Can’t Make Insurance Affordable for All Without Making it Affordable

I’ve had a number of positive things to say about the Max Baucus health care draft along with some criticisms. But it’s worth emphasizing that not all bullet points are created equal. To say that the subsidy levels Baucus is envisioning are not adequate is just one sentence. But it’s a really big problem. Baucus’ plan would be a boon to currently uninsured people earning less than 133 percent of the federal poverty line. And it’s fine for those of us who already have good employer-based health insurance. But for the 25 million or so uninsured people earning between 133 and 300 percent of FPL, the math just doesn’t really add up. In this chart Nick Beaudrot compared premium levels under Baucuscare to what they do currently in Massachusetts (which seems to work okay) with what federal health reform could do under some alternative scenarios:

This isn’t going to work, I think. You could imagine the House funding level scenarios working. And you could raise the revenue needed to get to House funding levels pretty easily if you were so inclined. But you pretty much have to be so inclined, because otherwise you’ll have something that fails this chunk of the population. Some bloggers are, I think, overstating somewhat the risk of a political backlash if we move forward with what Baucus is proposing—”uninsured people earning between 133 and 300 percent of the federal poverty line” is a fairly narrow slice of the population, and you could imagine a program that most of these folks hate still being popular overall. But maybe it’ll be a big problem and it’s definitely a big substantive problem.

And this weakness of the bill isn’t really in any way tied to its strength (which is in controlling long-term costs) so there’s no good reason not to fix this problem. Heck, it would even be better for Baucus’ donors in the insurance industry to make the affordability provisions more generous.