The Senate Finance Committee’s Nothing Burger Proposal
The Senate Finance Committee’s Nothing Burger Proposal
I think Ezra Klein is right to argue that the leaked version of the Senate Finance Committee’s health reform legislation is somewhat of a nothing-burger. It’s not well done, it’s not rare, it’s just medium well (which, incidentally, is just how Obama likes it):
But this is what I’d term “comprehensive incrementalism.” It makes everything a bit better. It is not radical. It is not root-and-branch reform. For all the concerns about cost, there is no strong public plan able to negotiate low rates and implement aggressive reforms.
Indeed, as Klein points out, the plan institutes some important market reforms (guarantee issue, no exclusion based on preexisting conditions), but its adjusted community rating variation rate is capped at 7.5:1, which means that an insurance company can charge an older person 7.5 times the rates it charges a younger applicant. Individuals and families up to 300% of Federal Poverty Level (FPL) would receive tax credits to cover the cost of coverage and small businesses would be eligible for a temporary small business tax credit. Again, the subsidies aren’t great, but they’re better than nothing.
On the public option, the committee went with the Conrad co-op compromise and offered the new corporation some start-up seed money. Children and pregnant women below 133% of the poverty level ($28,200 for a family of four) and parents and childless adults at or below 100% of the poverty level ($10,800 per year) are eligible for Medicaid. Everyone is required to purchase coverage, but the employer role is somewhat undefined.
In fact, the “placeholder” section about employer mandate is the murkiest part of the proposal. Employers are not required to provide coverage, but employers whose workers receive Medicaid (so they are below 133% of FPL) or a tax credit in the Exchange (those at or below 300% FPL) have to pay 50% of the national average Medicaid costs on behalf of their Medicaid workers and/or 100% of the tax credit for workers in the Exchange. So employers don’t have to provide insurance if they don’t want to, but employers with a preponderance of poor workers will have to help finance their workers’ coverage. This approach preserves the employer contribution, but it doesn’t exactly preserve the system:
1) If employers are paying 50% of the national average Medicaid costs, then employers in low cost areas would be subsidizing workers in high cost areas. Employers in low-cost areas would be over-paying to provide coverage workers in high cost areas. Given this dynamic, I don’t imagine that Senators from low-cost states will find the proposal too appealing.
2) This provides employers with an incentive to not provide coverage or offer workers expensive plans, basically forcing them into the Exchange. Health reform should align the incentives so that employers and employees are all better off when the employee is insured.
The “alternatives for employer responsibility” on the last slide of the draft are no better. Option 4 is no mandate at all and the first three seem to lack an adequate penalty to encourage firms to continue providing coverage.
3 Responses to “The Senate Finance Committee’s Nothing Burger Proposal”
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I looked at this Senate finance committee proposal and the proposal of the AHIP and they are nearly identical. Baucus’s Health Care Plan Is WORSE Than The Health Insurance Industry’s Plan. The AHIP has more generous subsidies to help low income individuals buy health insurance and a greater expansion in Medicaid. To say this proposal was written by lobbyist would be an insult to lobbyist
Baucus’s Health Care Plan Is Worse Than The Health Insurance Industry’s Plan
Ezra Klein at Washingont Post, released a health care reform draft proposal from the Senate Finance Committee. The plan is not just bad, it is worse than I would have ever imagined it would be. Just how bad is Senator Baucus’s draft proposal? It is worse than the proposal put forward by America’s Health Insurance Plans (AHIP). That is correct, the health insurance industry wrote a better proposal than the Democrats on the Senate Finance Committee.
For the most part Baucus’s proposal is almost identical to that of the AHIP lobby. Both do not include a public option and would offer a very low bare bone insurance plan. Both have individual mandates, a form of community rating, and some type of health care exchange. Both would also limit out-of-pocket cost based on the current HSA standards. In the few places the proposals differ, Baucus proposal is in fact less generous than the AHIP.
Paying for private insurance
Baucus Proposal – People making below 300% of the federal poverty level (FPL) would get subsidies to help buy insurance. If you make more than $31,500 you are on your own for the full cost of insurance.
AHIP Proposal – People making below 400% of the FPL would get subsidies to help buy insurance. Also everyone buying private insurance would get to deduct the full cost of their plan.
Medicaid Eligibility
Baucus Proposal – Every adult below 100% of the FPL would be eligible for Medicaid. Children below 133% of FDL would be eligible.
AHIP Proposal – Every adult below 100% of the FPL would be eligible for Medicaid. Children below 300% of FDL would be eligible.
The conclusion is simple. To claim that the health care reform plan put forward by the Democrats on the Senate Finance Committee was written by health industry lobbyists would be an insult to the lobbyist. Their plan was slightly better and did more to help average Americans buy health insurance.
June 18th, 2009 at 11:25 pmFor an individual, 300% of the poverty level would be $30,200. (Wonder whan the last time was that they updated that thing. 1980?)
June 19th, 2009 at 3:57 pmObviously, the Senate—and especially the Finanace Committee–needs to hear a big shout from the people out here in the real world who actually vote for them. There are enough of us. We can make our voices louder than that of the lobbies. Send in your stories. Mail, email, phone your senators and the other players. Tell them to give us a real FEDERAL public option now, one where rates can be set as in Medicare, one that can compete with the private sector, and cover everyone. Shout out folks. Help these Senate (mostly guys) get to know the people’s needs.
June 25th, 2009 at 10:35 am