Paying the Piper

My nerd license is probably going to be revoked for saying this, but I’m bored with the nonstop blogging over the Baucus healthcare bill that was released today.  (That’s the “chairman’s mark” for those dedicated to terminological exactitude.)  My lack of interest stems from two facts: (a) it’s pretty much what we all thought it was going to be, and (b) it’s basically just a starting point for negotiations, not an ending point.

Still, I’d like to highlight this comment from James Kwak:

One reason the Baucus bill is “cheaper” than the House bill is that it has lower subsidies. For illustration, let’s assume that the whole $140 billion difference is due to lower subsidies. Relative to the House bill, then, the Baucus bill costs the government $140 billion less; but it costs middle-income people exactly $140 billion more, since they have to buy health insurance. The difference is that in the House bill, the money comes from taxes on the very rich; in the Baucus bill, it comes out of their own pockets. Put another way, the Baucus bill is the House bill, plus a $140 billion tax on people making around $40-80,000 per year. That’s not only stupid policy; it’s stupid politics.

Can’t argue with that.  As regular readers know, I’m more concerned with subsidy levels than I am with the public option.  This is why.  The public option is a good thing, but even in the best case it’s available to only a small number of people and will likely have only a modest impact on the cost of health insurance.  Subsidy levels, conversely, affect lots of people and have a significant impact on the cost of health insurance.  According to CBPP, for example, a family making $45,000 would have to pay annual premiums of $4,800 under the Baucus plan, compared to $3,600 under the House plan or $2,500 under the Senate HELP plan.  That’s a pretty big difference.

So: adopt the the Baucus version of subsidies and when 2013 rolls around you’ll have lots of pissed off middle income families desperately trying to scrape up an extra five grand each year.  Adopt the HELP version of subsidies instead and these registered voters families will mostly think they’re getting a pretty good deal.  And to fund it, all you have to do is raise taxes on, say, Wall Street bankers.  What’s not to like?

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