WASHINGTON — Amid fresh signs of tensions among Democrats over health care, a leading senator released on Wednesday the last major proposal that Congress will consider as it attempts to refashion the American health care system, a $856 billion bill that includes a mix of sweeping new insurance regulations but no new government insurance plan.
The legislation from Sen. Max Baucus, D-Mont., fell short of his goal of charting a legislative course that could bring Republicans and Democrats together for the most ambitious overhaul of the health care system since the 1960s.
Under the bill, nearly everyone would be required to obtain insurance or pay a penalty. But insurers, in turn, would not be able to deny coverage to people with pre-existing medical conditions or to cancel policies after people got sick, as happens in the current system.
And the federal government would offer subsidies to help lower-income people buy coverage.
Three key GOP lawmakers who had been working with Baucus for months have rejected his bill, all but ensuring that any health care legislation that passes this year will win no more than one or two Republican votes.
There are also signs that Baucus’ proposal faces trouble among liberal Democrats, who have demanded that Congress allow the government to offer health insurance plans to the public in competition with private insurers.
Next: Unify the ideas
The completion of Baucus’ bill marks the end of one phase of the health care debate in which senior congressional Democrats developed a series of three health care proposals — one in the House and two in the Senate. Now, Democratic leaders on Capitol Hill will work to unify their party behind a final bill that could pass the House and Senate and make it to President Barack Obama’s desk.
Baucus touted his plan Wednesday as a road map for agreement.
“We worked to build a balanced, common-sense package that ensures quality, affordable coverage and doesn’t add a dime to the deficit,” the senator said.
“Now we can finally pass legislation that will rein in health care costs and deliver quality, affordable care to the American people,” Baucus said.
Few expect that will happen with much GOP support.
Senate Minority Leader Mitch McConnell, R-Ky., blasted the Baucus bill. “Americans don’t think a bigger role for government in health care would improve the system,” he said. “Yet despite this, every proposal we’ve seen would lead to a vast expansion of the government’s role in the health care system.”
Many Democrats already believe that Baucus’ bill does not have enough of a role for government, arguing that a government-sponsored health plan would be the best way to ensure that consumers who are not covered through work will be able to find an insurance plan they can afford.
Health care bills developed by senior House Democrats and by the Senate health committee both include provisions to create a so-called public option.
The Baucus bill instead would create of a series of private health insurance cooperatives, which Baucus and other centrist Democrats say could offer the same protections as a new government plan.
Other debates are flaring over how to penalize employers who do not provide coverage, how much aid the government should give to consumers to help them buy insurance and how to pay for the final package.
To help pay for his bill, Baucus is proposing a series of new excise taxes on insurance plans worth more than $8,000 for singles and $21,000 for families, and new fees on insurers, drugmakers, device makers and clinical labs.
In contrast, House Democrats rely heavily in their health care legislation on a new surtax on high-income taxpayers.
Areas of consensus
Despite some substantial differences with the other Democratic health bills, however, Baucus’ proposal also underscores the broader consensus about how to revamp the nation’s ailing health system to expand coverage and tackle rising costs.
The Baucus legislation — like the two other Democratic health bills — is designed to largely preserve the current system of employment-based health coverage.
Layered on top of that system, the legislation would create a series of highly regulated, state-based insurance marketplaces, or exchanges, where millions of people who do not receive coverage from their employer or from the government would be able to shop for insurance.
These people would be able to select from a range of plans offered by private insurers, as well as one potentially offered by a member-owned cooperative.
Like other legislation, the bill would also substantially expand eligibility for Medicaid, the 44-year-old state- federal health insurance program for the poor, which in some states currently covers only poor children and their families.
Under all the Democratic bills, Medicaid would be opened to all of America’s poorest residents, regardless of their family status.
Baucus’ bill also would set up a series of new initiatives in Medicare to make that gargantuan federal program more efficient, including incentives for hospitals to reduce re-admissions and for doctors to do more to coordinate their patients’ care.
These initiatives, though the least controversial parts of the health care legislation, are seen by many experts as crucial to reducing the growth in Medicare spending, which threatens to essentially bankrupt the program by 2017.
Proposal Highlights
Highlights of the health proposal presented
Wednesday by Senate Finance Committee
chairman Max Baucus, D-Mont.
COST: Baucus said the plan would cost $856 billion over 10 years, but the Congressional Budget Office put the cost lower, at $774 billion.
CO-OPS INSTEAD OF PUBLIC OPTION: The bill does not include a government insurance program — the so-called public option. Instead, Baucus is proposing nonprofit cooperatives be used to offer competition to private insurers. The program would get $6 billion in federal seed money to start.
INDIVIDUAL MANDATE: Most Americans would be required to have insurance beginning in 2013 or pay a penalty. The highest penalty, for those above 300 percent of the federal poverty level, would be $950 for an individual and $3,800 for a family.
The proposal would provide tax credits for people up to 300 percent of the poverty level ($66,000 for a family of four) to buy insurance plans through a new marketplace known as an exchange. Those with incomes between 300 percent and 400 percent of the poverty level ($88,000 for a family of four) could get a credit once they paid more than 13 percent of their income on insurance premiums.
The Medicaid health system for the poor would be expanded so that those below 133 percent of the federal poverty level ($30,000 for a family of four) would be eligible for benefits.
NO EMPLOYER MANDATE: Unlike the House plan, Baucus’ plan does not require employers to provide insurance or pay a penalty. Instead, companies with more than 50 full-time workers that don’t offer insurance would pay a fee for every employee who qualifies for a tax credit to obtain care. The maximum fee would be $400 per worker.
NEW FEES: The plan includes about $13 billion in fees, based on market share, on insurers, medical-device manufacturers, drugmakers and clinical labs beginning in 2010.
NEW TAXES: According to an estimate marked “very preliminary” by the congressional Joint Committee on Taxation, Baucus’ proposal would raise $259 billion in taxes, the bulk of which would come from imposing a 35 percent excise tax on insurers that offer “Cadillac” health plans, or those valued at more than $8,000 for individuals and $21,000 for couples.
SEEKING SAVINGS: To help pay for the rest of the plan, Baucus is seeking savings in programs such as Medicare. The proposal attempts to reduce Medicare costs by rewarding doctors based on the quality of care provided, not the number of treatments or tests administered.
It also includes a proposal to curb Congress’ power to set caregiver-reimbursement rates by creating a 15-member independent Medicare Commission. The commission would present Congress with a plan to cut Medicare rates in any year that the program’s costs are “unsustainable,” and it would take effect unless Congress passed its own alternative.
NEW EXCHANGE: The proposal includes online exchanges in which the uninsured who don’t get Medicaid could shop for policies at more affordable group rates.
BENEFITS FOR MEDICARE PATIENTS: The plan would expand Medicare prescription- drug coverage for seniors.
ABORTION AND IMMIGRATION: Baucus added language designed to ensure that illegal immigrants don’t benefit from expanded coverage in the bill and that existing state and federal laws governing abortions aren’t superseded.
LIMITS ON INSURERS: The plan would bar insurers from denying coverage based on pre-existing conditions. Bloomberg News, Politico
State Reaction
The Denver Post asked Sens.
Mark Udall and Michael Bennet
to respond to elements of the
Senate health reform proposal
presented Wednesday by Sen.
Max Baucus. Bennet did not respond,
but this is what Udall’s
office said.
COOPERATIVES VS. PUBLIC OPTION: Sen. Udall would prefer a well- crafted public option (as described before — on a level playing field not tied to Medicare reimbursement rates) because it is the most robust way of ensuring competition and cost-containment, but he’s certainly open to the co-op concept. We haven’t fly-specked the details, but a co-op might work reasonably well and it’s better to have some kind of not-for-profit mechanism than none at all.
FINANCING THE PLAN: Economists and other health care experts have said that encouraging the sale of overly- generous health benefits by providing tax breaks as we do today contributes to the overall rising cost of health care. Sen. Udall is on record supporting the concept of taxing so-called “Cadillac” plans because it can help pay for health reform and help lower costs in the long term.
AFFORDABILITY: Our staff is looking at it closely but we are not sure that the Baucus blueprint is sufficient to make coverage affordable to low-income families. This may be something that has to be worked out in committee.
PROPOSAL FAIRNESS:It’s more of a fair starting point than a final compromise, and that’s the way most senators are looking at it. Sen. Udall will be sure to push for stronger language to improve rural access.
