Wednesday, September 16, 2009

Is Baucus Using a Reversed Approach to a Public Option?

Max Baucus (D-MT), Chairman of the Senate Finance Committee, has tabled the idea of public option and is proposing an approach that will ostensibly allow people to keep their private insurance, but have public insurance available. The reality appears, however, is that the Baucus approach promises to make private insurance simply too expensive for most people and will likely crowd people out of traditional coverage. This is due to the fact that it has the same flaws as the proposal promoted by President Obama. The problems can be found on several levels:

Taxes will go up.

While candidate Obama promised that the vast majority of Americans would see a reduction in their health care costs from his proposed reforms (at approximately $2,500 a year), reality is looking much different and this is even more the case with the Baucus proposal. The Heritage Foundation has pointed out that the "Baucus bill would, however, impose new fees on drugs and medical devices. Also, beginning in 2013, the bill would impose a new federal excise tax on high-value health insurance plans. The tax would be applied to health plans valued at $8,000 for single policies and $21,000 for family policies. Because not all workers in such plans are high income, many will likely be on the receiving end of a middle class income tax increase..." This stands in complete contrast to Obama's promise of not raising taxes on those who make less than $250,000 a year.

An Individual Mandate.

Regardless if you take the exaggerated number of 45 million uninsured that the left loves or the more conservative estimate of 15 million, many of those are uninsured by choice. Under the Baucus plan, virtually everyone will no longer be allowed to opt out of coverage after 2013. The plan doesn't specify how much the specific premium will be, which is further proof that the devil is in the details.

Oddly, a plan designed to increase coverage will actually force many people to abandon private plans. The Heritage Foundation notes that the tax penalty for those with private coverage would be based on two bands and would "be $750 per person, with a maximum of $1,500 per family. This penalty could apply to individuals with incomes as low as $10,831 a year. For those with incomes above that level, it would be $950 per person with a maximum of $3,800 per family."

Oddly, and in direct opposition to one of the fundamental ideas the Democrats claim to value highly, the Baucus bill would undermine privacy rights. His proposal would force bureaucracies like the IRS to inform government health agencies how much individuals earn. In addition to undermining our personal freedoms and privacy, this proposal promises to be very expensive due to bureaucracy.

New Taxes for Employers.

It is interesting that, in an environment with the highest unemployment in a quarter of a century, proponents of the Baucus plan wants to penalize employers for not offering health care benefits. The Heritage Foundation notes that "Employers with more than 50 employees that do not offer health coverage would have to pay a tax for each employee whose family income is low enough to qualify for a premium credit."

Those who will be penalized by this will be low skilled workers who are in desperate need of income. Furthermore, the proposal more harshly targets those that are the sole income earners of the family. For example, if one family member already has benefits from another source, the tax will not be applied to the employer of the other family member. It does not take much imagination to see the many problems such an approach will provide and there should be little doubt about the results: higher taxes, lower incomes, and job losses for those who need employment most.

This is only the beginning of the problems that plagues the Baucus proposal. While the American people are still looking for relief on the employment front and more opportunity to get health insurance coverage, Baucus and the Obama Administration seem to be making it more difficult to reach either of these objectives.
Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

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