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Baucus Lays Out Health Care Overhaul Details

By Drew Armstrong, CQ Staff

April 24, 2009 -- House Sen. Max Baucus, D-Mont., said Friday that while he has not written off the idea of a government-run insurance plan for his health care overhaul proposal, it probably won't be his first line of attack, preferring to focus instead on the system for self-insured companies.

At a breakfast with reporters hosted by the journal Health Affairs, Baucus laid out details of his health care overhaul plans, many of which he will share in greater depth in a closed-door session April 29 with Finance Committee members.

While a government-run insurance plan was still on the table, Baucus said "it might be a bit on the side of the table." Instead, he said, he would focus on preserving the insurance system for self-insured companies while expanding private insurance and public programs such as Medicaid, the insurance program for the poor. "We'll end up with more private insurance and more public insurance," he said.

He later backed off that statement slightly, saying he might return to the government-run idea later on. Baucus has previously backed the idea of a government-run plan to compete with private insurers and drive down costs, but the political difficulty of the idea has put pressure on him to drop it. Many Republicans vehemently oppose any idea of a government-run insurance plan, while many of the left are demanding its inclusion.

His vision would make substantial changes to the insurance market, but with the goal of letting those who have insurance that they like keep it.

For many uninsured looking to buy coverage, Baucus would like to "set up a system similar to Massachusetts," where people can buy insurance through a "connector" that offers standard minimum benefit plans with subsidies for those who cannot afford it.

It would be a national marketplace, Baucus said, or at least with a common national standard. "I think the whole system should be more national, and the benefits have to be more national. You can't have benefits be one level in one state, and another level in other states."

But he would try to make sure that it did not deeply impact companies that buy insurance already. Health care experts have theorized that any large change to the insurance market, especially with a government-run plan option, would result in some companies and people shifting from company-provided insurance to the independent or government market.

"The system I envision is where self-insured companies, ERISA companies, can keep their own plans and manage health insurance in the way that they have. We're not going to change the ways self-insured companies handle health care for employees," Baucus said.

Many large companies are self-insured. Instead of buying coverage directly from a health insurer, they take on the risk themselves and pay an insurer to administer the plan. To the employee, there is little difference, but the company can lower costs by taking on the risk itself. Companies that self-insure are governed by the Employee Retirement Income Security Act (PL 93-406), better known as ERISA.

Many smaller businesses, however, are not self-insured. For those companies and for people buying insurance on their own Baucus said, "we'll set up a system similar to Massachusetts, where an individual looking for health insurance can go to the exchange and get health insurance from a health care company authoring insurance on the exchange, somewhat similar to the [Federal Employee Health Benefit Plan]," the system under which federal employees buy insurance, Baucus said.

"We have to reform the health care insurance market," he continued, by eliminating insurance companies' ability to deny coverage based on pre-existing conditions, along with other changes like guaranteeing people's ability to buy coverage.

Baucus' November "white paper" will serve as the foundation for the bill, he told reporters. Baucus is writing his own bill out of the Finance Committee, while Health, Education, Labor and Pensions Committee Chairman Edward M. Kennedy, D-Mass., is drafting a related but separate bill that will be combined with Baucus' on the floor.

In his white paper, Baucus included the idea of a government-run insurance option that would compete, with some limits, with private insurers. He also proposed temporarily opening up Medicare enrollment for people between the ages of 55 and 65, and expanding Medicaid to cover 7.1 million more people.

The private session with Finance Committee members will focus on how care is delivered and paid for, with future sessions on other topics.

"We're working on that," Baucus said. "My problem is getting numbers from [the Congressional Budget Office]. That's slowing us down a little bit."

It will likely be the first time members have a chance to see details of what Baucus and the committee's ranking Republican, Charles E. Grassley of Iowa, have planned.

Baucus wants to revamp health care payment systems like Medicare so they foster more efficient payment trends. Some areas of the country with efficient health systems spend far less to get the same quality of care as other, far more costly regions.'

Experts like former Congressional Budget Office director Peter R. Orszag, now the director of the White House Office of Management and Budget, have predicted that getting high-cost areas more in line with the country's more efficient regions could save hundreds of billions of dollars.

"Our job is to transfer that more broadly to the rest of the country, mostly through Medicare," Baucus said of the low-cost, efficient areas. "We're really trying to get internal savings in the system."

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