First the good side of Senator Baucus and his finally-released health plan which, despite months of discussion, still has no Republicans signed on. Insurance companies would be banned from charging more for pre-existing conditions and offering cut-rate “Swiss cheese” health plans. Lowest income families would get coverage through Medicaid. Individuals and people in smaller businesses could choose from a menu of health plans with standard packages. Hospitals must meet strong new community benefit and charity care requirements.
Now for the bad news. The Baucus plan would simply not provide the subsidies needed to make health coverage plans affordable for many low and moderate income families. It also wouldn’t have a strong public plan to help contain health costs but establish so-called “co-op” state plans – an idea that’s basically been tried and has failed here in NC over a decade ago. These are two glaring defects that must be remedied before going forward. With her work on the Senate Health Committee’s health bill, our own Senator Kay Hagan is in a unique position to help Senator Baucus and others understand the importance of affordable coverage and cost controls.
To see how bad the bill is for affordability take a look at two examples focused on low and moderate income families from the Center on Budget and Policy Priorities below. The Baucus bill would require premiums nearly five times larger than the ones supported by Senator Hagan in the Senate Health Committee’s bill released last month. In addition, premiums would be three times higher than those proposed in the House reform bill:
For example, a family of three at 133 percent of the poverty line (which would have gross income of $24,312) would have to pay $1,132 per year in premiums (or 4.7 percent of income) under the Baucus plan, compared to $365 and $243 per year under the House and HELP bills, respectively. A single individual at this income level (who would have income of only $14,404) would have to pay $670 per year toward premiums under the Baucus plan, compared to $216 under the House bill and $144 under the HELP bill. People at this income level would either have to pay these substantial premiums or face a significant penalty.
Many moderate-income people also could likely have significant difficulty affording insurance. A family of three making $46,000 per year — approximately 250 percent of the poverty line — would have to pay approximately $4,800 — or 10.5 percent of its income — to purchase insurance. This would impose considerable burdens on many families, particularly in view of what they already have to spend on necessities. By comparison, under the HELP bill, the family would pay about $2,600 (5.6 percent of income), while under the House bill the family would pay $3,700 (or 8 percent of income). These figures are for the premiums alone; deductibles and co-payments would impose additional costs.
Many of the families we’ve been talking to all across North Carolina could never afford these kinds of premiums for insurance. For them, the Baucus plan isn’t much help at all.
The other issue – costs – is just as important. Without a strong public plan option, insurance companies will be back to business as usual. That business is making money and they’ll be making even more of it with plenty of guaranteed new customers without having to change any of their current practices to compete with a public health plan option who isn’t paying top executives millions of dollars.
So in the end, while the Baucus plan isn’t a bad start, it needs some serious emergency surgery to make it into something we can all live with.