President Obama’s Concession Proposal

By Mass-Care

At 10AM yesterday, the White House released the outlines of President Obama’s health reform proposal “incorporating and improving on ideas from the House and the Senate, along with some new ones,” in anticipation of a summit this Thursday with Congressional Republicans.

Many supporters of comprehensive health reform had hoped that the President and the Democratic leadership would turn to the “reconciliation process” – a way of passing certain types of provisions through the budget that does not allow filibusters on the Senate – to pass a more robust health reform bill than the sad beast that had emerged in the Senate even prior to the election of Senator Scott Brown in January. The Senate bill offered virtually no cost relief for households, taxpayers, and businesses facing spiraling health costs, and attempted to pay for subsidized care for low-income people through a tax on workers’ benefits. Polls following the January 25 election show clearly that Massachusetts voters strongly oppose this approach to health reform, particularly in a state facing the highest premiums in the nation, but that – perhaps not intuitively – they felt that Congress was not going far enough on health reform, not that they were going too far.

The President’s proposal, which you can read more about at, unfortunately does not address these concerns, and by and large adopts the Senate bill’s approach to health reform. Here are the details as far as we can tell at this early date:

  • The President’s proposal drops the public option, making no mention it.
  • The proposal adopts the Senate’s approach to financing, relying on an ‘excise tax’ on workers benefits instead of taxing high-income taxpayers, as the House bill did. It delays implementation of the excise tax until 2018 and lifts the premium threshold slightly, but like the Senate bill it links the tax to general inflation – not medical inflation – virtually guaranteeing that a larger and larger percentage of workers’ benefits will face steep taxes, and will likely have their co-pays and deductibles hiked to avoid the tax threshold.
  • The proposal follows the Senate in not imposing an employer pay-or-play tax, which would require businesses to cover their employees or face a fine.
  • The proposal is closer to the Senate in imposing a fine on individuals who do not purchase health insurance of $695 per year OR a percentage of their income, whichever is higher.
  • The proposal does follow the House in closing the Medicare ‘donut hole’ for seniors, but not fully until 2020, when the hole would be covered at 25% coinsurance.
  • The proposal sticks with both House and Senate proposals to outlaw ‘recissions’ (insurance companies retroactively canceling coverage of sick patients), extending dependent coverage, and starting in 2014 disallowing exclusion based on pre-existing conditions, as well as lifetime or annual caps on benefits.
  • The proposal includes a concept new to national health reform of establishing a ‘Health Insurance Rate Authority,’ which would provide oversight of insurance plans’ proposed premium increases, and potentially have the power to block premium hikes if they were considered unfair. This is clearly an attempt to replace the public option with something else that promises to control costs. There are states that currently and in the past have implemented what’s called ‘prior approval’ for premium increases in the individual and small group markets (people or small businesses buying insurance on their own) – there is very little evidence about whether this is effective. It has the potential to prevent price gouging by insurers if it’s implemented aggressively, which would be a good thing, but not much promise of controlling the underlying drivers of health care costs, which is that we waste too much money on overhead, overuse certain goods and procedures, and that the cost of individual procedures is much higher than it should be.
  • There is no mention in the initial documentation put out by the White House of where the President’s plan stands on some key “wedge issues” such as women’s access to reproductive health services, or how immigrants – both documented and undocumented – would be affected.

All in all, we are disappointed that the fundamental problems with the Senate reform bill – that there is little promise of effective cost control, and it pays for reform on the backs of working people – are being replicated in the President’s proposal. This seems likely to lead to further voter backlash and alienation from workers and workers’ organizations.

Mass-Care will continue fighting for fundamental reform that addresses the root causes of the health care crisis we all face, and we are looking forward in particular to advancing the Campaign for Health Care Justice in the coming year. We will keep you informed as we learn more about national health reform efforts.