By John Reichard, CQ HealthBeat Editor
February 13, 2009 -- While the new Congress is shaping up as one in which Democrats run into a GOP wall when they try to pass their pet proposals, the ability of Oregon Democratic Sen. Ron Wyden to attract the support of staunch Republicans for his health overhaul plan offers a striking contrast — and assures that the plan will get plenty of publicity. That certainly was the case this week when the proposal (S 391) Wyden is co-sponsoring with Utah Republican Sen. Bob Bennett was showcased at a prestigious Washington, D.C. forum sponsored by The Atlantic magazine.
Seven Democrats including Wyden, five Republicans including Bennett and one Independent are co-sponsoring the bill. Five Republicans is more than enough to allow the measure to cross the magic 60-vote threshold needed to get legislation to the floor in the Senate and get it passed, assuming all Democrats and Independents back the Wyden measure. And four of the five names aren’t those of the three Republican senators that joined Democrats in backing economic stimulus legislation.
In addition to Bennett, the four include Sens. Lindsey Graham of South Carolina, Michael D. Crapo of Idaho, and Lamar Alexander of Tennessee. The fifth Republican on the Wyden bill is Sen. Arlen Specter of Pennsylvania, who joined with Maine Republicans Susan Collins and Olympia J. Snowe to back the economic stimulus package.
The other aspect of the Wyden bill that excites its supporters is that it is a way to get to universal coverage without driving up the federal deficit. A Congressional Budget Office estimate in 2008 said the measure would be budget-neutral.
The big knock on the plan is that it will unravel employer-sponsored health insurance. However, Wyden in his remarks to the Feb. 11 forum cheerfully brushed aside those concerns, expressed the day before by Senate Budget Committee Chairman Kent Conrad, D-N.D after a hearing in which he also praised the Oregon Democrat for his “contribution” to the overhaul debate. The new version of the bill, introduced Feb. 6, loudly proclaims — in legislative language at least — that workers can keep the coverage they have. Wyden said that was implicit in the old bill, but he made the change so no one has any doubts. Wyden said “We decided to be really subtle” and give a new section the title, “‘Guaranteeing You Can Keep What You’ve Got,’” he said.
The bill shifts the locus of health insurance away from employers to state-based pools where people choose from a menu of private health insurance plans. The current exclusion of health insurance premiums from taxable income would be eliminated, raising federal revenues, as would new tax payments from employers. However, households would receive a $17,000 deduction for family coverage, Wyden said. Individuals and families would be required to carry coverage and would receive subsidies to help pay the costs if they had lower incomes.
The premiums employers now pay for their employees coverage would instead be paid to workers in the form of higher wages. Individuals would have to pay the federal government for their premium costs at the time they file their income tax returns. According to a May 1, 2008 Congressional Budget Office estimate of the cost of the proposal Wyden offered in the 110th Congress, “most health insurance premiums that are now paid privately would flow through the federal budget. As a result, total federal outlays for health insurance premiums in 2014 would be on the order of $1.3 trillion to $1.4 trillion,” the estimate said.
Wyden said at the forum that employees could simply designate their employer’s plan as the coverage option they wanted rather than switch to another plan. So a worker could stick with current coverage or switch to a lower cost plan and pocket the difference between the deduction and the cost of coverage if it was less than the deduction. And to the extent higher cost workers were left in the employer plan and its costs went up, a “risk adjustment” mechanism to pay the plan more for its sicker enrollees would keep the plan from going under, Wyden suggested.
But a number of analysts see enormous obstacles to the plan despite its favorable scoring and ability to attract Democrats and Republicans. “It’s a bit strange that people still point to it,” said American Enterprise Institute Resident Scholar Joseph Antos in an interview this week. “It is not really bipartisan . . . and I don’t think it represents a consensus view,” Antos added, predicting it won’t serve as the basis of compromise talks.
“It can’t be the base plan from which you begin to deviate because it is way far out there in too many ways,” Antos said.
Antos said for example that Congress would not be able to keep its hands off the approximately $1.3 trillion that would flow to the government to pay insurance plans selected in state based pools. “If you have that kind of money running through Congress it will stick,” and get diverted to other purposes, he predicted. And it would be very difficult to figure out how to convert premium payments to higher wages, he said. Phasing out the exclusion could not be done quickly, he added, and many employers would stop offering coverage, he said.
Other analysts note with concern that the plan entails converting Medicaid and the State Children’s Health Insurance Program into supplemental coverage plans that would wrap around private coverage obtained through the state run pools. Doing so “is possible in theory,” but “it is quite difficult to do in practice,” said Edwin Park of the Center on Budget and Policy Priorities in a Sept. 24, 2008 analysis. Park cautioned that “a substantial number of low-income people covered through Medicaid or SCHIP could be placed at risk and lose access to needed care.”
“The changes are massive,” Antos concluded, and in that regard are reminiscent of President Clinton’s universal coverage that many analysts say frightened the public because of its complex changes to the health care system. They also would be made much too quickly, he said. “The real truth about health reform is we need more time.”