Baucus Health Care Reform Proposal is an Expensive 10-year Fix

Max Baucus, chairman of the Senate Finance Committee proposed a remake of the nation's $2.5 trillion health care system last week. In an attempt to keep Democrats concerned about insurance costs on board, Baucus, D-Mont, is considering changes to his sweeping health care bill that he plans to unveil today.

The summary alone of the Baucus proposal is 223 pages, making a comprehensive review of the thousand-page plan difficult. Again, the public wonders if the anyone will actually read the proposal before acting. The Baucus Health Care Reform Proposal summary can be viewed here. However, one thing is certain with his health care plan; it's going to cost a lot of money. This is an $856 billion dollar proposal that Baucus intends to pay for with $507 billion in cuts to existing government health programs and $349 billion in new taxes and fees. As I stated in my prior article on health care reform, if you think that you are going to have an improvement in your health insurance for free, you would be wrong!

Let's consider the plan to pay for this ridiculously expensive proposal over the next ten years. On one hand, Democrats have been espousing the philosophy that Medicare is one example of a tremendous government run plan. For all its glory, however, Obama has stated that by just eliminating waste and fraud in Medicare, we can partially fund any health care reform legislation that is ultimately passed. If there is this much waste and fraud in our current Medicare system, then why has this waste not been eradicated before? Waste and fraud must always be eliminated where it exists. However, the mere fact that a half trillion dollars in waste exists within the Medicare program should be enough to cause us to run for the hills when government begins proposing new $856 billion dollar legislation! The Baucus plan clearly intends to slash Medicare as a primary funding source for his health care reform package. The problem is that it is planned this will be done over a 10-year timeframe, carrying forward into at least one new Presidential administration. Therefore, the chance that these cuts will ever take place with political pressure to maintain the status quo in Medicare is slim. Meanwhile, the American public will be stuck with another bloated spending package to the tune of $856 billion dollars! Senate Minority Leader Mitch McConnell, R-KY, said, "This partisan proposal cuts Medicare by nearly a half-trillion dollars, and puts massive new tax burdens on families and small businesses, to create yet another thousand-page, trillion-dollar government program." McConnell continued, "Only in Washington would anyone think that makes sense, especially in this economy."

New taxes and fees comprise the second part of the Baucus fund raising scheme for his expensive health care reform proposal. The Baucus bill would require most Americans to carry health insurance or pay a fine of up to $3,800 per family. If a family chooses not to carry health insurance because they cannot afford it, this government intervention into their family finances will be truly painful. This penalty will likely be lowered when changes are proposed in the Baucus plan. However, the concept of taxing or penalizing a person or family into taking an action demanded by the federal government is nothing less than meddlesome government intrusion. The plan sets a cap on insurance premiums at 13% of annual income for those who earn up to four times the federal poverty line. With the poverty line at $22,000 per year for a family of four, their cap would be $2,860 in annual insurance premiums; those families earning $88,000 would be capped at $11,400. Critics complain that the 13% cap would leave family budgets exposed to unreasonable costs. Republicans believe that this penalty for not having insurance amounts to another big fat tax. Senator Orrin Hatch, R-UT, said, "If it looks like a tax and is enforced like a tax, it's a tax."

The Baucus health care reform package would also impose billions of dollars of new taxes on insurers and pharmaceutical and medical equipment manufacturers. The tax on insurers intends to penalize insurers who provide "Cadillac plans." This excise tax would amount to 35% on insurers whose plans cost more than $8,000 for an individual and $21,000 for family insurance coverage. The expectation, of course, is that insurance companies will pass this added excise tax on to their consumers.

The Baucus plan is sure to be changed as discussions on the proposal continue into the fall. Moderate democrats, republicans and even unions take issue with different parts of the existing Baucus health care reform proposal. This article has dealt most exclusively with the massive spending this bill proposes. The funding should be considered one of the most important aspects of the health legislation since those demanding reform claim our existing system is damaging our economy due to its sheer cost. It is difficult to see how an $856 billion dollar price tag will be paid for as the Baucus bill intends. It seems this is just one more hefty spending spree made at a time when our country's economic climate is already dire.

Sources:

Hitt, Gregg and Adamy, Janet. (22 Sept. 2009). Baucus Aims to Ease Middle-Class Burden in Plan. (online), 22 Sept. 2009. http://online.wsj.com/article/SB125355571317528449.html

Associated Press. (21 Sept. 2009). Baucus revises health bill amid concerns. (online), 22 Sept. 2009. http://www.msnbc.msn.com/id/32956647/ns/politics-health_care_reform/

Sahadi, Jeanne. (17 Sept. 2009). Baucus health care reform proposal and your wallet. (online), 22 Sept.2009. http://money.cnn.com/2009/09/16/news/economy/baucus_health_reform/index.htm?section=money_latest