The Seminal :: Independent Media and Politics

The Seminal :: Independent Media and Politics

As both Ezra Klein and Jonathan Cohn point out, the CBO numbers released yesterday are very preliminary, and don’t actually reflect what we’re going to get out of a health reform bill:

According to the estimates, which Marc Ambinder has posted here, the HELP bill will force the government to lay out around $1 trillion over ten years. That might not seem so bad; at one time, many reformers feared the number might be around $2 trillion. But, according to the CBO, the net effect of the bill would be to decrease the number of uninsured Americans by only a few million people. There’d still be 30 to 35 million uninsured, compared to 45 millions now.

A trillion bucks to insure 8 million people? Now that seems bad. Really bad. And, sure enough, critics are already seizing on the number as proof that reform will be a boondoggle.

But wait. The Senate HELP bill is not yet finished. Like the house design without the plumbing, wiring, and roof, the HELP bill is missing several key elements that would dramatically change the final estimate.

The most important of these, by far, is the employer mandate–that is, the requirement that employers either pay for their workers’ coverage or pay the cost of covering them through a new insurance exchange, set up and run by the government. The HELP bill has a big blank in the employer mandate, because it was an area over which the committees Democrats and Republicans were still negotiating when the committee submitted its language.

An employer mandate would change the projections in two ways. First, it would raise money, because of the employers who opted to pay into the exchange. Most likely, an employer mandate would raise between $200 and $300 billion, depending on the details.

The second way an employer mandate would affect the projections is more subtle–but, in some ways, more important. If you make insurance available to everybody through an exchange, fewer employees will demand coverage of their employers (and those that do may not demand it quite so strenuously). As a result, fewer employers will offer insurance in the first place. So you’re basically swelling the ranks of the uninsured in one way, even as you’re shrinking it in another.

That’s what’s going on in the partial HELP proposal. A lot of people are gaining coverage, but some are losing it, and the result is only a modest increase in the number of people with insurance.

But if you throw an employer mandate into the mix, everything changes. Now employers have to pay. And as long as the money they’d pay to insure their own workers isn’t radically different from what they’d pay to insure the through the exchange, they’re probably going to keep offering coverage. The net impact is many more people insured.

Add an expansion of Medicaid and a well-defined individual mandate–the other big elements missing in the HELP bill right now–and you should get some different projections. My educated guess is something like 35 to 40 million* people gaining insurance, at a net cost of between $1.1 and $1.4 trillion over ten years. Remember, that’s the preliminiary estimate CBO delivered a few weeks ago, when presented with such an outline.

Because this bill is missing shared responsibility primarily, these CBO numbers really should not be cited as facts, though that doesn’t stop Mike Enzi, the ranking Republican on the HELP committee, from passing judgment [pdf]. I think it’s a cover for his lack of solutions to the health care crisis.

There’s another big piece missing here, and that’s the public health insurance option. The public health insurance option doesn’t actually cost much, as most of the cost of this bill is for the subsidies offered through the exchange to make health care affordable, but it will make sure costs are sustainable. Without it, that $1 trillion over 10 years goes up, because base health care costs will not come down without the choice and competition provided by the public health insurance option.

And lastly, a note on those subsidies. Most of the subsidies do not go to cover the uninsured. That’s what’s different about this fight. It’s not only about the uninsured, it’s about the insured who can’t afford health care. So a lot of those subsidies will go to help people who are insured right now afford their insurance.

HELP is hoping for more complete scores by Friday.