Baucus shares health proposal that's cheaper, taxes insurance companies

Senate Finance Committee Chairman Max Baucus laid down his marker on healthcare reform over the Labor Day weekend in an effort to steer the policy debate before President Barack Obama delivers his landmark speech before Congress on Wednesday.
 
Liberal Democrats have pressed Obama to use his speech to demand their healthcare priorities, such as the creation of a broad government-run insurance program, known as the public option.  
 

Now Baucus, a Democrat from the traditionally conservative state of Montana, has presented a powerful counterweight to liberals in the form of draft legislation that he thinks presents the best opportunity to overhaul the nation’s health system.
 
The proposal, which Baucus has shared with a small number of negotiators on the Finance Committee, represents the culmination of weeks of talks among a bipartisan group known as the Gang of Six. It is estimated to cost less than $900 billion, more than $100 billion less than any other bill passed by a congressional committee this year.
 
Baucus would pay for a large chunk of his plan by taxing insurance companies on high-cost plans, a proposal that liberal groups and labor unions oppose.
 
A source close to the talks described the proposal as a broad outline for Gang of Six members to consider as they enter their final week of talks before a Sept. 15 deadline that Baucus said he will enforce. A Democratic lobbyist working on healthcare said the marker was intended to spur  GOP negotiators to strike a deal before the deadline passed.
 
Baucus’s proposal also does not include a public option, which liberals say is a necessity but Republicans have blasted as a government takeover of healthcare. Instead, it would set up membership-run health insurance cooperatives, according to sources close to the negotiations.
 
The draft is a strong signal to Obama and other Democrats that Baucus does not think a government-run insurance program or a proposal to pay for reform by raising taxes not related to healthcare has a chance of becoming law.
 
Liberal groups and labor unions signaled they are preparing to battle Baucus over his plan, sending letters on Friday to Obama, Baucus and Senate Majority Leader Harry Reid (D-Nev.) reiterating their demands.
 
Health Care for America Now, a coalition, which includes the AFL-CIO, the SEIU and MoveOn.org, renewed its call for the public option and panned the proposal to tax high-cost insurance plans.
 
“Taxing higher-cost health insurance plans or benefits will result in significant benefit cuts and discriminate against older workforces and higher cost regions of the country,” HCAN wrote.
 
Nevertheless, Baucus hopes his draft will serve as a framework for bipartisan compromise in the Senate. It addresses many of the demands of liberals while limiting the government’s role in the insurance market and curbing federal costs.
 
The proposal, designed to control spending in the long run, would subsidize healthcare costs for Americans who cannot afford insurance. It would not, however, change immigration law to extend coverage to illegal immigrants, according to a source familiar with the proposal.
 
The plan would expand Medicaid to provide insurance to Americans earning up to 133 percent of the federal poverty level and offer other subsidies to cover the out-of-pocket costs of people earning up to 300 percent of the poverty level. Low- and middle-income families would receive tax credits to help them purchase insurance.
 
Baucus would pay for the plan with new taxes on insurance companies, including a tax on high-cost premiums and a fee based on companies’ market shares, said a source familiar with the negotiations.
 
A healthcare lobbyist estimated the tax on high-cost premiums could generate about $200 billion. A tax on market share is estimated to generate $5 billion to $6 billion a year beginning in 2010.
 
Baucus estimates the plan will expand coverage to tens of millions of Americans and establish the practice of reimbursing doctors and hospitals on the basis of quality of care instead of the number of patients treated and procedures administered.
 
The draft legislation includes several major insurance industry reforms such as prohibiting companies from denying coverage on the basis of pre-existing conditions and capping out-of-pocket costs at about $6,000 per individual and $12,000 per family. It would also bar insurance companies from capping coverage and dropping policyholders if they become stricken with a serious illness.
 
Members of the Gang of Six, which includes Baucus and five other members of the Finance panel, will meet Tuesday to discuss the outline. Baucus has said the plan does not represent a final draft and that he is willing to amend it over the next week.