Why Progressives Are Batshit Crazy to Oppose the Senate Bill

Via 538.com

Pick your subheadline:

a) It's time to stop being polite and start getting real.
b) Here's hoping a picture is worth 1,000 words.

Any questions?

OK, I imagine that there will be a few. Here's how I came up with these numbers.

Senate Bill. These estimates are straightforward -- they're taken directly from the CBO's report on premiums for people at different income levels. A family of four earning an income of $54,000 would pay $4,000 in premiums, and could expect to incur another $5,000 in out-of-pocket costs. The $4,000 premium represents a substantial discount, because the government is covering 72 percent of the premium -- meaning that the gross cost of the premium is $14,286, some $10,286 of which the government pays.

One caution: this reflects the situation before the public option was removed from the bill. But, provided that the subsidy schedule isn't changed as well, that shouldn't change these numbers much.

Status Quo. In 2009, the average premium for a family in the individual market was $6,328, according to the insurance lobbying group AHIP. However, this figure paints an optimistic picture for two reasons. Firstly, the average family size in the AHIP dataset is 3.03 people; for a family of four, that number would scale upward to $7,925, by my calculations. Secondly, the CBO's estimates are based on 2016 figures, not 2009, so to make an apples-to-apples comparison, we have to account for inflation. According to Kaiser, the average cost of health coverage has increased by about 8.7 percent annually over the past decade, and by 8.8 percent for family coverage. Let's scale that down slightly, assuming 7.5 annual inflation in premiums from 2009 through 2016 inclusive. That would bring the cost of the family's premium up by a nominal 66 percent, to $13,149. And remember: these are based on estimates of premiums provided by the insurance lobby. I have no particular reason to think that they're biased, but if they are, it's probably on the low side.

Not only, however, would this family paying a lot more under the status quo, but they'd be doing so for inferior insurance. According to the CBO, the amount of coverage in the individual market would improve by between 27 and 30 percent under the Senate's bill. Taking the midpoint of those numbers (28.5 percent), we can infer that there would be about $1,427 in additional cost sharing to this family in the status quo as compared with the Senate bill; this would bring their cost sharing to $6,427 total.

Add the $6,247 to the $13,149 and you get an annual cost of $19,576 -- for a family earning $54,000! Obviously, very few such families are going to be able to afford that unless they have a lot of money in the bank. So, some of these families will go without insurance, or they'll by really crappy insurance, or they'll pay the premiums but skimp on out-of-pocket costs, which will negatively impact their fiscal and physical health. But if this family were to want to obtain equivalent coverage to that which would be available to them for $9,000 in the Senate bill, it would cost them between $19,000 and $20,000, according to my estimates.

Status Quo with SCHIP. Fortunately, some families in this predicament do receive some relief via the SCHIP program. SCHIP eligibility varies from state to state; a family earning income at 225 percent of the poverty line, as this family does, is eligible for SCHIP in about half of the country.

Premiums are fairly cheap under SCHIP -- for a family at 225 percent of poverty, generally on the order of about $60 per month to cover two children. We'll assume that this will inflate slightly to $75 per month, or $900 per year, by 2016.

The two adults in the household will still have to buy insurance in the individual market, which will cost $7,684 by 2016. That makes the family's total premium $8,584.

For the adults, we assume that the cost sharing component runs proportional to premiums, and totals $3,756. For the children, this calculation is a little bit more ambiguous. Out-of-pocket costs under SCHIP are capped at 5 percent of family income, which would be $2,700 for this family. But that's a cap and not an average -- we'll assume that the average is half of the cap, or $1,350. Total cost-sharing, therefore, is $5,106 between the adults and the children.

This means that premiums plus out of pocket costs will equal $13,690 for this family. I estimate the subsidy by subtracting this figure from the cost of unsubsidized insurance in the individual market; the difference is $5,885.

Caveat/Disclaimer. There are, obviously, some simplifying assumptions here, especially with regard to SCHIP. The only thing I can promise you is that I'm "showing my work". I would actively encourage people to pick apart these numbers and come up with their own, more robust estimates. One thing that should probably be accounted for is that the families in both the status quo and the status quo + SCHIP cases will frequently be able to deduct their health care expenses from their taxable income, especially if they've incurred substantial out-of-pocket costs. That means that the difference in net costs is slightly exaggerated by my figures.

* * *

Nevertheless, it's clear that this family would be receiving a very substantial subsidy, on the order of $10,000 in pretax income, under the Senate's bill. The reason I picked this particular family is because it provides a reality check against the example selected by the great Darcy Burner, who argued in an article at Open Left:
Affordable coverage for everyone: FAIL.

The latest CBO estimates for the Senate bill say that a family of four with a household income of $54,000/year should expect to pay 17% of their gross income on healthcare - about $9,000/year. (And that was when there was a public option to hold down costs!) That's more than they'll spend on federal taxes. That's more than they'll spend on food. I'm guessing if you took a poll, very few Americans would consider that affordable. And because of the way they've approached this, there's no effective cost cap on premiums and nothing providing downward pressure, so this is a problem that would get worse rather than better over time.
We can debate whether $9,000 for a family earning $54,000 is "affordable"; what we know is that it's a hell of a lot more affordable than the status quo, under which the family might have to pay more than twice as much to receive equivalent coverage.

In fact, Burner's example is unfortunately chosen; she picked one of the groups -- a low-income family in the individual market -- that would benefit the most under the Senate package. Other groups would not be so beneficially impacted. Premiums are projected to rise slightly, for instance, for high-income earners in the individual market, although this is a small fraction of people and they'd get better health coverage as a result. And people in the employer market would not be much affected, except those with generous benefits packages subject to the excise tax; these folks would have to pay more out of pocket, although probably in exchange for more cash income. On the other hand, there are those who have a pre-existing condition and who are not able to buy health coverage at all, and for whom the benefit is almost incalculably large.

I understand that most of the liberal skepticism over the Senate bill is well intentioned. But it has become way, way off the mark. Where do you think the $800 billion goes? It goes to low-income families just like these. Where do you think it comes from? We won't know for sure until the Senate and House produce their conference bill, but it comes substantially from corporations and high-income earners, plus some efficiency gains.

Because this is primarily a political analysis blog, I think people tend to assume that I'm lost in the political forest and not seeing the policy trees. In fact, the opposite is true. For any "progressive" who is concerned about the inequality of wealth, income and opportunity in America, this bill would be an absolutely monumental achievement. The more compelling critique, rather, is that the bill would fail to significantly "bend the cost curve". I don't dismiss that criticism at all, and certainly the insertion of a public option would have helped at the margins. But fundamentally, that is a critique that would traditionally be associated with the conservative side of the debate, as it ultimately goes to mounting deficits in the wake of expanded government entitlements.

And please do pick apart my numbers: I'm sure that you will find some questionable assumptions and possibly some outright errors. But if you found a persuasive, progressive policy rationale against the bill, I'd be stunned.

EDIT -- Another important point or two: To the extent there are critiques about this post, they are liable to revolve around the fact that $9,000 is not so affordable for our not-so-imaginary family. Two things to note on this:

Firstly, in most years, the family will not be paying $9,000. They'll be paying closer to $4,000 -- the base cost of the premium -- or maybe $5,000 for a few meds and doctors' visits and so forth. The costs will be much higher in those years when a member of the family gets sick. But the alternative in those years would be not having health insurance at all -- and in that case, either the the family member might die from the condition or the family will go bankrupt trying to prevent that.

Also, frankly, the individual mandate penalty is not very harsh, especially for lower-income people, so there's some potential for gaming the system in a way that isn't economically optimal but would give this particular family a better deal than suggested above.

Secondly, the critiques over the level of subsidies are rather tangential to where the locus of progressive energy has been -- on the public option. The presence of a watered-down public option would make very little difference in terms of this family's cost structure -- and yet, this same bill with a public option is one that most liberals would be head-over-heels for.

I happen to agree that the cost subsidies need to be improved somewhat for this type of family and indeed I wish that this is where more of the left's energy had been directed. Fortunately, I think this is something that really can (still) be improved in conference committee or on the floor. For instance, if you adopted the House bill's subsidies for families at under 250% of poverty, and the Senate's (which actually become more generous) for people at greater than 250% of poverty -- perhaps in exchange for a harsher (not weaker!) individual mandate penalty -- you'd have a pretty reasonable compromise.

We Are Ruled by Sociopaths

Via Doug J

Matt Yglesias writes:

The leverage that Lieberman and other “centrists” have obtained on this issue (and on climate change) stems from a demonstrated willingness to embrace sociopathic indifference to the human cost of their actions.

A sociopath is often defined as “a person, as a psychopathic personality, whose behavior is antisocial and who lacks a sense of moral responsibility or social conscience.” (This is what I found online and what I have always thought the definition was, roughIy—I realize there are more clinical definitions, but I know nothing about clinical psychology, maybe someone can help me out with this.)

I’m glad to see that this word is starting to get used more and more—not long ago, for example, Lindsay Beyerstein accurately described one of Slate’s new hires (a woman who had written books titled “How to Dump a Friend” and “Our Mutual Friend: how to steal friends and influence people”) as a sociopath.

To me, anyone who would start a war for no reason and show no remorse when it went terribly wrong is a sociopath. Anyone would not only torture but then try to use support for torture as a political wedge issue is a sociopath. Anyone who would hold the health of millions of Americans hostage so that he could get more face-time on “Meet the Press” is a sociopath.

I believe that the biggest question about our society is why it is that so many sociopaths rise to positions of power and influence. Are all societies this way or is there something special about the way ours is structured right now?

GOP Losing Lead Among Independents

Via Greg Sargent

The conventional wisdom for some time has been that Dems are bleeding support among independents, and this claim — based, in fairness, on a number of polls — has become central to GOP predictions of doom for Dems in 2010.

But new polling from Gallup suggests the trend is reversing, and finds that indys are swinging back towards Dems, though the Republicans still hold a narrow lead among them.

Gallup finds that Dems have edged into a small lead in the overall generic ballot matchup, 48%-45%, after having been behind in November, adding:

The major cause of the movement between November and the current poll is the changing preferences of independents. In the latest poll, conducted Dec. 11-13, independent registered voters tilt only slightly toward the Republican candidate, by 44% to 40%. In the November poll, independents’ preference for the Republican candidate was 52% to 30%.

That’s a sizable swing among indys: The GOP has dropped eight points among them, and Dems have gained by 10 points.

Still, Gallup notes, ominously for Dems, that if the current patterns hold, the traditional GOP turnout advantage could give them a real edge come Election Day 2010. That said, the narrative of a mass desertion of Dems by indys because of the Dem big-government agenda may have been premature or fleeting.

Bush E-mails Found: 22 Million Missing E-mails From G.W. Bush White House Recovered

Via Pete Yost

WASHINGTON — Computer technicians have found 22 million missing White House e-mails from the administration of President George W. Bush and the Obama administration is searching for dozens more days' worth of potentially lost e-mail from the Bush years, according to two groups that filed suit over the failure by the Bush White House to install an electronic record keeping system.

The two private groups – Citizens for Responsibility and Ethics in Washington and the National Security Archive – said Monday they were settling the lawsuits they filed against the Executive Office of the President in 2007.

It will be years before the public sees any of the recovered e-mails because they will now go through the National Archives' process for releasing presidential and agency records. Presidential records of the Bush administration won't be available until 2014 at the earliest.

The tally of missing e-mails, the additional searches and the settlement are the latest development in a political controversy that stemmed from the Bush White House's failure to install a properly working electronic record keeping system. Two federal laws require the White House to preserve its records.

The two private organizations say there is not yet a final count on the extent of missing White House e-mail and there may never be a complete tally.

Meredith Fuchs, general counsel to the National Security Archive, said "many poor choices were made during the Bush administration and there was little concern about the availability of e-mail records despite the fact that they were contending with regular subpoenas for records and had a legal obligation to preserve their records."

"We may never discover the full story of what happened here," said Melanie Sloan, CREW's executive director. "It seems like they just didn't want the e-mails preserved."

Sloan said the latest count of misplaced e-mails "gives us confirmation that the Bush administration lied when they said no e-mails were missing."

The two groups say the 22 million White House e-mails were previously mislabeled and effectively lost.

The government now can find and search 22 million more e-mails than it could in late 2005 and the settlement means that the Obama administration will restore 94 calendar days of e-mail from backup tape, said Kristen Lejnieks, an attorney representing the National Security Archive.

Sheila Shadmand, another lawyer representing the National Security Archive, said the Obama administration is making a strong effort to clean up "the electronic data mess left behind by the prior administration."

Records released as a result of the lawsuits reveal that the Bush White House was aware during the president's first term in office that the e-mail system had serious archiving problems, which didn't become publicly known until 2006, when federal prosecutor Patrick Fitzgerald disclosed them during his criminal investigation of the outing of CIA operative Valerie Plame.

A Microsoft Corp. document on the Bush White House's e-mail problems states that Microsoft was called in to help find electronic messages in October 2003, more than two years before the problem surfaced publicly. October 2003 was the month that the Justice Department began gearing up its criminal investigation into who in the Bush administration leaked the identity of Plame, the wife of Bush administration war critic Joseph Wilson.