FixHealthCarePolicy

Seven Fatal Flaws of Baucus Bill

A public plan disguised as a co-op, individual and employer mandates, massive federal regulation over insurance and benefits, and massive Medicaid expansion—the Baucus bill has them all. These are the same features plaguing the other bills in Congress and that Americans have routinely dismissed for months.

Seven Fatal Flaws

1) Middle Class Tax Hike: The Baucus bill would impose a new sales tax on drugs and medical devices and a new federal excise tax on insurance plans that exceed $8,000 for an individual and $21,000 for a family. These taxes will ultimately be passed down to the consumer, putting many middle class families on the receiving end of a tax hike.

2) An Individual Mandate: In 2013, almost everyone would be required to purchase health insurance that complies with new federal standards. Those making more than three times the poverty level would face a tax penalty of $950 (maxing out at $3,800 per family) and $750 (maxing out at $1,500 per family) for those below 300 percent poverty. This penalty could apply to individuals with incomes as low as $10,831 a year.

3) No Privacy: In order to enforce the tax penalty provisions, the government would be forced to collect detailed health insurance information on Americans, reducing patient privacy and adding significant administrative costs to employers and insurers.

4) A Pay-or-Play Employer Mandate: Employers with more than 50 employees that don’t offer health coverage would have to pay a penalty for each employee who qualifies for new federal subsidizes under the bill. Inevitably, low-income workers will be hurt the most as employers would simply downsize or cut wages.

5) A Thinly Disguised Public Option: The Baucus bill invites indefinite federal control of a “co-op” by providing an unnecessary $6 billion in federal funding for startup loans and grants and it gives broad latitude to the HHS Secretary to regulate co-ops and promote them. The co-op created in this bill is literally an acronym for a new government-run health plan.

6) Medicaid Expansion: Under the Baucus bill, millions of Americans would end up on Medicaid. The current Medicaid program is unsustainable and poorly serves the needy and indigent now. Taxpayers will pick up the new costs of Medicaid, and states will have little flexibility for real reform.

7) Medicare: The Baucus bill establishes value-based purchasing, requiring compliance with government guidelines on the delivery of medical services. Hospitals and physicians who don’t comply would get lower Medicare payments. This approach could bias or compromise doctors’ decisions and contradict U.S. law on the federal interference in the practice of medicine.

The President needs to lead by meeting with key leaders of both parties and seek bipartisan reform around two key themes: 1) instead of a one-size-fits-all federal solution, Congress should let the states take the lead on reform, and 2) reform the tax treatment of health insurance to give all taxpayers tax relief for purchasing private insurance and extend assistance (through spending offsets) to low-income families to purchase private insurance instead of expanding government care.

Tags: Max Baucus