Unbiased Analysis of Today's Healthcare Issues

The Baucus Plan

Written By: Jason Shafrin - Sep• 20•09

What is Max Baucus proposing in his inital health reform bill?  Most of the principles are based on the Senate Finance Committee 2009 white paper.  Below 

  • Creation of a Health Insurance Exchange. Insurers participating in the exchange could would be precluded from discriminating based on pre-existing conditions.
  • Expand Medicaid to all individuals below 133% of the federal poverty line.
  • Expand SCHIP to cover all children in household below 250% of the federal poverty line in 2013.
  • Reduce Medicare Part D ‘donut hole’ so that enrollees in the donut hole range only pay 50% of drug costs rather than 100%.
  • Standardize benefits into 4 categories: bronze, silver, gold and platinum.  
  • Excise Tax: Levy a non‐deductible excise tax of 35% on insurance companies and plan administrators for any health insurance plan that is above the threshold of $8,000 for singles and $21,000 for family plans.  
  • Individual Mandate with tax subsidies.  Those with incomes between 133% and 300% of the FPL would be eligible for these subsidies.  Those who don’t get health insurance will be subject to a fine.
  • Employers who don’t provide health insurance must contribute to a fund to cover government insurance/subsidies for these individuals. Small employers with less than 50 employees are exempted from this requirement.
  • Small business subsidy.  Businesses with the fewest workers and the lowest wages would be offered a new tax credit to purchase health insurance for their employees.  The subsidy is up to 35% of the business’s contribution.  
  • $6 billion for co-ops.  This money would be used to fund the start-up costs and capital requirements for these co-ops.
  • Preventive Services: Eliminate Medicare copayment for preventive care.  Provide financial incentives to encourage Medicaid to cover preventive care services without copayments.
  • Do not cut Medicare physician payment according to the SGR.  Instead, increase Medicare physician compensation.
  • Malpractice reform. Allow states to develop alternatives to the current tort litigation system.

Ezra Klein also has a nice review of parts of the Baucus bill: Exchanges, Insurance Regulation, Affordability, Individual Mandate, Co-ops, Taxing Insurers.  Time magazine also has a FAQ on the Baucus bill.

Also see  the CBO and CBPP analysis of the plan.

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  1. If is not easy to find a good source for an efficient and accurate summary of the free rider provision. Ezra Klein and CBPP have both covered it, but I found the former’s inconsistent with itself and the latter’s inconsistent with the Chairman’s Mark. I’ve finally sorted it out for myself and posted a summary on my own blog: http://theincidentaleconomist.com/free-rider-commentary-something-is-not-right/

  2. […] with other bloggers, I have been trying to understand pieces of the Senate Finance Committee’s health reform […]

  3. […] is a lot to digest in the 223 pages of text, and others have given good summaries of the high […]

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