The Baucus Health Care Reform Plan of 2009
President Obama's Plan to Make Health Insurance Affordable for All
Oct 15, 2009
In 2007, the United States spent $7,421 per person on health care, totalling 2.2 trillion dollars. This is twice as much as any other developed country (WhiteHouse.gov website, viewed on October 3, 2009). Since that time, these numbers have only gotten larger.
The Obama administration has asked Congress for a plan to make health care more affordable and accessible. Senator Max Baucus, Chair of the Senate Committee on Finance, unveiled a health care reform plan on September 16th, 2009 entitled "America's Healthy Future Act of 2009". The Baucus plan was passed by the Senate Finance Committee on October 16th, bringing this landmark proposal closer to becoming law.
The Baucus plan is controversial, and policymakers and experts are still debating whether all of its claims can be supported. For example, Michael Chernew, a public policy professor at Harvard Medical School, faults the plan for its uncertain costs ("Grading the Baucus Health Plan", The Editors, New York Times, September 16, 2009). Republican Senate Leader Mitch McConnell also alleges that the Baucus plan "puts massive new tax burdens on families and small businesses" ("Senator's Plan Joins Heated Healthcare Debate", Reuters, September 16, 2009).
Here, the original text of "America's Healthy Future Act of 2009" is examined to address the following questions:
- How does the Baucus plan intend to make health insurance more affordable and accessible?
- Would the Baucus plan increase the federal budget deficit?
- Would insurance coverage be mandatory if this health care reform bill becomes law?
- How does this bill aim to improve the quality of health care in the United States?
How the Baucus Plan Intends to Make Health Care More Affordable
According to Senator Max Baucus, costs associated with America's medical system can be reduced by:
- Limiting insurance premiums. Currently, people buy health insurance through their employer or on the private market. Unemployed people, or people who cannot afford private insurance, may choose to do without insurance. The Baucus plan aims to make private insurance more affordable by limiting the premiums insurance companies can charge. Insurance companies would consider just smoking, age, and family composition (whether a person is married or has children) when deciding how much to charge a client. For example, smokers would pay higher premiums than non-smokers (which is already the case), but insurance premiums would be capped so that a smoker would pay no more than 1.5 times what a non-smoker (of the same age and family composition) pays.
- Providing tax credits for those buying private insurance. This tax credit will subsidize the cost of health insurance for people whose gross income is no more than 300% of the federal poverty level.
How Health Care May Become More Accessible for All Americans
The bill states that, by 2013, all American citizens and permanent residents would be required to have health insurance, which would be easier to obtain because:
- No discrimination due to preexisting conditions. Under the new bill, insurers would not be able to refuse coverage to a person with a previously existing illness, disease, or injury. In addition, people who had been refused health insurance due to a previously existing condition will be able to buy insurance through a "state exchange".
- Private insurance will be bought through states, not directly from insurers. "State exchanges" would be set up to make it easier to buy and manage insurance starting in 2010. For example, Americans will be able to purchase health insurance through their state exchange at hospitals, schools, the Registry of Motor Vehicles, or Social Security Offices. Such "state exchanges" would not be actual insurance providers; instead, they would help customers understand their insurance options.
Paying for Health Care Reform Will Not Increase the Federal Budget Deficit
The Obama administration states that the Baucus plan would not increase the federal budget deficit. Some are skeptical given that implementing the Baucus plan may cost as much as $1 trillion (whitehouse.gov, viewed on October 15, 2009). However, on October 15, 2009, an independent analysis conducted by the Congressional Budget Office confirms that the Baucus plan would not increase the budget deficit over the next 10 years. In fact, adopting this plan would result in a $81 billion surplus at the end of a decade ("Letter to the Honorable Max Baucus", downloaded on October 15, 2009 from www.cbo.gov).
Where will the $1 trillion to pay for health care reform come from? Improvements to America's medical care can be funded by eliminating waste in existing government programs such as Medicare, according to the Baucus plan. Additional funds would come from ending government subsidies to insurance companies and reducing insurance paperwork.
Health Insurance Would Be Mandatory
Starting in 2013, under the Baucus plan, health insurance would be required for all American citizens and legal residents, which will be verified on federal tax returns. People who break this law would have to pay an excise tax, which would vary between $750 per year (for an individual whose income is between 1 and 3 times the federal poverty level) and $3,800 (for a family whose income is more than three times as large as the federal poverty level). (Note that the "federal poverty level", according to the United States Department of Health and Human Services, varies by state and family size, so specific incomes cannot be listed here.)
The Baucus Plan to Improve Health Care Quality in America
The Baucus plan states generally that the overall quality of health care in the United States can be improved by placing a greater emphasis on primary care and disease prevention. However, many specific changes are proposed for Medicare, such as:
- Annual physicals would be covered by Medicare;
- Payment to hospitals would be influenced by patient outcome.
A Summary of Health Care Reform in 2009
The Obama administration aims to make health care more affordable and accessible to all Americans by helping the uninsured purchase insurance, requiring health insurance, providing tax credits to offset the cost of private insurance, and emphasizing primary care and supporting hospitals and doctors that focus on overall health and disease prevention.
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