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Awaiting health care details from 'Gang of Six'

From msnbc.com's Tom Curry
The “Gang of Six” proposal unveiled Tuesday was meant, in part, to convince the bond markets and the ratings agencies such Standard & Poor’s that a majority in Congress will do what’s needed to rein in spending, raise more revenue, and, thus, cut budget deficits.

President Barack Obama embraced the proposal, calling it “a very significant step” because a bipartisan group of senators had declared, among other things, that “we've got to be serious about tackling health care spending and entitlements in a serious way.”

Obama’s reference to health care spending was a reminder of a topic that hadn’t been mentioned a lot in recent weeks amid all the talk of deficits, debt, and default.

Two summers ago, members of Congress were launching a historic debate over paying for health care.  Now they’re consumed by a debate over the debt.

But health care costs haven’t gone away. In fact, the debt and deficit dilemma is largely a question of how bring the growth in health care costs into line with the growth rate of the nation’s income.

On the topic of health care costs, if gaining credibility with the bond markets is the point of the “Gang of Six” effort, then investors will just have to wait for more information.

The plan is more a statement of intent than a binding mechanism for reining in health care costs.

Among some Democratic leaders, there was, at best, hesitation.

“Yesterday a lot of us were calling over to Sen. Conrad’s office and others asking for more detail,” Rep. Chris Van Hollen, D- Md., said on MSNBC’s “Morning Joe” Wednesday. “And they said that details will be forthcoming in the next couple of days. It’s really hard to get our caucus to focus on this without some of the details.”

The summary released Tuesday says the plan would order the Senate Finance Committee to abolish the unworkable Sustainable Growth Rate (SGR) formula, which was enacted in 1997 in an attempt to control Medicare cost growth. The SGR proved futile because Congress – including some members of the “Gang of Six” -- kept voting year after year to circumvent it.

The plan also would require the Finance Committee to, within six months, figure out how to come up with health care savings on the order of $500 billion over 10 years. But the plan orders the committee to do that in a way that could “maintain the essential health care services that the poor and elderly rely upon.” How to reconcile those two goals is left unexplained.

The “Gang of Six” plan also says: “Review total federal health care spending starting in 2020 with a target of holding growth to GDP plus one percent per beneficiary and require action by Congress and the President if exceeded.”

To reach the “Gang of Six” goal, Congress in 2020 would have to cut the growth rate of health care costs at least in half. But the outline offers nothing on how Congress might do that. 

Intriguingly the plan also calls for unspecified reductions in “tax expenditures for health,” which likely means the tax break for employer-provided health insurance for workers (currently a form of tax-free income).

So that leaves lot in the category of what former Defense Secretary Donald Rumsfeld would call “the known unknowns.”

In the short term, the detail work would be left to the Finance Committee, headed by a senator who is not part of the “Gang of Six,” Montana Democrat Max Baucus.

James Capretta, a former Bush administration budget official, warned Republicans in a post on the National Review web site Wednesday that Baucus “is an architect of Obamacare. If his committee were to produce any real health-care savings at all, it would be with the same kind of price-setting and central planning that was written into Obamacare.”

Damning words also came from the opposite side of the spectrum on Wednesday, from Gerald McEntee, head of a union that is one of the Democrats’ biggest donors, the American Federation of State, County, and Municipal Employees: “The plan makes enormous cuts in health care programs. And the plan would destabilize employer-sponsored health care coverage for 160 million Americans.”

So even without the details, some critics are savaging the plan. Will more details help, or hurt, the “Gang of Six” cause?