RJ Eskow: Top Five Reasons the Baucus Bill Is Really, Really Bad

RJ Eskow: Top Five Reasons the Baucus Bill Is Really, Really Bad

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So in order to clarify this complicated issue, here are the top five reasons why it's a really bad bill:

1. Premium rules that are a giveaway to the insurance companies.

The first shocker in the Baucus bill came early on in the draft. Since I've worked in health insurance underwriting I have a certain familiarity with these kinds of numbers. I was stunned to see that the bill allows insurers to charge up to five times as much for some enrollees as for others, based on age. (By contrast, the House draft bill only allows them to charge up to twice as much based on age.)

.... High-cost medical conditions, including chronic (and therefore pre-existing) conditions, aren't restricted to older people, of course. But they become increasingly common as we age -- so much so that indexing costs to age addresses a lot of the difference. The Baucus bill allows insurers to use age as a proxy for costly medical conditions and make coverage prohibitively expensive for those who need it the most ,,,

The net result would be to make insurance increasingly unaffordable to Americans as they age. Nevertheless ...

2. The individual mandate is in there anyway.

Although I've been critical of the way many proposals have structured the individual mandate, I've always said that I understand the logic behind them: If you're going to force insurers to take all comers at a relatively average price, the healthy as well as the sick need to enroll. But if you're allowing insurers to charge much more for the (probably) sick than they do for the (probably) healthier, why have a mandate at all? You're not pooling risk in the manner originally proposed, so this is a heads-I-win-tails-you-lose proposition for the health plans.

3. It taxes benefits, slowly but surely.

I've been opposing the idea of taxing so-called "Cadillac benefits" for a long time. This plan does just that, although they're not likely to be "Cadillac plans" for long. As I feared, the tax isn't based on plan design. It targets plans above $21,000 indiscriminately, regardless of the reason for the added cost.

How is this terrible? Let us count the ways. First, it will hit plans hardest when they enroll older employees (who, you will remember, can cost five times as much to cover). That will penalize older employee groups, and will encourage employers to discriminate on the basis of age. Next, it will hurt people who live in urban and coastal areas where medical costs are higher (not that the Senator from Montana cares about that, I suppose). Lastly, if medical costs continue to increase at 10% per year, $21,000 will be the cost of the average plan in five or six years.

This plan's good CBO forecast rests in part on this new tax income. In other words, it achieves much of its vaunted "budget consciousness" on the backs of the middle class.

4. No public plan option.

But you knew that already, didn't you?

5. Co-ops can't always "cooperate."

... But they can't pool their negotiating ability to get better deals from providers on behalf of the American consumer. (Congratulations, Dems -- more money out of the taxpayer's pocket.)

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The plan does other bad things, too, like the provision that will encourage employers to discriminate against lower-income workers. But hitting you with more than five of them at once could conceivably be bad for your health.