Will the Chickens Roost in the CO-OP? Max Baucus’ Health Reform Proposal.

Someone has leaked a document from Senator Max Baucus, titled a Framework for Comprehensive Health Reform, which purports to be the basis for discussion by the “Gang of Six” Senators on the Senate Finance Committee upon whose quivering shoulders rests the fate of the proposed federal take-over of Americans’ access to medical services. Someone skilled at uncovering code in electronic documents has determined that the author is a Baucus staffer by the name of Liz Fowler, who has done time in the external affairs department of mega-health insurer WellPoint, Inc., between stints with Senator Baucus.”

The “framework” is a tax-hiking helping of previously discredited, warmed over ideas.  Its 18 pages contain precisely one very good idea: Allow states to form one or more compacts to facilitate the interstate sale of health insurance (pp. 2-3). This is better language than in Rep. John Shadegg’s bill, the Health Care Choices Act. Rep. Shadegg relies on the Constitution’s interstate-commerce clause (article 1, section 8 ) to claim Congressional authority over state regulation of health insurance. However, the interstate-commerce clause applies to goods being bought and sold across state lines, not migrating people. The compact clause (article 1, section 10) is a much clearer delegation of authority.

It also contains one okay idea: eliminating so-called “income disregards” from determining eligibility for Medicaid (p. 7). A hodge-podge of these “disregards” artificially and opaquely brings people into Medicaid whose actual incomes would otherwise disqualify them. It’s better to have a transparent income cut-off. Unfortunately, and appallingly, Medicaid beneficiaries would not be able to bail out of Medicaid and take a tax credit to buy individual health insurance through a state exchange (which will be available only to non-Medicaid eligible individuals).

It asserts Congressional authority to command states to establish new bureaucracies, “ombudsmen” (p. 1), to act as “consumer advocates” when insurers reject claims. Is Senator Baucus unaware that state Insurance Commissioners and Attorneys General invest a significant amount of their time doing this?  Last September, Health Net agreed to reinstate 926 policies in California, pay $3.6 million in fines, and reimburse $14 million in medical claims for rescinded policies. In July 2008, Anthem Blue Cross agreed to pay $11 million in hospital claims deriving from rescinded policies in California. New York Attorney General Andrew Cuomo got UnitedHealth Group to cough up $350 million to address accusations of mispricing out-of-network charges.

Although it levies a pay-or-play mandate on employers, mandates individuals to buy coverage, taxes high-value health plans, and offers oodles of tax credits to small businesses and low-income individuals, the Framework neglects to add them all up to give us a total cost. (Given the public outrage at the Congressional Budget Office’s estimate that the House bill (H.R. 3200) would cost over $1 trillion dollars in the next ten years, it’s understandable that Senator Baucus would like to dodge this for as long as possible.)

The only real “innovation” in the Framework is that we finally have some shape to these co-operatives that have been mooted as an alternative to the public option (pp. 5-6). The Consumer Operated and Oriented Plan (CO-OP) program will dole out federal grants and loans to state-chartered, non-profit co-operatives that will compete against incumbent health insurers. The Framework asserts that the CO-OP’s board will disband by December 31, 2015, having handed out all the cash! I wouldn’t wait for that day: These co-operatives will be designed for perpetual taxpayer bailouts.

However, the co-operatives have a more important (unstated) purpose: Every Blue Dog Democrat or RHINO Congressman who is scared that he’ll lose his seat in November 2010, if he votes for the health-care take-over, can be bought off with the promise of a soft landing on the Board of Trustees of his local health-care co-op.

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