As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Wednesday, September 09, 2009

Fines For Failing To Pay Insurance Companies

This was a spectacular headline to weather for a full day atop Drudge:

Americans would be fined up to $3,800 for failing to buy health insurance under a plan that circulated in Congress on Tuesday as President Barack Obama met Democratic leaders to search for ways to salvage his health care overhaul [...]

The latest proposal: a bipartisan compromise that Sen. Max Baucus, D-Mont., a moderate who heads the influential Finance Committee, was trying to broker.

Baucus, meeting with a small group of fellow senators, promoted a plan that would guarantee coverage for nearly all Americans at a cost to taxpayers of under $900 billion over 10 years.

Some experts consider that a relative bargain because the country now spends about $2.5 trillion a year on health care. But it would require hefty fees on insurers, drug companies and others in the health care industry to help pay for it.

Just as auto coverage is now mandatory in most states, Baucus would a require that all Americans get health insurance once the system is overhauled. Penalties for failing to get insurance would start at $750 a year for individuals and $1,500 for families. Households making more than three times the federal poverty level - about $66,000 for a family of four - would face the maximum fines. For families, it would be $3,800, and for individuals, $950.

As I've pointed out, the bill is a bargain because Baucus achieves it through allowing insurers to provide less comprehensive health coverage to practically everyone in the country.

This will, and should, be the next line of attack for conservatives - that everybody will have to pay $3,800 to the government if they don't buy health insurance. That's just the maximum fine, but that will become the individual fine for everyone in the country after a trip through the conservative puke funnel. And there's an exemption if you can't find insurance premiums less than 10% of your income. But I prefer to look at the other side of this. This bill forces you to give up to 10% of your income to insurance companies who have, as part of their business, lied their way out of paying for health care for decades. Health insurers can also charge individuals five times as much based on their age, under this plan, a stark difference from the 2:1 community rating in the other Congressional plans. And the coverage doesn't have to be very good, particularly for young adults, who can get "only-if-you're-hit-by-a-bus" coverage. I believe in an individual mandate to increase the risk pool to the maximum level, but the above headline is its threat - that it just looks like a stick-up.

If Baucus wants Olympia Snowe to sign on to this, and the bill appears to be designed that way, he's probably going to have to increase the subsidies to 400% of federal poverty level, or at least 350%. Of course, that would cost more money, and Snowe wants to pay for the bill entirely through internal system costs, which I don't think can fill that gap. Baucus' numbers on revenue don't even seem to add up. Maybe something like David Cutler and Judy Feder's plan could make it in:

Health policy experts David Cutler and Judy Feder, however, have an innovative proposal for making them count. In a paper for the Center for American Progress, they argue for the implementation of "failsafe" policies — crude, surefire interventions — that will kick in if the expected savings don't manifest. Limiting the growth of Medicare payments, for instance. Increasing the excise tax on insurers. Moving the public plan towards Medicare rates.

You can think of a dozen with little trouble. But if you kept them looming behind the curtain — the Oddjob to your Goldfinger — in the event that the expected modernization savings didn't manifest, it would make the anticipated savings visible to CBO, and free up money for affordability. Moreover, it would make those savings more likely to manifest, as insurers wouldn't want more of tax on their heads and hospitals wouldn't want lower rates, and so there would be more of an incentive to implement some of the softer, gentler reforms.

All in all, I understand why policy experts think the pendulum is swinging back toward reform happening. But without a public option, forcing people under penalty of fines (and what if they don't pay the fines? Prison?) to fork out a bunch of money to private insurance companies is just going to be flat-out unpopular. Especially if the help from the government to pay for that insurance is not affordable, which I don't believe it is in the Baucus plan. I guess Snowe's trigger would be tied directly to affordability, but it just seems like a trigger would be written so as to assure its never coming into existence.

Labels: , , , , , , , ,