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Posted by on Feb 20, 2010 in At TMV, Breaking News, Economy, Health, Politics | 86 comments

Pick Your Poison: Premium Hike Or Tax Hike On Health Plans

In researching data as fodder for a column touting the much ballyhooed televised summit on health care legislation next Thursday between President Obama and members of both parties in the House and Senate, I was dumbstruck by urban legends that usually get in the way of a good story.

It involves cost containment.

For-profit insurance carriers apply a model using premiums, share-of-costs and caps to balance income with beneficiary costs. In at least five states, individual policy holders — about 9% of all Americans –are being hit with anywhere from 18 to 39% premium increases. Company health premiums — paid by about 60% Americans — are increasing about 5%. Industry sources say administrative costs average 30%. Nationally, inflation increased 1%. The largest carriers earned $12 billion in profits last year.

To hear progressives tell it, Medicare covering seniors starting at age 65 are happy with the single-payer government program and proudly claim it operates with only a 1% overhead. Two things they omit: Waste and fraud amounting in the billions and private supplemental coverage called “Medigap” subject to substantial premium increases.

I know about the latter. When I moved from rural Oregon in 2003 to metropolitan San Diego my Medigap carrier American Republican increased my monthly premium from $101 to $256.

Here’s the rub what I’m suggesting.

When it comes to paying our health care bills, we’re going to get soaked. It makes no difference if it is called a rate hike by the private sector or a tax levy by the public sector. Call it by any name and it’s the same money out of your pocket.

That’s one thing I loved about the Clinton administration. They called taxes and spending “investments” with unabashed chutzpah.

This is where I part ways from the Republicans and some moderate Democrats in Congress. The mere whisper of a tax increase is considered a treasonous offense. That is the basic argument against the public option provision passed in the House health reform bill. Yet, the Congressional Budget Office determined it was budget neutral.

A Newsweek Poll released this week indicates such skepticism. It reported:

When asked about Obama’s plan (without being given any details about what the legislation includes), 49% opposed it and 40% were in favor. But after hearing key features of the legislation described, 48% supported the plan and 43% remained opposed.

President Obama is using the announced rate hikes by Anthem Blue Cross to 700,000 policy holders in California and other states for political capital re-energizing health care legislation from the ashes.

That’s why, next week, I am inviting members of both parties to take part in a bipartisan health care meeting, and I hope they come in a spirit of good faith. I don’t want to see this meeting turn into political theater, with each side simply reciting talking points and trying to score political points. Instead, I ask members of both parties to seek common ground in an effort to solve a problem that’s been with us for generations.

On Monday, Obama’s own comprehensive proposal, aimed at uniting Democrats who spent much of the past year deeply divided on many points, will be released online.

What won’t be included is a robust public option despite a growing groundswell of a progressive block of 20 Democratic Senators in support by attempting to sidestep procedural hurdles through a 50-vote plus one reconciliation.

Ezra Klein, an astute observer of the health care reform legislation, explains there is considerable buck passing on the proposal between Senate leaders and the White House. The Washington Post reporter writes:

Trying to figure out the politics of this public option revival has been a bit of a strange experience. On the one hand, momentum seems to be building: The letter asking (Majority Sen. Harry) Reid to run the public option through the reconciliation process has 18 senators attached. Last night, (Secretary of Health and Human Resources) Kathleen Sebelius told Rachel Maddow that if the public option is “part of the decision of the Senate leadership to move forward,” then the administration would fight for it.

Today, Harry Reid’s office said, “If a decision is made to use reconciliation to advance health care, Senator Reid will work with the White House, the House, and members of his caucus in an effort to craft a public option that can overcome procedural obstacles and secure enough votes.” His caveat: The White House has to help round up the votes.

On the surface, then, you have almost 20 senators supporting the idea, the Senate majority leader giving it his backing and the White House saying they’ll follow the Senate’s lead. Green pastures ahead, right?

Well, not as far as I can tell. I’ve spoken to a lot of offices about this now, and all of them are ambivalent privately, even if they’re supportive publicly. No one feels able to say no to this letter, but none of them seem interested in reopening the wars over the public option.

That’s why the White House kicked this at Reid and Reid tossed it back at the White House. If the public option is a done deal, everyone will sign on the dotted line. But between here and there is a lot of work that no one seems committed to doing, and that many fear will undermine the work being done on the rest of the bill.

What you’re seeing here are the weird politics of the public option at play. It’s popular in the country. It’s wildly popular among the base. It’s the subject of obsessive interest in the media. There is little downside to supporting it publicly, huge downside to opposing it, and no one is allowed to ignore the issue, or even take a few days to see where the votes are.

But it’s divisive on the Hill. Bringing it back energizes all the narratives that Democrats fear most: That they’re cutting secret deals without Republicans in the room, that they’re building an extremist bill, that health-care reform is a government takeover. And this is all happening without 60 votes in the Senate or even certainty of simple majorities in the Congress. Democrats have spent the last month in a state of agonized confusion, and just as matters were clarifying, now this battle threatens to start up again.

Progressives as myself simply see the public option as a tool to lower costs in the free market place of insurance policies. Free markets are the linchpin of conservatives, yet they become critics of the very system they cherish on this subject.

Hey, as much as you like, you can’t have it both ways, guys. As we see from the Ezra Klein report, it would be nice for the Democrats to show some cojones on the public option. The public supports the concept but the Republicans have framed it as a socialist plot even though we all remember that woman at a town hall meeting last August:

“Down with socialism. But, don’t you dare touch my Medicare.”