Digby's Hullabaloo

The Light Dawns

by digby

Roger Hickey notes moderates Dems are beginning to reassess the politics of opposing the public option: “Concentrating their minds is the realization that they are about to vote to force every American over the age of twenty five to purchase health insurance. Moderate Democrats are the ones most receptive to the demands of the insurance industry, and the price the insurance industry is demanding in exchange for insurance reform (like preventing companies from discriminating against people with pre-existing conditions) is the ‘individual mandate’ – which means voters are forced to buy insurance, whether they can afford it or not.

At this moment, all Democratic politicians, even the most conservative, are realizing that their voters will blame them, not the insurance companies, if the policies the voters are required to buy are so expensive that premiums consume over 20 percent of those voters’ annual incomes. Suddenly, more generous tax subsidies to cover middle-class premiums seem like a good idea. And if the public option can bring down the cost of premiums those subsidies have to pay for, then the overall size of the reform price tag can be kept under control – a long time demand of moderate Democrats.”

A lot of people probably don’t remember the monumental clusterfuck that was Medicare Catastrophic. (If you don’t know the details, you can rad all about it here. pdf.)

Here’s the introduction:

Less than a year and a half after enacting the Medicare Catastrophic Coverage Act of 1988 (P.L. 100-360), Congress was forced by a ground swell of negative public reaction to retract the legislation, the first major enhancement in Medicare benefits since the program’s inception in 1965. A retrenchment of this magnitude is unprecedented in postwar social welfare policy.

The act was repealed because a discrete group of fairly affluent seniors were affected and they rebelled, big time. But the larger lesson is that there is precedent for health care reform to be rejected by the people if they perceive it to be unfair.

This time there is a rather large group who, in the absence of an affordable public plan, are likely to be angry about health care reform and they will be aided by the large block of teabagging phonies and their industry allies in raising holy hell about it. These are people who are going to be forced to buy pretty expensive insurance policies from private insurers, and for whom the subsidies are just not adequate. They are average middle class people who are going to be told they need to find a way to now set aside nearly 50% of their discretionary income for Blue Cross insurance executives to make multi-million dollar bonuses. And that is from a very small amount of discretionary income.

Do you think these people will be upset?

Consider an illustrative family of three in which the father earns $35,000 from a small retailer and the mother earns $11,000 as a part-time sales clerk. Neither receives health care through his or her employer. The couple has a daughter in elementary school. The couple has avoided accruing credit card debt but has no life insurance or retirement savings. After paying basic expenses,[4] this family has about $650 a month to cover costs for clothes, car repairs and maintenance, various other household expenses, restaurant meals, and any hobbies or activities — as well as the family’s health care expenses. Under the Finance Committee bill, this family could pay $360 — 55 percent of the remaining monthly amount — to cover the cost of premiums. In comparison, under the Senate HELP bill, this family would pay $214, or 33 percent of its remaining monthly budget, for premiums. Under the House bill, the family would pay monthly premiums of about $305, or 47 percent of its remaining monthly income.

Even the more generous plans seem to be a recipe for backlash. And I don’t think the citizens have been adequately prepared for it. But the plans with the lower subsidies are insane. I don’t suppose that most of the people writing these plans have recently had to live with only a couple hundred dollars a week to spend among three people, but if they did, they would know that cutting that in half is impossible. I don’t know how many people this affects, but it’s obviously in the millions.

There’s a reason why so many people are uninsured and it isn’t only because they have pre-existing conditions. It’s also because insurance is unaffordable. Unless this reform fixes that problem they haven’t fixed it at all. They need to create a public plan that these subsidies can actually make affordable or these folks are all going to have to become criminals and defy the mandate. And if that happens reform fails.

I think you will see a terrible backlash if they don’t get a grip on the political realities here. I hope that Hickey is correct and that they are, or this could be a monumental debacle.