Liberal Democrats have an answer to the problem of rising health costs. They want government gradually to take over the health insurance market, and then use its monopsony power to force prices down.
Conservative Republicans have answers too. We want to intensify competition by putting individuals not employers in charge of health decision-making and allowing health policies to be sold across state lines.
The so-called moderate Baucus plan announced yesterday offers no such answers. It imposes an individual mandate, extends federal subsidies, and imposes a tax on employers to generate some expansion of coverage. But as to cost control, it proposes virtually nothing.
Baucus takes pride in his plan’s deficit neutrality: It raises revenues in tandem with its higher costs. While minimizing costs to the Treasury is a valid concern, there ought to be at least equal attention to the costs to the economy – to employers and to workers. This issue, of so vital concern to both liberals and conservatives, was entirely dropped by the Baucus moderates.
18 responses so far
1 balconesfault // Sep 17, 2009 at 11:13 am
Yep – Baucus plan is an unmitigated flop. It is what happens when you leave “reform” in the hands of someone who seems to think their primary constituency isn’t voters who are opposed to expansion of government power … or voters who do believe greater government involvement in providing healthcare is critical to slowing the growth of costs … but rather, insurance lobbyists.
2 balconesfault // Sep 17, 2009 at 11:33 am
Howard Dean on the Baucus bill:
“The Baucus bill is the worst piece of healthcare legislation I’ve seen in 30 years. In fact, it’s a $60 billion giveaway to the health insurance industry every year. It was written by healthcare lobbyists, so that’s not a surprise. It’s an outrage.”
3 joemarier // Sep 17, 2009 at 11:34 am
Not insurance lobbyists. HEALTH lobbyists. Let’s not just pick on the group that at the very least has an incentive to control costs; the Baucus plan is making sure that NOBODY in the industry takes a loss. Everything will continue as planned. It will be more profitable than ever, in fact, once those government checks start flowing in.
In short: It’s the farm bill.
4 sinz54 // Sep 17, 2009 at 12:20 pm
The notion of regional non-profit co-operatives, on which the Baucus plan depends, can work–but it won’t work as Baucus and other Dems envision it.
We already have some existing co-operatives in some parts of the country. But they stay solvent by being selective in which applicants they will accept. Typically, they won’t accept an applicant who’s too poor to pay; nor will they accept an applicant with a serious pre-existing condition.
Baucus’s co-ops will be loaded down with unfunded mandates like guaranteed issue. And unlike a large insurer, they won’t have a large enough pool of members to spread the costs of guaranteed issue onto. These co-ops will fail within the first 5 years of operation.
5 roland.lindsey // Sep 17, 2009 at 12:48 pm
This legislative effort in the Senate has been political theatre from the beginning to the end. I don’t believe Baucus ever thought this would be a success. But, he and the others have done their bit for Insurance Company and Country, so they can be certain to keep receiving payments.
6 SpartacusIsNotDead // Sep 17, 2009 at 1:26 pm
Conservative Republicans are dead wrong about the effect their proposals would have on insurance prices. There is no evidence whatsoever that individuals will be able to exert more leverage on insurance companies than large employers are currently able to exert. If that were the case, premiums for individual policies would be rising slower, much slower, than premiums for employer group policies.
Also, the notion that allowing people to buy insurance across state lines is a complete canard. Many posters on this site have already explained very clearly why this is not a solution for rising premiums. There are no national provider networks. Some states prohibit the practice of denying coverage due to pre-existing conditions. Other states don’t prohibit this practice. Premiums are lower in the states that don’t prohibit the practice.
7 midcon // Sep 17, 2009 at 2:00 pm
I am amazed that anyone would entertain the thought that their representatives are actually supposed to represent the individual voters and not those who help ensure that they retain their seat. Regardless of their party identification, all representatives obey Maslow’s hierarchy of needs. Lobbyists support meeting these needs – you do not becuase you will continue to vote for your favorite representative regardless. The power and influence of lobbyists knows no bounds. Even Bono of U2 recognized this which is precisely why he established his own 40 person full time lobby shop on K street.
Everyone decries actual and imagined attacks on the Constitution but for some reason fail to recognize or do anything about the effective supersession of Article I! And yet with great umbrage we band together with our tea bags and march against taxes or birthplace or whatever, all the while ignoring the fact that we don’t count anymore. Where is Mr. Smith? Not in the U.S. Congress that’s for sure. He wouldn’t even make it to Washington in this day and age.
8 balconesfault // Sep 17, 2009 at 2:11 pm
Where is Mr. Smith? Not in the U.S. Congress that’s for sure. He wouldn’t even make it to Washington in this day and age.
I think there’s an old Boswell quote that goes along the line of – if being in Parliment corrupts men, then we should only elect scoundrels and save the honest men around us from that inevitable corruption.
9 ProfNickD // Sep 17, 2009 at 2:58 pm
Racist.
10 gnunews // Sep 17, 2009 at 4:27 pm
Yep, you’re David. The Baucus plan is a pile of crap. Apparently Baucus forgot the point of health care reform which is to bring down the cost of health care. I’ve read his plan and I see nothing in it that will reduce the cost of health care as a whole. Some people may get it for less money because of tax credits, but as a nation there’s nothing in that will result in any less money going towards health care.
I think we’re reaching a point where we should just not do anything, particularly if all we end up with is mandated health insurance for everyone. The problem isn’t that people don’t have health insurance, the problem is that health care is eating up too much of our GDP.
11 gnunews // Sep 17, 2009 at 4:29 pm
I meant to say, “You’re right David.” I wish there was a preview button on this site or a way to edit posts.
12 GAC // Sep 17, 2009 at 10:14 pm
Though I consider myself a conservative Republican, I think David is dead wrong on the point about cost control. The Baucus plan actually contains the one thing that health economists across the political spectrum agree would far and away do the most to slow medical cost growth. That one thing is capping the currently open-ended tax subsidy for employer-provided insurance. Baucus does it through the less elegant and less transparent means of imposing an excise tax on insurance companies rather than directly limiting the tax break for workers, but that’s a result of political necessity. The economic effects are roughly the same. While there is much to dislike in Baucus’s bill, his is the only major proposal so far to address cost control head on — and he deserves credit for that.
13 oldgal // Sep 18, 2009 at 9:12 am
Will somebody explain for me why selling health insurance policies across state lines won’t end up like the credit card mess with all purveyors moving to the state(s) with the standards most beneficial to the purveyors, or end up causing massive federal regulation (omg, an expansion of big government)?
14 sinz54 // Sep 18, 2009 at 11:01 am
spartacusisnotdead:
There is also no evidence that the percentage profit margin of insurers is constantly increasing, year over year. It remains about 25%. It’s not like it was 5% thirty years ago and now it’s 100%.
So since health care costs are rising faster than inflation and faster than GDP growth, the cost drivers must lie elsewhere.
In fact, even in nations with single-payer systems, health care costs rise faster than inflation and faster than GDP growth.
You liberals’ populist attacks on insurers are misplaced. You could ZERO OUT their entire profit (with a single-payer system) and health care costs would just go on rising–
Until your other shoe dropped and you started instituting rationing.
You’re hoping to put that one past the American public so they won’t notice it.
But we don’t intend to let you get away with it.
If we must ration health care, let’s have a dialogue about it.
See, I stole your playbook about dialogues.
15 sinz54 // Sep 18, 2009 at 11:06 am
gac:
The effect is: An indirect form of rationing.
By limiting the tax breaks for group insurance, this limits the incentive to provide generous “Cadillac” style health care plans, loaded with all kinds of benefits.
That’s why organized labor hates it. In recent years of collective bargaining, they agreed to wage cutbacks (to help American companies compete against foreign firms) in exchange for keeping their generous health care benefits. (Yes, paid health care beats wage raises.) Baucus would put an end to that.
16 balconesfault // Sep 18, 2009 at 11:44 am
The effect is: An indirect form of rationing.
By limiting the tax breaks for group insurance, this limits the incentive to provide generous “Cadillac” style health care plans, loaded with all kinds of benefits.
Interesting talk, from a purported fiscal conservative.
In essence – the claim being made here is that if the Federal Government does not subsidize something (and a tax break is certainly a subsidy) they are indirectly rationing the provision of that commodity.
So by that same logic – if the Federal Government does not provide for taxpayer funded universal healthcare – the Federal Government is therefore rationing healthcare.
17 GAC // Sep 18, 2009 at 9:14 pm
balconesfault:
You took the words right out of my mouth. Except that I was going to say that it’s like saying that cutting food stamps is rationing food.
18 I Guess That Concludes Negotiations « The Regimen // Sep 25, 2009 at 10:08 pm
[...] to put it mildly, a special case.) Not only that, but Frum himself dismissed the Baucus bill in an extraordinarily flippant posting on his website. Frum says he wants cost-control through increased competition, but that’s [...]
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