The Real Problem With Baucuscare

I’ve got a Daily Beast column noting that saving the public option wouldn’t resolve the biggest problem with Max Baucus’ health care plan — it just doesn’t offer enough financial help:

The trouble is that all that help costs a lot of money, on the order of $1.4 trillion over 10 years. Baucus wanted a cheaper plan, more like $900 billion. And that meant basically dropping the subsidies for people earning between three to four times the poverty line, or between $66,000 and $88,000 for a family of four. Instead, Baucus simply guarantees that nobody in that range would need to spend more than 13 percent of his or her income on insurance premiums. But there’s no guarantee that will actually get you much in the way of insurance. As Jonathan Cohn points out “your insurance wouldn’t cover everything. There’d be deductibles, co-payments, and so on. If you bought the minimum-level plan, you’d be on the hook for as much as $12,000 in out-of-pocket expenses — a level you could hit pretty easily if you had a serious illness or injury.”

Or as Wheeler put it, the plan “would basically institutionalize a condition in which the middle class continues to fall further and further behind, paying far too much for health care and/or avoiding necessary treatment.”

The reality’s not quite that bad. In practice, Baucus’ mandate would include a loophole allowing anyone whose premium costs would be more than 10 percent of their income to get an affordability exemption. Thus, at worst a family in the relevant income range would be left in just the same position they are today. Still, the fact that a universal health-care plan would not, in fact, achieve universal health care counts as a significant flaw and Baucus’ bill really does deserve pretty harsh criticism on this score.


That said, the problem with the left’s critique of Baucuscare is that their main remedy — the inclusion of a public option — doesn’t actually solve the problem. It’s important to understand that the public option being envisioned in current legislation isn’t a taxpayer-financed government program along the lines of Medicare. It would be administered by the government (or possibly the government would contract with a private company to administer it) but it would have to be fully financed out of premiums just like a for-profit plan or a co-op or anything else. Consequently, it would still be the case that many families wouldn’t be able to afford a decent insurance plan without substantial additional subsidies from the government. And that’s precisely why the House bill not only includes a public option, it also includes hundreds of billions of dollars in additional spending to insure the affordability of comprehensive coverage.

A public option would help, in other words, but ultimately when it comes to affordability in the short-term there’s just no substitute for spending more money. By shaving the price tag of the bill from $1.3 trillion over ten years to $900 billion over ten years now down to something more like $800 billion over ten years, Baucus and Olympia Snowe are guaranteeing that the program won’t really have the resources to deliver on its promises. The bill would still give a lot of help to some people, and some help to a lot of people, and this (more so than the public option) seems like the kind of thing that further congresses are certain to tweak one way or the other. But it’s still a major instance of Centrists Behaving Badly and the President’s decision to endorse the $900 billion price tag in his joint address strikes me as a bit of a blunder since it set the stage for Snowe taking a further ax to things.