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Hullabaloo


Wednesday, August 03, 2011

 
Signing away the signature

by digby


During the long, tedious lead up to the debt ceiling vote, I often wrote that I thought that the one policy Obama would protect would be his health care reforms. It's his signature legacy. As time wore on it became clear that he might be willing to cut Medicaid in some ways, which was heartbreaking since it was the most liberal part of the reforms. Still, I had always known that this was the most likely to be cut back and was only surprised that the President himself would be involved in it.

But this, I have to say, really stuns me. Jonathan Cohn reports that a consensus is emerging that Democrats should root for the automatic triggers over what will surely be an even more hideous "deal" by the Super Committee:

Why would Democrats prefer the automatic cuts? President Obama and the Democrats largely shielded the big entitlements and programs from the poor. Media reports have suggested that Budget Director Jack Lew and National Economic Adviser Gene Sperling were particularly adamant about protecting Medicaid. The super-committee, by contrast, would surely look to these programs for cuts, perhaps substantial ones. Ideas like reducing federal funding for Medicaid or raising the eligibility age for Medicare, both of which figured into earlier negotiations between Obama and House Speaker John Boehner, are sure to get a close look.

But don’t kid yourself: The automatic cuts will still hurt, because they’d still affect plenty of important programs. And among them is the administration’s signature legislative accomplishment, the Affordable Care Act.

The new health care law will make insurance more affordable by providing subsidies to people who buy insurance on their own. And these subsidies come in two forms. There are tax credits, which people can use to offset the cost of their premiums. And there are subsidies to defray cost-sharing: In other words, the government will help reduce people’s out-of-pocket costs. Under the debt ceiling deal, the tax credits are exempt from automatic reductions, because they are a tax credit and not a form of spending.

But, as both administration and congressional sources are confirming, the cost-sharing subsidies are not exempt. They will decline. And that’s worrisome because the subsidies were already pretty low. In fact, many of us were hoping that, over time, lawmakers would see fit to raise them rather than reduce them. Exactly how much the subsidies would decline is unclear, as nobody I’ve contacted seems to have run the numbers yet and it depends partly on some variables impossible to know right now. (I don't even want to guess until I get more information; I’ll update this item when I do.)

This is a big deal. First of all it allows them to start cutting into the ACA before it even gets started in the name of projected deficit reduction. It doesn't get any more abstract than that and the fact that the administration that is credited with the reforms signed on is a very ominous sign. As Cohn says, the subsidies are inadequate as it is and need to be raised. (Indeed, that was a huge point of argument by the supporters of the reforms --- "we'll fix it later.")

"Deficit reduction" without tax hikes is a recipe for this kind of disaster and it's fairly clear the President and the Democrats had no fall back plan if the Grand Bargain failed. But I'm still fairly shocked that they allowed the HCA to be messed with before it's implemented. If there's any merit to the argument that bad negotiation was a feature of this trainwreck, this supports it.
(On the other hand, the health reforms don't poll well with Independents so maybe they've decided it's not worth defending.)

The worst of all possible worlds will be if the Super Committee decides to hold the HCA hostage as a way to pass their own hideous agreement and put liberals on the hook again for the same program. (Maybe they can sneak in some anti-abortion nonsense at the end and we can all party like it's 2010.) I certainly wouldn't put it past the Republicans to play both sides of that argument. After all, they win either way.

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