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Baucus Health-Care Bill Draws Little Support

The least expensive congressional health-reform bill lacks a "public option" and would be funded largely through industry fees

The $856 billion proposal for national health-care reform that Senator Max Baucus (D-Mont.) unveiled on Sept. 16 is the most moderate and the least expensive of any proposal to emerge from Congress thus far—the result of months of negotiations. But that didn't protect it against immediate attacks from all sides.

Baucus, who heads the powerful Senate Finance Committee, spent months crafting what he hoped would be a bipartisan bill, even abandoning the creation of a controversial publicly financed insurance plan that was long expected to be the centerpiece of any Democratic health-reform legislation. As a result, "I think I've come up with a good, balanced bill that can pass the Senate," Baucus told a news conference as he introduced the bill.

He may be the only one who thinks that. Despite making numerous concessions to Republican lawmakers, the proposal did not garner any Republican support, not even from the three senators whom Baucus has been working to win over all summer: Charles Grassley (R-Iowa), Michael Enzi (R-Wyo.), and Olympia Snowe (R-Me.), a moderate who was considered the most likely to support Baucus' proposal. The bill "does not meet the shared goals for affordable, accessible health coverage," Grassley said in a statement.

Baucus got little love from Democrats, too, with many angry that he abandoned the public plan in an attempt to find common ground with Republicans. The public plan, once a centerpiece of Democratic proposals, has been seen as a way of putting competitive pressure on private insurers. Senator Jay Rockefeller (D-W. Va.) was particularly incensed, saying in a statement that "we need a public plan option in health-care reform to drive down the insurance costs that are pummeling working families." Rockefeller warned that he may not vote for a bill that he perceives as too weak.

Opposition to Health-Industry Tariffs

The business community in general was happy about the absence of the public plan because companies always feared that it would merely drive up the cost of private insurance. Moreover, the Senate bill does not require businesses to provide insurance to employees, a provision in the House bill that many companies oppose. But certain sectors of the health-care industry swiftly went on the offensive over new tariffs that Baucus would levy—on insurers, medical device makers, clinical labs, and drug companies—to meet the cost of covering the uninsured.

The bill is designed to meet President Barack Obama's goal of being "deficit neutral"—that is, its costs would be covered by $507 billion in cuts to government health programs and $349 billion in new taxes and fees. The bill proposes fees of $6 billion a year on health insurers, $2.3 billion on pharmaceutica1 companies (which the industry had already agreed to in a deal with President Obama), $4 billion on medical-device companies, and $750 million on clinical laboratories. The tariffs would be calculated according to a company's market share and would remain active for 10 years, raising a total of $130.5 billion.

The Congressional Budget Office's preliminary score of the Baucus proposal finds that it would actually reduce the federal deficit by $49 billion in the first 10 years—and even thereafter—while covering 94% of legal U.S. residents. The budget office figures that the plan's $774 billion cost to the government over the decade would be more than offset by additional taxes from revenues and fees, plus cost savings.

Baucus also wants to levy a 35% tax on the most generous health insurance plans offered by employers—those with premiums of more than $8,000 a year for an individual and $21,000 for families. America's Health Insurance Plans (AHIP), a powerful lobbying organization for health insurers, praised the plan in general but took issue with the notion of taxing the industry's most lucrative products: "New taxes on health-care coverage will have the opposite effect by making coverage less affordable for families and employers across the country."

Insurers Would Have to Serve Everyone

Criticism from the health-care industry was relatively low-key, in part because extending coverage to the uninsured would potentially deliver millions of new customers to its members. Medicaid benefits would be extended to a larger share of the poor, and a national insurance exchange would be created that would make it easier for individuals and small businesses to buy affordable insurance. In 2013, almost all Americans would be required to buy insurance, with tax credits available to individuals and families with incomes up to 300% of the poverty level—about $66,000 for a family of four. Individuals and families that do not buy insurance would face penalties ranging from $750 to $3,800. Companies with more than 50 employees that do not provide health insurance would have to reimburse the government for at least part of the cost of any federal subsidies paid to workers.

The bill would also require insurers to offer affordable plans to all Americans, no matter their health status, age, or the presence of preexisting conditions—changes AHIP has already agreed to.

Whether any of this will become law is still a giant "if." Baucus wants to bring his bill before the full Senate Finance Committee for a vote next week. Meanwhile, Senate Majority Leader Harry Reid (D-Nev.) said he will convene a caucus of Senate Democrats on Sept. 17 to plot a way forward on health-care reform. House leaders have not yet set a date for further action on their proposals, but Obama has said over and over that he wants to sign a bill before yearend.

White House spokesman Robert Gibbs said Wednesday that the Baucus bill is an "important building block" but will almost certainly change as the full House and Senate start debating the issues. "I don't think the President looks at today as the end," Gibbs said.

Former Senator Bob Dole, who was Senate Majority Leader when President Bill Clinton tried to pass health-care reform in the early 1990s, questioned how much longer fellow Republicans can continue to oppose Democratic proposals without putting forward a comprehensive proposal of their own. "I think there's some realization that it's time to start fixing the problem on our side," Dole said. "You can't just walk.…Leadership is not just voting no."

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