Baucus Plan Would Cause Significant Dislocation in Insurance Markets
How Many People Would Pay More for Not Having “Bureaucrat-Approved” Coverage?
White papers released by Finance Committee Chairman Max Baucus have proposed several significant changes to the way most Americans obtain their health care coverage. Specifically, Sen. Baucus would establish additional requirements on all new forms of health insurance and have bureaucrats in new Exchanges give a “seal of approval” to those plans that comply. Many individuals may be affected by these new bureaucratic mandates as follows:
- Baucus proposes that plans “cannot charge cost-sharing (e.g., deductibles, co-payments) for preventive care services.” However, a recent survey of employer-sponsored plans found that more than one in ten workers subject to a deductible do not have preventive care services exempted from that deductible. These workers do not meet the definition of “bureaucrat-approved” coverage.
- Baucus proposes that “plans could not include…annual limits on any benefits.” The same comprehensive survey of employer-sponsored plans found that more than one in five covered workers—more than 30 million individuals nationwide—do not have annual limits on cost-sharing. These workers do not meet the definition of “bureaucrat-approved” coverage.
- Baucus proposes that “plans could not include lifetime limits on coverage.” However, more than half of all individuals with employer sponsored coverage—over 80 million covered lives—participate in policies with some maximum lifetime benefit. Even though a March survey found the average lifetime maximum benefit for small group health insurance approached $5 million, these workers do not meet the definition of “bureaucrat-approved” coverage.
- Baucus proposes that plans must have an “actuarial value”—the percentage of health expenses paid by the plan—of at least 76%. However, the most popular plan in Massachusetts’ new Connector has an actuarial value of 56%, according to the Congressional Research Service. Thus—even though Sen. Baucus holds up the Connector as a model for his nationwide Exchange—seven in ten individuals enrolled in Massachusetts will not meet his definition of “bureaucrat-approved” coverage.
- While individuals will not be required to relinquish their current plans, Sen. Baucus has also proposed taxing some portion of health insurance benefits in order to finance health reform. While his white papers have also proposed tax credits to subsidize low-income individuals’ coverage—and offset any new benefit taxes—he has also stated that “no low-income tax credits would be provided to those in grandfathered (i.e. existing) plans.” As a result, individuals in any of the categories above could pay more to keep their current coverage—because their plan is not “bureaucrat-approved.”
Given that most Americans who have health coverage are happy with their current plan, many Members may question the wisdom and necessity of raising individuals’ taxes in an attempt to strong-arm them into a new system of bureaucratic mandates—particularly when those mandates will lead to richer benefit packages that will likely raise health costs, not lower them. Moreover, some Members may question whether the “bureaucrat-approved” insurance will soon lead to controls on prices—or access to life-saving therapies and treatments—being placed on Americans’ health coverage in an attempt to control the skyrocketing costs accelerated by further bureaucratic mandates.