NYTimes:

President Obama told union leaders at a private White House meeting on Monday that he remained committed to taxing high-cost insurance policies as a way to drive down health costs. But he also signaled that he was willing to amend the proposal to “make this work for working families,” a senior administration official said.

We'll see. The strange thing to me is this - if you think it is good policy - as most defenders of it have argued, wouldn't the President's "flexibility" upset you? The other thing I still do not get is how they plan to improve "affordability" (see my previous post) (which means increasing the subsidies to purchase private insurance) without finding a different revenue source. "Fixing" the excise tax is projected to cost 50 billion dollars. How much extra money will be spent to "improve affordability?" If the "deficit hawks" were REALLY deficit hawks, they would embrace the House funding mechanism - raising taxes on the wealthy - those who earn more than $500,000 a year.

Speaking for me only

Whatever the theoretical merits of the excise tax experiment as policy, it is a political disaster. Richard Trumka, President of the AFL-CIO, today at the National Press Club:

The bill rightly seeks to ensure that most Americans have health insurance. But instead of taxing the rich, the Senate bill taxes the middle class by taxing workers' health plans--not just union members' health care; most of the 31 million insured employees who would be hit by the excise tax are not union members.

The tax on benefits in the Senate bill pits working Americans who need health care for their families against working Americans struggling to keep health care for their families. This is a policy designed to benefit elites [. . .] at the expense of the broader public. It's the same tragic pattern that got us where we are today, and I can assure you the labor movement is fighting with everything we've got to win health care reform that is worthy of the support of working men and women.

(Emphasis supplied.) Imposing this experiment will exact a severe political cost on the Democratic Party. It is political malpractice.

Speaking for me only

One of the more interesting conundrums of the health bill negotiations is the desire to increase the affordability provisions of the bill (in essence, the subsidies, the Medicaid eligibility will almost certainly remain at 133% of FPL as set by the Senate bill) while at the same time cutting the reach of the excise tax (without replacing it with with the House surtax on the wealthy.) E.J. Dionne writes:

Almost everyone in both houses wants to find ways of making insurance more affordable. Steps in this direction would include more generous subsidies for the purchase of insurance than those in the Senate bill and expanding its Medicaid provisions. The bill's price tag will grow from the Senate's $871 billion over a decade, probably to somewhere between $930 billion and $950 billion.

Expanding Medicaid eligibility would actually make the bill cheaper, because Mediciad will be less expensive than subsidizing the purchase of private insurance. Of course, it will not happen because that takes away market share from the insurance companies. The question then is how would the expanded subsidies be paid for? The excise tax is under assault:

Matt Yglesias riffing off of E.J. Dionne:

Something I think it’s sometimes difficult for “sensible liberal” pragmatists of my own ilk to keep in mind is that it’s a good thing for the cause of sensible meliorationist liberal pragmatism to see some feisty folks with a more radical vision gaining some traction in the public discourse. Being sensible and pragmatic only works when there’s some people out there anchoring the debate and giving you the opportunity to be the sensible pragmatist rather than the wild-eyed radical.

Why it is difficult to keep that in mind is beyond me. I for one have been writing about the potential for the Left blogosphere to play that role for years. People like Yglesias are intent on being Very Serious People (I call them Village Bloggers for a reason.) The Left blogs needed to resist that siren call. More . .

The reason there is such a complete merger of interest among low-life tabloids, Matt Drudge, reality shows and the Washington political press corps is precisely because they are indeed indistinguishable -- merged. -- Glenn Greenwald

The old saying is that "politics is show business for ugly people." The new book by Mark Halperin and John Heileman proves this as well as anything recently has. Glenn Greenwald writes:

First, Ezra Klein's fairy tales:

The subsidy scheme: This one's really a no-brainer. The House's legislation makes insurance more affordable than the Senate's does. And really, that's what this process is all about. The House would expand Medicaid coverage to households with incomes of up to 150 percent of the poverty level, rather than the 133 percent proposed by the Senate. And between 150 percent and 300 percent of the poverty level, the House's subsidies are stronger, helping people buy better insurance, at a lower cost, with less out-of-pocket risk, than the Senate bill. For decades, Democrats have worked to ease the plight for folks who can't afford insurance. To come this far only to choose the less generous subsidy scheme would be like building a grand house only to decide to save a few bucks by not putting locks on the doors.

(Emphasis supplied.) Yet that is exactly what is going to happen. The price tag for the bill is set at less than 900 billion. It ain't changing. So what then Ezra? More . . .

From the comment thread of a much cited today Austin Frakt post:

The literature is clear that an increase in premiums will decrease the available pool of funds necessary for wages. However I would argue that a corresponding decrease in premiums would be ’sticky’ in any return to the employees. The problem of course is that we have never seen the premiums go down.

Austin Frakt [--] Excellent point. My thinking on this one is that it is a short-run/long-run question. In the short-run, wages will stick as you suggest, in the long run, they’ll go up [. . .].

(Emphasis supplied.) Any data to support that "thinking?" Why no of course. Alan Greenspan "thought" a lot of things too. Also, "In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again." - John Maynard Keynes.

Also, The Eagles

Speaking for me only

I am sympathetic, for my own personal reasons, to people charged with not disclosing conflicts of interest. For the most part, I doubt that people say things they do not really think because someone gave them a check. I think they generally get the check because of WHAT they think. I think that is the case with MIT Professor Jonathan Gruber, now embroiled in a brouhaha over his failure to disclose his government contract with the Obama Administration.

To be clear, it is my view that Gruber surely should have disclosed his government contract and the Obama Administration should never have referred to him as an "independent" voice. That said, the more intriguing question for me is what did the Obama Administration's contracting of Gruber mean about its views on health care reform? R.J. Eskew writes:

Bloomberg:

The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.

AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008.

(Emphasis supplied.) Is any comment necessary?

Jon Walker fleshes out an argument I made for the entire year - going the 60 vote route in the Senate for "comprehensive" health care reform instead of following the Schumer two bills plan was political malpractice by the Democrats:

By insisting that the bill be passed using regular order, where it would need all 60 votes in the Democratic caucus to break a filibuster, Obama and Harry Reid made many conservative Democrats in the Senate take votes that were not in their political self-interest. The issue had become so partisan, attempts by conservative Democrats like Ben Nelson and Blanche Lincoln to make the bill more “centrist-y” and lard it up with local pork simply backfired. The conservative constituents are still angry because, in the end, they still voted for something labeled “health care reform,” and the Democratic base in state is now pissed because they ended up crippling the bill for seemingly no reason (let’s not forget Lincoln’s Senate website still claimed she supported a public option even as she was saying on the Senate floor that she would filibuster any bill that had one). Passing the bill using reconciliation with only 50 votes would have allowed several conservative Democrats–like Ben Nelson, Blanche Lincoln, Evan Bayh, and Mary Landrieu–to avoid taking a tough political vote.

Many people have argued the fanciful notion that the excise tax on health care plans (the so called "Cadillac" tax) will lead to increased wages. Indeed, the CBO and the JCT have adopted these assumptions in their scoring of the Senate health bill. The Economic Policy Institute, where Biden economic advisor Jared Bernstein worked prior to joining the Obama Administration, does a thorough debunking (PDF) (here is the press release (PDf) (which includes comments from Robert Reich, Rep. Joe Courtney, and EPI economists Lawrence Mishel and Josh Bivens):

One claim for the Senate excise tax has recently surfaced: that health care cost increases have been a major driving force in constraining wage growth and that wages will grow more strongly by curtailing employer health costs via the excise tax. This claim boldly asserts that health care costs are large enough (and the tradeoff with wages is large enough) to drive major changes in overall wages.

[More...]

Via d-day, the President is on board with improving "affordability" in the health bill:

Obama agreed at Tuesday evening's meeting to help strengthen affordability measures beyond what's in the Senate bill, the aide said.

How to do that without public competition? Increase the subsidies. How to increase the subsidies?

[S]weetening the deal for low- and middle-income households could require more taxes to pay for additional subsidies.

So how does the President propose to pay for his affordability, given his endorsement of the Senate financing approach (including the awful excise tax) over the House approach (which taxes the wealthy (income over 500k/year)? We'll see.

Speaking for me only