More Musings About Why Burr-Coburn-Hatch Are Backing Away from Their PCARE Propsal

Burr-Coburn-Hatch

Still trying to wrap my mind around Republican Senators Burr-Coburn-Hatch PCARE health care… well, not “bill”… and not really “proposal”either…

Last week Burr-Coburn-Hatch thought they had their ducks all lined up. For example, the Weekly Standard, James Capretta:

The Burr-Coburn-Hatch Proposal: As Bill Kristol and Jeff Anderson noted earlier today, the introduction by Republican Senators Burr, Coburn, and Hatch of an Obamacare replacement plan is an important milestone in the health care debate. This is a serious and practical replacement proposal, offered by three prominent legislators. It could easily serve as the starting point for a legislative effort, perhaps even next year if Republicans regain control of the Senate, to undo Obamacare and replace it with something far better. This plan is well thought out substantively and politically…

Only, it turns out, not so much. A bunch of those who were supposed to endorse don’t show up. And soon the three are backing away from some elements of their own proposal…

The intelligent Richard Mayhew writes:

http://www.balloon-juice.com/2014/01/31/reinventing-the-wheel/: The financing of the P-CARE proposal… a significant change… as the Republicans… realize that they are proposing a massively expensive and disruptive tax hike…. Sen. Coburn’s office issued a “clarification” this morning: “Institute a modest cap on the exclusion for the most generous high-cost plans; specifically, cap it at 65 percent of the average market price for an expensive high-option plan.” Hey numbnuts, there is already a 40% excise tax scheduled to go into effect for the most expensive plans. It is called the Cadillac tax and your f—ing campaign committees have been running against it for four years now. Why re-invent the wheel?

And Donald Taylor, apropos of :

http://donaldhtaylorjr.wordpress.com/2014/01/31/still-seeking-clarity-on-private-score/: Still Seeking Clarity on Private Score: Still no response for more information/clarity about the private score from the Center for Health and Economy…. (1) either the sponsors didn’92t support what was scored by the Center for Health and Economy in the first place (amount of premiums above $5,400 taxable for individual policies, $11,250 for family ones), or (2) they have changed their mind due to criticism from Republicans about increasing taxes. I should note that I think the capping of the tax exclusion at the levels scored by H&E is a good policy…. Turns out this health reform thing is hard.

The second of Taylor’s alternatives is the correct one. The original documents state:

Our proposal caps the tax exclusion for employee’s health coverage at 65 percent of an average plan’s costs. The value of employer-sponsored health insurance would be capped and indexed to grow at an annual rate of CPI +1. This approach is certainly fairer than Obamacare, and it provides for more equitable tax treatment of health insurance, whether an individual is self-employed or works for a Fortune 500 business…

The words “expensive high-option” and “most generous” are additions. The original proposal sets the bar at the “average plan”.

The political problem Burr, Coburn, and Hatch have is that they signed on to the Republican spin masters’ “repeal and replace” mantra: repeal–because ObamaCare is Beelzebub–and replace–because we need health card reform. But “repeal” means that their proposal is then seen relative to a pre-ObamaCare baseline, which means that they are not offering to reduce burdens on the middle class by eliminating the burdensome mandate penalty and rationalizing the “Cadillac” tax, but rather increasing the burdens by taxing benefits. They may have hoped that $140 billion a year of net deficit reduction over the next ten years would be a shiny object that would attract support. But the reaction from Republicans taught them–once again–that in Republican eyes reducing the deficit is a good thing for Democratic proposals to do.

Otherwise, it’s ObamaCare light: I might like widening the 3-1 age-rating bands to 5-1, but it’s not a game-changer. I might dislike the setting of Medicaid Advantage rather than Expanded Medicaid as the default, but it’s not a game changer. And the replacement of community rating and the individual mandate with community rating if continuous coverage requirement and original nationwide open enrollment seems cruel, unusual, and unworkable and to get them relatively little in terms of the removal of the mandate penalty. Otherwise the differences are different twists of the tax-rate and spending-level dials: very important, but not differences for which repeal-and-replace is sensible.

The big difference is the replacement of the Cadillac tax with a larger, stricter vehicle that raises more money. It would be good to decouple health insurance from employment. The Cadillac tax in ObamaCare is a good idea. The reduction in the exclusion of benefits from taxable income in PCARE is a good idea. Too-rapid an implementation of such a reduction in the exclusion of benefits–pointless churn when a robust, community-rated individual insurance market does not yet exist–a la McCain 2008 is a bad idea. But which of the two is a better idea? Burr-Coburn-Hatch don’t provide enough specificity for me to say anything, and are blank on how continuous coverage interacts with the reduction in the benefits exclusion.

The problem is that Democrats stop listening at “repeal”, Republicans stop listening when they learn that part of “replace” is a tax on benefits, and the remaining technocratic middle sees less likelihood of bureaucratic disaster with ObamaCare.

So the target audience of supporters is reduced to deficit hawks. And there are not many of those with the true plumage.

And so the Center for Health and Economy has a problem. They had been working with Hatch not to “score” the proposal–their numbers are not their forecasts of what CBO will say–but rather to estimate what they think the plan would do. But it turns out that Hatch and company do not really want an estimate with numbers: rather than say “OK, the benefits exclusion will end not at 65% but 75% and grow not at CPI+1% but CPI+1.5%”, they move away from quantitative descriptions entirely. It is as if the Republican senators want the facade of an analysis, but not the analysis itself.

And that puts the CHE in a very difficult position. They want to provide serious analytical support to substance-oriented Republican technocrats. But how?

And so the technocratic dialogue, such as it is, goes backward. We get, instead, Cathy McMorris Rodgers’s response to the State of the Union, and the extremely puzzling anecdote of Bette in Spokane.

And so Tim F., apropos of Bette in Spokane’s unwillingness to shop on the ObamaCare website, says:

http://www.balloon-juice.com/2014/01/31/a-very-short-lived-revolution/: “38% say they are more likely to pay the fine the government will assess most Americans who lack health insurance.” That 38 percent generally approximates the conservative fringe of America, you know, the ones who clung to George W. Bush to the bitter end, the ones who believe Obama was born in Kenya, the ones sickened by America’92s creeping communism. There are probably a handful in that 38 percent who are choosing to pay the fine for non-ideological reasons. But there are many more who are doing so to spite the president. Because, you see, placing yourself at risk of financial ruin, severe disability, or even death is totally worth it in pursuit of undermining the communist plot hatched at the Heritage Foundation. It’s like eating crappy, unhealthy fast food in order to spite liberals. Or refusing to exercise because Michelle Obama…. Living without insurance will wear a person down. Nobody wants to hope and pray that you make it through each day without a surprise that leaves you bankrupt and homeless (pdf). Some people really will go all the way for Glenn Beck. Thankfully most, even the dumb angry ones, have better things to do…

My view: if Burr-Coburn-Hatch want to actually participate in a technocratic dialogue, they need to stop R&ring and start proposing sensible amendments to ObamaCare. They’ve been R&Ring. How’s that working for them. And CHE needs to stop trying to provide technocratic analytical support for politicians who do not want it, and to focus on proposing and analyzing what it thinks are sensible amendments to ObamaCare.