Senate Finance Committee Chairman Max Baucus released America’s Healthy Future Act of 2009 this week. The CBO analysis is here. It says that the bill will reduce the deficit by an estimated $49 billion over ten years — hardly “bending the curve.”
As I read the bill, I made some live notes via my Twitter feed. Here are some of the important points of the bill, some of which I’ll address below:
- Provisions for state insurance exchanges and national insurance plans, with subsidies for families up to 300% of the poverty line
- Provisions to allow plans to be sold across state lines
- Individual insurance mandates with excise taxes for those who don’t comply
- Taxes on insurance plans above a certain value
- Penalties on employers with more than 50 employees if those employees receive tax credits for the insurance exchange
- $6 billion for the creation of co-ops
- Expansion of Medicaid and CHIP eligibility
- Increase of Medicaid rebates paid by pharmaceutical manufacturers
- Creation of an Outcomes Research Institute to study clinical effectiveness of products
- No malpractice reform
- Exclusion of non-prescribed over the counter medicine from HSA/FSA/HRA/MSA reimbursement
- New requirements for 501(c)(3) hospitals
- Fees on drug and device makers and on clinical laboratories based on “market share”
- “Young Invincible” optional plan for people 25 and younger that would provide catastrophic-only coverage
There is opposition to the plan on both sides of the aisle. Harry Reid says the plan isn’t good enough for Nevada, and Jay Rockefeller doesn’t want to increase taxes on working people in West Virginia. As for bipartisan support, Senator Snow isn’t signing the bill, and Senate minority leader Mitch McConnell slammed it.
The latest Rasmussen poll also doesn’t look good for the President’s efforts. But while the Baucus plan is unlikely to pass in its current form, let’s evaluate it so we know what would or wouldn’t work well.
On the plus side, the bill does not contain an explicit public option, and it promotes innovation in payment structures with an emphasis on positive patient outcomes, and it allows for insurance plans to be sold out of state. It also doesn’t contain employer mandates, although we’ll look at the penalty below. The Outcomes Research Institute will focus on clinical effectiveness, as opposed to cost effectiveness.
Heritage examines some of the flaws, which include:
- Taxes and fees for drug and device makers, insurance companies, and insurance plans at $8,000 for singles ($21,000 for families) that will be passed onto consumers
- Individual mandates that would infringe upon individual liberties, would impose a penalty on some individuals, and would likely require the reporting of personal information
- An employer penalty that would hurt businesses and would provide incentive to avoid hiring low-income employees
- Federal funds for co-ops that could be a future government playground
- Regulations for insurance markets that would drive up costs and could hurt competition
- Expansion of Medicaid, when the system is already unsustainable and many eligible people haven’t signed up
The bottom line is that the plan wouldn’t stimulate the competition needed to meet the demands of consumers, nor would it significantly lower costs. The increased regulations, taxes, and fees would be passed onto consumers. Bob Laszewski and Diana Furchgott-Roth agree with me.
Senator Baucus is supposedly making some changes to the bill, but perhaps he should start over and adopt the principles I’ve advocated numerous times on this blog.
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