The Baucus Health Plan Proposal--Evidence There Is No Consensus on the Key Health Reform Issues

Max Baucus will be a key player in the health care debate the next two years. As chairman of the Senate Finance Committee he has jurisdiction on many of the key issues including Medicare and provider payment reform.

He is also a leader in the true bipartisan spirit--something crucial to actually getting reform done.

Yesterday, he released a 98-page white paper, "Call to Action--Health Reform 2009."

Reading the executive summary, which given the news stories I have read is about all the press has looked at, the Baucus outline is pretty much Barack Obama's health reform plan. Obama's campaign health plan is 18 pages long and Baucus has tried to take it a distance further with 80 more pages.

The Baucus Health Plan includes:

• Basing the system on existing private and public health plans—employer-provided, Medicare, Medicaid, and SCHIP.
• Insurance exchanges - Creating a system of one or more Insurance Exchanges for individuals and small business to buy their coverage from complete with a management board to run it—very similar to the Massachusetts Connector and the Connector Board.
• Premium subsidies - His subsidy proposal is vague. The Insurance Exchange Board would determine a schedule of coverage affordability based on available health plans, their costs, and income levels. A tax credit would be available to subsidize those deemed not to be able to afford part or all of the cost. This is identical to the process the Massachusetts Connector Board follows.
• Medicare buy-in - Before the Insurance Exchange is up and running and its plans available to consumers, Baucus would allow those age 55-64 to buy-into Medicare.
• Insurance regulation - Insurers could offer health plans through the exchange but would have to comply with benefit and plan option requirements and would be subject to guarantee issue requirements. The health plans could rate around restricted age, sex, and lifestyle issues.
  
• A government-run plan for the under-65 market - After the Insurance Exchange is running Baucus would create a government-run option for consumers to choose. It would not look like Medicare but would have benefit options like the private plans offered in the Exchange.
• Traditional insurance distribution - Insurers could also market outside the exchange using the traditional direct and intermediary distribution systems.
• Medicaid expansion - Medicaid would be expanded to cover all of those below 100% of poverty who were uninsured.
• SCHIP expansion - SCHIP would be expanded to cover all of those below 250% of poverty who were uninsured.
• An individual mandate - Baucus’ plan does differ with the Obama Health Plan in that his plan has an individual mandate to buy health insurance - “Once affordable, high quality, and meaningful health insurance options are available to all Americans, through their employers or through the Exchange, would have a responsibility to have health coverage.”
• An employer mandate - All but the smallest employers would be required to offer and pay for coverage or pay into a government pool—“pay or play.”
• Incremental cost containment "lite" - The plan’s cost containment features are vague and embrace many of the same incremental items both Republicans and Democrats have listed—all “cost containment lite” features. Baucus’ list includes the elimination of fraud waste and abuse, increased price and cost transparency, wellness initiatives, and health information technology.
• Medical malpractice reform - He explores a number of medical malpractice reform ideas around the theme of no fault health courts but makes no specific proposal.
• Physician payment reform - He spends a great deal of time on the issue of physician payment reform calling for better payments for primary care, reforming the Sustainable Growth Rate formula, and pay-for-performance and quality. However, he never deals directly with the issue of specialist payments and never draws a specific conclusion on how he would proceed.
• But no cost estimates or plan to pay for it - What is remarkable about he Baucus Health Plan is that he offers no cost estimates or mentions how he would pay for it! The Obama Health Plan would cost at least $100 billion a year and the Baucus plan is very similar—almost identical at the outline level.
  

I read one press report that suggested the similarity to the Obama health plan and the Massachusetts health law must mean that the Congress is coming close to a consensus on how to proceed with health care reform.

My advice to the reporter is to spend some time reading the document. It is not so much a plan for specific action as a recounting of the many broad possibilities we could take on key issues such as physician payment reform and medical malpractice reform. There is no detail for just what the most expensive and important element--individual subsidies--would be. It is notable that physician payment reform is an unavoidable issue for the Finance Committee given the pending 21% physician fee cut and he clearly has no specific plan there. There is no cost estimate or plan to pay for it.

Baucus is so vague on key elements because there is no consensus, particularly from the key relevant stakeholders to any of these issues, on just how to proceed. There is no cost estimate because the plan is so vague in structure and timetable. There is no source for funding because there isn't a source for the likely $100 billion this would cost in the first year.

If you read just the executive summary you might see proof of consensus on what health reform might look like.

If you read all 98 pages it is clear there is no consensus on many of the key details, what health reform would cost, the timetable for implementation, or the source for paying for it.