Baucus’ Health Future Bill: Updated

Max Baucus Chairman Senate Finance Committee
Max Baucus Chairman Senate Finance Committee

Max Baucus (D-MT), the chairman of the Senate Finance Committee and member of the bi-partisan “group-of-six”, explained to the press his Chairman’s mark of his health care bill.  This 220-page version has not been accepted by the Finance Committee nor the gang-of-six members and there are positive and negative sentiments being expressed from both sides of the isle.

This bill pushes for much faster action.  Unlike H.R. 3200, which does not do much of anything until after the Presidential elections in 2012, this bill proposes to do a few things almost-immediately.  The plan will insure those with pre-existing conditions “within a year of enactment”.  Those individuals would have access to a high-risk pool where those individuals’ premiums will be subsidized by $5 billion in government funding.  The bill also requires the establishment of State Exchanges in 2010 through which consumers could purchase health plans.

To increase competition, the framework proposes two changes to the existing insurance model.   First, it will allow (not force), states to form inter-state “health care choice compacts” to allow an insurer to sell insurance in other states, but how many of these will form is questionable.   Any policies sold under a compact would be subject to only the laws of the state in which the policy is written.  That would mean that compacts would most-likely emerge only between states with similar regulations and laws.  Even though the laws of the insurer’s state is enforced, the regulatory responsibility appears to be split among the insurer’s state and the insured’s state.  Secondly, national plans, which contain uniform benefits, could be offered across state lines.  The insurer offering such national plans must be licensed in every state in which they intend to sell the plan.  Although the benefits must be uniform, the premiums may not be.  The rating rules of each state will be considered and individually enforced for the calculation of premiums.

The bill does not appear entirely partisan as major concessions appear to have been made from both perspectives.  The most-notable being that tort reform has been left out which will appeal to the trial-lawyer lobby on the liberal side.  Instead, there is soft language in the back of the bill that states, “Congress should consider establishing a state demonstration program to evaluate alternatives to the current civil litigation system.”.  The left may also appreciate that The bill does require that all Americans have health insurance by 2013.  The penalties will range from $750/yr for individuals on the low-end of the pay-scale to $3800.00/yr for families on the high-side.  $750.00 a year isn’t much of a penalty and will certainly be attractive to those that are currently uninsured.  If the cheapest premium exceeds 10% of a person’s adjusted gross income, no excise tax will be levied (progressive tax).  Until 2013, anyone under 100% of FPL will be exempt from excise tax.  In 2013 anyone that makes less than 133% of FPL.

For conservatives, this framework does not include the hot-button issue of a public option and the bill does require that proof of citizenship or lawful residence be obtained prior to issuing a a policy to an individual.  The verification must be done against the Social Security Administration data for citizens and Department of Homeland Security data for legal aliens.  The plan also does not require nor does it prevent payments for abortions.  Current State laws will continue to regulate those activities.

To supplant the public option, the bill does provide for private, non-profit co-ops.  As they are non-profit they would conceivably be forced to use any profits to control costs, improve benefits and keep premiums low.   The co-ops cannot be sponsored by any level of government and must be governed by a vote of its members.

Alot of costs will be shifted to the states.  “Childless adults” otherwise ineligible for medicaid, that are at or below 133% of FPL will be required to be covered by Medicaid – a taxpayer funded, state-run health care plan.  States are already drowning in red ink and Medicaid is one of the major causes for state-level deficit spending.  Beginning in 2014 more federal money will be used to subsidize state medicaid programs to alleviate the burden of covering these newly-eligible beneficiaries.

Several initiatives are in the bill that are intended to improve the efficiency and efficacy of Medicare.   Medicare payments to hospitals and physicians will be based on actual performance.  2012 would be a base-line year to collect statistics and 2013 the first year where Medicare reimbursement is based on meeting or beating the standards created from those base-lines.   There is a section to institute a pilot to find alternative pay methods to create incentives for providers to coordinate patient care across the continuum of care, re-categorizes Physician’s Assistants as Attending Physicians for Medicare-covered hospice services and establishes a Medicare Commission to examine and make recommendation to congress to solve the Medicare insolvency problem.  One change that is does not seem to actually improve Medicare is that $22.29 billion is being eliminated from Medicare for the Medicare Improvement Fund which was intended to make improvements to parts A and B of Medicare.

A few new bureaucracies are also created within Baucus’ plan.   The bill establishes Board of Governors for the Patient-Centered Outcomes Research Institute.  The institute is intended to make recommendations to congress in hopes of curing the Medicare insolvency issue.  A ” Workforce Advisory Committee”, that includes union leadership, will also be created to look into increasing the availability of trained medical professionals.

Some changes to existing insurance programs also appear in the bill.  The pairing of a health savings account with a high-deductible health plan is often used by consumers to keep their health care costs low.  Baucus has implemented a change that will eliminate the use of HSA funds for non-physician prescribed (over-the-counter) medicines.  Currently HSA disbursements could be used tax-free for those kinds of medicines.

There are new mechanisms to fund the Medicare trust fund in Baucus’ plan.  A little more than $13 billion comes from a combination of drug companies ( $2.3 billion), medical device manufacturers ($4 billion), $6 billion from providers, and $750 million from clinical laboratories,  in fees to be paid on an annual basis.  This is in addition to the 2.9% tax currently levied on all income-earners in America.

Finally, the Baucus bill levies a 35% excise tax on insurance companies for premium plans which includes any plan with benefits worth more than $8,000 for individuals or $21,000 for families.  Corporate taxes are always passed on to consumers which will inevitably result in either premium plans being eliminated by the insurance companies or taxes being passed on to consumers as higher premiums.  As the co-ops are non-profits, they would be exempt from federal taxes giving them an unfair advantage in the premium insurance market.

Of major concern to both conservatives and liberals, is that middle-class households could be hit by premiums that are up-to and including 13% of their gross income.  The issue is that if premiums are going to be such a large percentage of American’s income, where are the savings?

UPDATE: 10-2-09:

As the Chairman’s mark went through committee, it got modified.  The new draft is available online (kudos) and we went looking for the changes.

  • Most of the law will now not go into effect until July of 2013 instead of January
  • The non-profit health care exchange will be exempt from all taxes… but competing insurance companies will not.  This will kill any competition
  • Gift to unions: $15 Billion from 2013-2015 to cover retiree health insurance
  • States can opt-out of the national plan – of course we can’t opt out of paying for it
  • Any plan with lifetime limits will not be allowed to be offered in the exchange
  • eliminates the ability of other entities to create competing exchanges – what happened to increased competition being the biggest impact on costs?
  • Congress and its employees will be required to purchase insurance on the exchange instead of through the Federal Employee’s Program
  • An additional statement about having a study on the use of electronic health records
  • HHS secretary will be required to conduct a review of allowed benefits at least once-a-year
  • Penalty for not carrying insurance changed from 1500-3800 down to $750.00 per adult in the household
  • Specifically spells out that not carrying insurance will have “no criminal penalty”
  • Medicaid Improvement Fund eliminated in 2014 ($700 million per year in cuts to medicaid)
  • A Single form will be available to apply for the exchange, medicaid and CHIP programs at once
  • Mandatory coverage of prescription drugs removed from the bill
  • CMS (Centers for Medicare/Medicaid Services) gets a new buerocracy – CHCO: to integrate Medicare and Medicaid…
  • Creates a demonstration project for up to eight states to test changing from fee-for-service payment model to a global provider payment model
  • Continues the HIPAA wellness regulations: If you do certain healthy things, you can get a discount on premiums and such
  • Reduced the bonus to physicians for participating in the quality reporting initiative to .5% from 2%
  • Increase the penalty to physicians who do not participate in the quality reporting initiative to 1.5% from 1%
  • Establishes another bureaucracy in the CMS: The Innovation Center
  • Changes in how residency slots are used – hard to understand
  • Takes $230 million from medicare trust fund to pay develop new physicians and nurses
  • Changes to Medicare Part D (drugs) that I could not understand after 5 readings…. any help appreciated
  • Nurse midwives will be reimbursed the same as physicians for covered procedures
  • I have no idea what the heck this change means: “The Secretary shall begin the rulemaking process to implement the Commission‘s proposal upon
    delivery of such proposals to Congress on January 1.  The Secretary may use interim final
    rulemaking to implement the changes proposed by the Commission.”
  • Adds a provision that the GAO should conduct an audit in 2015 to make sure the bill did what it said it would
  • Establishes background checks for long-term care employees
  • Some extensions of the Medicare RAC program that I didn’t quite comprehend
  • An Increase in the excise tax against insurers from 35% to 40% for individual health insurance valued over $8,000 – that’s most of them.  Remember, these changes also made the government exchange “tax-exempt” – anti-competitive amendment – not a level playing field
  • If you spend your own money on medical expenses, you will not be able to deduct them until you spend 10% of your gross income (base bill was 7.5 gross income
  • A change seems to say that in the case that the bill is not deficit-neutral, they will notify Congress, and adjust the subsidies to the the exchanges: wait… what subsidies, I thought the exchanges were self-funded… something fuzzy this way comes

Support Conservative Daily News with a small donation via Paypal or credit card that will go towards supporting the news and commentary you've come to appreciate.

Rich Mitchell

Rich Mitchell is the editor-in-chief of Conservative Daily News and the president of Bald Eagle Media, LLC. His posts may contain opinions that are his own and are not necessarily shared by Bald Eagle Media, CDN, staff or .. much of anyone else. Find him on twitter, facebook and

Related Articles

One Comment

  1. Great article. There’s a lot of good info here, though I did want to let you know something – I am running Ubuntu with the circulating beta of Firefox, and the design of your blog is kind of bizarre for me. I can understand the articles, but the navigation doesn’t work so well.

Back to top button