The President's new health care proposal

The President's new health care proposal

While I oppose the President’s health care proposals (old and new), I have to give the White House staff credit for a slick new website in advance of Thursday’s Blair House health care debate.

I will highlight a few policy elements of the President’s new proposal, then turn to tactical analysis.

Major changes in the President’s proposal

  1. Like the Senate bill, the President’s proposal would raise taxes on wages by 0.9 percentage points for individuals with incomes > $200K and families with incomes > $250K. In addition, the President’s new proposal would impose a 2.9 percent tax “on income from interest, dividends, annuities, royalties, and rents” for those with income above $200K (individuals) and $250K (families). Flowthrough income from ownership in a small business or partnership would not be subject to this tax.
  2. The President’s proposal delays the taxes on pharmaceutical and health insurance companies. It appears (but we can’t be certain) that they intend to raise the same amount of revenue from these industries, meaning that the per-year tax would go up.
  3. The “Cadillac tax” has been delayed to begin in 2018 and the threshholds would be $27K for families (as opposed to $23K in the Senate bill). The Senate-passed levels were so high as to be absurd – they would apply to almost no one. This exacerbates that problem. No word on whether union plans are still exempt.
  4. The President would create a new federal Health Insurance Rate Authority¬†“to provide needed oversight at the Federal level and help States determine how rate review will be enforced and monitor insurance market behavior.” Health plans would therefore be subject to state and federal rate regulation. I presume this is a reaction to the recent California/Anthem premium hike story.

Strategy and tactics

Far more interesting than the substance of the new proposal (which is excruciatingly detailed) is trying to understand what Team Obama is trying to do with it.

Speaker Pelosi released a statement that she “look[s] forward to reviewing it with House Members.” I can’t find anything from Senate Majority Leader Reid yet.

POLITICO reports that White House communications director Dan Pfeiffer said:

We view this as the opening bid for the health meeting. … We took our best shot at bridging the differences. We think this makes some strong steps to improving the final product. Our hope is Republicans will come together around their plan and post it online.

Q:¬†Whose opening bid? The President’s? Or Democrats’?

I struggle to understand how the President’s new proposal is relevant to any serious attempts at legislating if he cannot deliver either House or Senate Democrats in support of it. Maybe this is the first part of a well-coordinated strategy in which Pelosi and Reid press their own members to line up behind the President’s proposal. Or they could just be winging it again.

One week ago I wrote about four possibilities for what the President might be trying to accomplish with the Blair House meeting:

  1. If he thinks a Democrat-only deal is possible, then they’ll need to use reconciliation to pass a bill. The meeting is to set up that hardball legislative process by demonstrating that Republicans are uncooperative.
  2. If he thinks no Democrat-only bill is possible, then he may be looking to set up Republicans as the fall guy for his exit strategy.
  3. He may want to begin negotiations with Congressional Republicans.
  4. He doesn’t have a game plan.

Speaker Pelosi’s comment suggests that (1) does not yet apply. If you’re about to coordinate with House and Senate Democrats and ram through a compromise using reconciliation, you need to have a unified proposal. The point of the Blair House meeting would be to highlight obstructionist Republican behavior and justify hardball procedural tactics. If Democrats aren’t unified behind the President’s substance, then Republican opposition is once again irrelevant.

House and Senate Democratic leaders have been signaling to their friends to get ready for a big partisan reconciliation push. Doing so requires substantive agreement, at least between Pelosi and Reid. That substantive agreement clearly does not yet exist.

Somebody in the Administration put a lot of work into this proposal. It is extremely detailed, and it reads like a best effort to find a fair middle ground between two warring legislative bodies. All that substantive work is subsumed by the apparent lack of strategic coordination and substantive agreement with Members of his own party. The President’s staff appear to be trying to set up the Blair House meeting as a partisan debate, but Democrats are not yet unified. Maybe the pressure of the Blair House meeting will bring Democrats together on substance?

I will believe that a reconciliation push is going to happen only when (a) Pelosi and Reid both definitively say that it will, (b) they announce agreement on a substantive proposal, and (c) a House floor vote has been scheduled. Until then it’s just bluster. For now I continue to believe there’s a 90% chance of no law.

This strengthens my argument from last week that this Thursday Congressional Republicans should show up, propose ideas of their own, and respectfully critique the various plans. Republicans should come with their own reform ideas but should not feel obliged to unite behind a single Republican proposal. They should also ask Speaker Pelosi and Leader Reid if each supports the President’s proposal as a legislative compromise. If Team Obama wants to highlight the partisan differences and Republican obstruction, then the Republicans should want to highlight their positive reform ideas, their problems with the Democratic proposals, and ongoing Democratic disunity.

Blame-shifting exit strategies?

It is possible that we are witnessing uncoordinated Democratic leaders each pursuing their own exit strategy in anticipation of legislative failure:

  • The President proposes a “compromise” and blames Republicans for being unreasonable and unconstructive. Legislative failure is the Republicans’ fault, not the President’s.
  • Speaker Pelosi continues to press for a two bill strategy in which the House and Senate will pass a new reconciliation bill. If the Senate cannot or will not do so, legislative failure is the Senate’s fault, not the House’s or Speaker Pelosi’s.
  • Supported by outside liberals, Leader Reid points out that the House could just take up and pass the Senate-passed bill. Legislative failure is therefore not his fault or the Senate’s.

Each of these strategies is consistent with telling your allies that you’re continuing to push forward, right up until the moment you give up and blame someone else. Of these hypothetical blame-shifting rationalizations, the President’s would be the weakest. It is common knowledge that Republicans have no procedural authority to block either Speaker Pelosi’s two bill strategy, nor to prevent the House from taking up and passing the Senate-passed bill.

Maybe they’re almost ready for a big partisan legislative push using reconciliation, leading to a triumphant partisan signing ceremony at the White House. Maybe the “Never give up, never surrender!”¬†comments from the President and Speaker Pelosi over the past month are preparation for a stunning legislative victory.

I’m still in the maybe not camp.

23 responses

  1. Dear Keith,

    In item #3 (Cadillac tax) above, are the $27,000 and $23,000 numbers indexed to inflation?

    • The amounts are subject to indexing; however, the indexing does not start until the tax kicks in in 2018 (after Obama's second term). Clever politics here. A lot of the administration proposals will increase the health insurance premiums in the short term (before 2018), and these premiums can increase a lot in 7 years. Voters today, who are largely under this threshold, will undoubtedly have a false sense of security and won't feel any immediate threat. And, unions should be able to re-negotiate their contracts before then.

    • The amounts are subject to indexing; however, the indexing does not start until the tax kicks in in 2018 (after Obama's second term). Clever politics here. A lot of the administration proposals will increase the health insurance premiums in the short term (before 2018), and these premiums can increase a lot in 7 years. Voters today, who are largely under this threshold, will undoubtedly have a false sense of security and won't feel any immediate threat. And, unions should be able to re-negotiate their contracts before then.

    • I responded to this earlier; however, the comment was deleted, presumably because someone with the power to do so did not agree. So, I am going to try again and this time with a bit more elaboration.

      Here is what the President's proposal has to say about the indexing of Cadillac plans:

      "The President’s Proposal changes the effective date of the Senate policy from 2013 to 2018 to provide additional transition time for high-cost plans to become more efficient. It also raises the amount of premiums that are exempt from the assessment from $8,500 for singles to $10,200 and from $23,000 for families to $27,500 and indexes these amounts for subsequent years at general inflation plus 1 percent. To the degree that health costs rise unexpectedly quickly between now and 2018, the initial threshold would be adjusted upwards automatically."

      What that means to me is that the amounts listed are subject to indexation only from 2018. This means that increases in premiums that occur between now and 2018 will generally not be taken into account in the indexation. The only exception is to the degree that health care costs RISE UNEXPECTEDLY QUICKLY between now and 2018 (emphasis added). What "unexpectedly quickly" means is not defined and is anyone's guess. I view this as a clever way to give voters today the perhaps false impression that merely because their health premiums fall under the threshold today, they won't be hit by the excise tax.

      Now, if someone wants to add to this comment and disagree, I think that's fair. However, if you want to delete this comment without discussion, I think that would be unfair and frankly, a bit unsportsmanlike.

      • Huh. I'm the only one with authority to delete, and I certainly do not remember doing so. It might have gotten caught in my spam filter, but I cannot see why.

        This is a good comment, as are your others, and I apologize that you had to enter it twice.

  2. Keith,

    Having read so much of this *stuff* over the last year, I still think a hyper-partisan legislative push is still very probable. However, even at best, this will become a Zombie-law –

    1. In order to pass an amended Senate bill by Reconciliation, Speaker Pelosi has demanded a reverse-order Reconciliation process to occur. That is, the Senate must pass a Reconciliation bill BEFORE the House approves the original Senate bill plus changes. This is incredibly illogical, a total abuse of the Reconciliation process and procedurally tricky as the Senate Parliamentarian could rule against it. But…..

    2. Hyper-partisan tactic numero duo is the use of VP Biden as the legislative dirty-bomb! In his role as Presiding Officer of the Senate, VP Biden has all the authority he needs to ignore Senate precedence, ignore the parliamentarian's rulings and be the hammer that bashes this legislative square peg into the round hole(s) of the electorate (ouch!!).

    The above would require a considerable cast-iron stomach on the part of the Democrats, but it is doable. And considering the willingness of Pelosi and Obama to use their vulnerable members as cannon fodder along with their schizophrenic delusions that as soon as they pass this bill everyone will magically forget how awful it is, I'd put the odds at 50/50….

  3. Obamacare is not improving in the polls. If they could compromise they would have done so by now, but the problems have been compounded by delay. You never hear about Stupak and his pro-life caucus any more, which forced Pelosi to take his language the first time around. Nobody is about to change on that subject, and the Hyde language is not acceptable to Democrats in the Senate, quite apart from the serious differences over union plans, etc. Meanwhile the budget numbers get more scarey, even to those who favor nationalized health care. Blue dogs have changed their votes, members have resigned and died, etc. It is dead.

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  5. I'm sure Obama, Reid, and Pelosi have no interest in an HCR exit strategy. Reid probably leaving the Senate so this is his legacy. The odd part about this post is that the author thinks that he understands what Pelosi is thinking by her public statements.

    If Reid and Pelosi announced they had a deal it would play right into Republican messaging that the deal had already been made behind closed doors and the health care summit is a bogus publicity stunt.
    So this post seems a bit… naive.

  6. Really? You think that House members are going to be less likely to vote for the Senate bill than the House bill, especially considering that the House bill had a public option? I think you're wrong, and I think it's because you've got the same caricatured view of the Democratic caucus that most political-class Republicans hold. It's not that it's wrong as a gestalt, but the electoral incentives driving the Democratic caucus are by no means as uniform as a lot of you guys believe.

    Scuttlebutt amongst the Blue Dogs is that Stupak is holding only six votes right now; many of the Stupak caucus (though certainly not Stupak himself) find the Senate abortion compromise acceptable. Kusinich is almost certainly a pocket vote for the health care bill, and the general belief around Clyburn's office was that there were several other pocket votes for the Senate's version of the health care bill. Minnick was certainly one, according to staff gossip, though that appears to have been stymied by the Nebraska bribe.

    By my count: 220 minus 6, plus Kusinich. Any of the above are gettable votes, many because of their representation of highly Af-Am districts: Bart Gordon, John Barrow, Artur Davis, Kosmas, Markey, or John Baccieri. Potentially others. This isn't an insurmountable whip count by any means.

    • Actually, 220 minus 9, considering that the House is down Cao, Murtha, and whomever the Hawaiian guy with gubenatorial ambitions is. Still, though the vote's going to be seat-of-the-pants, it's not not doable, so long as those in charge (is there anyone in charge?) turns the screws pretty rapidly.

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