Senate Finance Chief Calls for Mandatory Insurance (Update3)

By Aliza Marcus

Nov. 12 (Bloomberg) -- Senator Max Baucus, presenting the first Democratic health plan since President-elect Barack Obama's victory, said all Americans should be required to have insurance once coverage is made affordable.

Baucus, of Montana, chairman of the Senate Finance Committee, said in a health-care blueprint released today that only a mandate could ensure people didn't wait until they were ill to buy health insurance, forcing up the price for everyone.

The 89-page proposal revives a debate from the Democratic presidential primaries about how to overhaul the U.S. health- care system. Obama supported requiring coverage only for children, saying adults would buy coverage voluntarily if it were affordable. Senator Hillary Clinton of New York said insurance must be mandated for everyone.

``Requiring all Americans to have health coverage will help end the shifting of costs of the uninsured to the insured,'' Baucus said today in his plan. The requirement ``would be enforced possibly through the U.S. tax system or some other point of contact between individuals and the government,'' he said, without spelling out possible penalties.

Obama said during his campaign that making sure everyone had affordable coverage would be a priority in his administration, and Democrats in Congress have said they wanted to work closely with the new administration.

Because of the urgency of health-care reform, Congress should move on legislation in the first half of next year, Baucus said at a press conference today in Washington.

``There is no way to solve America's economic problems without solving health care,'' he said. The $2.2 trillion health-care system ``sucks up 16 percent of our economy and is still growing,'' Baucus said.

Grassley's Response

Senator Charles Grassley of Iowa, the senior Republican on Baucus's committee, questioned where money will be found for major changes in health care coverage.

``Dramatically expanding government spending and putting additional pressure on employers already struggling to create jobs would have repercussions that need to be carefully considered,'' Grassley said in an e-mailed statement. ``It's not a time for rosy scenarios.''

Baucus's plan underscores that Democrats in Congress don't want Obama to delay action on his health-care agenda because of the financial crisis, said Thomas Mann, a political analyst at the Brookings Institution in Washington.

``Key congressional players have decided to put some pressure on by having legislation ready to go at the beginning of the new administration,'' Mann said. ``There are a lot of Democrats who want to get something done early.''

Baucus, 66, whose committee has jurisdiction over government-funded health programs, will be among a number of Democrats in the Senate seeking a major role in next year's health-care debate.

Kennedy's Role

Senator Edward Kennedy of Massachusetts, who has brain cancer, has vowed to return to Washington in January to lead the fight for universal coverage. He is chairman of the Health, Education, Labor and Pensions Committee.

``Baucus is getting a marker out there to make sure this all isn't deferred to Kennedy,'' Mann said in a telephone interview.

The two senators have spoken three times in the past few weeks about their plans and are ``very much on the same page,'' Baucus said.

``I got a very, very complimentary call this morning from Senator Kennedy,'' Baucus said. ``I was so touched.''

The views of Clinton, who sought to overhaul health care when her husband was president, also will be closely watched.

Medicaid, Medicare

Under Baucus's plan, Medicaid, the government health plan for the poor, would be expanded to cover all those living below the federal poverty level, set this year as an income of $10,400 for an individual and $21,200 for a family of four.

Initially, Americans ages 55 to 64 could buy coverage through Medicare, the federal health insurance program for the elderly and disabled that usually covers those 65 and older.

That option would be available while the U.S. worked to create a nationwide insurance exchange, where small businesses and people without employer-provided benefits could buy health plans.

Echoing Obama's campaign proposals, Baucus said the exchange should include a new government plan, similar to Medicare, that would compete with private insurance, as well as subsidies to make coverage more affordable. Except for small businesses, employers that don't offer insurance to their workers would have to contribute to a fund to help cover others.

`Affordable, High-Quality'

``Once affordable, high-quality, and meaningful health insurance options are available to all Americans through their employees or through the Exchange, individuals would have a responsibility to have health coverage,'' he wrote in his plan.

Baucus also broached another sensitive issue from the presidential campaign season, suggesting workers may be required to pay a tax on part of the value of health benefits they get from employers. He said the ``targeted reform'' wouldn't subject all employer benefits to taxes.

Senator John McCain of Arizona, Obama's Republican opponent, had proposed taxing all employer-provided benefits to finance new tax credits that would help individuals buy coverage. Obama opposed that idea.

Offering even a limited tax on benefits may be aimed at winning Republican support for the overall package, Les Funtleyder, an analyst at Miller Tabak & Co. in New York, wrote in a note to investors.

To contact the reporter on this story: Aliza Marcus in Washington at amarcus8@bloomberg.net

Last Updated: November 12, 2008 17:58 EST

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