Senate Finance Committee chair Max Baucus, D-Mont., has taken center stage in Washington with the release of his highly anticipated health care reform plan. His proposal will likely serve as the foundation of whatever legislation emerges from Congress.
Sen. Baucus had promised to be bipartisan. This summer, he convened the “Gang of Six” — three Republican and three Democratic senators from the Finance Committee — to negotiate the details of his plan.
But in the end, he has failed to attract bipartisan support for his proposal, which would put the federal government front-and-center in the delivery of health care. Baucus’ plan would not only fail to address what’s wrong with the American health system but would also compound the country’s economic woes by strapping individuals and businesses with new taxes and costs when they can least afford to pay them.
Take the provision that legally requires individuals to purchase insurance. Starting in 2013, everyone who doesn’t have government-approved coverage will face a fine.
According to proponents, this “individual mandate” will increase the size of insurance risk pools and bring down premiums. Young and healthy people who might normally go without insurance will be forced to buy into the system and, in effect, subsidize the old and sick.
Of course, this line of reasoning ignores the fact that many Americans are uninsured not because they want to be but because they can’t afford insurance. Nationwide, the average annual premium for family health coverage is $12,300. That figure is expected to double over the next decade.
Forcing millions to purchase budget-busting insurance policies or face hefty fines will push family bank accounts to the brink and make economic recovery even harder.
The Baucus plan attempts to address these affordability concerns by allocating billions in subsidies to people with incomes up to four times the poverty level, or $88,000 for a family of four. But with health insurance costs rising at astronomical rates, taxpayers will no doubt have to shell out ever-increasing amounts each year so that the subsidies can keep pace.
Sen. Baucus’s proposal would also institute an array of controls on private insurance. Carriers would be subject to “guaranteed issue,” which would force them to issue policies to all comers regardless of health history, and “community rating,” which would restrict their ability to charge different prices to the sick and to the healthy.
In addition, Sen. Baucus would impose new limits on out-of-pocket spending. And all insurance plans would be required to include certain benefits, like maternity leave and newborn care. These controls are well-meaning.
They’re supposed to ensure that everyone can buy a robust health plan at a reasonable cost. Many states have some or all of them in place already. But in every instance, they’ve dramatically driven up the cost of insurance.
As part of his effort to attract support from moderates, Sen. Baucus dispensed with the highly controversial “public option,” a government-run insurance plan designed to compete against private insurers. But his replacement is just as bad — a network of government-funded and -chartered nonprofit insurance cooperatives.
These co-ops could offer insurance at artificially low rates and operate without risk of going bankrupt because they’d have a direct line to the federal treasury and an implicit guarantee of federal backing — à la Fannie Mae and Freddie Mac.
As a result, private insurers would be forced out of the marketplace, unable to compete with the government-funded alternative. In the end, government-run plans would be the only ones available. And taxpayers would be on the hook for all Americans’ coverage.