Baucus Health Care Reform Proposal
Posted by benarmstrong on 1/18/2009 1:47:43 PM.
This policy was first proposed by Max Baucus, Senate Finance Committee Chairman.
Level of Government: National
Status: Proposed

Abstract
Background:
The Baucus Plan is an unofficial proposal in the form of a Senate Finance Committee White Paper.  It was released shortly after the election of Senator Barack Obama and is believed to represent the framework for Congressional health care reform beginning in 2009.  The Baucus and Obama plans include many of the same principles and proposals.
Purpose:
The Baucus Plan seeks to increase the 1) accessibility, 2) quality and 3) affordability of American healthcare through a suite of national reforms. The Baucus Plan envisions access to affordable health care for every American.
Plans:
Accessibility
The Baucus Plan mandates that all American citizens have health care coverage. A mandate for universal health care is only possible with expansive access to affordable care. The Baucus Plan seeks to build upon the current employer-based system and government programs in order to provide the level access that a mandate needs in order to be plausible. The Plan offers a tax credit for small businesses that choose to offer health care to their employees. Large firms that do not offer health care to their employees will be forced to contribute to a fund that covers care for the uninsured. 

The plan creates a Health Insurance Exchange to develop a transparent market for quality health insurance that guarantees access for all Americans. A board of appointed experts will comprise the Independent Health Coverage Council, which will oversee the creation and management of the exchange and the larger reform program. The Plan will offer tax credits to individuals and families with income under 400% of the Federal Poverty Level who buy health insurance through the Exchange. 
 
To expand current public programs, the Plan offers citizens between 55 and 64 years the option of joining Medicare. A “Medicare buy-in” would allow these citizens to buy Medicare coverage, but only until the Health Insurance Exchange is created. The Plan extends Medicaid eligibility to everyone in poverty. It also commits to cover all children under 250% of the poverty level through expanded enrollment in the State Children’s Health Insurance Program.
 
Quality
The Baucus plan seeks to increase the quality of the “health care delivery system” by focusing on preventative care, reforming the health care payment system to reflect the quality of care, encouraging collaboration among health care providers and modernizing the “health care infrastructure.” 
 
The Plan argues that primary care facilities are a focal point for managing and preventing chronic conditions. It will increase payments to primary care providers and further investigate the efficacy of “medical home” and community treatment methods.   
The Plan also seeks to make health care payments according to the quality of the provider’s care. It will require increased transparency and extensive reporting on health care provider quality.   The plan will also incentivize collaboration among physicians and health care providers by testing and investigating new payment methods for groups of providers that work together.

The Plan allots significant resources to training medical staff and modernizing the health care record system so that doctors can more efficiently collaborate, access patient files, and evaluate treatments. 

Affordability
The measures that the plan sets forth to increase access and quality will also reduce the cost of health care. The plan offers increased subsidies and expanded public health care coverage for low-income individuals and families, effectively reducing the cost for them to access health care. For small businesses, a tax credit reduces the cost of providing health care to employees. 

Measures to increase quality and efficiency, too, are meant to drive down costs for the state. The plan argues that focusing on preventative care will lower the ultimate costs of health care borne by the government. In modernizing the health delivery system, the plan purports to reduce wasteful spending. Increased transparency, the plan argues, will also reduce the costs of ensuring universal access to affordable health care.
Resources:
The Plan argues that reducing waste in health care spending will eliminate $700 Billion of the United States’ current health care expenses. It contends that maintaining the current health policy will cost the United States Government $2 Trillion in the near future. It proposes a reduction in wasteful spending, abuse of process and inefficient tax incentives. It does not, however, offer a total cost of the plan, nor does it offer a specific method of paying for it.  

Policy Details

The Baucus Plan requires all American citizens to have health care coverage.  The Plan does not propose a specific enforcement mechanism or penalty for the uninsured.

The plan argues that mandating coverage, focusing on an employer-based system and creating an insurance exchange will pool risk among more individuals of variable health and reduce the overall cost of health insurance.  Mandating coverage will usher more health people into the market, reducing overall risk.  An employer-based system “naturally” spread risk over a larger population.  While the plan does not outline any direct measures to change the current insurance risk pools, it does claim that the proposed Health Insurance Exchange will be capable of adapting the current system to pool risk more cost-effectively.  The Exchange will be authorized to ensure that “plans enrolling sicker-than-expected people would not suffer a financial disadvantage compared to those enrolling healthier people.”

The plan creates a Health Insurance Exchange to develop a transparent market for quality health insurance that guarantees access for all Americans.  The Exchange would communicate information about the cost and quality of health care options available to individuals and small businesses.  It would allow Americans to shop for health insurance that meets quality standards.  The exchange will only offer health care options that are comprehensive, non-discriminatory and meet certain quality standards.  The funding model for the exchange will mirror that of Massachusetts’ Commonwealth Connector program, placing a small tax on premium payments. 

The plan creates a Health Insurance Exchange to develop a transparent market for quality health insurance that guarantees access for all Americans.  The Exchange would communicate information about the cost and quality of health care options available to individuals and small businesses.  It would allow Americans to shop for health insurance that meets quality standards.  The exchange will only offer health care options that are comprehensive, non-discriminatory and meet certain quality standards.  The funding model for the exchange will mirror that of Massachusetts’ Commonwealth Connector program, placing a small tax on premium payments. 

The Baucus Plan seeks to promote community care from the national level.  It would provide community challenge grants for local preventive health programs.  It also seeks to promote local nutrition programs.  The plan pledges to support community health centers, particularly those in rural areas.

The Baucus Plan offers tax relief for all individuals and families with income under 400% of the Federal Poverty Level (FPL) who choose to buy a health care plan through the insurance exchange.  The Baucus Plan would cover all children in families under 250% of the FPL with the State Children’s Health Insurance Program and all individuals and families in poverty with Medicaid. 

Related Links
Heritage Foundation Analysis: The conservative think-tank presents market-based critiques of the Baucus Health Care plan.
The American Prospect Analysis: Ezra Klein presents an interpretation of the plan's components from the left.
Initial News of the Baucus Plan: The New York Times covers the politics and substance of Max Baucus's new health care policy paper.
National Center for Policy Analysis Critique: A free-market thinker alleges that Baucus's plan will restrict choice and increase costs.
National Journal Expert Debate: Experts exchange ideas in response to the release of Baucus's white paper. The debate features academics, legislators and journalists.
Baucus Plan Full Text: The primary document from which we draw our summary and analysis.

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