Baucus' Move

There's been a lot of ink spilled about the failure of Clinton-era health care reform, but certainly legislators inside the Democratic caucus, particularly Blue Dogs and moderates, had a hand in sinking the proposal. Maybe it was because they felt cut out of the negotiations, or because they just didn't believe in the scope of the problem. Well, the best indication that 2008 is different is that Max Baucus, not a progressive, has boldly sketched out a universal coverage plan just a week after Barack Obama's election. There is good reason to be skeptical, however.

Here's the birds-eye view of Baucus' plan:

Without waiting for President-elect Barack Obama, Senator Max Baucus, the chairman of the Finance Committee, will unveil a detailed blueprint on Wednesday to guarantee health insurance for all Americans by facilitating sales of private insurance, expanding Medicaid and Medicare, and requiring most employers to provide or pay for health benefits [...]

The proposals are all broadly compatible with Mr. Obama’s campaign promises. But Mr. Baucus’s 35,000-word plan would go further than Mr. Obama’s in one respect, eventually requiring all people — not just children — to have coverage.

“Every American has a right to affordable, high-quality health care,” Mr. Baucus said. “Americans cannot wait any longer.” Far from being a distraction from efforts to revive the economy, he said, “health reform is an essential part of restoring America’s economy and maintaining our competitiveness.”

Mr. Baucus would create a nationwide marketplace, a “health insurance exchange,” where people could compare and buy insurance policies. The options would include private insurance policies and a new public plan similar to Medicare. Insurers could no longer deny coverage to people who had been sick. Congress would also limit insurers’ ability to charge higher premiums because of a person’s age or prior illness.

People would have a duty to obtain coverage when affordable options were available to all through employers or through the insurance exchange. This obligation “would be enforced, possibly through the tax system,” the plan says [...]

In his plan, Mr. Baucus makes these proposals:

¶People age 55 to 64 should be able to buy Medicare coverage if they do not have access to a public insurance program or a group health plan. More than four million people in this age group are uninsured.

¶Medicaid would be available to everyone below the poverty level, providing at least seven million more people with access to the program. In many states, adults with incomes well below the poverty level — $17,600 for a family of three — are ineligible for Medicaid.

¶The State Children’s Health Insurance Program would be expanded to cover all uninsured youngsters in families with incomes at or below 250 percent of the poverty level ($44,000 for a family of three). This would raise the income limit in about half the states.

You can read the white paper here. This is basically the generic Democratic health care plan, not much different from what Obama campaigned on. Obviously, the big difference here is that the plan would include an individual mandate to buy health care, which was part of Hillary Clinton's plan during the primary but not Obama's. I don't think Obama is unaware of that fact - his chief of staff during the general election campaign, James Messina, held the same position for Baucus. And Obama has said that Congress should take the lead on this issue.

And there would be a public option to compete with the insurance companies. Jon Cohn has this:

It look a lot like the plan Barack Obama touted on the campaign trail: Expanded Medicaid and S-CHIP for the poor; a pooling mechanism that allows individuals and the uninsured to buy coverage at group rates; a new public insurance plan, modeled vaguely on Medicare, that would be available to people buying coverage through the new pool; subsidies to offset the cost of insurance coupled with efforts to restrain the cost of medicine in the long term; and regulations that force insurers to sell to everybody, regardless of pre-existing condition.

I think a lot of this may be a matter of jurisdiction. If Baucus comes out first with a big proposal, it becomes the spine for the eventual legislation. The Committee on Health, Education, Labor and Pensions would presumably have some control over this as well, and right now that's chaired by Ted Kennedy. The good news is that Kennedy has come out with praise for Baucus' effort. But we have no idea what's going on behind the scenes, where it matters.

These sorts of jurisdictional battles can be damaging. And they have real effects. HELP is a liberal committee that could pass a fairly pure bill that might have problems on the floor. Finance has a moderate, bipartisan history and would probably pass a heavy, consensus-oriented bill that will be built to smoothly pass once brought to the floor. I've heard talk, in the past, of setting up a special Committee of some sort that would include members of HELP and Finance (and probably Clinton and some others) to build health reform, but so far as I know, that's not gone anywhere. Then there's the wild card of Kennedy's health. WIthout Kennedy, HELP has nothing.

I'm not sure we should all cheer Baucus' outline, although the addition of universality and the recognition that we need reform is very important. First, the good. Fixing health care is the fiscally conservative thing to do. The only entitlement program with the potential to bust the federal budget is Medicare, and that's directly attributable to out-of-control costs. We currently spend more than any country in the industrialized world per capita on health care and achieve less results. The insurance and pharmaceutical industries have gamed this system for decades and the horror stories are legion. What's more, business is coming to the realization that they can't compete without government relieving the health care burden that makes it impossible for them to succeed. Despite the neo-Hooverist cant that Obama has to go slow on things like health care until the economy is sound, the fact is that expanding health care would provide an immediate stimulus for individuals and business. In addition, the unions are in full support of the measure and willing to spend on crafting public opinion. Politically speaking, those are a lot of allies in our corner. And by attacking this early, you get the sense of a "liberal shock doctrine," with progressive ideas used to combat a looming crisis.

Now, the bad. Mandates can be a forced market for insurance companies - in fact, they favor it in exchange for health care reform. Baucus' proposal is not a single-payer system. He came right out and said today that "I don't think a single payer health care system makes sense in this country, we are America, we will come up with a uniquely American health care system that's a combination of public and private." That kind of exceptionalism just makes no sense against economic reality. If the insurance industry can pawn off the sick onto the public plans, those costs will rise while insurers take in record profits. There is a clause in the proposal that "Private insurers offering coverage through the (Health Insurance) Exchange would
be precluded from discrimination based on pre-existing conditions," which is great, but insurers have used other means, like recsission (retroactively kicking people off the insurance rolls when they file a claim because they "lied on their forms"), to get out of paying for treatment. There also doesn't appear to be any language that insurers must spend a significant portion of their premiums of actual care. As for the cost controls, there's this clause, "The plan also considers careful reforms of medical malpractice laws that
could lower administrative costs and health spending throughout the system, while ensuring that injured patients are compensated fairly for their losses," which sounds like another round of tort reform to me.

It's hard to fully trust Baucus. He wrote the first Bush tax cut and he helped shepherd the Medicare Part D prescription drug bill which was a giveaway to industry. But Baucus also helped stop the Social Security privatization scheme and outflanked Republicans to get a Medicare fix passed this summer. His record is mixed at best, and that's not the greatest profile to have when you're the point man on universal health care:

His appetite for pork -- and his skill at wresting it for his state -- is so legendary that The Washington Post branded him a "High Plains grifter." As one former Baucus staffer put it to me, "He's like the city councilman for the state of Montana." And, he's well known for his tendency to break with the Democratic Party. In 2001, he was so instrumental in passing Bush's tax cut that he stood behind the president at the bill-signing ceremony, a visual that featured prominently in his 2002 campaign ads. (In 2003, however, Baucus voted against the second round of tax cuts.) He voted to repeal the estate tax and earned a 70 percent approval rating from the Chamber of Commerce.

Also helpful is the fact that Baucus never enters an election underfunded. "One of the rewards I was told about before I selected the committee," says Durenberger, "was someone said, 'You have to run for re-election. This is the best place to raise money.'" Much of Baucus' cash comes from the industries most affected by his committee's legislation. According to the Center for Responsive Politics, this cycle has seen Baucus raise almost $800,000 from securities and investment firms, $565,000 from the insurance industry, and $462,000 from the pharmaceutical industry. Ninety percent of his funds have come from out of state. In total, he's raised more than $10 million. (Some of which has gone to the Democratic Senate Campaign Committee; Baucus bragged to me that he had more than doubled the target contribution set by Sen. Chuck Schumer.) [...]

When I meet with Baucus at the City Grille in Denver, he is eager to emphasize this chapter in his story. "When Reid put me in charge of stopping the privatization of Social Security, man that was fun. That was the right thing to do," he says. "I remember President Bush came to Great Falls, Montana, and I set up a meeting with seniors at the same time, just across town, just right in his face. I relished the opportunity just to beat down privatization flatly and squarely." His message is clear: I can fight.

Unbidden, Baucus then launches into a retelling of his fight in July to block the 10.6 percent cut in Medicare physician reimbursement. Here too, the message is clear. "I walked away from Senator Grassley," he says. "I tend to work with Senator Grassley. But there comes a time when you just gotta say, 'Sorry.' These things get watered down too much, it's just not right, so I just broke with him on that and pushed through a Medicare bill that finally got 60 votes. We had to work hard to get those 60, because Grassley didn't agree, but that was the right thing to do. So when Ted Kennedy walked on the floor to cast the 60th vote, that's a moment I'll always treasure."

I'll take Baucus at his word that he is serious about the health care crisis. But a new reform must be the right kind of reform - it can't be a watered-down giveaway to industry that keeps them alive for no significant reason. I recognize that conservatives have bashed "socialized medicine" for so long that there needs to be a lot of education around the issue before you frontally assault it. But if you waste this moment once again, and create a system that rewards insurers more than people, all of the trust built up in this historic campaign will fade away.

It's crucial that we make perfectly clear that health care should be at the top of the agenda for the incoming Democratic majority. But it's not enough to demand its presence - we have to actively shape the reform itself as well. This legislation is by no means final - in most areas it's deliberately vague. Sen. Baucus is trying to control the pathway through which health care must travel. We the public must get a tollway on that path as well.