House Bill vs Finance Bill

Ezra Klein explains the two main flavors of health reform on option in the congress:

From what I’m hearing, the specifics will look something like this. The Senate Finance Bill gets to 94 percent coverage. The House bill will hit 96 percent. The Senate Finance bill spends a bit over $450 billion on subsidies to help people afford insurance. The House bill will spend more than $700 billion. The Senate Finance bill doesn’t have an employer mandate. The House bill does. The Senate Finance bill funds itself by taxing family health-care benefits over $21,000. The House bill funds itself by taxing incomes over $500,000. The Senate Finance bill expands Medicaid. The House bill expands Medicaid by more. The Senate Finance bill costs $829 billion. The House bill costs $871 billion. And the rumor is that there are some other goodies in there, but I’ve not been able to confirm that yet.

The House bill, in other words, will cover more people at a more affordable cost to individuals. It can do this for a number of reasons, but the big one is that it saves a lot of money by including a strong public option and a real individual mandate. The combination of those two policies allows the government and individuals to pay a bit less while encouraging employers to pay a bit more. Its funding mechanism is a whole lot more popular than taxing health-care plans, but it will also do less to “bend the curve.”

The essence of this, as I see it, is that the House has a structurally better bill but the Senate has a better funding mechanism. The Baucus/Kerry excise tax concept gets you revenue needed to pay for health reform, but also has curve bending power and maintains deficit neutrality into the “out” years. The best way to put these ideas together is to basically take the House bill and largely finance it with (a slightly tweaked version of) the excise tax. You’ll need a bit more money than that to pay for the House’s commitments, so then you need to add on a bit of surtax money.

That’d be a bill that expands coverage enormously, ensures affordability for the middle class, disciplines the insurance industry with a real public option, is legitimately deficit neutral over the long term, and bends the cost curve in the right direction.