Handicapping Health Care Reform

Like most people I thought the Democrats would pass a health care reform bill even if it was universally disliked. I assumed that health care bill had about 99% chance of passing. Recently I lowered the odds to 50%. I have two major reasons to lower the odds.

  1. The primary reason I am lowering the odds is that both the Senate and House versions of the health care bills continue to include the public option. The public option issue polls very badly among prospective voters and is very divisive for the Democratic party. This issue by itself poses a very difficult decision for at-risk Democratic House members. Although this is a small part of the bill, it is shaping up to be the straw that breaks the camels back. The argument that the public option is a de facto government take over of the health care system appears to be resonating among both the media and the public.
  2. The huge unresolved issue is how to pay for the health care bill. One of the tax revenue options is the tax on the luxury health care plans. Despite the “luxury” name it looks increasingly like it would be a tax on union health care plans. I cannot see the unions standing by idly while this happens. The idea that the Democratic party is proposing to raise taxes on significant part of its base is both amazing and risky. The proposed changes to the Medicare Advantage and Drug Benefits are equally difficult to explain. Instead of improving Medicare the savings from Medicare is being used to expand health care to other groups. It is not surprising that polls of the elderly show that they are against the health care reform bill. To a lesser extent the cost shifting malaise affecting the elderly extends to the average voter. Increased payroll taxes are being used to subsidize insurance premiums. The polls suggest the voters are likely take it out on their elected officials next fall. One option not openly discussed is that the health care reform bill will become an unfunded mandate. Although an unfunded Health Care Reform bill would be distasteful to most voters, the politics of the Democratic party may force the party to not specify the funding specifics so that the Democratic party can get enough votes to pass something that looks like a Health Care Reform bill.