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The state of health care since the State of the Union

In case you missed President Obama’s State of the Union address last Wednesday night, you can watch the section on health care here:

We’re tired of post-speech analysis telling you how good the speech was, or how bad the speech was — we figured you can judge for yourself.

But to put the health care part of the speech in context– the Massachusetts Senate election threw the fate of health care reform up in the air.  Many Democrats in Congress have been waiting for leadership from the White House on whether to move forward on health reform.  With the State of the Union address they got it… sort of.

Ezra Klein explains what nervous Democrats saw in the president’s speech:

A robust defense of the concept of health-care reform. A plea for “everyone to take another look at the plan we’ve proposed.” A reminder that Democrats “have the largest majority in decades, and the people expect us to solve some problems, not run for the hills.” An apology for “for not explaining [health care] more clearly to the American people.”

And beyond all that, they got something intangible but nevertheless important: The sense that their president can still lead, that he’s not cowed or planning his retreat, that he might still be of use on the campaign trail, that things are not as bad as Politico [the political news website] has been telling them. Obama had some swagger last night, and so Democrats have some this morning.

But there was much they didn’t get, too. For one thing, a timeline, much less a deadline.

What now?

According to speaker Nancy Pelosi (D-Cali.), the House is working on two tracks to pursue health care reform:

Track 1: Pass some smaller health bills quickly. Possibly as soon as the end of the week, Pelosi is hoping to announce a series of smaller health care bills that would include some of the more popular parts of health reform.  It’s a little unclear exactly what these smaller bills would include (as we have mentioned before, breaking up the Democrats’ health reform plan is nearly impossible since the big pieces are all interrelated).

The only clearly defined proposal we’ve heard so far would be to remove the antitrust exemption for insurance companies.  Since 1945, insurance companies have been exempt from federal laws against price-fixing and schemes where businesses agree not to compete.  Originally this was to allow states to regulate insurance companies instead of the federal government.  However it has led to a handful of insurance companies dominating most markets in many states… although some would argue that this isn’t necessarily a bad thing.  (It’s a complicated issue– we’ll look at the pros and cons of removing the exemption in an upcoming post.)

The idea behind passing smaller bills, according to Pelosi, is to demonstrate momentum for reform while House and Senate leaders work on track two.

Track 2: Figuring out a way to pass comprehensive health care reform. Remember that health care reform could pass tomorrow, if the House agrees to pass the Senate bill.  However, Democrats in the House don’t have enough votes to pass health reform without major changes to the Senate bill, so congressional leaders are negotiating those changes now.  The Senate could then pass these changes through the reconciliation process, which remember, only requires 50 votes to pass.

Progress is being made in the negotiations. According to Jonathan Cohn at the New Republic:

House and Senate leaders are already finding common ground on issues like improving the Senate bill’s affordability protections and getting rid of the “Cornhusker kickback.” Instead of the federal government picking up the entire cost of Nebraska’s Medicaid expansion–a special deal that became an embarrassment even to Nebraska Senator Ben Nelson, for whom the deal was made–the federal government would simply cover a greater share of Medicaid costs for all states. This would actually be good policy, as well as good politics, so it’s win-win.

The big sticking point right now, according to Cohn, is the excise tax on so-called “Cadillac plans”:

  • House Democrats are against the excise tax because it could end up targeting a large number of middle class families.
  • Fiscally conservative Democrats in the Senate want to keep the tax, pointing to a number of economists and the Congressional Budget Office who say that the tax is essential to reducing costs and controlling health care spending in the long term.
  • Still there is room for a compromise.  For example, they could raise the income threshold so that the tax would apply to fewer people.

The main thing now is to keep the process moving by continuing to push for comprehensive reform. President Obama made a strong case for moving forward with reform in his State of the Union address.  Hopefully, he’ll continue to push forward and Congress will join him.

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