Galesburgers for Health Care Reform Regular people working to make a reform a reality…

by Exra Klein of the Wash­ington Post
October 2, 2009

The Senate Finance Com­mittee fin­ished its markup last night. Pretty much, anyway. It adopted a couple of impor­tant amend­ments, including one from Olympia Snowe cut­ting the penal­ties for the indi­vidual man­date to less than $800 per person. But the drama came late in the evening. About one in the morning, Wyden’s Free Choice Act came before the com­mittee. But it never came up for a vote.

Instead, Max Baucus effec­tively ruled it out of order. The reason? It didn’t have a full CBO score. This came as a sur­prise to Wyden and his team, who’d gotten the amend­ment scored by the CBO, and had been in end­less nego­ti­a­tions with Baucus, the White House, employers, and labor over the past week. If the score was in fact par­tial, as Baucus and Conrad claimed, you’d think someone might have men­tioned it. No one did.

But sud­denly, in the wee hours of Friday morning, the chairs of the Finance and Budget Com­mit­tees were explaining that the amend­ment lacked a valid score. ANde an amend­ment without a valid score is “out of order.” Wyden was left with little choice but to with­draw the amend­ment. It was not delib­er­a­tive democ­racy at its finest. But it served its pur­pose: it killed the amendment.

To under­stand the Free Choice Act, you need to under­stand that the exchanges are cur­rently closed to busi­nesses over 100 employees. In many states, they’ll be closed to busi­nesses over 50 employees (the Finance Committee’s bill lets states choose their threshold, either 50 or 100). And in all states, they’re closed to indi­vid­uals who are offered “afford­able” cov­erage by their employer. If I don’t like the insur­ance The Wash­ington Post is offering, or I feel I can get a better deal on the exchange, I am simply not allowed to go use the new net­work and take my pick from the many plans offered.

To under­stand how this will play out, con­sider these two graphs. One was made by my friend Matt Ficke, and it breaks out the per­centage of workers employed by firms of dif­ferent sizes. As you’ll note, everyone working in the last four columns — that is to say, a solid majority of the pop­u­la­tion — is barred from the exchange.

To put this more starkly, here’s a graph showing the workers who might be eli­gible for the exchange, if all states go up to busi­nesses of 100 people and all eli­gible busi­ness buy their workers in, and the workers who will not be eli­gible at all.

If the Free Choice Act had passed, politi­cians could have made a very simple argu­ment to the insured: When this bill becomes law, you will have insur­ance choices just like those enjoyed by a member of Con­gress or a gov­ern­ment employee. You will have a variety of insurers com­peting for your busi­ness and the oppor­tu­nity to keep the same insur­ance even as you change jobs, or fall unem­ployed, or open your own busi­ness. You don’t have to take advan­tage of this if you don’t want to. You can stick with what your employer offers. But if you do want the choice, you can have it. It’s here for you. That’s what reform means, for everyone: choices, com­pe­ti­tion and continuity.

But it turns out not to mean that. The pro­posal was doomed by the joint oppo­si­tion of busi­nesses and labor. Busi­nesses didn’t like it because they lose con­trol over their employees’ health ben­e­fits. Labor groups didn’t like it because they lose con­trol over their mem­bers’ health ben­e­fits. That’s not an entirely selfish con­cern: It is easier to bar­gain on behalf of your workers or mem­bers if they have no other options, and thus are guar­an­teed cus­tomers for the insurer. But it is a short-sighted con­cern. It means the pro­tec­tion and preser­va­tion of a system where employers offer us one or two health-care choices, which may or may not be of high quality, and which will almost cer­tainly dis­solve if we leave or lose that job. It also means a system in which insurers com­pete less, and costs are fur­ther hidden from con­sumers, and busi­nesses con­tinue to bar­gain on their own.

This was, in other words, a battle over the suf­fi­ciency of the status quo. And the Senate Finance Com­mittee, hearing com­plaints from those who pre­side over a health-care system that works so poorly, sided with the status quo.