Transparency having become an early casualty in the process of driving through “health care reform” despite rising opposition, the Senate Finance Committee chaired by Max Baucus (D-MT) is marking up a shell bill, a 200+ page outline.
Some think the strategy is to take the product, merge it with the product of the Senate Health, Labor & Pensions (HELP) Committee, and tack it on as an amendment to a bill imposing a tax on certain recipients of bailout funds. Conceivably, the transformational change of one-sixth of the economy could be enacted in two weeks (The Foundry, Heritage Foundation 9/22/09). Then the bureaucrats could set to work on the 100,000+ pages of regulations.
Senator Baucus called the proposal “one of the largest pieces of social legislation since the Depression.”
The individual mandate would force every American to buy approved insurance, or face an IRS-enforced penalty of up to $3,800 per family, writes Linda Halderman, M.D. (American Thinker 9/17/09). Or perhaps it would be only $1,900, since the Committee accepted amendments by Sen. Schumer (D-NY) and Sen. Snowe (R-ME).
Baucus proposed a new payroll tax of $400 per worker not provided with generous health benefits. Along with a 35% tax on too-generous health coverage exceeding $8,000 per year, with the $8,000 limit to include flexible savings accounts (cafeteria plans).
His $856 billion proposal would protect Medicare, Baucus said at a press conference. Then he said that financing would come partly from eliminating Medicare Advantage payments, noted Dr. Halderman.
Baucus had urged the Centers for Medicare and Medicaid Services (CMS) to look into “scare tactics” by Humana, which was informing its beneficiaries that they could lose their Medicare Advantage benefits. The Wall Street Journal called it “bullying tactics,” America’s Health Insurance Plans called the CMS action a “gag order,” and even AARP called it a “selective and inappropriate use of its regulatory powers” (NY Times 9/22/09).
The Humana mailing was “misleading and confusing to beneficiaries, who may believe that it represents official information about the Medicare Advantage program,” said Jonathan Blum, acting director of a CMS regulatory office, and former senior aide to Sen. Baucus. CMS is not investigating AARP for its political advocacy. On its website, AARP states as “fact” that “none of the health care reform proposals being considered by Congress will cut Medicare benefits or increase your out of pocket costs” (Wall St J 9/24/09)
The Baucus bill was stripped of a few of the most contentious elements in an effort to attract Republican support: the “public option,” an employer mandate, and Medicare payments for counseling seniors about “end-of life care.” The Congressional Budget Office (CBO) estimated a 10-year cost of $774 billion, and estimated it would cover 94% of “Americans” by 2019, leaving 25 million people—one-third of them illegal aliens—without coverage., writes John Iglehart (N Engl J Med 9/24/09).
Lacking initial support, it is proceeding along “the sort of winding path often followed by major legislative initiatives,” writes Iglehart.
Initial CBO analysis says the Baucus bill would not add to the deficit because its costs would be covered by a tax on “Cadillac” insurance plans, a slowing of the growth of Medicare and Medicaid payments to nonphysicians, and new fees on clinical laboratories and medical-device manufacturers.
Insurers would be required to cover everyone without discrimination on the basis of health status or caps on annual or lifetime coverage.
John Goodman notes the following effects in an article entitled “Baucus Declares War on the Middle Class”:
- The threshold for the 35% excise tax on “Cadillac” insurance is indexed to the consumer price index (CPI), not the medical price index (MPI), which grows three times as fast. Eventually, all insurance will exceed the cap and be taxed.
- “Credible” employer coverage might cost $13,000 for a family. The maximum the employee can be required to pay is 13% of income, or $6,500 if income is $50,000. The employer must pay the rest (out of reduced wages). The full cost that must be paid by workers, either in premiums or reduced wages, after adjusting for taxes, amounts to 26% of his income.
- If the worker qualifies for Medicaid, the employer faces no increased costs. Thus, there is an incentive to hire the poor, and not to hire the middle class.
- Millions of families will be forced to move from private plans, which provide a broad choice of physicians, to Medicaid and S-CHIP plans with much more limited access.
David McKalip, M.D., notes the following effects on physicians, from the version of the bill available to him:
- Capitation will become the dominant mode of payment.
- Doctors would have to be a “Medicare-enrolled physician” to order services that would result in any cost to the Medicare program.
- Doctors will be penalized for going over budget, and no statistically valid samples will be used. At the same time, the cost of procedures and devices they order will be driven up by taxes.
- Doctors will be made to pay $350 each into a fund to pay for “screening” programs to cover unannounced and random site visits to check for “waste, fraud, and abuse.” Doctors may be prevented from practicing in a “fraud-prone” specialty, or required to put up a $500,000 surety bond.
- Medicare funds are redistributed from specialists to primary-care physicians.
Estimates of the effects of “health care reform” bills ignore the effects of other pending legislation, such as the Waxman “cap and trade” bill. Higher unemployment caused by this bill would increase the number of uninsured. The Kaiser Family Foundation estimates that for every percentage point increase in unemployment (the loss of 1.54 million jobs), the number without health insurance rises by 1.1 million. Using projected job loss figures from Heritage, this could mean more than 820,000 losing their health insurance annually. New health problems are also highly correlated with job loss—including hypertension, heart disease, diabetes, alcohol-related problems, and low birth-weight babies (National Center for Public Policy Research, September 2009).
Although Democrats may be staking everything on passage, Iglehart notes: “The reform effort could be derailed at any point along this treacherous path, and the future of Obama’s presidency could hinge on the outcome.
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