Baucus Offers Health Plan

WASHINGTON (By Robert Pear and David M. Herszenhorn, NYT) September 17, 2009 — The chairman of the Senate Finance Committee on Wednesday unveiled his long-awaited plan to remake the nation’s health care system and insure millions of Americans. But he did not win support from a single Republican despite tailoring his proposal to be less costly and to extend the reach of government less than other health bills moving through Congress.

The chairman, Senator Max Baucus, Democrat of Montana, said the committee would start voting next week on his proposal, which embodies President Obama’s top domestic priority.

The bill closely resembles what Mr. Obama said he wanted, except that it does not include a new government insurance plan to compete with private insurers.

Given reservations expressed Wednesday by members of both parties, the Baucus bill is likely to be modified as it lurches through the committee to the Senate floor and then, presumably, on to negotiations with the House, which is working on a more costly, more expansive measure.

Mr. Baucus described his plan as “a good balanced bill that can pass the Senate.” But the prospects that Congress will deliver a comprehensive bill to Mr. Obama by the end of the year, as he has requested, are difficult to gauge. In seeking a middle ground, Mr. Baucus disappointed many liberal Democrats.

Speaker Nancy Pelosi said the House bill, drafted by Democrats, was superior in many ways and “clearly does more to make coverage affordable for more Americans.”

With the release of Mr. Baucus’s proposal, a huge fight over the role of government in American life — comparable to the struggle over creation of Social Security in 1935 — moves to a new phase, in which hundreds of lobbyists and millions of average citizens will be engaged.

The Congressional Budget Office said Mr. Baucus’s bill would still leave 25 million people uninsured in 2019. About one-third of them would be illegal immigrants. By contrast, the budget office said, 17 million people would be left uninsured under the House bill. At least 46 million people are now uninsured.

For more than three months, Mr. Baucus has been negotiating with three Republican senators, and some of their ideas are incorporated in his bill. He predicted that some Republicans and most Democrats would eventually support a version of his bill.

Senator Olympia J. Snowe, Republican of Maine and one of the senators Mr. Baucus has been negotiating with, said she was not ready to endorse the plan, but would continue working with Mr. Baucus with the hope of getting a deal.

The need for action is urgent, Mr. Baucus said, declaring: “Our health care system is simply unsustainable. It’s breaking the bank for everyone, from families to businesses to governments.”

Mr. Baucus’s bill is the least expensive of five major health care bills moving through Congress. The Congressional Budget Office said the expansion of coverage would cost $774 billion over 10 years, compared with price tags of more than $1 trillion for the other measures.

The budget office said the cost of Mr. Baucus’s bill would be fully offset by new taxes and fees, along with savings squeezed from Medicare, so it could reduce the cumulative total of federal budget deficits by $49 billion over the next 10 years. At the end of that period, it said, new revenues and savings would be growing faster than costs, so the bill could also help reduce deficits in the decade after 2019.

Like the other bills, Mr. Baucus’s proposal would require most Americans to have health insurance, with financial penalties for those who flout the requirement. But his plan differs from the others in significant ways:

¶Instead of creating a new government health plan, Mr. Baucus would set up nonprofit insurance cooperatives in every state. The Congressional Budget Office said the co-ops “seem unlikely to establish a significant market presence in many areas of the country.” This finding provides ammunition to liberals who say the co-ops could not compete effectively with big insurance companies.

¶The Baucus plan, like the other bills, offers subsidies to help low- and middle-income people buy insurance. But eligibility is more limited, and the subsidies appear to be less generous than in the other proposals, causing some Democrats to suggest that many people could still find insurance unaffordable.

¶Unlike the other bills, the Baucus plan would impose a new excise tax on insurance companies that sell high-end policies costing more than $8,000 for individuals and $21,000 for families. Mr. Baucus hopes the tax would put downward pressure on health costs. The American Federation of State, County and Municipal Employees denounced the tax, saying it would hit “health plans that provide benefits for many middle-class families.”

¶The bill would not require employers to offer coverage. But employers with more than 50 workers would have to reimburse the government for some or all of the cost of subsidies provided to employees who buy insurance on their own.

The legislation would reshape the $2.5 trillion-a-year health care industry, which accounts for roughly one-sixth of the American economy. It would significantly expand Medicaid and substantially reduce Medicare payments to hospitals, managed care plans and many other health care providers.

The bill would create state insurance marketplaces, or exchanges, where consumers could shop for insurance and compare plans. Insurers would have to meet strict new requirements and could not deny coverage or charge higher premiums because of a person’s health status or pre-existing medical conditions.

The White House issued a low-key statement saying the Baucus plan provided “another boost of momentum for the president’s effort to reform the health system.”

The mixed feelings among Democrats were illustrated in two statements issued by the Senate majority leader, Harry Reid of Nevada, who is up for re-election next year.

In one statement, Mr. Reid praised the Baucus plan, saying it “brings us a step closer to having a comprehensive health insurance reform bill on the Senate floor.” But in the other, he expressed concern that the bill would force his state to increase its Medicaid spending, and he said the measure “needs improvement.”

Conservatives savaged the Baucus plan. “Democrats should scrap their expensive plans and work with Republicans on a fiscally responsible proposal,” said the House Republican leader, Representative John A. Boehner of Ohio.

Mr. Baucus would extend benefits to millions of the uninsured by expanding Medicaid, at a federal cost of $287 billion over 10 years, and by offering subsidies to individuals and families, at a cost of $463 billion over 10 years.

He would offer tax credits to help small businesses buy insurance, at a cost to the Treasury of $24 billion over 10 years.

The budget office said the proposed tax on high-premium insurance plans would generate $215 billion in revenue over the next 10 years.

People who go without insurance would pay penalties totaling $20 billion, it said, while employers who do not offer coverage would pay penalties of $27 billion. A family without insurance could face a penalty up to $3,800 a year.