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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

‘Chevy Tax,’ Opt-Out’s Reverberations, Lieberman’s Motives

I’ll just share three interesting revelations scattered among the fallout from Senate Majority Leader Harry Reid’s announcement yesterday of the compromise Senate health reform package.
First, in his op-ed in today’s WaPo, “Health Reform’s Chevy Tax,” Harold Meyerson sheds fresh light on the numbers involved in the tax on the so-called ‘Cadillac benefits”:

The Senate’s tax would initially apply to all individual policies costing more than $8,000 a year, or $21,000 for a family. Those thresholds are to be indexed to the overall consumer price index (CPI) plus 1 percent. Problem is, medical costs and health insurance premiums increase a good deal more than the overall CPI. Since 2000, they have risen three to four times faster — which means, more policies will be subject to the tax with each passing year. The congressional Joint Committee on Taxation has calculated that in 2013, when the reforms kick in, the tax will apply to 19 percent of individual plans and 14 percent of family plans, but that by 2019 it will sock 34 percent of individual plans and 31 percent of family plans.
Last time I looked, a third of American motorists were not driving Cadillacs…Unfortunately, that excise tax targets a lot of Chevy plans as well.

Meyerson adds that the assumption that workers will get higher wages to help pay for the taxes is not warranted by recent experience, and he supports the surtax on incomes over $500,000 funding proposal championed by House Speaker Nancy Pelosi and others as a more credible progressive alternative.
I do hope Andrew Sullivan is right in his ‘The Daily Dish’ post “The Lethal Politics Of The Opt-Out Public Option” in The Atlantic Online. Sullivan writes:

…Imagine for a moment that the opt-out public option passes and becomes law (I give it a 65 percent chance at this point). Then what happens? Well, there has to be a debate in every state in which Republicans, where they hold a majority or the governorship, will presumably decide to deny their own voters the option to get a cheaper health insurance plan. When others in other states can get such a plan, will there not be pressure on the GOP to help their own base? Won’t Bill O’Reilly’s gaffe – when he said what he believed rather than what Roger Ailes wants him to say – be salient? Won’t many people – many Republican voters – actually ask: why can’t I have what they’re having?
This is why this is lethal. The argument against new entitlements requires a macro-level perspective. You have to argue that…you just need to rely on the wonderful private sector to deliver the goods in a more market-friendly way. This is always a tough sell because it requires voters to put abstract concerns over practical short-term gains. It’s why conservatism always has a tough time in welfare state democracies…Imagine Republicans in state legislatures having to argue and posture against an affordable health insurance plan for the folks, as O’Reilly calls them, while evil liberals provide it elsewhere…I can see a public option becoming the equivalent of Medicare in the public psyche if it works as it should. Try running against Medicare…it has the potential to make “liberalism’ popular again; it has easily demonized opponents – the health insurance industry; and it forces Republicans not to rail against socialism in the abstract but to oppose actual benefits for the working poor in reality.

If Sullivan is right, the opt-out concession to win moderates could end up being more of a problem for Republicans than an unadulterated ‘robust’ public option.
Lastly, anyone seeking a convincing explanation for Sen. Lieberman’s opposition to the public option for health care reform, despite strong support for it in recent polls, need not look much further than Charles Lemos’s MyDD post “The Worries of Joe Lieberman ,” in which he explains:

“I want to be able to vote for a health bill, but my top concern is the deficit.” So says Senator Joe Lieberman of Connecticut, a state that is home to 72 insurance headquarters, the largest concentration of that industry in the nation. Connecticut has three times the US average of insurance jobs as a percent of total state employment. In 2004, the insurance industry in Connecticut was a $12.2 billion dollar industry. Two years later, it hit $14.6 billion. That’s a CAGR of 9.4 percent.
Sixteen of those 72 insurance companies provide health or medical service insurance. Those 16 insurance companies employ over 22,000 employees and have annual payroll of over $2.3 billion. The total annual state insurance industry payroll exceeds $6 billion. 5.5 percent of the state’s gross domestic product comes from the insurance industry. But no Joe Lieberman isn’t worried about their profits, he’s worried about adding to the deficit.

Lemos goes on to add that Lieberman’s crocky tears about the deficit are somewhat belied by his blank check support for war ops in Afghanistan, now over $230 billion over the last 8 years, coupled with the fact that the CBO projects more than $100 billion in savings as a result of the publlic option over the next 10 years. As Lemos puts it “I can see a return on investment in healthcare, it’s harder to see one on Afghanistan.”

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