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Snow Day ’s No Day to Stop Working on Health Reform

December 19th, 2009 . by economistmom

bo-obama-in-snowBo Obama in the snow outside the White House today (photo by Getty Images from washingtonpost.com).

Despite the record snowfall here in DC, the Senate made it to the office today by God (most of us couldn’t even make it past our driveways), and they made some progress on health reform, with Majority Leader Reid securing the crucial “60th vote” from Senator Nelson of Nebraska. Looks like there will be a Senate-passed bill by Christmas.

Negotiating for that 60th vote didn’t necessarily make the bill any “better” though.  (Note the official “purpose” of Leader Reid’s so-called “manager’s amendment” as written at the top of the legislative text“To improve the bill.”)  The Congressional Budget Office expresses some continued skepticism about the cost control that will be achieved under the bill, despite their official scoring of the bill as deficit reducing even beyond the prior version of the bill (emphasis added):

These longer-term calculations assume that the provisions are enacted and remain unchanged throughout the next two decades. However, the legislation would maintain and put into effect a number of procedures that might be difficult to sustain over a long period of time. Under current law and under the proposal, payment rates for physicians’ services in Medicare would be reduced by about 21 percent in 2010 and then decline further in subsequent years. At the same time, the legislation includes a number of provisions that would constrain payment rates for other providers of Medicare services. In particular, increases in payment rates for many providers would be held below the rate of inflation. The projected longer-term savings for the legislation also assume that the Independent Payment Advisory Board is fairly effective in reducing costs beyond the reductions that would be achieved by other aspects of the legislation.

Based on the longer-term extrapolation, CBO expects that inflation-adjusted Medicare spending per beneficiary would increase at an average annual rate of less than 2 percent during the next two decades under the legislation—about half of the roughly 4 percent annual growth rate of the past two decades. It is unclear whether such a reduction in the growth rate could be achieved, and if so, whether it would be accomplished through greater efficiencies in the delivery of health care or would reduce access to care or diminish the quality of care.

And a CQ story [accessible via subscription only] explains part of what turned Senator Nelson around (emphasis added):

As expected, the manager’s amendment to the bill (HR 3590) would drop a new government-run insurance plan, or public option, that is dear to liberals…

The amendment also tightens restrictions on insurance coverage for abortion…

Nelson also won an assortment of smaller changes to the bill that would assist rural hospitals — important to his state — and increase payments for Nebraska’s Medicaid program. “I will vote for health care reform because it will deliver relief from rising health care costs to Nebraska families, workers, rural communities and employers,” he said in a statement…

[T]hanks to the manager’s amendment, Nebraska would receive 100 percent federal financing for new Medicaid beneficiaries in perpetuity

Majority Leader Harry Reid, D-Nev., said he negotiated with Nelson over a period of “many, many weeks,” but played down the idea that Nelson received special treatment not afforded other senators. He said the manager’s amendment reflected “a number of different interests” of various senators.

“You will find a number of states are treated differently than other states,” Reid said. “That’s what legislation is all about. It’s compromise.”

Reid said the legislation included various provisions designed “to get a number of different people’s votes.”

So ’s no day to stop working, but maybe it’s the perfect day for a “snow job” on how politics as usual is producing better government?…

2 Responses to “Snow Day ’s No Day to Stop Working on Health Reform”

  1. comment number 1 by: AMTbuff

    Democrats know that they they’ll have to go to fiscal rehab soon. To delay the onset of withdrawal pains, they’re getting as high as possible now.

    That’s about the only explanation I can see for approving such an obviously unworkable package. Even if it survives constitutional challenges, it can’t survive the economic bone-headedness of its premium subsidies and penalties that raise effective marginal tax rates to absurd levels. This thing has less of a chance of flying than the turkey I ate last month.

    Have the Democrats ever heard of a thing called winner’s curse?

  2. comment number 2 by: Jason Seligman

    Look at the bright side, we’ll have this wonderful natural experiment whereby Nebraska alone will no longer live in fear of Medicaid as a fiscal home-wrecker. Indeed after the first couple of years State exposure should decline as the current Medicaid population “ages out” of the program, and new participants replace them, sans financial burden.

    Won’t it be interesting to see what form health care and health insurance provision take in Nebraska.

    Of course if the state should “supplement” physician compensation, Nebraska could see itself with the lowest state costs and the highest physician participation rates in the country. But no public option, that would not be fair to the market. Indeed.

    Now then I do agree with the Senators emphasis on the supply side for rural health. Fancy hospitals in big cities are not an effective means by which to help the health of those in rural communities, by and large. That infrastructure is arguably a part of the key to preventing flight of younger members of the community too, Heck, by rough measure you’ve seen two industries out there growing, tech, and health. I score it like so:

    Rural and tech:
    With access to healthcare and a latte,…, sure.
    Without healthcare? Not really likely, with or without the latte.