Subsidies, regulations drive health reform bill

WASHINGTON – Senate Finance Committee chairman Max Baucus, D-Mont., on Wednesday released the crucial moderate alternative in the struggle to refashion America’s health care system, a $856-billion bill that includes a mix of sweeping new insurance regulations but no government-run plan.

Under his proposal, nearly everyone would be required to obtain coverage or pay a penalty. Insurers, in turn, would not be able to deny policies to people with pre-existing medical conditions or to cancel coverage after people got sick. And the federal government would provide hundreds of billions of dollars in subsidies to help lower-income people buy coverage.

The legislation fell short of Baucus’ goal of charting a course that could bring Republicans and Democrats together for the most ambitious overhaul of the health system since the 1960s.

Three key GOP lawmakers who had been working with Baucus for months have rejected his bill. The proposal also drew fire from liberals who insist that any overhaul must contain a “public option” insurance plan administered by the government.

But the Baucus proposal still may serve as a template for a final Senate bill because it was designed to attract moderate and conservative Democrats.

“There are some on both sides of the aisle who think I have gone too far,” Baucus said in a news conference. “It’s an effort to get balance. It’s an effort to get the bill passed.”

“This,” he added, “is probably one of the largest pieces of social legislation in American history since the Depression.”

Responding to widespread concern about the effect on the federal budget deficit, Baucus produced a bill that would cost significantly less than a $1 trillion-plus version pending in the House. It also imposed less stringent requirements on businesses.

All that drew praise from centrist Democrats whose support has been elusive, especially those from relatively conservative states.

“It’s a strong step in the right direction,” said Sen. Mary Landrieu, D-La.

But liberals on Wednesday argued that the Baucus bill did not provide generous enough subsidies for families of modest means and did not stop insurance companies from charging exorbitant premiums.

Baucus’ plan would not go as far as other leading proposals to reduce the ranks of the uninsured. According to a preliminary analysis by the Congressional Budget Office, the bill would leave about 25 million people without insurance, compared with 17 million under the House version.

Nor was there much evidence that Baucus’ alternative to the public option provided for in legislation proposed by the House and by the Senate health committee – establishing nonprofit cooperatives – would work to compete with private insurers and bring costs under control.

“They seem unlikely to establish a significant market presence in many areas of the country,” the nonpartisan CBO concluded.

The Baucus legislation, like the other two health bills, was designed to largely preserve the current system of employment-based health coverage. Layered on top of that system, the legislation would create highly regulated, state-based insurance marketplaces, or exchanges, where millions of people who do not receive coverage from their employer or from the government would be able to shop for insurance.

These people would be able to select from a range of plans offered by private insurers, as well as one potentially offered by a member-owned cooperative.

Despite major concessions, the bill did not win the endorsement of a single Republican – not even Sen. Olympia Snowe of Maine, one of the bipartisan group of six Finance Committee members who met for months to discuss the bill.

Snowe called the bill a “step in the right direction,” but said she was still worried that it would be too costly to the government and consumers, and that it did not do enough to ensure a competitive insurance market.

Baucus’ bill would substantially expand eligibility for Medicaid, the federal-state insurance program for the poor.

Provisions in Baucus’ bill would also set up a series of initiatives to make Medicare more efficient, including incentives for hospitals to reduce readmissions and for doctors to do more to coordinate their patients’ care.

To help pay for his bill, Baucus has proposed a series of excise taxes on insurance plans worth more than $8,000 for singles and $21,000 for families, and new fees on insurers, drug makers, device makers and clinical labs.