The CBO Smiles on the House Bill (HR 3200)

Basically, Henry Waxman, Charlie Rangel and George Miller did not want me to watch the All-Star Game tonight.  What other possible reason could they have for dropping a 1,018 full bill version of HR 3200 – The America’s Affordable Health Choices Act on Tuesday night?

I have not yet read the full bill, but I have perused the many of the policy materials on the Education and Labor Committee blog, did a quick spot check of specific sections, and of course read the excellent commentary by Ezra Klein, Jon Cohn and Igor Volsky – who even includes putatively “sexy facts” in his chart break down of the features from the score by the Congressional Budget Office.  The best part of the bill was how little surprised I was by its features.  After all, it tracks very well to the draft House bill that was released weeks ago in terms of structure and features, and its mechanisms for new revenue were already telegraphed by Rep. Rangel of Ways and Means.  It also comports along the same lines as the plan that all Democratic candidates – including Barack Obama – ran on.

The question was what would the Congressional Budget Office think?  The House bill was always seen as more robust than either the version coming from Senate Health, Education, Labor and Pensions or Senate Finance – meaning it was anticipated to be more expensive.  What would the CBO say it cost, and how many Americans would it really cover?

There’s a reason for looking at the CBO as a looming, potential threat to the viability of getting reform enacted.  During the Bill Clinton effort, the CBO made the determination that all premiums paid to the network of private HMOs that formed the backbone of that plan should count as federal income.  Even though it didn’t change the reality of how much money Clinton’s plan would have cost, it changed the political perception of his program as an unprecedented expansion of the federal government.  A plan that was already reeling received a knockout blow.

One need only look at the miscommunication and brouhaha that arose a month and a half ago when the CBO released preliminary numbers on 2/3 of the Senate HELP bill showing it cost over $1 trillion over 10 years but would only cover a few million more people to realize a bad score could stop reform in its tracks.

That’s why it’s so gratifying that CBO has given the House a good score – indeed, better than I anticipated.  In what are admittedly preliminary numbers – the bill may still change during markup and amendment, the CBO scores the complete House package as costing $1.042 trillion over 10 years, well under the $1.5 trillion or more anticipated by many.  It would also be effective, with approximately 97% of Americans receiving coverage through public programs like Medicare and Medicaid, their employer, or through the Health Exchange transparent marketplace for comprehensive benefits, with its subsidy credits to make health insurance affordable as a fraction of your income.

What’s striking is that the major controversial pieces in the bill haven’t been watered down in the face of opposition.  They didn’t need to be.  It still has a public health insurance option that’s more robust than the version in the Senate HELP committee, in that it would start off with Medicare rates for doctors and hospitals (although it would modify those rates upwards if the doctor took both Medicare and the public plan) before shifting over time to negotiating with providers like any health insurance plan.  Far from adding to the cost of health care reform, that more robust public plan is a cost-saver, generating a surplus of $150 billion over ten years.  Those who complain that the public plan will “crowd out” private insurance no longer have the numbers to back it up – the CBO projects even this robust public plan will only enroll 11 to 12 million people.  That’s a frustrating low number for those of us who think the public plan will truly be a better deal.  But if it helps diffuse the “fast march to socialism” meme, I’m all for it.

If covering 4% of Americans over ten years is a “Washington takeover of health care,” then me paying state sales tax is an “Albany takeover” of my personal budget.

The House has a stronger employer “pay or play” in that the fee for not giving your employees meaningful coverage would be 8% of salary for businesses with an income of over $400,000 a year, rather than the tamer $750 per full-time employee in the Senate.  The combination of savings from Medicare and Medicaid – usually the obvious things that we’ve talked about again and again, like cutting overpayments to private Medicare Advantage plans – and the surtax on the wealthiest 1.2% of Americans are anticipated to easily pay for the bill’s provisions (the final word is still pending, although the House bill would wisely scale back the surtax if it turned out to generate more revenue than was required.)  Anticipating a misinformation campaign from the opposition about how any tax on the wealthiest sliver of Americans would hurt small businesses, the House policy document announcing the surtax throws water on that assertion:  “96% of small businesses would see no tax increases under this proposal.”

These are the very things that the opposition is likely to demonize.  They’re also the very things that, according to the CBO’s calculations, make it work.

Of course, if you had read the news reports over the past week, you might have expected a severely curtailed and compromised bill, or one more susceptible to the complaints from the conservative Blue Dogs.  But the House hasn’t pared down its ambitions one bit.  And lo, the CBO does smile upon the results.  Let’s hope that stiffens the backs of reformers in the House – they’ll need to be strong to shepherd this bill through the political mess to come.

(Photo credit: House Education and Labor Committee on Flickr.)