As chairman of the Senate Finance Committee, Senator Max Baucus holds the keys to health care reform; any health care legislation must pass through his committee. So what he says or doesn’t say is important to those following the twists and turns of the congressional effort to fix our health system. This is the fourteenth of an occasional series of posts on the senator’s pronouncements and how the media has covered them. The entire series is archived here.
Is Senator Baucus becoming more charitable? Last week the Montana senator—who has been, by virtue of his chairmanship of the Senate Finance Committee, in the midst of the health care storm for months—finally released the Chairman’s Mark of the Senate health care bill. (That’s Congress speak for the bill draft that already has the paw prints of the special-interest lobbyists all over it.) Before legislation reaches this stage, the deals have pretty much been cut, though not all of them. Working closely with the myriad lobbying groups that have swarmed all over his Committee, the senator managed to get consensus around some important elements:
• An individual mandate requiring every American to have insurance
• Penalties for those not complying with the mandate
• Subsidies in the form of tax credits for people who can’t swing the premiums
• Payment for those subsidies partly coming from taxing or assessing fees on insurance companies that sell high-cost, comprehensive policies; and fees set to be levied on drug companies and device makers for various high-ticket products like insulin pumps and power wheelchairs.
• No public plan with teeth that could give insurers a run for their money
Yesterday the chairman issued a press release indicating that he’d had a change of heart about some of these ideas. Said Baucus: “My modification to the Chairman’s Mark focuses on making health care more affordable for middle class Americans.” After hearing pleas from some of his own committee members, Baucus softened up. Instead of the $3,800 tax penalty assessed on families with incomes greater than about $66,000, he proposed cutting it in half, making families who don’t qualify for subsidies liable for only a $1,900 penalty. Penalties for naughty individuals who don’t buy a policy are also reduced: someone with an income a smidge under 300 percent of the poverty level, or about $32,500, would pay a tax penalty of only $750 a year instead of $1,500.
Easing the penalty doesn’t solve the problem of getting everyone covered with some kind of insurance. If penalties are this low, it might be cheaper for families to pay the $1,900 instead of $13,000 a year, the average premium. In Massachusetts, people already are doing that. But then, what does that do for achieving the goal of universal coverage—which is, after all, what this whole reform effort started out to do months ago?
In exchange for issuing policies to sick people, insurers get to jack up premiums for older people, a kind of proxy for medical underwriting. Baucus essentially allows companies to charge older people more for their coverage. Initially, he wanted to charge them five times more than a younger person, but now he suggests letting them charge four times more. A 58-year-old, for example, who has lost employer coverage and is struggling to pay the premiums for an individual policy may not see that as much of a gift.
The chairman threw in some goodies for workers in small businesses, too. In many cases, if their employers offer coverage, their deductibles cannot exceed $2,000 for individuals and $4,000 for families. Wow! That means a family will have to accumulate $4,000 in medical expenses before the policy pays a dime. Is that another incentive to refuse coverage, take the penalty, and run?
Baucus would also make it easier for young people—the so-called ‘young invincibles’—to buy a cheapie policy through a new government brokerage service that will provide coverage for catastrophic illness with no coverage below a certain amount of out-of-pocket spending. They’d get coverage for preventive care, though.
At the center of the affordability controversy is the question of what percentage of income the government can require a family or a single person to spend on health insurance and still be eligible for a subsidy. Baucus now says that the poorest people should be able to spend 2 percent of their income on insurance. Those with incomes at 300 percent of poverty would be required to spend 12 percent. (I guess you can say that’s better than the thirteen percent first proposed.)