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Another Blow to the Insurers

The Senate Finance Committee is in session, preparing for a vote that, various sources say, should come around 2 pm. It is expected to pass the Baucus bill, with amendments, by a comfortable margin. The smart money seems to be on a 14-9 "yes" vote, which would mean Maine Olympia Snowe joining a unanimous block of Democratic colleagues. It's not a sure thing, of course, any more than the timing of the vote itself.

At the moment, senators are going through their opening statements, using their time to stake out their positions or to ask final questions of two experts brought before them: Doug Elemdorf of the Congressional Budget Office and Thomas Barthold of the Joint Committee on Taxation (JCT). Naturally, the senators are using the questions to make substantive points. And Senator Jeff Bingaman just made an important one about the controversial health insurance study that the insurance industry put out over the weekend.

As you may recall, a major assumption in that study was about the reaction to a new excise tax on high-value insurance policies. The tax would, if implemented, make more generous health insurance policies (some of them, anyway) more expensive. PriceWaterhouseCoopers, the firm that conducted the study, decided to assume that consumers would react simply by paying those higher prices.

But that's not what proponents of this initiative are saying. They're saying that, confronted with higher prices for the same policies, consumers (and employers choosing policies for their employees) will shop around for better buys--and that this counter-pressure will ultimately bring down the cost of insurance overall.

Bingaman, in his question, asked Barthold what the JCT thought about all this. Barthold wouldn't comment specifically on the PriceWaterhouse study, which isn't surprising. But he did say unambiguously that JCT assumed the tax would foster "behavioral changes." Translation: People will do exactly what the proponents of the idea hope they will do. If you read the JCT analysis of the bill, you'll see it comes to the same conclusin.

The JCT could be wrong. But most experts agree with that position--except, of course, the ones getting paid by the insurance industry to do its bidding.

By the way, I'll be following the Senate Finance proceedings on my twitter account, @jcohntnr.