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BaucusCare = TaxoCare

Shikha Dalmia
September 9, 2009, 5:01pm

Montana Senator Max Baucus has already given his prognosis for the so-called public option - or government-run health care plan - ahead of the president's prime-time health care speech tonight: Dead on Arrival. But he is planning to proceed on his alternative plan, regardless of whether it has bipartisan support or not. "Irrespective of whether there are any Republicans, I will move forward," Mr. Baucus said after meeting Wednesday with Democrats on his committee. He has vowed to "mark up" his bill by Sept. 21.

So what is Baucus' plan? And will it be more government-light (or less government-heavy) than the public option would? Don't bet your grandma's life support on it.

According to a Wall Street Journal story this morning, under the plan, Americans will be mandated to buy health insurance on the threat of fines. People who earn between 100% and 300% of poverty level (or $22,000 and $66,000 a year) would face fines ranging from $750 to $1,500 a year. Those with incomes 300% could pay anywhere from $950 to $3,800. In other words, if your cash flow is tight and you are trying to decide whether to fix that leaky roof or purchase health coverage, the government will make you do the latter - or pay up for the privilege of remaining uninsured. As I have noted before, there is a name for this kind of coverage: TonySopranoCare.

Baucus also wants to replace the government insurance option - to keep private insurers honest, you know - with non-profit insurance cooperatives run collectively by patients and providers or something like that. But the rub is that the government will have to spend tens of billions of dollars to seed these cooperatives. Some of that money will come from the fines on individuals. And the rest? According to the Journal story:

Starting next year, the plan also calls for annual fees of $6 billion on health-insurance providers, $4 billion for medical-device makers, $2.3 billion on drug makers and $750 million on clinical laboratories. The fees would be levied on individual companies based on market share. Insurers also face an excise tax of 35% for any health plan worth more than $8,000 a year for individuals and $21,000 a year for families.

Karen Ignagni, chief executive of America's Health Insurance Plans, an industry lobbying group, said the new fees would make it more difficult for health insurers to contain rising costs. "Our members are talking about that being at odds with the goal of cost containment," she said.

In short, insurance companies will be forced to finance their own competition. By that logic, should Baucus be forced to contribute to the campaign of his Republican opponent in the next elections?

And this is what passes for a "moderate" bill in Washington these days!

Post Script: I have two nagging fears about the President's address: One: that I'll fall asleep before he's done, and I have to write about this tomorrow. Two: that he'll actually call for tort reform - such as capping liability awards -- that the Republicans have made their holy grail. If he does, he will claim to have made a huge bipartisan gesture and demand that Republicans accept the mega government takeover of 17% of the economy that the Democrats are demanding. Then patients will be really screwed: They'll face higher health insurance costs and/or taxes as insurers pass on the new "fees" to them. And they'll have less recourse when their doctors screw up.


Shikha Dalmia is Senior Analyst


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