Here’s what we have been waiting for and waiting for and waiting for –Senate Finance Chairman Max Baucus’ outline for “bipartisan health care reform.” You’ll find the 18-page document here.
Keep in mind this is still a work-in progress. But I couldn’t help but notice a gift to the for-profit insurance companies near the very top of the document:
Insurance Reform in the Non-Group Market. Beginning January 1, 2013, health insurance plans in the individual market would be required to offer coverage on a guaranteed issue basis and would be prohibited from excluding coverage for pre-existing health conditions. Limited benefit plans and lifetime limits would be prohibited, and health insurance companies would be prohibited from rescinding health coverage.
Health insurance premiums would be allowed to vary based only on tobacco use, age, and family composition according to the following ratios:
- Tobacco use – 1.5:1
- Age – 5:1
- Family composition:
o Single – 1:1
o Adult with child – 1.8:1
o Two adults – 2:1
o Family – 3:1
Premiums could also vary to reflect geographic differences. Taking all these factors together, premiums could vary by as much as 7.5:1
Insurers won’t be able to charge you more if you are sick. But they will be able to charge more if you are older—in fact, they are allowed to charge you five times as much!
If you smoke, they can charge you 50 percent more; if you have children they can charge you 50% more than they would charge a childless couple, and if you are a single parent, they can charge you 80% more than they would charge a single adult. (Since children’s health care costs are, by and large, significantly lower than adults’ costs, that seems a pretty steep surcharge for the sin of single parenthood.)
I can imagine that some readers would say that it is only fair to charge smokers more. But consider this: the vast majority of adult smokers in the U.S. are poor. Many will qualify for full subsidies; others will be eligible for partial subsidies. So who will pay 50% more for their health care—you, the taxpayer. If he receives a subsidy, the 50% surcharge isn’t likely to induce a smoker to stop smoking. This is simply another way to funnel more taxpayer money to private sector insurers.
Single parents also tend to cling to the lower rungs of the income ladder. Many will qualify for at least a partial, if not a full subsidy. Who pays the extra 80%? That’s right—you and I.
Finally, if insurers can charge 50-somethings five times as much as they charge 20-somethings (who the Baucus plan refers to as “young invincibles”), a great many of them are going to need subsidies. More tax-dollars winging their way to Aetna.
But wait, there is a loophole here: “An exemption [from mandate that everyone buy insurance] is permitted if coverage is deemed unaffordable – defined based on a circumstance where the lowest cost premium available exceeds 10% of a person’s income.” Okay, here’s the answer for 50-somethings that just can’t afford paying five times as much as younger customers: we excuse them from the program. No penalty, no mandate. In other words, we don’t cover them at all—at the point in their life when they are most likely to need heath care.
Somehow, this isn’t what I thought they meant by “universal coverage.”
Oh, and in case you wondered. . . No, there is no public sector insurance option in the Baucus plan. The private sector insurance industry will have a monopoly on the millions of new customers who will be coming their way, tax subsidies in hand.