The Weak Spots in the Baucus Bill

The Baucus bill is vulnerable in several immediately apparent ways:

It would reduce Americans’ liberty by requiring them to buy health insurance and fining them if they don’t.
It would ruin private insurance by requiring insurers to cover all comers at the same premium. In doing so, it would thereby give people — especially the young and healthy — a colossal incentive not to buy insurance (despite the fines), knowing that, anytime they get sick, they can buy “insurance” at that point, and can do so at the same premium as if they’d been paying into the insurance pool all along. The combination of insurers having to cover people with expensive preexisting conditions at premiums that won’t cover those people’s costs, and of millions opting out because they can opt back in with no penalty at any point, would cause everyone else’s insurance premiums to skyrocket. This, not the “public option,” is the real stealth attack on private insurance.

The bill would cost nearly $1 trillion over ten years and would provide federal government subsidies — not tax-breaks, but actual subsidies — to families making up to $88,000 a year (400 percent of poverty). If, with inflation, the poverty-rate rises three percent a year, then by 2014 the federal government would be subsidizing those making over $100,000.

According to the CBO, the bill would be paid for through a roughly even mix of tax-increases and “savings” squeezed out of Medicare. The tax-increases would total $354 billion over ten years. The Medicare cuts are either fanciful, in which case the bill would cause deficits to explode, or else they are real, in which case seniors will be the ones to explode. Seniors had no problem making themselves heard at the August town-hall protests, but President Obama and Senator Baucus seem to have turned a deaf ear.

In the year 2019 alone (according to the CBO), the bill would raise federal government spending by $147 billion (in one year!), would raise taxes by $69 billion, and would be paid for mostly through $93 billion in “savings” from Medicare and smaller federal health programs.

One might ask whether any of these three things taken separately would be a good idea. Should we raise government spending on health care by $147 billion in a single year? Should we raise Americans’ taxes by $69 billion in a single year? Should we cut Medicare and related spending by $93 billion in a single year? If the American people would answer “no” to each, as I suspect they would, then the response to the Baucus bill as a whole should be the same — only three times as loud.

This blog post originally appeared on National Review’s Critical Condition.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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