The Senate Finance Committee's Health Reform Plan

This is the "Baucus Committee", which is generally more conservative than the Senate HELP Committee (Kennedy, Dodd & Harkin). The SFC's bill hasn't been drafted fully, but last week Sen. Baucus released an 18-page summary of its provisions so far. I relented from my new "kill-no-trees...create-no-paper-waste" policy and actually printed a copy and then actually read the thing.
Here are some things to worry about in this bill (and why):

• Insurance market reforms - (p2-3) - Although plans would have to refrain from discriminating against pre-existing conditions & must eliminate lifetime limits on coverage, they could vary premiums by age group, up to a ratio of 5-to-1! That's pretty substantial for the 50+ crowd who are likely to need the most care. It's basically saying that each age-group of uninsured will subsidize itself. No transfer from the young to the old. It would not provide real relief on premiums for the older laid-off crowd that can't change careers fast. Oh, and by the way, plans could offer a super-cheap policy for the "young invincibles" who wanted only catastrophic coverage, thereby siphoning off the lowest risk segment of the population from the general market. End result? VERY HIGH PREMIUMS for older uninsured people. Makes the idea of "affordability" laughable for anyone who isn't young and healthy or near-poor (see below).


• Benefit options- (p3) - Oops! First I got this wrong. I thought that the summary was saying that Plans could keep 35% of premium collections for their own expenses & profits. What they really meant was that each plan's benefit would have to limit patients' out-of-pocket expenses to 35% of total costs (on average across enrollees). That's much better. So, I'm not worried about the plan options they're talking about.


• Health Insurance Exchanges - these would be set up and run by the states, instead of a Federal bureaucracy. Excuse me, but I'm from New Jersey. (Enough said?) In all my years working in Washington near or in the Federal workforce I've never seen the incompetence, waste and corruption that I've followed in my home state. (Well, maybe in my first years as an intern in a dying federal agency.) It's a bad idea in this case not to have the regional markets organized by a central commission. There, instead of 50 state bureaucracies reviewing insurance offerings for their fine print, you'd have just one. Regions would be distinct, but the expertise to regulate the markets would be centralized (like Medicare).


• Medicaid - (p. 7-9) This section is unclear, but it appears that people between 100% and 133% of poverty will be able to choose between Medicaid and the Health Insurance Exchange. That's good. And, instead of completely federalizing the funding for that newly eligible group (as in the House bills), States would have to share in the cost. At least I BELIEVE that's what the section says. Read it for yourself. Making States share in the cost of providing care for Medicaid is a good thing, since they actually administer the programs. Of course, Governors hate this because they don't have enough money right now, and how would they come up with new money? The 55/45 split between Washington and States called for in the proposal could be altered so that federal taxpayers pay more, but States should have some skin in the game if Medicaid is going to be covering these people. And giving working people the option to join the exchanges (with subsidies) is a good thing. Who wants to be in Medicaid? Nobody that I know, rich or poor, unless there is no other option.


• Subsidies to Low income individuals (p 3-4) - Up to 400% of the poverty line, you'd get a refundable tax credit (i.e., whether or not you owe taxes). According to the Institute of Medicine, that's about 80% of the population of uninsured people. For example, at 400% of poverty, your premium payment would be capped at 13% of your income. For a family of 4, with a household income of $88K, (400% of poverty) that would mean a cap of $11K. Gov't would give tax credit for the rest. At least I think that's how it would work. Read it for yourself and let me know if I've got it wrong. jwagner@bethesda20817.net. Does that sound affordable?


• Revenue Provisions (p. 17) - I love the new tax on employers with high-cost health plans. The tax would ultimately be 35% of the plan expenses beyond the threshold. The tax would give employers incentive to reduce their health benefit costs. And I don't like the idea of subsidizing (with my tax dollars) the high-cost plans of the richer companies. On the other hand, the bill would completely eliminate the subsidy that employers get when they give Medicare-eligible retirees drug benefits. That's currently a 26% subsidy for every dollar of benefit. It's what has kept employers from dropping health coverage for Medicare-eligible retirees. Lots of employers might drop coverage for retirees. Is that bad? Medicare drug benefit is still available for all. So, I'm not sure whether it's bad or good. More thinking to come.