Maxing out on health reform

Senate Finance Committee Chairman Max Baucus’ unveiling of a health reform proposal yesterday fed speculation about the possibility of Democrats tackling health reform from the get-go of the new Administration.

The Montana Democrat’s proposal is detailed in an 97-page "call to action" document. In his letter of introduction, Baucus says the plan is not a legislative proposal but his vision for policy reforms and the political process.

Baucus says the plan will require an initial investment, but doesn’t name how much. There are no cost figures in the plan, but the Senator writes, "It is my intention that
after ten years the U.S. will spend no more on health care than is
currently projected, but we will spend those resources more
efficiently, and will provide better-quality coverage to all Americans."

The Baucus proposal is very similar to the plan Sen. Hillary Clinton proposed while campaigning for president. Her plan was very similar to Obama’s plan, except that Clinton wanted to require people to buy insurance and Obama opposed such a mandate.

Regarding the mandate, Paul Krugman writes
that Obama’s opposition during the campaign was largely tactical
politics and "so he may well be prepared to do the right thing now that
the election is won."

Krugman’s logic here is that to achieve true universality in
coverage, and thereby avoid the death spiral of adverse risk selection,
it’s necessary to require everyone to purchase insurance.

Critics of a mandate argue that it punishes those who cannot
afford insurance, which is why Baucus and other supporters
must prove there are sufficient subsidies for low-and middle-income families if
they want support from consumer advocates and unions.

This same battle over the mandate was fought last year in
California. Eventually, opponents realized that if they wanted
community rating and guaranteed issue the mandate was necessary.

the end, however, battles over the level of subsidies remained. Several
Democrats who killed the reform bill said they weren’t convinced
insurance would be affordable. But in reflection, several commentators said killing the reform was less about concern for the consumer and more about politics between the Assembly, Senate and Governor’s Office.

Anthony Wright, president of Health Access a California consumer advocacy group, wrote about the mandate issue yesterday on his blog:

We at Health Access have been skeptical of the individual mandate, but
not opposed to the notion that we all–sick and healthy–should
contribute to health coverage (as many health reforms, including
single-payer, include). Rather, our issues were more about the problems
in the inefficient and inequitable individual insurance market that
some may be forced into. It was only in the context of expanding group
coverage, shrinking the individual market, and placing new subsidies
and restrictions, that we and other consumer groups supported AB x1 1,
the negotiated deal between Governor Schwarzenegger and Speaker Nunez.

Politics of health reform at a national level will be no easier. The
Senate will have to secure 60 votes, and true reformers will have to ignore the cash pouring in from lobbyists.

I’ll admit that I’m somewhat glad the Clinton reform effort failed in the
1990s, when I was too young to care about health care. Now, I’ll have a chance to watch the sequel.

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