Senator Baucus: what $856 billion buys you

On September 16, 2009, Senate Finance Committee Chairman Max Baucus (D-MT) offered some of the details of the healthcare reform proposal that will be presented for debate.  The Senator's 223-page summary of the proposal, "America's Healthy Future Act," provided additional details for his committee members. 

During the press conference, Senator Baucus called the proposal "one of the largest pieces of social legislation since the Depression."

He described the mandate that would be imposed on every American: buy health insurance or face an IRS-enforced penalty of up to $3,800 per family.  Annual tax returns would be used to "ensure compliance" (Subtitle D-Shared Responsibility, page 28).

Forcing individuals to buy coverage regardless of its cost would be made simpler, he claimed, by another provision of the plan: no insurance company could offer lower premiums to applicants with good health (Rating Rules in the Individual Market, page 4). 

For example, a healthy woman who exercises regularly and doesn't abuse drugs could not pay less for the same plan offered to a morbidly obese, sedentary man with liver disease from chronic alcohol use.  Policies could not be discounted for health, only for age-but not to an extent that would allow the youngest policyholders a deep discount.

$856 billion would protect Medicare, promised Senator Baucus during his press conference.  Within minutes of that statement, however, he admitted that funding for the proposal would come from eliminating Medicare Advantage payments.  Medicare Advantage is private, choice-based coverage within the federal program.  It is currently selected by over one third of Medicare Part D enrollees-more than nine million seniors.

When a reporter asked if Medicare payments to doctors and hospitals would be addressed by the $856 billion legislation, Senator Baucus quickly responded.

"It's not part of healthcare reform, what Medicare pays doctors."

For business owners, the Senator outlined a new payroll tax of $400 per employee.  The alternative to paying the penalty would be offering generous health benefits to every worker. 

But not too generous, thanks to another new tax described in the Senate Finance Committee Chairman's 223-page summary:

For workers with health insurance valued at over $8,000 per year, any coverage above that amount would be taxed at a rate of 35 percent (page 199).

Senator Baucus called this a "tax on insurance companies," something that would bring about "consequences on the way employees get insurance."

The $8,000 limit on employer coverage would have to include amounts contributed to flexible savings accounts (cafeteria-style plans).  These pre-tax accounts, used by employees to cover co-pays and out of pocket expenses, would be limited to $2,000 per year so that the federal government could tax all additional amounts saved.

Medicaid would be dramatically expanded to cover those with higher incomes than current criteria.  But this would not impact the states significantly, Senator Baucus claimed, despite the fact that states are on the hook for paying up to half of new coverage costs.

$856 billion, it seems, does more than simply fulfill our "moral obligation" to pass the type of reform described by Senator Baucus.  It buys a new set of government-enforced obligations for American citizens of every age, health and employment status.

Dr. Linda Halderman was a Breast Cancer Surgeon in rural central California until unsustainable Medicaid payment practices contributed to her practice's closure. She now serves as the healthcare policy advisor for California's Senator Sam Aanestad while continuing to provide trauma and emergency services in rural communities.
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