Baucus's HC Reform Bill Even Discriminates Against Low Wage Earners...Despicable!

(What caused Sen. Max Baucus a Democrat, to make such terrible compromises in this bill? Could it be he has already sold his soul to the Health Insurance companies for big campaign bucks? Why didn't he just stand up to his GOP colleagues in a civil way of course, instead of allowing them to call all the shots? Inquiring minds would like to know if he's able to rest well at night after helping to draft such a crappy, ineffective bill?)

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(What ails Health Care, ails America.)

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The Baucus Bill: The Worst Policy in the Bill, and Possibly in the World


Sen. Baucus's bill (America's Healthy Future Act) retains the noxious "Free Rider" provision on employers. Rather than a simple employer mandate that forces every employer over a certain size to provide health-care insurance or pay a small fee, the free rider approach penalizes employers for hiring low-income workers who are eligible for subsidies. That will create an incentive to do one of two things: Don't hire low-income workers (hire a teenager looking for a job rather than a single mother, or hire a housewife looking for a second job rather than an unemployed breadwinner), or hire illegal immigrants.

And it actually gets worse. The employer pays more if the low-income worker needs subsidies for his family as opposed to just himself. So it not only discriminates against low-income workers, but it particularly discriminates against low-income parents. Single mothers will get the worst deal, as they have lower incomes, and as you might expect, children who need health care.

The penalty itself is a bit confusing, and if anything, even worse than one might imagine: The employer will pay the lesser of A) the average subsidy in the exchange times the number of subsidized workers or B) $400 times the total number of workers. Two examples should clarify this:

Baucus Corp has 100 employees and does not offer health-care coverage. Thirty of the employees receive subsidies on the exchange. The average subsidy that year is $5,000. Baucus Corp woulds pay $400 times 100 employees, as $40,000 is less than $150,000 ($5,000 times 30 employees). Each of those low-income employees is costing Baucus Corp $1,333 more than an employee who didn't need subsidies.

Now imagine that Baucus Corp. only has five employees who need subsidies, and the average subsidy that year is $5,000. In that scenario, Baucus Corp would pay $25,000 rather than $40,000, because $25,000 is less than $40,000. Each low-income worker now costs Baucus Corp. $5,000 more than a worker who doesn't need subsidies.

So in the scenario where Baucus Corp. has a lot of low-income workers, they cost a huge amount overall because they're multiplied against the total number of workers. In the scenario where Baucus Corp. has a few low-income workers, they cost a huge amount individually because they're multiplied against the average subsidy cost. No matter how you look at it, the policy makes it profitable for employers to discriminate against hiring low-income workers. It is not only the worst policy idea in the bill, but one of the worst policy ideas I've ever seen.

Update: Originally, this post didn't include one of the penalty options, as I was basically confused on how it worked and thought it would apply too rarely to be worth mentioning. I reread the section, though, and corrected the post to offer a fuller picture of this no good, very bad, horrible policy.



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Sources: Washington Post, MSNBC, Center for Budget & Policy Priorities, Google Maps

America's Healthy Future Act: What It Doesn't Include (223 Page Draft)

AMERICA'S HEALTHY FUTURE ACT

(You can download and read the 223-page bill over at Senate.gov or read it online at OpenCongress.org)


Senate Finance Committee Chairman Sen. Max Baucus [D, MT] has been working for months in his committee, and specifically with a bipartisan “Gang of Six” negotiating senators, to produce a healthcare reform bill that would appeal to Democrats and Republicans alike.

Today he released a 223-page Chairman’s mark of the bill, which you can download here (pdf) or read online at OpenCongress.

It’s definitely worth taking a look at. Unlike the bills we’ve seen come out of other committees in Congress, the draft released today by the Finance Committee is written in plain language, so you can actually read it and understand it pretty easily. The Finance Committee will hold their mark-up session of the legislation next week. That’s when the bill presented in the document released today will be put into full legislative text and expanded to 1,000+ pages. Shortly after that, we’ll have it posted on OpenCongress like the House bill, so the process of public mark-up and review can begin.

In many ways, the basic framework of the Baucus bill matches Congress’ other healthcare bills and President Obama’s outline for reform. It would put in place new consumer protections, for example banning insurance companies from denying patients because of pre-existing conditions. It contains an individual mandate requiring all Americans to get some form of insurance. It would expand Medicaid and provide subsidies to help low-income people buy insurance. It would set up new state-wide marketplaces, or exchanges, to help people comparison shop for insurance plans.

How does the Baucus bill released today differ from the healthcare bills form other committees?

First off, it doesn’t contain a public insurance option. Instead, it sets up the Consumer Operated and Oriented Plan (CO-OP) program. Under the program, the government would allow and provide seed money for the creation of private, non-profit healthcare co-ops. The co-ops would be government by majority votes from its members, and all profits would have to be used to lower premiums, improve benefits, or otherwise improve the quality of healthcare delivered to its members.

Secondly, the Baucus bill contains fewer subsidies to help middle income people buy health insurance as it would require them to do.. Under the bill, people making above 300 percent of the federal poverty level would be expected to spend about 13 percent of their income on health insurance. And people in that income range would be subject to out-of-pocket limits. For example, a family of four making abover 300 percent of FPL would have an out-of-pocket limit of $11,600 on top of their $10,800 in premiums.

Third, it costs less. While most of the other bills coming out of congressional committees had price tags above $1 trillion over 10 years, Baucus’ bill has been scored by the Congressional Budget Office at $856 billion. The savings come from a combination of the reductions in subsidies for middle-income people and a plan to tax some of insurance companies’ most expensive plans.

Though the bill was specifically written to attract Republican support, no Republicans have said they are willing to vote for it. For example, Sen. Olympia Snowe [R, ME], the Democrat’s most likely Republican ally said yesterday that she could not back the bill, citing “concerns” that have yet to be addressed. On the other side of the spectrum, Democrats are beginning to come out against the bill.

Finance Committee member Sen. John Rockefeller [D, WV] said today that he can’t support the bill because of its plan to tax insurance company’s premium plans. Rockefeller said that the tax will simply get passed down to the middle class in the form of higher premiums. He has also cited the lack of a public option as a reason for his opposition to Baucus’ bill.


Sources: Senate.gov, OpenCongress.org