Baucus Plan faces scrutiny, changes

BAUCUS PLAN FACES SCRUTINY, CHANGES…. It’s likely that sometime today, Senate Finance Committee Chairman Max Baucus (D-Mont.) will formally unveil the framework of his health care reform proposal for his colleagues. After months of delays, that’s a positive development — policymakers have been waiting on Baucus’ panel for far too long.

The problem, at this point, is with the proposal itself. Putting aside the public option for a moment — Baucus’ plan doesn’t have one — most reform advocates agree that the subsidy cap for uninsured families should be set at 400% of the federal poverty level. Last week, Baucus signaled his intention to support a 300% cap, and there was some scuttlebutt about a 350% compromise.

Suzy Khimm reports that Baucus won’t budge. This will not help in making the bill more appealing to Democrats. For that matter, the far less generous approach won’t even help with Republicans — only Sen. Olympia Snowe (R-Maine) is even considering support for the bill.

Jonathan Cohn considers whether the Baucus framework is adequate in its subsidies.

The bottom line here depends, in part, on which people you consider–in particular, whether you’re looking at the poor or middle class, and whether you’re looking at the relatively sick or the relatively healthy.

Total medical expenses, including premiums and out-of-pocket expenses, would be no more than 20 percent of annual income for most of the people profiled in the document. For the poor, it’d be dramatically less. That’s the (relatively) good news.

And the bad news? These figures are all for people in average health. But people end up paying a lot more in out-of-pocket expenses when they have a serious medical issue–whether it’s because of an accident, an acute illness, or a chronic disease. According to my back-of-the-envelope calculations, a family of four making $42,000 a year could owe $9,000 a year in medical expenses if it hit the maximum in out-of-pocket expenses–which is pegged, in the Finance legislation, to deductible levels in Health Savings Accounts. That’s easy to do when one family member gets in an accident, has an acute medical problem, or is dealing with a chronic disease.

A family of four making $78,000 a year could owe $23,000 — nearly a third of its income — if it had a member with high medical bills.

Keep in mind, progressive Dems on the Finance Committee were blocked from Baucus’ negotiations on shaping the proposal, and weren’t even told which provisions were under discussion. Today will be their first real chance to examine the plan in any kind of detail, and they’re going to want to make some changes. Indeed, The Hill reports that they’re likely to “demand” some fairly significant improvements to the framework.

Publius makes the case that reform advocates should keep fighting for the public option, but at the same time, “can get more substantive bang for their buck by fighting for both better subsidies and higher levels of coverage (i.e., % of costs individuals have to provide)…. [T]he public option is important, but I see it as a longer-term protection. If the Dems pass a bill that mandates coverage but provides skimpy subsidies and anemic coverage, it could be a full-blown policy disaster immediately.”

I realize that it’s not exactly a catchy rallying slogan to chant, “A subsidy cap at 300% of the federal poverty level is unacceptable!” but the truth is, it’s a provision that really needs to be changed.