Making the Baucus bill better

MAKING THE BAUCUS BILL BETTER…. Paul Krugman notes today that Max Baucus’ health care framework is, at present, “unworkable and unacceptable.” But, he added, it’s not as bad as some reform advocates feared, and it can be improved. “[T]his plan has to change,” Krugman noted. “What matters now is the direction in which it changes.”

Ezra Klein had several recommendations on how to make the Baucus proposal far more palatable, and Krugman has some specific suggestions in his column.

First, it bungles the so-called “employer mandate.” Most reform plans include a provision requiring that large employers either provide their workers with health coverage or pay into a fund that would help workers who don’t get insurance through their job buy coverage on their own. Mr. Baucus, however, gets too clever, trying to tie each employer’s fees to the subsidies its own employees end up getting.

That’s a terrible idea. As the Center on Budget and Policy Priorities points out, it would make companies reluctant to hire workers from lower-income families — and it would also create a bureaucratic nightmare. This provision has to go and be replaced with a simple pay-or-play rule.

Second, the plan is too stingy when it comes to financial aid. Lower-middle-class families, in particular, would end up paying much more in premiums than they do under the Massachusetts plan, suggesting that for many people insurance would not, in fact, be affordable. Fixing this means spending more than Mr. Baucus proposes.

Third, the plan doesn’t create real competition in the insurance market. The right way to create competition is to offer a public option, a government-run insurance plan individuals can buy into as an alternative to private insurance. The Baucus plan instead proposes a fake alternative, nonprofit insurance cooperatives — and it places so many restrictions on these cooperatives that, according to the Congressional Budget Office, they “seem unlikely to establish a significant market presence in many areas of the country.”

Sounds good to me. The question going forward, though, is how the negotiations will proceed. Is Baucus open to significant improvements? Just as important, is he prepared to use his mark as the starting point for moving to the left, or to the right?

Time‘s Karen Tumulty talked to Baucus last night, and reported that he’s “sounding open to making some changes” and will “iron out” differences with Democrats. That necessarily means a better bill. Most notably, Baucus vowed to “address” Democratic concerns about the size of middle-class subsidies, which seems encouraging. On the public option, he added that the provision is effectively off the table for him, but Baucus described the “trigger” idea, promoted by Sen. Olympia Snowe (R) of Maine, as a “live possibility.”

And speaking of Snowe, it’s also worth noting that Democrats aren’t the only ones demanding that Baucus improve the subsidy rates. Snowe told the NYT, “[T]here would have to be more subsidies” in the proposal.