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Baucus Outlines Health Care Plan

By Drew Armstrong, CQ Staff

November 12, 2008 -- Max Baucus, the head of the powerful Senate Finance Committee, laid down a marker on a health care overhaul Wednesday, declaring his independence from other power brokers and signaling that Congress would not wait for the new president to move forward on the issue.

The 89-page document Baucus unveiled stakes out his own territory on the issue independent from Edward M. Kennedy, D-Mass., chairman of the Health, Education, Labor and Pensions Committee and also suggests that Baucus intends for Congress to take the lead.

Many details in Baucus' plan match with what President-elect Barack Obama proposed during the campaign but it also includes elements, such as an individual mandate to buy coverage, that break with the president-elect.

Obama has proposed offering health care access for all Americans, but without a requirement that they be covered.

The centerpiece of Baucus' proposal, which he developed independently over the course of the 110th Congress, is the creation of a "health insurance exchange," where insurers could sell plans to the uninsured.

Baucus and Kennedy both appear ready to move first with their own proposals to overhaul the nation's health care system while the president-elect is still trying to figure out where the issue ranks on his agenda relative to the economy, energy, and other issues.

Still unclear is how Baucus and Kennedy will work together towards their shared goal. Both lawmakers have been meeting separately with private industry, advocacy groups, and other Democratic lawmakers to plan for an overhaul of health care policy.

Baucus said he received a "very, very complimentary call" from Kennedy, while Kennedy released a statement calling Baucus' proposal "a major contribution to the debate on health reform."

They will likely end up with competing visions, however, once Kennedy releases his own health care plan. "It seems like the Baucus guys have put a lot of time and effort into this," said a GOP aide. "He probably better reflects where the majority of the Senate would be, even though Kennedy is more closely aligned with Obama," said the aide.

Aides said there was no firm date by which Baucus would actually introduce legislation. The first step would almost certainly be the expansion of federally funded children's health insurance, known as SCHIP. The authorization for the program is up in March, and Baucus' plan proposes expanding eligibility to all children in households earning less than 250 percent of the federal poverty level.

Many parts of Baucus' plan were intentionally left vague, according to Baucus policy aides. Absent, for example, are politically sensitive details on how large a fine would be levied on large employers who do not provide health insurance, how many children would be covered under SCHIP, or even what the plan would cost or how those costs would be offset—all questions that will create fights among lawmakers and interest groups.

"This was a first step," said one Baucus policy aide. "Now we're going out for another round of stakeholder input," said the aide.

Baucus is already planning hearings, and announced a Nov. 19 hearing on health care and the economy that will likely be the first official forum for feedback on his plan.

It does seem certain, though, that the plan would not fully comply with pay-as-you-go budget rules, which require any new spending to be offset. "We're not going to fully offset the cost of the plan in the early years," said the aide.

"In the short term, health care reform will likely cost more than can be achieved in saving from all the quality improvements and financing changes," the plan reads.

Charles E. Grassley of Iowa, the Senate Finance Committee's ranking Republican, said in a statement that "paying for health care reform needs to be done in an intellectually honest way for the fiscal health of our country."

In presenting the plan, Baucus tied a health care overhaul to the economy, which Obama has said will be his first priority. "The health care system is broken for individual Americans, and it's killing our economy, too," Baucus said. "There's no way to really solve America's economic troubles without fixing the health care system."

Baucus' health insurance exchange would be a primary mechanism for covering the country's 47 million uninsured, along with an expansion of SCHIP and Medicaid.

Baucus said he expected the health insurance exchange to be phased in over a period of several years. While it was put in place, those 55 and older would be able to buy into Medicare early, a strategy designed to start covering some uninsured people and also, presumably, to help build political support for the plan.

In addition to covering the uninsured, the plan would also emphasize improved medical outcomes coupled with lower costs, would trim waste in federal health programs and would rebalance their financing.

"To fix our system, we have to deal with access, quality, and cost. We need to get everyone under the tent for health coverage, improve the quality of the care that our people receive, and address the rising costs of health care so our businesses can compete," Baucus said.

New Incentives
The fee levied on large employers who dropped coverage would be paid back into a pool that would help cover those still uninsured.

Medicare's payment mechanisms would also be redesigned. Currently, Medicare pays physicians on a per-service basis, meaning they get paid for every procedure they perform. Critics say this encourages them to perform a higher volume of procedures with less regard for low-cost, high-quality treatments. Along with increasing the number of primary care providers who often give early-stage treatments and preventive medicine, Baucus' plan would refocus physician payments on quality of care and outcomes rather than volume.

Baucus' plan also would take steps to refocus the health care system on primary care and preventive medicine. This would mean higher payments for primary care physicians, likely at the expense of higher-paid specialists like surgeons, cardiologists, and others.

The proposal also would focus on eliminating fraud, waste, and abuse in public health care programs and "address overpayments" to private insurers in the Medicare Advantage program, likely by cutting the payments to the plans.

"Careful reforms of medical malpractice laws" to help lower health care costs would be considered, Baucus said, "while ensuring the injured patients are compensated for fairly for their losses," according to the summary.

Baucus also wants to explore "targeted reforms of the tax code" as it relates to health "to make incentives more efficient" and more fairly distribute benefits.

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