The America's Healthy Future Act () was a bill proposed by Democratic Senator Max Baucus of Montana, who chaired the Senate Finance Committee, on September 16, 2009. It is also colloquially known as the Baucus Health Bill, the Baucus Health Plan, or BaucusCare. Baucus initially publicly released a 223-page summary of the proposal. It started going through the Senate mark-up process on September 22. That amendment process finished Oct. 2, and was passed by the Finance Committee on October 13 by a 14 to 9 vote,. An October CBO report stated that enacting the proposal would, on net, end up reducing the federal deficit by $81 billion over the 2010–2019 period.
History behind the proposal Chairman Baucus was known as the head of a bipartisan group called the 'Gang of Six' in the Senate Finance Committee. Senators Jeff Bingaman of New Mexico and Kent Conrad of North Dakota made up the other Democratic members of the 'gang', while Olympia Snowe of Maine, Chuck Grassley of Iowa, and Mike Enzi of Wyoming made up the Republican side. They underwent months of negotiations and compromises over the summer of 2009 to achieve a healthcare plan. In the first week of September, Baucus began saying that he would push through a plan even if he could not obtain bipartisan backing. He remarked that "time has come for action, and we will act" on September 9.
Before the proposal was made, President Barack Obama publicly promised that he would not support a plan that would cost more than $900 billion over the next ten years. He also said that a plan could not add to the federal deficit, with every bit of new spending completely offset. The Baucus proposal stalled in the committee in August 2009 due to the town hall meetings faced by members of Congress, in which many opponents attended.
Alleged conflicts of interests in its creation Senator Baucus, chairman of the Senate Finance Committee, received over $3 million from the health and insurance industries from 2003 to 2008, more than any other member of Congress. The Republican Ranking Member on the Committee, Senator Chuck Grassley of Iowa, received more than $2 million since 2003. Commentator Jack Cafferty and representatives from the Physicians for a National Health Program and Campaign Money Watch have argued that this lobbying creates a conflict of interest for the Senators. Baucus disputes the allegations, referring to a 2007 meeting reported on by The Wall Street Journal in which he told medical lobbyists "[y]ou should worry about me coming after you."
Economic background According to Senator Olympia Snowe (R-ME), the cost of the average employer-provided insurance plan will rise to nearly $31,000 in several years if no health care reform measures are done.
Proposal details
Components of the proposal The proposal specifies the creation of health insurance cooperatives, which would be member-controlled, non-profit forms of health insurance that would compete with private insurers. It does not include a public insurance plan. The co-operatives would receive $6 billion in federal funding in 2012 to start off, but they would operate independently after that point. The introduction of the co-ops is intended to drive health care costs downward.
The proposal also creates an individual mandate that requires people to either buy insurance or pay a penalty. Those with incomes below three times the federal poverty level would receive subsidies to purchase their plans. For a family of four, $66,150 would be the dividing line. The penalty would be up to $950 per person or $3,800 per family each year. These measures would come into effect for all American residents in 2013. According to Politico: Senator John Ensign (R-NV) received a handwritten note Thursday from Joint Committee on Taxation Chief of Staff Tom Barthold confirming the penalty for failing to pay the up to $1,900 fee for not buying health insurance. Violators could be charged with a misdemeanor and could face up to a year in jail or a $25,000 penalty, Barthold wrote on JCT letterhead. He signed it 'Sincerely, Thomas A. Barthold'.
Individuals would be able to buy their insurance from an exchange created in their state, which would be created in 2010. Premiums would be capped at 13% of the buyer's income, with the rest of the costs paid by subsidies. Insurance companies would be required to cover certain services such as hospitalization, maternity care, newborn care, chemotherapy, and pediatric care. Their plans would be presented as either bronze, silver, gold, and platinum options, sorted by the least to the most expensive. Only individuals and firms with fifty or fewer employees would be eligible to use the exchanges until 2017, when states would bring in larger employers. In 2022, they would become open to all. Persons who are not lawfully in the United States would not be permitted to participate in the exchange, either with or without subsidies. According to Baucus: In order to prevent undocumented immigrants from accessing the state exchanges obtaining federal health care tax credits, the Chairman's Mark requires verification of the following personal data. Name, social security number, and date of birth will be verified with Social Security Administration (SSA) data. For individuals claiming to be U.S. citizens, if the claim of citizenship is consistent with SSA data then the claim will be considered substantiated.
Although the proposal does not establish an employer mandate, which would have required firms to provide insurance for their workers or pay a penalty, the proposal requires businesses with more than fifty employees to pay fees going towards the aforementioned subsidies. The maximum possible fee would either be $400 per full-time employee or the average cost of the subsidies a firm's employee's take in multiplied by the number of those receiving them. The proposal forbids insurance companies from restricting coverage based on 'pre-existing conditions'. The insurance premiums can take into account tobacco use, age, family size, and geographic location. Insurance companies would also be forbidden from setting up lifetime or annual caps that specify a maximum amount of care that customers can receive.
The proposal also includes a new excise tax on so-called 'Cadillac' health care plans that are more expensive and comprehensive than the majority of plans. Any plan costing over $8,000 for an individual and $21,000 for a family would be subject to a 35 percent tax on the amount past those levels. The Center on Budget and Policy Priorities, a liberal-leaning think tank, estimated that about 10 percent of families have plans that would be subject to the tax. The Committee for a Responsible Federal Budget has argued that this tax is beneficial both because it grows fast enough to keep up with new costs and because it can helps to slow health care cost growth. The group has also stated that the tax will cause employers to offer workers higher (taxable) cash wages instead of health benefits, thus generating more government revenue. According to Congress' joint committee on taxation, the proposal would create $215 billion in the next ten years from the tax. Another $93 billion in funds will come from new annual fees imposed on groups such as pharmaceutical companies and medical device manufacturers. Additionally, the Senate Finance Committee approved provisions that would lump Flexible Spending Accounts (FSAs) together with high-cost insurance plans and subject them to the excise tax, which would likely cause many employers to reconsider offering FSAs altogether.Associated Press Flex Spending Accounts Face Hit in Health Overhaul
Other funds come a reduction in future Medicare spending, which would be over $400 billion in the next decade. Specifically, payments under the Medicare Advantage system would be decreased by $113 billion in the next decade. The so-called 'doughnut hole' in prescription drug coverage would be closed. In the long term, the proposal would set up an independent commission that could alter payments further.
Additionally, a small portion of funds would come from a new cap imposed on Flexible Spending Accounts (FSAs), pre-tax health benefits that enable millions of Americans to manage their out-of-pocket health care costs. Americans Healthy Future Act would impose a $2,500 limit on contributions to FSAs. Unfortunately, 7 million Americans have FSAs above $2,500, and those with the highest out-of-pocket health care costs- the sickest – would be hit the hardest by the restrictions.
CBO scoring of the bill
The proposal was initially designed to cost $856 billion over the next ten years. However, the Congressional Budget Office (CBO) stated on September 16 that it would only cost about $774 billion over that period. The CBO report stated that enacting the proposal would, on net, end up reducing the federal deficit by $16 billion in 2019. It also estimated that, by 2019, the number of non-elderly uninsured people would fall about 29 million, which would leave about 25 million of the non-elderly (about one-third undocumented immigrants) still uninsured. Thus, the number of non-elderly legal residents with insurance would rise from about 83% being covered to about 94% being covered. A Forbes.com report has stated that "it's not entirely clear what will happen to health care costs in 2020 and beyond."
On September 24, the CBO re-evaluated the proposal, taking into account the changes created by the Senate Committee. The CBO stated that the proposal would bring in $23 billion in the first ten years. Specifically, the Committee decreased the penalties for avoiding buying insurance, expanded the subsidies, and lowered the excise tax on high end insurance plans. A CBO report issued on October 7 stated that enacting the proposal would, on net, end up reducing the federal deficit by $81 billion over the 2010–2019 period. That report prompted praise from White House Press Secretary Robert Gibbs and from Senate Majority Leader Harry Reid (D-NV), who called the scoring a "landmark occasion". Senate Minority Leader Mitch McConnell (R-KY), criticized the numbers as misleading given that the Baucus proposal would not come into effect for about another five years.
Changes to the proposal On September 25, the health correspondent for the News Hour with Jim Lehrer reported that the Committee had cut the proposed tax to medical supplies that belong to 'Class A', which includes items such as condoms and band-aids that cost below $100. Only the other classes would be taxed. On October 14, journalists from the Financial Times stated that the 'Cadillac plans' tax would now impose a 40% fee on any plans exceeding $8,000 a year for individuals and $21,000 a year for families. They also described the individual mandate requirement as "much watered-down", with those earning less than 300% of the federal poverty now subject to a penalty of between $750 and $1,500 a year.
The premium subsidies for low-income individuals included in the final bill were structured to initially limit the premium middle-income people would have to pay for coverage to 12 percent of income.Julie Appleby, "Finance Bill's Fine Print May Cause Sticker Shock For Some Consumers" , Kaiser Health News, Kaiser Family Foundation, October 29, 2009January Angeles and Judith Solomon, "Finance Committee Health Reform Bill Makes Improvements, But Still Falls Short of What Is Needed for Many People to Afford Health Care" , Center on Budget and Policy Priorities, October 13, 2009 After the first year, however, the subsidy would be based on a percentage of premium rather than a percentage of income. Because costs are expected to rise more quickly than income, over time cost of coverage after subsidies will rise above the initial 12% of income limit.
Comparisons with other bills