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Scaling Back Reform: Dumb Policy, Dumber Politics

Senator Kent Conrad was back on television Sunday morning. This time the venue was “Face the Nation.” But the message was the same one he’s been delivering for a while: It’s time to scale back health care reform. “It’s going to have to be significantly less than what we’ve heard talked about,” Conrad said.

Conrad was apparently referring to the bills three House committees and one Senate committee have already produced. Those bills called for federal outlays of around $1 trillion, or more, over the next ten years. They also called for the creation of a robust public insurance plan. Conrad has made clear both moves are too ambitious for him.

Not that he’s alone in this view. Lots of conservative Democrats are inclined to agree. The Obama administration has always had its skeptics, too.

For some of these folks, surely, smaller is simply better on principle. They just don’t like sweeping, government-led reforms. And they really don’t like coming up with ways to pay for them.

Still, it’s safe to assume some of the advocates for scaling back are thinking about politics, too. And not without reason. After a rough month in which talk of “death panels” filled the airwaves and polls showed voters growing gradually more disenchanted with the administration’s handling of health care, these people undoubtedly figure it’s a safer political bet--that a smaller reform package will ultimately prove more popular.

But would it really? As I’ve written previously, the legislation that’s made it through committee has already been “scaled back.” In order to keep the price tag at or below $1 trillion over ten years, Democrats had to write bills that would roll out reforms slowly, over several years, so that a new system was not fully in place until 2013 or later. That’s a long time to wait for change, particularly if you’re one of the unlucky souls who ends up without insurance--or with inadequate insurance--when illness strikes.

The saving grace of those four bills was that the consumer protections and financial assistance in them remained reasonably strong. If reform ends up looking like those four bills, then financial assistance would be available to people earning up to four times the poverty rate--or around $88,000 a year in family income. (Subsidies would be available on a sliding scale, so that a family making $70,000 would get very little, a family making $60,000 would get more, and so on.) Such a measure would also limit out-of-pocket expenses to $10,000 a year per family, while providing other crucial protections. And, of course, it would include a real public insurance option.

If Conrad and his supporters get their way, the new health care system won’t be nearly as generous--or protective. They’ve made clear they want a package that costs less than $1 trillion. A lot less. And, thanks to the Center on Budget and Policy Priorities, we have some sense of what that would mean in practice.

Based on previously leaked drafts of legislation going through the Senate Finance Committee--the last of the five considering health legislation, and the only where it’s still hung up--the Center was able to project what a scaled back plan would look like. Their conclusions, as noted previously in this space, were pretty discouraging: individual with income above $32,490, and a family of three with income above $54,930, would not receive any subsidy to help pay for coverage.
Substantial numbers of people with incomes modestly above 300 percent of the poverty line could face difficulty paying the full price for coverage. The average job-based insurance policy today would cost a family of three at 300 percent of the poverty line about 23 percent of its income. This could leave the family short of funds for other expenses such as housing and child care.

So people making between three and four times the poverty line--that is, families with incomes between roughly $66,000 and $88,000 a year--would get no assistance whatsoever. Families making less than that would still get some assistance, but it’d be a lot less than they’d get otherwise.

The consumer protections would be weaker, too, particularly if there’s no public plan (since a properly designed public plan would, among other things, push private insurers to provide better coverage). Under such a plan, the Center on Budget concluded, “families with modest incomes who buy the lowest-cost coverage could face significant challenges if they experience a serious illness or injury, because their plans could leave them subject to steep out-of-pocket costs.”

Put aside, for a moment, whether this makes sense substantively. It makes absolutely no sense politically. Scaling down legislation basically means gutting the benefits that would go to the working and middle class. In other words, it would help fulfill the fear many of these voters already have and that opponents of reform have tried hard to stoke: That reform doesn’t have much to offer the typical middle-income American.

You can imagine why Republicans might think this is a dandy idea. But why on earth would Democrats agree?