Did Reid even consider the "opt-out" clause?
Harry Reid announced yesterday that the "Public Option" was back in play in the Senate, but his apparent ace in the hole (pardon the awful Nevada gambling puns) was that states could opt out of the public option if they so chose. What wasn't outlined was how states would opt in or out (would it be an executive branch decision? Would opting out or in be a permanent decision or could it be reversed if the state's government later changed hands to elected officials with a mandate for changing the state's status? Could you opt out after you opted in?) but a much more fundamental problem makes me question how this plan is in anyway practicable. First, to dispatch with the obvious, the "opt out" plan is a clear political triangulation, which might not work anyway, meant to satiate progressives who think the public option is the whole point but to give political cover to blue dogs who, if the opt out plan actually made sense might be able to sell it at home as having gotten health-care but having not forced the most heavy handed government regulation on their constituents.
The problem, though, is this thing called the Constitution. Specifically the very first clause of Article 1, Section 8 which gives the Congress power to levy taxes and excises, but which specifies that "all Duties, Imposts and Excises shall be uniform throughout the United States."
I'm not sure that the details of how the plan will be paid for have been laid out in their final form, but the gist is a penalty for those who can afford insurance but don't get it (which Obama argues is not a tax--hard to follow his logic there) but much more importantly a tax of at least 8% on medium to large employers who provide health-care to all their employees and then an alternative tax that will cost presumably approximately the same as paying for employee's health-care for employers who don't. There will also probably be some sort of tax incentives and penalties for small business owners, too, and there might also be other taxes like something of a luxury tax on "Cadillac" health plans that provide too good of coverage and cost too much.
It's hard to understand how states could allow their citizens to opt out of these taxes; I'm no lawyer but it seems like a pretty clear breach of the aforementioned clause of Article 1 Section 8 to not have these taxes not apply uniformly to all the states, whether they've opted out or not. Given that, if the "opt out" option is that your constituents pay exactly the same amount of taxes to fund federal health care as they would whether you've opted in or out, and the only difference is whether those constituents are eligible for Federal largess which is being paid for out of (in theory) the taxes that they're paying anyways, it seems pretty implausible that even the most live-free-or-die, libertarian polity would support its government hamstringing their state relative to all others by sending tax dollars out of the state to subsidize all the other states' ability to offer "free" health-care, and even the most principled, Federalist state government would be able to justify a policy that would be so costly to state residents.
The opt out plan is basically like an offer from one of your friends who has season tickets for a baseball team to let you and some other friends split the cost and then each get a share of the tickets. Except your friend is forcing you to pay for the tickets anyways and the only thing you can opt out of is accepting the tickets once they're bought and paid for. You might not like baseball, but since you were forced to pay anyways the offer of being able to "opt out" of getting what you paid for is not exactly the same as being able to "opt out" of the whole scheme to share season tickets in the first place.
Until I hear somebody explain how a state would not have to pay for the public option even if they opted out, or if they did, what incentive they would have that would help make up for the shortfall from their decision to opt out it seems like a completely unworkable plan. That's not to say the rest of the plan makes sense, but this feature seems particularly egregious in the way that it has not been thought out, and how a lack of detailed consideration of incentives and understanding of economics seem to make this health-care sage an exercise in political farce bound to turn into legislative nightmare.
The problem, though, is this thing called the Constitution. Specifically the very first clause of Article 1, Section 8 which gives the Congress power to levy taxes and excises, but which specifies that "all Duties, Imposts and Excises shall be uniform throughout the United States."
I'm not sure that the details of how the plan will be paid for have been laid out in their final form, but the gist is a penalty for those who can afford insurance but don't get it (which Obama argues is not a tax--hard to follow his logic there) but much more importantly a tax of at least 8% on medium to large employers who provide health-care to all their employees and then an alternative tax that will cost presumably approximately the same as paying for employee's health-care for employers who don't. There will also probably be some sort of tax incentives and penalties for small business owners, too, and there might also be other taxes like something of a luxury tax on "Cadillac" health plans that provide too good of coverage and cost too much.
It's hard to understand how states could allow their citizens to opt out of these taxes; I'm no lawyer but it seems like a pretty clear breach of the aforementioned clause of Article 1 Section 8 to not have these taxes not apply uniformly to all the states, whether they've opted out or not. Given that, if the "opt out" option is that your constituents pay exactly the same amount of taxes to fund federal health care as they would whether you've opted in or out, and the only difference is whether those constituents are eligible for Federal largess which is being paid for out of (in theory) the taxes that they're paying anyways, it seems pretty implausible that even the most live-free-or-die, libertarian polity would support its government hamstringing their state relative to all others by sending tax dollars out of the state to subsidize all the other states' ability to offer "free" health-care, and even the most principled, Federalist state government would be able to justify a policy that would be so costly to state residents.
The opt out plan is basically like an offer from one of your friends who has season tickets for a baseball team to let you and some other friends split the cost and then each get a share of the tickets. Except your friend is forcing you to pay for the tickets anyways and the only thing you can opt out of is accepting the tickets once they're bought and paid for. You might not like baseball, but since you were forced to pay anyways the offer of being able to "opt out" of getting what you paid for is not exactly the same as being able to "opt out" of the whole scheme to share season tickets in the first place.
Until I hear somebody explain how a state would not have to pay for the public option even if they opted out, or if they did, what incentive they would have that would help make up for the shortfall from their decision to opt out it seems like a completely unworkable plan. That's not to say the rest of the plan makes sense, but this feature seems particularly egregious in the way that it has not been thought out, and how a lack of detailed consideration of incentives and understanding of economics seem to make this health-care sage an exercise in political farce bound to turn into legislative nightmare.
Labels: ballyhoo, government, health-care, politics
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