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The Elusive Fiscally-Responsible Common Ground

February 22nd, 2010 . by economistmom

The White House presented their proposal for health care reform today with a good deal of virtual fanfare on their very impressive webpage devoted to the much-hyped “health care meeting.” (For the real live show and audience participation/crowd reaction, we’ll have to wait until Thursday.)

The proposal is supposed to be somewhat a compromise between the House and Senate versions of health reform.  But it’s a very familiar kind of compromise in that instead of encouraging both sides to give up something that they want (but is costly), it trims the fiscally responsible pay-fors that make the most economic sense but that politicians (on both sides of the aisle actually) would rather not swallow.  In the case of health reform, the number one smartest thing to include is the higher taxation of employer-provided health benefits.  The Senate proposal included this feature via an indirect excise tax levied on insurance providers, which was already somewhat of a “second best” solution from an economic perspective because it didn’t allow the tailoring to households’ ability to pay that a tax levied directly through the personal income tax would.  The Senate’s indirect tax, in an attempt to look like it didn’t burden anyone who wasn’t truly rich, had already been diluted by exempting all but the most expensive insurance policies, and it wouldn’t take effect until 2013.  But the President’s proposal reduces the tax further by delaying the tax another five years, to 2018.

If you look at the section on the White House’s health meeting webpage that highlights the “Republican Ideas” the Administration supports/includes and compare it with the subsection on the aspects of the President’s proposal for “Ensuring Fiscal Sustainability” (implying the proposals that actually lower the deficit), you’ll find no overlap.  That’s because the only thing both sides agree on is in cutting things that sound like they’re just “waste, fraud, and abuse”–which doesn’t get us far enough to count as “ensuring” “fiscal sustainability.”

Given what the White House reveals/admits on their health meeting webpage, we shouldn’t expect to be dazzled by all the “bipartisan fiscal responsibility” we’ll see on Thursday.

9 Responses to “The Elusive Fiscally-Responsible Common Ground”

  1. comment number 1 by: SteveinCH

    This is all on the Democrats now. The Republican approach is to not spend the $2 trillion in the first place. Certainly that is more fiscally responsible than what the President just presented.

  2. comment number 2 by: Brooks

    For the real live show and audience participation/crowd reaction, we’ll have to wait until Thursday.

    Oh no, just when I thought nothing could be more conducive to political/ideological posturing and grandstanding than having it televised, they’re going to have a live audience?!

    And how has that audience been chosen?

    I can only hope that the audience is made to stay silent until the end (or end of segments prior to breaks). If not, it will probably be even more of a circus than I expected. Each side will pander even more to their target audiences with talking point rhetoric, kind of like these guys http://www.theonion.com/content/video/new_live_poll_allows_pundits_to

  3. comment number 3 by: Brooks

    Just to echo Diane’s frustration, once again we have members of Congress and a White House that should be negotiating solutions to our long-term fiscal imbalance in terms of “I’ll accept some of your types of fiscal responsibility if you’ll accept some of mine”, but instead are negotiating in terms of “I’ll accept some of your types of fiscal irresponsibility if you’ll accept some of mine.”

  4. comment number 4 by: Bill Watson

    Having two systems to choose from; either a public option, or the other a private option, could serve everyone and save hundreds of billions of dollars annually.

    Public Option

    Collecting national sales taxes to pay for public option healthcare, instead of requiring consumers to purchase insurance and make copays, and delivering all free care for public option patients only from government hospitals, would save a $trillion from the $2.6trillion devoured by private systems last year if all 300 million Americans received public care.

    Of course not everyone in the US would choose to use public care but the cost savings illustration is dramatic.

    Everyone choosing free government care could have it with no restrictions.

    Employers could optout of paying for employee care.

    States could eliminate all healthcare costs.

    The federal government’s entitlement disasters of Medicare and Medicaid could easily be salvaged without bankrupting the federal government by using a national health care system to deliver high quality care and medications through government systems at a fraction of the costs now being devoured by private systems.

    Private Option

    No public funding would be paid to private insurers or providers and all care would be delivered from private hospitals free from government mandates.

    Any money spent for private health insurance or care should be tax deductible to purchasers and tax free to recipients.

    Going back and forth between free public, and user purchased private care, would allow ultimate freedom, and always free public care would be available.

  5. comment number 5 by: SteveinCH

    Bill,

    I think this belongs in the Magic Pony section of the post. For this system to work, you’d have to set the sales tax high enough to pay for healthcare regardless of how many people signed up. It’s highly unclear as to how that would work. As to your contention that you could save $1 trillion, I’d ask you to back it up but unfortunately, I’d get the daily KoS or some equally authoritative source.

  6. comment number 6 by: SteveinCH

    Allow me to say “wow”

    From Politico

    “The appointees are: Andy Stern, the president of SEIU; David Cote, the Honeywell International CEO; former Federal Reserve Vice Chairman Alice Rivlin; and Ann Fudge, a former Young & Rubicam Brands CEO. — Carol E. Lee (9:42 a.m.).”

    The head of the SEIU on a commission to reduce the deficit. That may be the most laughable possible choice that the President could make and his “Republican” appointees are business people friendly to the administration.

    My hopes for any good outcome just declined massively

  7. comment number 7 by: Jim Glass

    Everyone choosing free government care could have it with no restrictions.

    I want this with food and housing first — after all, they are a lot more important than medical care. How long are you going to live without food and housing?

    So I want all the food and housing I want, no restrictions, paid for by the govt (that is, by you).

    Also, free stabling and all the hay my ponies want, for all the ponies I want.

    The federal government’s entitlement disasters of Medicare and Medicaid could easily be salvaged without bankrupting the federal government by using a national health care system to deliver high quality care and medications through government systems “at a fraction of the costs”…

    So the “disasters” of our two current single-payer govt-run health systems, Medicare and Medicaid, will be fixed by creating … a new much bigger single-payer govt-run health care system!

    Which will operate at “a fraction of the cost” of the current ones. Ha.

    But hey, I’m open minded: How about testing this idea *with* the current govt-run single payer health care systems? The govt has complete control over them, so why not?

    If it works with Medicare, bravo! The nation is saved from bankruptcy! And we can then expand it to cover everybody else, without the risk of making a mistake.

    What? Health care costs in the US aren’t rising faster than elsewhere? And the dominating reason why the level of costs here is higher than in other nations is that pay in the healthy care industry here is double what it is Britian, Germany, France … so that to operate the “new Medicare” at “a fraction of the cost” you’ll have to slash salaries of medical workers arcoss the board?

    Well, that’s fine! I’m sure you can get Andy Stern to slash his workers salaries’ — if they are doing it for a govt single payer system! And all the doctors in the AMA will gladly work for slashed pay too.

    Just test it out with the “new Medicare” first, to be sure. OK?

  8. comment number 8 by: Jim Glass

    “The appointees are: Andy Stern, the president of SEIU”

    When the White House visitor logs for last year were released, they showed Andy Stern had been to the White House more often than any other person — more than anyone else in government, business, academia … anyone.

  9. comment number 9 by: SteveinCH

    So for those who thought the glass was half full on statutory PAYGO, how do you feel about excluding the first possible bill that was proposed from the rules?