Wednesday, September 23, 2009

Needs more Sage

The sausage factory was in full tilt yesterday. Lots of speeches about historic opportunities, stunning assaults on liberty and the like. NYTimes has a bit. WSJ describes a bit of it. And some more. And Politico.

Biggest substantive changes by Baucus as they start sorting through amendments: (1) affordability standard dropped a bit (12% of AGI between300- 400% poverty (down from 13%), with sliding scale percent of total premium paid down to 2% (down from 3%) at 134% of poverty; just above Medicaid eligibility; (2) Penalty, fee, tax, money you have to pay, etc. if you do not comply with the individual mandate dropped in half; max at $1,900/year for family.

Big issues are given the mandate, is it affordable? Probably not. Answer is to increase subsidy. Second big (and bigger) issue is how do you pay for increasing the subsidy? Best answer is to cap exclusion for employer paid insurance at avg. national premium (will easily pay for it and more importantly, will actually introduce a cost saving measure into the system).

Lost in the horse race is a basic reality. Regarding people being uninsured, there are really 3 basic apporaches you can take.

(1) Do nothing.
(2) Cover people automatically via gov't insurance
(3) attempt to insure people via private insurance using subsidies, exchanges and the like.

Lots of details and different ways you can do (3). But, this effort is first and foremost an attempt to create a market for health insurance where one has failed to develop. If you don't like the general approach, see options (1) and (2). You could of course like approach (3) and want the details to be different.

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