Wednesday, September 16, 2009

Baucus Bill Chairman's Mark

full text is here. More later.

Update: Reading through the bill. Mostly similar to what leaked all last week. State based exchanges with substantial insurance reforms, allows employers with up to 100 employees to buy insurance via state based exchange, allows states to create cross-state compacts to sell policies across state lines (think that is new).

Update: Also, I think I have said this before, but the co-ops idea is a political compromise and not an actual reform. Given the attempt to expand coverage via private insurance in an individual purchase market, I would favor a public option. A gov't run health insurance plan that people who are eligible for the exchange (meaning uninsured, work for small businesses who are eligible) could buy if they wanted. But, the co-ops are not worth doing so far as I can tell. So, for me it is public option or not....and if no public option then we shall see whether private insurance companies end up competing in a way that lowers premiums....this is mostly theoretical. I agree that it works real well for ice cream cones, airline tickets and running shoes, but there is just not much evidence it works for health insurance. And in NC, Blue Cross/Blue Shield sold 98% of the individual market policies last someone is going to have to enter if there is to be competition....and they sold about 8 in 10 group policies in the state. I don't have anything against BC/BS, it is just unlikely that NC is about to become a hot bed of competition sans a public option.

Still has financing provisions discussed last week....35% excise tax on the value of benefits above $8,000 for indivdiuals and $21,000 for families. I didn't realize until now that this included major medical premiums (paid by employer and employee), and dental premiums AND amounts put into flexible spending accounts. So, for me that is about $11,000 in major medical, $1,000 for dental and $4,000 into a flexible spending account (already gone this year!) for a total of $16,000 per this law. So, my health insurance company WOULD NOT pay a tax on my plan. And I think of myself as having pretty good insurance. Note that this plan does not exempt self insured companies from this. If self insured and hire an administrator, then tax levied on administrator. If self insured and administrate your self, then tax on the business that is self insured. So, point is not just to raise revenue, but to disincentivize high value health insurance plans....aka, reduce moral hazard in the system to try and slow cost growth.

I would prefer a straight cap of the tax exclusion of employer provided insurance. And I would put it down to the mean value of employer paid insurance premiums and use the extra for premium support for folks between 200-400% of poverty. It is simpler and it is simply closing a loop hole in the tax code. this approach is a bit convoluted, and while it may do the same thing in a round about way (raise money to offset spending in the bill and decrease incentives to have too much insurance that leads to overuse) a cap of the tax exclusion would do this simpler, and would more directly put the incentive to use less for overinsured folks where it belongs (the users of care). Not clear to me how much this raises, but I am thinking about $200-$300 Billion over 10 years or so. Update: Wall Street Journal says this raises $215 Billion over 10 years. Also says provisions below raise $93 Billion over 10....but I read it to say each tax levied each year for 10 which would be ~$130 Billion over 10....

Other major financing provisions inlcuded are several aggregate taxes levied on specific industries, with the tax liability divied up by market share.
*Drug companies $2.3 Billion/year
*Medical device makers (like pacemakers, artificial joints) $4 Billion/year
*Health Insurance companies $6 Billion/year
*Clinical labs $750 Million/year
Total $13 Billion/year, or $130 Billion over 10 years.

Here is a good post comparing what premiums would look like under Baucus bill, Baucus structure with total cost of House bill ($1.1T v. $880B over 10 years), and compared to Massachusetts reform approach. The writer is basically saying structure is ok, but underfunded.

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