Slate's interactive guide to the Senate Finance committee markup on health reform.

How to fix health policy.
Sept. 21 2009 8:07 PM

Write Your Own Health Reform Bill!

Slate's interactive guide to amending the Baucus bill.

Click here for a guide to following the health care reform story online.

The health reform bill (text, summary) introduced last week by Sen. Max Baucus, D- Mont., chairman of the Senate finance committee, is kind of a dog. The product of many months of negotiation among a bipartisan seven-member "coalition of the willing" (reduced to six after the defection of Sen. Orrin Hatch, R-Utah), it includes so many concessions to the GOP that at least three Democrats (Sen. Jay Rockefeller of West Virginia, Sen. Ron Wyden of Oregon, and Sen. Maria Cantwell of Washington) are threatening not to vote for it. Yet the bill has not won the support of a single Republican.

Even so, Congressional Budget Office Director Douglas Elmendorf speaks well of the Baucus bill (blog, report). So does Ronald Brownstein at the Atlantic. They like it because it's projected to reduce Medicare spending more drastically than the other versions of the bill passed by three House committees and the Senate's health committee. But Princeton economist Uwe Reinhardt speaks ill of it. He dislikes the bill because it does a terrible job of curbing private sector health costs. Indeed, Reinhardt argues, private-insurance premiums may rise so fast after the bill's passage that it could provoke a populist revolt.

Not Elmendorf nor Brownstein nor Reinhardt has a vote on the Senate finance committee. Can the Baucus bill be fixed by those who do? That's the assumption behind 564 amendments to be offered as the committee takes up health reform this week.

The amendments are all described on the Senate finance committee's Web site. Unfortunately, they're scattered among six PDF files, and navigating them is a nightmare. Slate's Chris Wilson, who sees opportunity where others see an ungainly data dump, assembled all these amendments into a single spreadsheet  that can be sorted according to sponsor, party, budgetary offset, and whether the amendment in question addresses insurance coverage, reform of "delivery systems" (i.e., doctors and hospitals), or financing (taxes). (Some readers may need to log in to Gmail to view the sortable version. A low-fi version is available here.)

Here are three problems I would especially like the committee to fix:

Stingy premium subsidies. Like the other health reform bills, the Baucus bill contains an "individual mandate" requiring virtually all Americans to obtain health insurance or pay a tax penalty. All four bills extend government subsidies to low- and moderate-income purchasers. But according to the nonprofit Center on Budget and Policy Priorities, low- and moderate-income people would pay three times as much under the Baucus bill as they would under the House bill (text, summary) and nearly five times as much as under the Senate health committee bill (text, summary). A family of three earning $46,000 per year would have to spend $4,800, or more than 10 percent of its income. And that's just for premiums; if a family member actually used this insurance to go to the doctor, there would be additional expenses such as co-payments and deductibles.

Wyden will introduce an amendment (249) that would increase subsidies for those earning between 200 percent and 400 percent of the poverty level. Wyden would pay for the added subsidies with a sin tax on Internet gambling. Sens. John Kerry, D-Mass.; Jeff Bingaman, D-N.M.; and Chuck Schumer, D-N.Y., have a slightly different amendment (300) to increase the subsidy that's also worth considering. It would be paid for with a tax on health insurers. Baucus has signaled he will support some sort of increase in subsidies.

"Free rider" tax. Another problem with Baucus' bill is the way it taxes businesses to pay for health insurance. I sympathize with Baucus' desire not to rely too heavily on an employer tax to pay for health reform—better to get employers out of the health-insurance business altogether. Baucus' substitute for a straight-up "pay or play" requirement is for employers to make the federal government whole for the (relatively meager) subsidies it provides to low- and moderate-income employees who purchase private health insurance in newly created health-insurance exchanges. But as the Center on Budget and Policy Priorities points out, this creates a strong disincentive for employers to hire low- and moderate-income employees, especially if they have families.

Citizens for Tax Justice, a labor-affiliated nonprofit, has recommended a variety of alternative means to pay for health reform and points out that President George W. Bush's tax cuts cost two-and-a-half times as much as the supposedly spendthrift House health reform bill.

Kerry and Schumer propose an amendment (226) to eliminate the free-rider tax and replace it with a "pay or play" tax. Cantwell has an amendment (295) that would let employers reduce their "free rider" tax to whatever extent they contribute to a medical account for the employee in question. I don't see how that would make much of a practical difference from the employer's point of view. Sen. John Cornyn, R.-Texas, has an amendment that would require the secretary of labor to certify that a "free rider" tax won't result in lower wages or higher employment. This seems mainly an attempt to embarrass the Obama administration. Cornyn has no offset for this but says he'll bring one to markup. My guess is that his offset is "Don't pass this bill."

No public option. The biggest problem with Baucus' bill is that it lacks a "public option," a government-created health insurance program that would compete with private health plans in the health exchanges, thereby exerting downward pressure on private-sector premiums (and more broadly provide a safe harbor should the bill's new regulations fail to end chicanery by private insurers). Instead, the Baucus bill creates nonprofit health cooperatives to do the same thing.

These are a poor substitute, Sen. Rockefeller argues in a Sept. 16 letter to Baucus. Rockefeller points out that in the United States, health co-ops are "a dying business model," having enjoyed a brief vogue during the early 20th century and subsequently dwindled in number to somewhere between five and seven. They "function just like private health insurance companies," Rockefeller continues, and therefore wouldn't likely create much in the way of price competition for private for-profit insurers.

Schumer and Cantwell have an amendment (261) to create the same public option described in the Senate health committee bill. Rockefeller has a slightly different public-option amendment (187). I'd be delighted to see either one pass.

I have some other problems with Baucus' bill, but these three are the most important. You don't like my bill as amended? Consult Wilson'sspreadsheet and amend it yourself.

E-mail Timothy Noah at chatterbox@slate.com.

Timothy Noah is a former Slate staffer. His  book about income inequality is The Great Divergence.

Chris Wilson is a Slate contributor.

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