Thursday, September 17, 2009

The Baucus Debacle

It's finally here, set to go to mark-up next Tuesday. The famous "bipartisan" effort that so far has the support of absolutely no Republicans, including President Sen. Snowe.

You can read the Chairman's mark here [pdf]. In Finance tradition, the bill is written in narrative form, rather than legislative form. All amendments will also be offered in plain English, and then the plain English mark turned into legislative form.

Start reading, and chronicle the debacle in the comments. Let's start with this one, on page 2 (page 5 of the pdf), where it establishes that older people could be charged 5 times as much as younger people. You're reading that right:  

Under the Baucus legislation, private insurers could also charge older individuals up to five times more for coverage. "You're just using age as a proxy for health status," Uwe Reinhardt, an economics professor at Princeton University told the New York Times. Reinhardt estimates that "Senator Baucus's age-rating plan would allow insurers to cover roughly 70 percent of the additional risk they'd take on by being required to accept all comers, regardless of health."

Affordability questions remain paramount throughout the mark, not just for older Americans (over 55, not yet eligble for Medicare). Marcy is doing a fantastic job of breaking down the costs for middle America, and the very real possibility that this bill would make American workers captive to their employers:

The individual definition of affordable uses 10% of Adjusted Gross Income. Whereas the employer's definition of affordable uses 13% of (apparently) total income.

Now, it's a good thing (sort of) that the affordability rate for individuals is 10% of AGI. That means a family would be able to opt out if there were no health care available at even a lower rate than I thought (for example, it might mean a middle class family could opt out if health insurance cost them $6,000 a year, as opposed to $8,000 a year). It's a bad thing, though, because it means MaxTax would be far from universal--a lot of middle class families will pretty much have to opt out because they can't afford coverage.

But if your employer offers health care--even if it covers just 65% of costs--then you can't opt-out unless you're paying out of pocket 13% of your total income!! Oh, and to opt-out you have to go to your manager and tell him or her that you're opting out, which means the employer will be fined; how many people do you think will be fired rather than opt-out?

So far the Baucus debacle is very good for Wal-Mart, very good for AHIP, and not so great for the rest of us.

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