Excise Tax In Exchange For The Public Option?

By Big Tent Democrat, Section Other Politics
Posted on Fri Feb 19, 2010 at 10:12:19 AM EST
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I wondered why no one had made this argument proferred by Matt Yglesias:

Given the level of liberal discomfort with the excise tax, the best policy option available would be for progressives to get their way on the public option (where progressives are right) and centrists to get their way on the tax question (where centrists are right) then you’d have an excellent bill.

Forgetting about the policy judgments Yglesias makes, such a political deal could make sense. The Senate bill has no constituency outside the Beltway and a fierce opponent of its excise tax in labor. The public option could rally progressive support for the health bills even in the face of labor opposition to the excise tax. Would it work? I don't know but at least it seems plausible.

Speaking for me only

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Excise Tax In Exchange For The Public Option? | 50 comments (50 topical)

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I want to know why we're not hearing (5.00 / 4) (#1)
by andgarden on Fri Feb 19, 2010 at 10:19:24 AM EST

about Medicare buy-in again. It seems like a no brainer.

No brainers ought to be (5.00 / 4) (#2)
by observed on Fri Feb 19, 2010 at 10:25:28 AM EST

easy for the Senate---they have all the qualifications.


Fall back position I think (none / 0) (#3)
by Big Tent Democrat on Fri Feb 19, 2010 at 10:26:10 AM EST

For once, someone may be bargaining correctly.

Very curious about this one to be honest.

Obviously I have no confidence that any form of a PO will get in the bill, mostly because I think Obama does not want it, though also because some Dem Senators don;t want it.

But the excise tax is a huge obstacle and if the Obama people want it, they have to give for it to even have a chance to get the excise tax.

The most likely outcome still is no bill imo.


I'm thinking there's a bigger problem (none / 0) (#4)
by andgarden on Fri Feb 19, 2010 at 10:28:21 AM EST

in the House now. I'm having some trouble counting to 217.


And BTW, they may HAVE to include (none / 0) (#5)
by andgarden on Fri Feb 19, 2010 at 10:29:11 AM EST

Medicare buy-in to give Kucinich a reason to switch to yes. Though for him, I'm not even sure that would be enough.


Who knows? (none / 0) (#6)
by Big Tent Democrat on Fri Feb 19, 2010 at 10:34:14 AM EST

I do think that adding a PO makes Pelosi task easier, ESPECIALLY if Obama really wants that excise tax.

the PO may provide the only plausible way to get the excise tax in.


There's going to have to be (none / 0) (#8)
by andgarden on Fri Feb 19, 2010 at 10:36:10 AM EST

some more serious horse trading. And it will probably have to be in public too.

The WH is apparently concerned about the appearance of "process" (i.e., the Nelson deal), but I have no doubt that they'll have to go through the ringer again in order to achieve final passage.


The union exemption to the excise tax was also (none / 0) (#14)
by Dan the Man on Fri Feb 19, 2010 at 10:44:21 AM EST

an example of "process". If they're going to junk the Nelson deal because it looks bad, are they going to junk the union exemption deal also?


That's why its in everyone's interest (5.00 / 1) (#15)
by andgarden on Fri Feb 19, 2010 at 10:46:45 AM EST

to neuter the excise tax for all. Just like every state should get the Nebraska Medicaid deal.


The unions have backed out of their deal (none / 0) (#16)
by Big Tent Democrat on Fri Feb 19, 2010 at 10:48:26 AM EST

for that reason.

The financing issues are thorny.

The reality is there is not going to be a bill I think.


I still think there's just too much invested (5.00 / 2) (#17)
by andgarden on Fri Feb 19, 2010 at 10:52:34 AM EST

in this already. Never underestimate the attraction of the sunk cost fallacy.


Not from progressives (5.00 / 1) (#18)
by Big Tent Democrat on Fri Feb 19, 2010 at 11:02:39 AM EST

I see no reason for them to vote for the Senate bill politically and a lot of reason not to.

Obama and Rahm have to give up on a lot of issues it seems to me.


I think the prospect of either (5.00 / 1) (#19)
by andgarden on Fri Feb 19, 2010 at 11:04:02 AM EST

a PO or Medicare expansion would make this irresistible for progressives.


: I think you're right (none / 0) (#20)
by Big Tent Democrat on Fri Feb 19, 2010 at 11:13:07 AM EST

It is a plausible deal.

My giuess is that there will be nothing (none / 0) (#23)
by Salo on Fri Feb 19, 2010 at 11:39:16 AM EST

The "progressives" like Elise, etc over at Kos are fanatical about the excise tax. For obvious reasons the Unions consider it to be toxic. Lets see who is better organized eh?


The Unions will silently kill this bill off. (5.00 / 3) (#24)
by Salo on Fri Feb 19, 2010 at 11:42:42 AM EST

The Bill is designed to divide various aspects of the working class in America, and it's succeeded in spades.

It appears the "progressive" gate crashers were actually Eisenhower Republicans all along--Obama their stealth candidate, just as the "Tea Party" are going to reveal themselves as radical Reagan Republicans, "progressives" are actually a bit center right...


: I'm trying to understand this, (none / 0) (#48)
by pfish on Sat Feb 20, 2010 at 09:19:51 PM EST

but it doesn't make sense. Who genuinely is trying to divide the American working class with this bill and toward what end?

BTD: I don't understand (none / 0) (#40)
by Andy08 on Fri Feb 19, 2010 at 03:47:28 PM EST

the thinking from the view point of the worker: they want to keep their coverage; not be switched to a PO so if the excise tax remains it makes no difference to them.

Am I missing sth.?


Yes. (none / 0) (#49)
by pfish on Sat Feb 20, 2010 at 09:23:31 PM EST

"the thinking from the view point of the worker: they want to keep their coverage; not be switched to a PO so if the excise tax remains it makes no difference to them.

Am I missing sth.?"

If they keep their coverage, and if the excise tax remains, then they will be taxed on their benefits. It makes a huge difference. I think they realize it's politically untenable for the unions to be exempt from the excise tax that everyone else would have to pay. That's why the union leadership has withdrawn their support.


: Your comment just (none / 0) (#50)
by Andy08 on Sun Feb 21, 2010 at 07:42:52 PM EST

reinforces what I said: that as long as the excise tax is there and since workers want to keep their coverage as promised having the PO is irrelevant to the discussion (of the unfairness of the excise tax).

Maybe smart politically (5.00 / 3) (#10)
by gyrfalcon on Fri Feb 19, 2010 at 10:36:54 AM EST

in terms of passing the bill, but I don't think so smart to keep the excise tax in terms of public support and the effect on the mid-terms. It's absolute anathema to an awful lot of voters and an extremely easy and understandable rallying cry for GOPers and tea partiers.

yup (5.00 / 1) (#13)
by CST on Fri Feb 19, 2010 at 10:43:12 AM EST

I still don't see anything in this for the unions. That's not to say I don't think it's worth it, from a policy standpoint. But I don't see how it helps move voters.


Unions can pay their money into the PO (none / 0) (#22)
by Salo on Fri Feb 19, 2010 at 11:35:14 AM EST

and have a huge part of admin "overseeing" in the admin of that fund.


That would be (5.00 / 2) (#25)
by cawaltz on Fri Feb 19, 2010 at 11:43:32 AM EST

providing they qualify for whatever income level is eligble for a public option. 150% the poverty level for a family of 4 is less than $34,000. My household wouldn't qualify if they were to use 150% for our family of 6($44,290). Unless the standard has changed for the umpteen millionth time opting in may not be an option for union households who traditionally make more than their non union counterparts.


: I thought the 150 was for Medicaid (none / 0) (#26)
by nycstray on Fri Feb 19, 2010 at 11:52:33 AM EST

and 300-400 was for subsidies? I didn't realize there was a poverty level requirement to the PO . . .

: Means testing a PO will kill it. (none / 0) (#37)
by Salo on Fri Feb 19, 2010 at 03:30:11 PM EST

Dead.

They're not eligible for (5.00 / 2) (#27)
by gyrfalcon on Fri Feb 19, 2010 at 11:54:33 AM EST

any version of the PO. Almost by definition, they'd be getting health insurance from their employers, and not too many union members would fall into the income restrictions.

But it's not just the unions that would be hit by the excise tax, especially down the road a bit, and large portions of the public think they're going to get hit with it, even if they aren't.


down the road (none / 0) (#29)
by CST on Fri Feb 19, 2010 at 11:58:03 AM EST

if a public option is done right and done well (and expanded) it should in theory reduce the cost of healthcare across the board and keep costs from rising so fast.

But it's hard to sell policy on an "if".


It's also hard to sell policy when (none / 0) (#30)
by Anne on Fri Feb 19, 2010 at 12:35:25 PM EST

it's little more than a slogan/catchphrase: leaving aside for the moment the general inequity of an excise tax on benefits, how can anyone accept any deal until we all know what "a" public option is?

I keep asking this question, and still, people prattle on about "a" PO as if it were manna from heaven (more Senators have signed on! so glad they are finally listening to us!); from what we've seen so far in this long process, I'm betting that if there is a deal, the so-called public option is more likely to resemble Cash for Clunkers, except this time we will be the ones giving up the cash - again (it's the bankster bail-out template all over again) - and getting a clunker-to-end-all-clunkers.


: Even the administration is doing it (none / 0) (#31)
by jbindc on Fri Feb 19, 2010 at 12:44:53 PM EST

Sebelius said WH would back a public option if the Senate Dems bring it to a vote.

: It's a Beach Head. (none / 0) (#38)
by Salo on Fri Feb 19, 2010 at 03:31:05 PM EST

A social democratic Omaha Beach.

Well I start from what I'd like to see. (none / 0) (#39)
by Salo on Fri Feb 19, 2010 at 03:31:50 PM EST

and work down form that if I have to.


that would be nice (5.00 / 1) (#28)
by CST on Fri Feb 19, 2010 at 11:55:42 AM EST

but it's not the way any versions of the public option have been set up so far (such as the one that passed in the original house bill). Unless they have a really low income.


Salo, you are assuming (none / 0) (#41)
by Andy08 on Fri Feb 19, 2010 at 03:49:45 PM EST

workers want to be switched to the PO: by and large, they don't...


: Union charters (none / 0) (#43)
by Salo on Fri Feb 19, 2010 at 04:23:11 PM EST

generally call for universal Insurance and care though.

It's not just unions (none / 0) (#35)
by cal1942 on Fri Feb 19, 2010 at 02:07:33 PM EST

many, many non-union workers would be bit by the excise tax.

This is another case where unions carry the water for everyone who works and effected non-union workers won't notice who went to bat for them.


: Agreed, that is indeed the case. (none / 0) (#42)
by Andy08 on Fri Feb 19, 2010 at 03:50:08 PM EST

This idea makes perfect sense (5.00 / 2) (#36)
by Makarov on Fri Feb 19, 2010 at 02:56:48 PM EST

if your goal is to craft a health insurance bill that gives everyone a reason to hate it.

Is anyone else (none / 0) (#7)
by cawaltz on Fri Feb 19, 2010 at 10:35:31 AM EST

having a problem with the link?

I want to read about the Democrats preparing to shoot one of their constituencies in the back.

Wrong link to the Matt Yglesias article? (none / 0) (#9)
by Babel 17 on Fri Feb 19, 2010 at 10:36:43 AM EST

The current one just points to this page.

http://yglesias.thinkprogress.org/archives/2010/02/fish-white-house-logic-on-public-option-revival.p hp

looks to be the one.

: Thank you! n/t (none / 0) (#11)
by cawaltz on Fri Feb 19, 2010 at 10:39:25 AM EST

: Thanks (none / 0) (#12)
by Big Tent Democrat on Fri Feb 19, 2010 at 10:40:54 AM EST

Wonder if this'll happen? (none / 0) (#21)
by Salo on Fri Feb 19, 2010 at 11:25:38 AM EST

A P.O. that the Unions can stick their cash into.

I've said it repeatedly.

It's so simple it's shockingly brilliant.

: Pete Stark's Americare bill (none / 0) (#34)
by beowulf on Fri Feb 19, 2010 at 01:39:59 PM EST

The Americare bill has an employer mandate that allows employers to buy into the Medicare system.
http://seminal.firedoglake.com/diary/5749
Individuals could buy into Americare or into a private insurer that offered at least the same level of coverage, but the affordability subsidies are only payable towards Americare premiums, that was one of the key elements of Hacker's Public Option proposal that was thrown overboard pre-negotiation.

who says so? (none / 0) (#32)
by cpinva on Fri Feb 19, 2010 at 12:52:50 PM EST

and centrists to get their way on the tax question (where centrists are right)

it was a stupid idea before, even with a public option, it will remain a stupid idea. it's not even a "right" idea.

tell you what let's do (and i'll give this one out for free, no billable hour. trust me, you don't even want to know my hourly rate.):

eliminate the deductability of health insurance premiums, above the average amount for all employees, for those paid in excess of, oh, say 250k per year (well above "middle-class"). they don't even need to report the excess as income individually, just their employer doesn't get a tax deduction for it.

since the liklihood of a union member making that kind of money is pretty darn slim, they shouldn't have a problem with this. it isn't an additional tax, merely a reduction in allowable deductions for tax purposes, a permanent difference. it also has the benefit of self-correcting, for increases in the cpi.

everybody (more or less) walks away happy

: I figured (none / 0) (#33)
by cawaltz on Fri Feb 19, 2010 at 01:22:11 PM EST

in this instance Matt was speaking for himself. The excise tax works to decouple employers from health care. Why it would be smart to decouple 60% of the population BEFORE offering them a feasible alternative is beyond me. It seems smarter to solve the problem of the 40% without health care first(ensure it works) and then potentially seek to decouple.
What really is beyond me though is why they seek to tax middle class plans when the top 400 taxpayers had some odd 130 billion plus in income primarily from capital gains and investments(only 6.5% was the result of their own labor).

More than labor (none / 0) (#44)
by pluege on Fri Feb 19, 2010 at 05:29:24 PM EST

and a fierce opponent of its excise tax in labor.

there are plenty of people that hate the Senate bill primarily for the excise tax. It represents a loser sweep for dems: the healthy uninsured hate the mandate, the insured hate the excise tax.

This is why the Senate HCR bill has no support except insurance companies and the non-voting poor.

Bad Headline (none / 0) (#45)
by pluege on Fri Feb 19, 2010 at 05:33:06 PM EST

its not PO in exchange for excise tax because the excise tax stays. It is PO in exchange for support for the repugnant excise tax.

the excise tax is so very repugnant - actually counter the goals of HCR by incentivizing people to have LESS healthcare. what on earth are those obama morons and vichy dems thinking (not thinking)?

Per Chris Bowers, BO doesn't have PO in his bill-- (none / 0) (#46)
by jawbone on Fri Feb 19, 2010 at 06:30:13 PM EST

Update--public option not in White House health care proposal: Just in case there was any doubt about the White House and the public option, a public option is not included in their draft health reform compromise proposal.
Chris Bowers :: Health reform state of play, February 19

Now, is Obama compromising with himself, thinking of offering to add PO in exchange for something else (something odious to progs/libs?), or just making clear he had no intention of having PO all along?

Who can tell? He sure doesn't tell the public where he stands!

: obama is impervious to progs/libs (none / 0) (#47)
by pluege on Fri Feb 19, 2010 at 10:03:41 PM EST

there is no PO in the BO bill because BO is a corportist through and through. The PO is bad for big money insurance companies. BO doesn't give a rat's arse about what is good for the average schmoe.