Third, Obama was smart to get the insurance and health-care CEOs to stand with him at that press conference on May 11. Obama certainly is not naïve enough to think this means they’re 100 percent behind him. But it does mean they’re playing ball. “In the business community, they assume health care is passing,” says Stan Greenberg, the Democratic pollster and analyst. “There will be a bill-writing table, and they want to be at it.” That, too, is a world away from ’94.
The White House wants a bill that will insure about 30 million more people than are currently covered (leaving about 17 million still uninsured); that will, for the already insured, theoretically reduce costs by bringing more people into the system and creating more competition; and that will end denials of coverage owing to expense and preexisting conditions for those with major illnesses.
The main points of contention will be two. The first, naturally, is cost. Two weeks ago, a Congressional Budget Office preliminary estimate pegged it at $1 trillion over ten years—that’s actually revised downward from an earlier preliminary estimate of $1.5 trillion. But it’s still real money. So where’s the revenue coming from?
Academics have been digging into this problem for years. The easy things, like higher sin taxes on cigarettes and booze, yield a few billion, no more. The administration is looking for revenue from other sources, like the recently announced plan to limit offshore tax havens.
But really, there’s only one way to raise revenue, and that’s to collect it. We know this as “taxes.” Here’s what’s kicking around the Hill now. Currently, if you have employer-sponsored insurance as most insured Americans do, it is untaxed. So they’re talking about taxing it. But for whom and at what rate?
Taxing all plans would obviously bring in the most revenue, at least $2 trillion over the same decade. But equally obvious are the political problems. So they’re examining options. One is to tax so-called Cadillac plans only—the most thorough and expensive plans, which tend to be held by higher-income folk. Another is to tax the plans only on those making—you guessed it—$250,000 or more. This doesn’t generate nearly as much revenue, but it solves a political problem in that it would permit Obama to keep his campaign promise not to raise taxes on people earning less than that. “If it’s at $250,000,” says one knowledgeable Democratic insider, “I don’t think it would give Obama particular heartburn.”
Problem: Charlie Rangel, whose Ways and Means Committee will play a key role on the revenue side, says he’s dead set against all this. And besides, wouldn’t the Republicans just feast on it? Here’s where things get really weird. Last week, some top Republicans unveiled their own plan—and it would tax every employer-sponsored plan! They’d offset it (but only partially) with tax credits for the purchase of plans in the free market. We’ll see how that goes down. As I write, Rush hadn’t weighed in yet.
The second issue is the so-called public option, the centerpiece of Obama’s campaign proposal—a public insurance provider to force competition on the private ones. Obama put forward, and liberals want, a full-on Medicare-style public option. My conversations over the past week lead me to conclude that this is very unlikely. Chuck Schumer has sketched out a compromise that I’m guessing will carry the day. It would force the public option to pay for itself with premiums and co-payments and not government revenues or taxes, partly defeating its purpose. Liberals won’t like it: Keep an eye out for Paul Krugman’s verdict on the Schumer plan. Krugman will probably be right on the substance. But he doesn’t have to get votes.
The Senate and House are working on all this right now. The relevant committees will hold hearings over the summer. Look for a bill around Labor Day, they tell me, and a vote sometime in September. Will it be a perfect ten? No. But insuring 30 million people is not a small thing. Neither is finishing (or starting to finish, let’s say) the last, great unfinished task of twentieth-century American liberalism. When Republicans fought the Clintons in ’94, they knew very well that passage of health care would be momentous: a large benefit once granted is never taken away, and it can shift the country’s entire mind-set leftward for a generation or two. Clinton failed at this—and Obama is determined not to fail in the same way.