SMITH: Republicans’ health care proposal a step backward

This week, the House of Representatives is projected to begin floor debate and/or vote on a massive health care reform bill. The Senate will begin floor debate in a few weeks. This is an enormous step forward for our country, and while the bills could be better, both have numerous good qualities that for some odd reason won't garner bipartisan support.

I started writing this column on Monday, but by Tuesday, to my great surprise, the Republicans actually started putting out a plan for their bill. Unfortunately, the bill does nothing. In fact, it's not a bill; it's a policy document. According to House Minority Leader John Boehner (R-Ohio), the plan would not prohibit insurers from denying coverage to people with pre-existing conditions.

Let me repeat that.

If you have a pre-existing condition, under the Republican plan, insurers can still deny you coverage. The bill doesn't contain a public option or anything like it, and its proposals don't save money. Tort reform, according to the Congressional Budget Office, would reduce national health care spending by "about .5 percent." And, as Ezra Klein of the Washington Post says, "the Republican bill would allow insurers to base themselves in whichever state has the weakest regulatory standards and then sell policies built around those rules nationwide."

Selling insurance across state lines would work just the way selling credit cards across state lines works – states rush to put the least regulation in place to bring in business, and now every credit card company charges exorbitant rates from South Dakota and Delaware.

I have no words to describe how livid I am about this proposal. For this to be touted as any sort of meaningful reform, without any way to insure people or prevent inhumane insurance practices, is a blatant lie and a knee to the groin of the American people. There are no taxes, no mandates, just unfunded money given to states to set up catastrophic insurance pools. There isn't a public option, which saves the government money and bends the overall cost curve of health care. Instead, insurers get laws to enshrine what they're already doing. It's absolutely ridiculous.

The Democrats' bill is, of course, lacking. Because of the bipartisanship fetish with a party that clearly is more interested in screwing Americans than helping them, it isn't as strong as it should be. It could be improved in two major ways and numerous lesser ones.

The public option could be made far stronger. It could pay Medicare rates plus 5%. There's a problem with this plan – rural states, like Nebraska, get reimbursed at a much lower rate than large states, like New York. If the Democrats fixed the reimbursement issue, a strong public option would pass both houses. That's not in the cards, even though the CBO estimates that it would save the government $110 billion over 10 years, and charge premiums 11 percent less than private insurance, saving $1,400 per year for American families.

This is not the public option in either of the bills before either House of Congress. The public option in either House operates on negotiated rates with providers – a level playing field with private insurers. The difference between the government and Aetna are relatively substantial, though: The government plan will have many more people, thus much larger scale, making it competitive to hospitals and able to charge slightly lower rates.

In addition, the government saves tremendously on administrative costs, which will also help to lower premiums. The negotiated rates public option will save the government $25 billion – still not so bad, in comparison to rapidly escalating insurance rates, which I remind you are what the Republicans are eager to have you pay.

In addition, the Democrats could open up the exchanges over a prolonged period of time to every business in America. This would ease the transition to single-payer, the only way (aside from rate regulation, which would really be socialist) to control costs over the long term. The House bill provides for a weaker form of it, and I expect that they'll insist on this through the conference committee. Proposals like an employer mandate (with exceptions for small businesses) would also help to finance the overall cost of the bill. A weak one exists in the House bill; it could be improved, but it's good enough.

People are worried that the health care reform bill will cost too much. For starters, it's deficit-neutral in both houses. The taxes used to pay for it in the House will affect three-tenths of one percent of the population, and the floor on taxing insurance plans in the Senate is very high and will affect few people throughout the country.

Taxing the rich, as the House does, is one of the most politically popular ways to pay for health care if taxes have to be raised. Polls show more than 60 percent of Americans approve of that particular tax, and supermajorities believe that the rich pay too little in taxes. Second, this bill costs $90 billion a year. We pay $680 billion per year in a defense budget. Health care reform is thrifty in comparison.