumably rises in line with inflation plus a little in the future, what happens if healthcare costs continue to increase a couple of percentage points per year faster than that?

I suspect there will be a lot of resistance, especially from public sector unions and others with very good employer provided health insurance coverage which employees still perceive as secure.

Posted by: BC | Nov 14, 2007 5:20:16 AM

I believe that in 1993 there were a total of 60 senatorial cosponsors to various bills which would have provided universal coverage. It happened then, but Clinton, Clinton and Magaziner decided to make the Senators wait. Never, ever make a senator wait if you want to get a bill passed.

Posted by: Robert Waldmann | Nov 14, 2007 5:26:52 AM

I have now lexis/nexised for the first time. I was wrong, the Chafee proposal was like Obamacare, it did not mandate universal coverage. However the state of play on June 28 1993 was http://tinyurl.com/2joqyh

MOST LIKELY ALTERNATIVE: Chafee "gave the most detailed
outline to date" 6/25 on what is likely to be the GOP's "most
prominent legislative counter-proposal to Clinton's plan," WASH.
POST reports. The bill, which is being developed by 23 senators
including Sen. Min. Ldr. Bob Dole (R-KS), "is similar to one
favored by conservative Democrats and includes many elements of
President Clinton's plan." Common features include: purchasing
pools; a standard benefits package; information to help people
choose a health plan; and a prohibition against denying coverage
because of health condition, sex or occupation. But the Chafee
plan "parts company" with the admin. over the gov't role "in
guaranteeing universal coverage and controlling health care
costs." It doesn't include an employer mandate and gov't
subsidies would be provided only "as savings from initial reform
are realized."

Also http://tinyurl.com/create.php

President Clinton's fuzzy timing for unveiling health reforms leaves Republicans waiting for a casting call in Washington's next big drama.

Sen. John Chafee, R-R.I., scrapped plans to announce a comprehensive health reform proposal drafted by moderate Republican senators when Clinton backed away from a firm announcement date.

[snip]

Like Clinton, many moderate GOP senators favor sweeping overhaul of the health-care system.

"That's the thing Bob Dole really cares about. Bob Packwood cares about. John Chafee, Dave Durenberger, along with Sen. (Jay) Rockefeller, Sen. (Don) Riegle on our side," says Senate Finance Committee Chairman Daniel Patrick Moynihan.

But moderate Republicans worry that to get too far ahead of the White House is to become a political decoy, drawing criticism away from Clinton.

Chafee's office says he's drafting a bill that would include a minimum benefits package, require insurers to cover everyone, reform malpractice laws and subsidize coverage for the poor. Chafee has ruled out payroll taxes but not other levies.

Because GOP senators have 44 votes and ideological kinship with some conservative Democrats wary of Clinton's tax-and-regulate approach, Republicans may be in a position to stamp their ideas onto any health reforms that pass the Senate.

[snip]

While waiting, those in Chafee's group are trying to coax a majority of their Republican colleagues into joining them. But Sen. Phil Gramm of Texas and a handful of other conservatives say any proposal they support must include a tax-deductible medical savings account - like an individual retirement account - and require individuals to buy their own insurance.

There was a filibuster proof majority for fundamental health care reform in June 1993.

Posted by: Robert Waldmann | Nov 14, 2007 5:52:31 AM

Would the wage increase that comes from substituting cash salary for what the employer currently spends to provide health insurance be subject to FICA taxes even if income taxes (at the population level) are offset by some combination of a higher standard deduction, lower income tax rates, and a higher Earned Income Tax Credit (EITC)?

I'm not sure the FICA issue makes much difference either way, except giving opponents of comprehensive reform another debate point. But from a public policy perspective, you ideally want to subject the extra salary to any and all of the same taxes normally assessed. By removing tax code subsidization to the health insurance industry, you remove one element that jacks up healthcare inflation. And again, there's no reason the FICA tax rate couldn't be modestly adjusted to achieve revenue neutrality.

What would be the impact on the insurance industry's administrative costs from selling policies one at a time instead of thousands at a time (to large employers) even if underwriting is eliminated due to community rating, guaranteed issue and mandatory participation?

As I wrote above, I suspect this legislation will be savagely opposed by the insurance industry, as it overturns the comfortable applecart of their business model. I also must say, as much as I think community rating and guaranteed issue are highly desirable changes to the system, I've always been of the belief they can'/won't work without a healthy dollop of government reinsurance. Sure, you can tell an insurance company it must sell a policy to a 59 year old overweight diabetic with heart trouble and lupus, but you can't obviate the reality that it won't be in their business interest to do so. There will still exist an overwhelming financial incentive to game the system. Far better, I think, to simply adopt John Kerry's idea (actually it was first proposed, IIRC, by none other than Dwight Eisenhower) and remove or reduce a situation private industry is not really capable of dealing with satisfactorily.

Posted by: Jasper | Nov 14, 2007 9:04:20 AM

It's not the bill that is introduced that is important--it's the bill that gets passed. The Senate might only add a few "details", but it still would have the House's mark-up to deal with, and the House would also have to override the veto.

It may be that Senators of both parties are using the bill to extract money from the insurance & medical industries for the upcoming elections. Never underestimate the venality of the modern politician.

Posted by: NrothgalOfTheNorth | Nov 15, 2007 1:38:24 AM

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