The Budget Deal and the Triumph of Conservatives

The Ryan-Murray budget deal is generally a positive development for America, I guess.  It apparently means that we won't have endless budget showdowns and brinksmanship for a while.  No threats to shut down the government.  Hopefully (though I don't think this is part of the deal) no more Debt Ceiling hostage taking.

I find a few things notable about the deal:

• For the first time, Republicans have accepted some increased revenues as part of a deal.  This really is shocking, as it seemed so impossible.  The fig leaf they used is that they raised "fees" on air carriers, not "taxes".  Of course, that's a distinction without a difference. Of course, I'd like to see a broad-based tax hike instead, but this is still something.  I was sure that Democrats had accepted that tax hikes were never going to happen, and were going to start making concessions to Republicans without getting anything in return.  But they got something, even if it wasn't much.
• Make no mistake, though.  Republicans have won. Yes, there's a de facto tiny tax hike.  But this locks in spending at essentially Sequester levels going forward.  Federal government spending will continue its downward trajectory, just as conservatives have demanded.  It's now clear that Democrats miscalculated horribly in 2011 when they figured that making defense cuts a prominent part of the Sequester would give Republicans a reason to come to the table.  It turns out that there aren't as many Republicans hawks as we thought there were.
• On the bright side, though, we actually did get a reduction in Pentagon spending, at least in comparison to what it would have been.  That seemed like a far-left pipe dream a few years ago, and it's a really good thing.

Given that we now have a Republican victory and an essentially austerian policy, let's keep that in mind when we see the results of the economy in the next few years.  If the economy takes off soon, conservatives get a lot of credit.  If it stays in the doldrums, they get a lot of the blame.

Explaining ObamaCare

I wrote the below explanation in an email correspondence, and figured taht after spending so much time on it, I ought to share it with all of my fans.  I was asked to explain the ACA to a conservative who keeps complaining about pieces of the law, and also complains that the bill is too long and complicated.

So here goes:

1. We want to make it possible for anyone to get health insurance, even those with pre-existing conditions who have been shut out by insurance companies.
2. Americans don't want the government to take control of the system any more than they already have- they want private insurance companies to continue to operate.
3. So the law tells insurance companies that they must take people in their plans whom they previously rejected or charged crazy rates to- cancer survivors, old people, diabetics, etc.  They also have to charge the same to everyone, so they couldn't say: "Sure, we're offering you insurance, but it will cost you $10,000 a month".
4. But now that we're forcing insurance companies to take everyone, their costs are going to go up- after all, the reason they rejected people with pre-existing conditions is because they're expensive to insure.  So we need to make sure that young healthy people sign up too, so the risk pool is diversified and ins cos are still viable.  That's why we have the individual mandate, so young healthy people must sign up.
5. Because anyone can get insurance now, we can't allow people to not get health insurance, and then sign up as soon as they get sick- they'd be freeloading on the system- another reason for the mandate.
6. To make it possible for people to shop for plans intelligently, the government standardized the plans so people will know what they're buying.  That way a company can't get people with a really low premium for a policy that doesn't cover hardly anything, as a lot of them used to do a lot.
7. Also, if you allow a plan that covers practically nothing, more of the young healthy people would sign up for it because it would be cheap, and that would screw up the risk pools for the rest of us.
8. So if you force everyone to sign up for health insurance (or get fined), then you have to subsidize poor and lower middle class people- we obviously can't tell people they must get insurance, if they can't afford it. So that's why the law includes subsidies for middle class, and expanded Medicaid for the poor.
9. Some employers don't provide health insurance to their employees, leaving those people stuck.  The law mandates that employers provide it to FT employees.  That will keep some people off the exchanges.
10. So the costs: many people are still paying for their own insurance, but now it's more affordable because of the reasons above.  But the expanded Medicaid and subsidies are expensive.  Those were paid for with various taxes, like the one on medical devices and on "cadillac plans".  The bean counters did the Math, and calculated how much revenue they'd need for the plan, and set up the taxes to cover it.

So as you can see, it's complicated!  But each piece flows from the previous one.  It won't work without the individual mandate.  It won't work without employers covering their employees.  It won't without subsidies and Medicaid expansion.  It won't work if insurance companies can offer bare bones plans to siphon off the young healthies.

 

As I've said a bunch of times, if you want a simple plan, we could do that.  Make Medicare available to everyone.  You'd have to have way more taxes of course, but we'd be getting something back for it.  That's what Canada does.  Or you could have government do even more, paying the doctors and hospitals directly- socialized medicine.  That's what England does.

 

But if you want to keep the current system of insurance companies and employer-based health insurance, and you want to make insurance available to those who currently can't get it, then you have to get complicated. 

All conservative alternatives might improve some things around the edges, but they wouldn't solve the BIG problem, which is how people with pre-existing conditions would get insurance through the individual market, and how poorer people (including the working poor) would get insurance if their employer doesn't offer it.  I guess Republicans think this isn't a very important problem- I think it obviously is.