Senate Finance Considers Baucus Plan

A vital step in the passage of health care reform began September 22 as the Senate Finance Committee began consideration of the plan proposed by its chairman, Senator Max Baucus.

PHAN offered a mixed review of the plan, saying it moves the process forward but will not achieve PHAN's goals unless improved by amendment.

The Baucus plan, known as America’s Healthy Future Act, joins two other bills working their way through Congress: HR 3200, under consideration in the House of Representatives; and the Senate Health, Education, Labor Committee (HELP) proposal, which was reported out of committee in August. 

The release of this legislation adds to the momentum generated to date and supports the goal of accomplishing comprehensive health care reform this year.  However, the bill also suffers from serious flaws and in its present form would not achieve PHAN’s goals for affordable coverage, secure access, quality care and sustainable system-wide costs.

As noted, The Baucus plan moves the debate forward and includes several positive features:

·         Like HR 3200 and the HELP bill, it would prohibit insurance companies from excluding coverage or raising rates because of pre-existing health conditions. 

·         From the beginning (2013), small businesses with up to 50 employees could buy coverage in the insurance exchanges.  This goes substantially beyond other bills under active consideration in Congress.

·         Medicaid coverage would expand to cover people up to 133 percent of the federal poverty level (FPL), including those who do not fit one of the existing categorical requirements.

·         Some provisions, such as employer tax credits and a reduction in Medicare drug prices, would start in 2010, which is earlier than in the other bills.

The plan is also seriously flawed when compared to HR 3200 and the HELP bill.

Affordability.  The Baucus plan would offer lower subsidies to individuals and families with incomes between 150% and 400% of the FPL, thereby forcing people in that income range to pay substantially more for coverage.  For a family of four earning $85,000 annually, it would be at least $850 more expensive; for a family of four earning $45,000 annually, it would be at least $1,100 more expensive.  Coupled with higher out-of-pocket costs, the Baucus plan would keep insurance coverage out of reach for many and leave even more vulnerable to health care-related bankruptcies.

Choice.  The plan does not include a public insurance option. Both the HELP bill and HR 3200 include a robust public option that would be an affordable alternative and would help keep costs down by offering competition with private insurers. Pennsylvania is one of the states with little competition in the private insurance market; more than 70% of premiums are held by only four companies.

Employer responsibility.  Unlike the other plans, the Baucus plan does not include a requirement that employers offer coverage to their employees.  It would simply require that employers pay whatever subsidy amounts employees may qualify for by purchasing coverage via the insurance exchange.  This would be a substantial disincentive for companies to hire lower income workers or workers with families. Other plans do a better job of ensuring that everyone contributes to the cost of health care. 

Cost. The Baucus plan would cost $856 billion over 10 years, and is fully paid for by fees on drug companies, insurers and medical device manufacturers, savings from reduced waste in Medicaid and Medicare and a tax on high end insurance plans, defined as those valued at more than $8,750 for an individual and $23,000 for a family plan.  HR 3200 does a better job of fully paying for reform through a surcharge on the incomes of the top 2% of taxpayers.