Tuesday, September 08, 2009

The Baucus Plan

I haven't read it in detail, yet, but what I have skimmed so far suggests that it's more patching of the frock that is the existing health care system. A big patch put on that fraying hem: Let more poor people on Medicaid, the state system which covers health care needs of certain poor people right now. This isn't a bad thing to do, of course, except that Medicaid already is in deep trouble and in many places a physician who accepts Medicaid payments is as rare as those hen's teeth.

Besides, Medicaid reimbursement levels are set by the states (though federally subsidized), so they differ widely across states. But never mind. I guess this patch is better than nothing.

The Baucus plan requires that everyone is covered, either through an employer, the government or through a private policy, but the policy doesn't actually help the people who are pushed into the private health insurance market very much at all.

So that's the summary for access. All people would be covered but what they are covered for might vary greatly.

How would these changes be paid for? This is how:

Fees on insurance companies, drug makers, medical device manufacturers and insurers. Tax of 35 percent on insurance plans costing above $8,000 for individuals and $21,000 for families, applied to premium amounts over the threshold. Cuts to Medicare and Medicaid. A fee on employers whose workers receive government subsidies to help them pay premiums. Fines on those who fail to get coverage, up to $950 for individuals, $3,800 for families.

I haven't studied those suggested fees yet, but I'm skeptical that any of these would bring in enough money. Cuts to Medicare and Medicaid would sorta work against the idea of increasing the number of people eligible for Medicaid, would it not? What, exactly, would be cut there and whom would it hurt?

And the rules of the game? How would they be changed in the Baucus plan for the insurance companies? Note that there would be NO public plan, only the introduction of consumer co-ops into the system. Those might not be a bad idea, because they would not be run on the profit motive so we'd get some control for its effects in this market full of information problems. But consumer co-ops don't have price setting power, don't get quantity discounts and cannot take on pharmaceutical companies or big hospitals. So I think the industry can relax here.

But this is a good change in the game rules:

BENEFITS PACKAGE: The government would set four benefit categories ranging from coverage of around 65 percent of medical costs to about 90 percent. No denial of coverage based on pre-existing conditions. All plans sold to individuals and small businesses would have to cover basic benefits, including primary care, hospitalization and prescription drugs.

It is good because it tries to standardize the product people buy in insurance, and banning the denial on the basis of pre-existing conditions is a necessary change.

But what does that banning mean in practice? Will people with pre-existing conditions get insured but only at an incredible high premium? That wouldn't be change we can believe in, would it?

Perhaps I get the answers I need from a careful study of the plan itself.