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5 Reasons the Baucus Health Bill Fails the Basics

The Baucus health care proposal is a terrible bill. And the Senate's foremost health care expert is having none of it.
 
 
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On a conference call with reporters on Tuesday, Sen. John D. Rockefeller IV, D-W.V., laid out the reasons why he will vote against the health care reform proposal released by Senate Finance Committee Chairman Max Baucus, D-Mont., on Wednesday. The bill requires significant changes before it will win his vote, Rockefeller said.

Rockefeller's defiance is significant because he chairs the Senate Finance's health subcommittee and was locked out of negotiations on the bill when Baucus threw all his eggs in the basket of imaginary bipartisanship by appointing a "Gang of Six" -- three uncompromising Republicans and two malleable Democrats (in addition to himself) -- to hammer out the legislation, which contains no public health insurance plan but does contain a number of other provisions that Rockefeller finds troubling.

"[T]here's no way that I can vote for the Senate [Finance] package for a lot of reasons and, obviously, the lack of a public option is one of them," Rockefeller told reporters -- even if it meant Baucus' proposal never made it out of the committee to face a vote by the full Senate.

"I'm not going to worry about is it coming out of the committee or is it not coming out of the committee," Rockefeller said. "I'm going to vote based upon what I feel."

Rockefeller is known in the Senate as a health care expert; on the conference call, Roger Hickey, of the Campaign for America's Future, referred to Rockefeller as the most knowledgeable person in the Senate on the topic now that Sen. Ted Kennedy, D-Mass., has died.

A stalwart proponent of the public health insurance option featured in the other health-reform bills currently before Congress, Rockefeller credited his overall position on health care to his work as a Vista volunteer in the 1960s. Vista was a Peace Corps-style program that focused on impoverished areas of the United States.

Asked about President Barack Obama's desire to get some kind of health care plan passed, and pressure by the administration to pass something -- anything -- Rockefeller told reporters, "It does represent a worry of mine … that if it becomes just a question of passing something so that you can say you did health care reform, then you really didn't do what we have an historic opportunity [to do]. That I find very distressing."

He then deferred to Yale professor Jacob Hacker, who was brought onto the call by Rockefeller to serve as an expert.

"It's been said that we shouldn't let the perfect be the enemy of the good," Hacker said, "but I would also say that we shouldn't let the terrible be the ally of the expedient."

As laid out by Rockefeller, the Baucus proposal appears to be quite terrible. The bill will goes before the full committee next week for mark-up, when senators on the committee will be allowed to offer amendments to the legislation.

"I will have many, many, many amendments," Rockefeller said, including one for a public option.

Here is a summary of the reasons Rockefeller gave for his promise to vote against the Baucus bill, unless significant changes are made:

1. No public option. Rockefeller urged that reporters not buy into the conventional wisdom that health care reform cannot pass if a public option is included in the final bill.

"It's amazing what happens when it comes down to crunch time -- when people really have to go on record," he said. Everything we've seen up until now, he explained, is posturing. "Things can shift," he said.

Without a public health insurance plan, Rockefeller says, private insurers will face no meaningful competition, which is necessary for driving down costs.

"Real competition comes from people who don't have to make any profit and they don't have to have any fancy marble columns at the entrance to their building," he explained. (Or pay their CEOs $24 million a year, as Aetna does.)

In 26 states, Hacker added, one private insurance company holds the policies of more than half of the population. In nine of those states, he said, "the largest insurer has 70 percent or greater market share." Simply slapping a few regulations on those companies isn't going to do the trick of reducing costs or significantly improving service to consumers.

2. Nearly half of insured people will see no reform of their health-insurance policies -- no protection on pre-existing conditions, no cap on out-of-pocket expenditures. You heard that right.

Under the Baucus plan, the well-being of 46 percent of Americans will continue to be subject to lack of coverage for pre-existing conditions, they will continue to be dumped mid-illness by their insurance companies using the rescission process, and they will see no cap on their out-of-pocket expenditures.

That's because nearly half of the U.S. population, according to Rockefeller, receives its health insurance through large employers, who self-insure, and self-insured plans are exempt in the Baucus bill from the reform measures imposed on other private insurers.

Self-insurers are generally large companies or entities that act as their own health insurance companies. They have enough employees to create a large pool for risk-sharing, and enough capital to finance the creation of their own plans. When an employee gets sick, it's the employer, not an outside insurance company, that pays for the illness. Employees may be made to contribute to the self-insured company's plan through payroll deductions.

"That's another reason why we want them to have a place where they can go, something called a public option," Rockefeller said.

3. The Baucus plan does not assure affordability, but penalizes those who can't afford health insurance and those who require high-level coverage.

The bill squeezes the middle class, mandating that everybody buy health insurance or face significant penalties when filing their tax returns (up to $950 per year for individuals and $3,800 per year for families).

But beyond that, Rockefeller explained, it will impose a 35 percent excise tax on companies that offer high-level coverage ($8,000 for singles, and $21,000 for families), even to workers in high-risk jobs, such as coal miners (a major constituency in Rockefeller‘s state), steel workers and workers in chemical plants -- people who, according to Rockefeller, "are doing about the most dangerous job[s] that could be done in America."

That tax will likely either result in a reduction of benefits to these workers or a reduction in wages.

"That's not a really smart idea," the senator said. "In fact, I think it's a really dangerous idea. "

Furthermore, Rockefeller said, the lack of a public option limits the amounts the Baucus plan can offer in subsidies to lower-income Americans for the mandated purchase of health insurance. According to estimates by the Congressional Budget Office, some 18 million people under the Baucus plan would be eligible for subsidies to pay their premiums, but some would still pay as much as 13 percent of their income to purchase the mandated coverage.

"One thing that I think is really important to understand is that the subsidies and the public plan are very easily linked," Rockefeller explained, "because if you can provide coverage for less because you have a public plan competing against private plans, then you can use those freed-up dollars to make the subsidies for lower- and middle-income people more generous."

 "Those differences could amount to, for a family of four at 250 percent of poverty, something like $3,000 a year difference in maximum out-of-pocket costs -- the premium and the maximum out-of-pocket costs the family would pay," he explained.

Initial CBO estimates suggested that the public plan, if properly designed, "could save on the order of $150 billion over 10 years," Rockefeller said. "We should recognize that that kind of money would be very helpful, particularly if we're trying to stay within some overall limit in terms of spending to make sure that we can afford to provide good subsidies for Americans in the lower part of the income distribution."

"It would be a gross crime," he continued," if we passed health care reform with mandated coverage for middle-class Americans who couldn't afford the coverage."

4. Medicaid, the existing public plan for poor people, will be compromised. Medicaid is a public plan in which the federal government and states share the financial burden. The Baucus plan introduces a concept called "Medicaid flexibility," which will offer states the ability to trim their Medicaid rolls and limit coverage, Rockefeller said, and squeeze the rolls of children enrolled in the State Children's Health Insurance Program, which Rockefeller co-authored.

"Now, a governor, obviously, has a low budget -- he's going through the problems that everybody else is -- and if he can, you know, knock kids out of [S-]CHIP or cut down on Medicaid," Rockefeller said, "many of them are perfectly content to do that, because most people aren't all that sympathetic, and these people don't have voices they can collectively raise."

The "Medicaid flexibility" provision, said Rockefeller, "is something that Sen. Baucus did to try and attract Sen. Grassley's vote."

Sen. Charles Grassley, R-Iowa, is one of Baucus' Gang of Six. During the negotiations in August, Grassley took to the hustings in his home state, where, at town-hall meetings, he advanced the lie that the Democrats' health care plan included "death panels" before which seniors would allegedly be made to appear, and he carried a copy of Glenn Beck's book under his arm as he made the rounds on his senior-scaring mission.

So, will this trade-off at the expense of the poor win Grassley's vote?

"This is a strange part of this whole process," Rockefeller said. "You've got three Republicans, and you're trying to put in place things they want, hoping you'll get them. I don't think [Baucus] will …"

At the public unveiling of the Baucus plan on Wednesday, neither Grassley nor the other Republican members of the Gang of Six -- Olympia Snowe of Maine and Mike Enzi of Wyoming -- deigned to show up. Neither did the Gang's other two Democrats, Kent Conrad of North Dakota and Jeff Bingaman of New Mexico.

5. Poor children get slammed. As if it's not enough to give governors the "flexibility" to "knock kids out of CHIP," as Rockefeller puts it, the State Children's Health Insurance Program will be decoupled from Medicaid and moved into a health-insurance exchange -- a kind of virtual shopping mall of insurance plans that is a mix of options offered by private, for-profit insurers and private plans administered by nonprofit co-operatives. This adds another level of bureaucracy for their parents to negotiate, burying the program amid an array of other plans that are not accessible to poor people.

Adele M. Stan AlterNet's Washington bureau chief.