HELP Committee Gets A Good Score

Reformers in the health care debate have a right to be pleased by the latest release of the CBO score for the bill coming out of the Senate Health, Education, Labor and Pensions (HELP) Committee. The baseline numbers are that 97% of the population would be covered for a total cost of $611 billion over 10 years. That sounds too good to be true! A better plan than the Senate Finance Committee's, including a public option, at a fraction of the cost! Only this number, like the previous HELP Committee score, is a bit incomplete. The news remains good, however.

The short version is this: CBO estimates that by 2019 the bill will cover 21 million people at a cost of $597 billion. But -- and this is important -- the HELP Committee's bill doesn't include the Medicaid expansion, because Medicaid is under the sole jurisdiction of the Finance Committee. But if Medicaid is expanded to 150 percent, it will cover an additional 20 million at a cost of about $1 trillion. Add in the savings that Finance is expected to get from reforming Medicare and you're looking at a bill that will cost $1 trillion to $1.3 trillion and cover 42 million people (which would mean 97 percent of the legal population in 2019 would have health insurance) by 2019.

Jon Cohn has a fuller explanation. But this gets us back to basically where reformers expected the score to be in the first place - a successful plan with a cost that remains a fraction of overall health care spending and, if offset properly, would not raise the deficit at all. The "down payment" of funding that the President put down previously would get you 50%-65% of the way there, which is much better than expected considering that this covers practically everyone.

The question then becomes, why did the HELP Committee write such a better bill? I think the working assumption has always been that the HELP Committee is more liberal than the Finance Committee, and that health care is one of those issues where more reform aligns with cheaper overall costs and better effectiveness. Think Progress attributes the new score to the inclusion of a public option, but Ezra says it's because of the employer mandate:

The June 15th proposal didn't include an employer mandate. And without one, the news was grim: Employers would drop coverage for 15 million employees and send them to the Health Insurance Exchange where they would need government subsidies to afford health insurance. That meant costs exploded and coverage contracted. Health reform looked like a bum deal.

But oh, what a difference a mandate makes: The new version of the HELP bill includes an employer mandate for firms with more than 25 workers. Every full-time worker who isn't given health-care coverage triggers a penalty of $750. Every part-time employee not given coverage costs $375. Doesn't seem like very much, does it? But it's enough. In Massachusetts, the employer mandate has been a success with a piddling $295 penalty. Indeed, the evidence we have suggests that the small penalty creates a massive change in behavior.

And you see the result in CBO's latest score. The June 15 report estimated that 15 million Americans would lose their employer-based coverage under HELP's bill. Today's report estimates that a mere 150,000 will lose their coverage. That's nothing. And it means that a lot more Americans end up insured and the government spends a lot less in subsidies.

The HELP Committee document highlights both the public insurance option and the employer mandate, so they obviously feel comfortable that both elements explain the more favorable score.

I personally think the employer-based system has flaws (and I'd think employers would want out of it), but a mandate combined with generous subsidies for those who have no job could combine to jury-rig a decent system, especially with cost controls.

For a few reasons, this really helps those supporting a public plan in the debate. Even if you understand the CBO scoring mechanism, it's a cheaper solution that covers more people than the Finance Committee's. And the baseline numbers will be distorted IN THE DIRECTION of reform, rather than away from it, which happened with the first HELP Committee bill. The point is that we now know what a comprehensive health care reform would look like and cost, based on best estimates. And since this public plan is more akin to Chuck Schumer's and somewhat weaker than, say, the House Tri-Committee version, potentially even more savings could arise from THAT CBO score. At that point, the public option becomes the fiscally responsible option. And while that hasn't stopped the fiscal scolds before, the momentum for inclusion would be hard to stop.

...This, from a WaPo chat with Ezra, sums up my feelings:

Ezra Klein: I think the real problem with a system built around an employer mandate is that it's still a system built around employers, which means that it's still crazily inefficient and patchwork. What you're basically seeing here is tension between the politics and policy of health reform. The politics say leave what everyone has alone. The policy says change everything because what we have now doesn't work. And the politics are winning.

...worth posting the President's reaction:

For decades, Washington has failed to act as health care costs continued to rise, crushing businesses, families and placing an unsustainable burden on governments. Today the Senate HELP committee has produced legislation that lowers costs, protects choice of doctors and plans and assures quality and affordable health care for Americans. The Congressional Budget Office has now issued a more complete review of this bill, concluding that it will cost less and cover more Americans than originally estimated. It also contains provisions that will protect the coverage Americans get at work. When merged with the Senate Finance Committee’s companion pieces, the Senate will be prepared to vote for health reform legislation that does not add to the deficit, reduces health care costs and covers 97% of Americans.

The HELP Committee legislation reflects many of the principles I’ve laid out, such as reforms that will prohibit insurance companies from refusing coverage for people with pre-existing conditions and the concept of insurance exchanges where individuals can find affordable coverage if they lose their jobs, move or get sick. Such a marketplace would allow families and some small businesses the benefit of one-stop-shopping for their health care coverage and enable them to compare price and quality and pick the plan that best suits their needs.

Among the choices that would be available in the exchange would be a public health insurance option. The public option would make health care affordable by increasing competition, providing more choices and keeping the insurance companies honest.

The legislation also improves the quality of patient care, improves safety for patients and strengthens the commitment to preventive health care – preventing people from getting sick in the first place.

I thank chairman Kennedy, Senator Dodd, and all the members of the HELP Committee for their hard work on health reform.