The American Spectator : Baucus Blunders

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Baucus Blunders

By Peter Ferrara on 9.23.09 @ 6:08AM

Before this is over, the mean-spirited Montana senator will be dubbed Mad Max.

Senate Finance Committee Chairman Max Baucus has finally achieved broad bipartisanship with his new health overhaul plan. Nobody else has been able to unite 99 Senators behind any idea in health reform. But Baucus has managed to do just that, with 99 Senators unified behind the idea of NOT supporting his plan.

The plan is carefully crafted to scare away anyone interested in good public policy or just good politics (read re-election). The Baucus bill is grossly underestimated to cost almost $1 trillion in new spending, all financed by higher taxes on health care and health insurance, particularly union health plans, and Medicare cuts for senior citizens, while still leaving at least 25 million uninsured according to the CBO. It still provides for a government takeover of health care and the bureaucratic structure for government rationing of health care, increasing rather than lowering health costs overall.

What is most instructive about the bill is that it shows why Republicans and conservatives cannot support anything like what President Obama and the Democrats are talking about on health care. Below are the features of the Baucus plan that no Republican or conservative could possibly support, even though it is too "moderate" for the rest of the Democrat party.

Higher Health Costs

The Baucus plan is carefully structured to raise health costs for everyone, federal, state and local governments, businesses, and families. The CBO estimates it will raise federal spending by almost $1 trillion over 10 years, but the bill's spending would mostly be operational for only 6 of those years. That means the true 10-year cost once it is fully phased in would be closer to $2 trillion.

Health insurance prices will soar under the Baucus bill. One reason is that the government will force everyone to buy the health insurance coverage that the government insists you must have, which will include all the politically correct benefits like coverage for abortion that altogether add up to big costs. Insurance is also required to cover anyone who shows up no matter how sick they are and how expensive their health care will be (called guaranteed issue), and they can't be charged more for that coverage just because they may need highly expensive care (called community rating), which will raise insurance costs even more. The government will also limit the deductibles, co-payments, and out of pocket costs that people can choose for their health insurance. The Council for Affordable Health Insurance (CAHI), which includes some of the smartest free market economists on health care in the country, estimates that these factors alone would cause health insurance premiums to almost double.

Over 50 years old, I currently enjoy a health insurance plan with a $10,000 annual deductible that costs me under $260 a month. That's about $3,000 a year, and that is all I need because it protects me against the high costs of serious illness. But when President Obama and his socialist Democrats get done helping me, my insurance will probably cost more than twice that, which I will be compelled to pay for under threat of force.

The new taxes on health care and insurance in the Baucus bill will also increase health costs. The bill imposes a tax on higher cost health plans, mostly union health plans, equal to 35% of the cost above $8,000 for individuals and $21,000 for families. But those thresholds are indexed only to grow with general inflation, not health costs. So over time, more and more health plans will be subject to the tax. After just 10 years, the most popular plans in the Federal Employee Health Benefits program will be subject to a tax of almost $1,000 a year. This indicates that average health plans will be paying such a tax burden by that time. These higher costs will be paid by workers and employers.

But the bill includes another tax on all health insurance plans as well that has been overlooked, further increasing costs. Additional taxes are imposed on prescription drugs, medical devices, and clinical labs. All of these will mean higher costs for workers and their insurance plans. Employers who do not provide the government mandated health insurance will pay an additional tax of $400 for each worker eligible for government assistance to buy such insurance on his own. This will further increase costs for employers and cause some low and moderate income workers to lose their jobs.

A bigger impact than any of this will be the effect of incentives from the bill in increasing the demand for health care. With the government or insurance companies paid in part by the government paying the bill, consumers will have every incentive to demand more and more health care. This increased demand will just raise health care prices, meaning higher insurance costs as well.

Runaway Entitlements

The Baucus bill provides for a ridiculous runaway explosion in entitlement spending. Medicaid is already projected to cost almost $5 trillion over the next 10 years, reaching $674 billion for 2017. Yet the bill sharply expands Medicaid to everyone up to 133% of poverty, include childless adults not previously covered under the program.

Worse is a new middle class entitlement in the bill providing government subsidies to buy health insurance to everyone with incomes up to 400% of poverty, which is $88,000 for a family of four. Have Mr. Baucus and his fellow left-wing Democrats who think even his bill is not enough not heard of the long-term entitlement crisis? Are they completely ignorant of the long-term budget projections showing we can't even pay for the entitlement overpromises we have already made? The unfunded liabilities for Social Security and Medicare are now over $100 trillion, while our entire economy only produces $14 trillion a year, and that will be declining even more soon enough unless the current socialist reign of error in Washington is ended.

No they are not ignorant and yes they have heard of the entitlement crisis. After next year's midterm elections their plan will to suddenly be to announce, "Oh, my gosh, these long-term deficits are completely unacceptable." The establishment media will echo with wise Washington greybeards intoning that of course the only responsible course is massive, unprecedented tax increases, to Swedish socialist levels and beyond. Most Congressional Democrats secretly harbor dreams of returning to the glory days of 90% top income tax rates, placing a socialist cap on success in America.

Block grant Medicaid and SCHIP back to the states like we did so successfully in 1996 for AFDC, they'll say, and let each state design a true safety net to make sure no one suffers without essential health care. In their view, the federal government along with the states can spend enough to make sure that the uninsured that truly can't afford basic health insurance have the money they need to do so. But no Republican, conservative, or any grown-up who can count can support the massive entitlement spending increases in the Baucus bill, or the other Democrat health overhaul plans.

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topics:
Health Care, Max Baucus, Mandates

About the Author

Peter Ferrara is Senior Fellow at the Carleson Center for Public Policy, Director of Entitlement and Budget Policy for the Heartland Institute, and General Counsel of the American Civil Rights Union. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush. He is the author of America’s Ticking Bankruptcy Bomb, now available from HarperCollins.

Letter to the Editor View all comments (26) | Leave a comment

Melvin| 9.23.09 @ 7:25AM

The Baucus bill is pretty much like anything else the government does, they take a pile of dog squeeze, put whipping cream and a cherry on top and tell us, "here have some desert, it won't cost a thing."
Then we ask the government, "Why does this desert taste so bad?" The response from the government is, "Here let us put a little more whipping cream on top and then it will taste much better."

Notary Sojac| 9.23.09 @ 12:17PM

Then the Republicans take out half the the dog squeeze and ask me for a contribution based on the great job they're doing.

Tim| 9.23.09 @ 4:25PM

"Reform" means changing the dog's diet.

JP| 9.23.09 @ 7:50AM

Perhaps this is Mad Max's way of killing ObamaCare. Yesterday, the Senate Finance Committee had to call a number of its staffers to conference to go over the byzantium complexity of how the surtax on expensive health insurance would be calculated. Not even the staffers (the very ones who wrote the bill) could give the committee a straight, articulate answer. And that was just one item.

How are the lawmakers going to amend a bill they don't fully understand? Already there are numerous contradictory statements coming out of the Senate. And key Senators like Jay Rockefeller are demanding explicit language on insitituting a public option. Otherwise, he says he will vote against it.

As many a 5 Senators may join the GOP in not allowing this monstrosity out of debate. If that's the case, ObamaCare is dead. If they can vote cloture, the bill then must go to reconcilliation, where the process will begin all over. If they can reconcile, the Senate must begin again debate over the final draft. Again, there is a very good possibility for a filibuster. Otherwise, Reid would have to use the nuclear option. I don't think that is going to happen. Reid is behind in the polls big time and forced reconcilliation would be the end of his career.

2Anglico| 9.23.09 @ 8:58AM

This whole health care frenzy has been a beautiful thing. Max Baucus, ultra-liberal/leftist, has come out from under his sheep's clothing. A rabid wolf has been exposed. The ball is in your court, Montana voters.

owyheewine| 9.23.09 @ 10:51AM

The Baucus bill may be a blessing in disguise, because with all of the warts, it shows, by supposedly paying for all of the folly, how expensive these universal insurance bills are. As more people figure out that free insurance is not free, support has got to plummet.

kurt| 9.23.09 @ 9:39PM

This assumes that human nature is not human, and that the next vote will not help the human deliver himself from human nature.

Kurt| 9.23.09 @ 9:42PM

I meant to write 'the next vote will help the human deliver himself from human nature. Scratch the not.

Gill O’Teen ✝✡| 9.23.09 @ 2:12PM

Notary Sojac, your 12:17PM post should have made me laugh, but instead it brought a tear to my eye. I fear that yet once again, next year, I will have to choose from the least of offered evils. I firmly believe that we must rid ourselves of all the kommies serving in government positions, this includes every elected dumbocrat as well as all their RINO psychophants. But what will I do if, like in last year’s presidential contest, my choice is between only such vermin? Well, like not enough of us, I fell for the argument that if I didn’t vote for john-boy, we’d get a Beavis buddy who would make us remember peanut vendor’s glorious reign fondly. So I voted for john-boy and the nightmare continues. I’m not sure, but I think the golden calf just surrendered to the Aborigines at the UN. It’s so hard for this stroke victim to separate the wheat from the chaff of his words. Maybe there is no wheat.

Gill O’Teen ✝✡
gill.Oteen07041776@gmail.com
Don’t Tread on Me!!

Kurt| 9.23.09 @ 9:44PM

Indeed, the lesser of two evils is still evil!

Hardius| 9.23.09 @ 3:40PM

Am I the only one who thinks that the lobbyist are the problem that needs to be addressed first. They outnumber our elected officials in Congress 6 to 1. With that kind of pressure, bribes, graft, and kickbacks how can we even pretend that there is a chance for a wholesome outcome. If we do not force Congress to ban lobbyist from Washington D.C., the corruption that overwhelms our nation will never abate no matter which party is in control.

c. j. acworth| 9.23.09 @ 5:41PM

Hardius;
I doubt it is possible to get rid of lobbyists. As long as congress insists on trying to tax and regulate every aspect of the economy, those affected will do all in thier power to influence the ones doing the regulating.

Kurt| 9.23.09 @ 9:30PM

No Hardius, the problem is not lobbyists; rather it is people who either believe they can get something for nothing-and tempararily do-and the people that want to believe their time will come and they too will get something for nothing. They then keep voting the incumbents in, the incumbents then do what the financiers of their election campaign ask. It ain't the lobbyist, nor the politician, rather it is the voter or the non voter. In other words: It's you and me and our company.

Michael L. Hauschild| 9.23.09 @ 4:57PM

This is the Presidents bill; Baucus is just the stealth vehicle. By the time it gets out of the Senate under nuclear propulsion it will go to the joint committee and there become a rubberstamp of exactly what the extreme liberal left wants.
The House version will be “moderate” (after all they must have some semblance of bi-partisanship and give cover to the Blue Dogs) but it will be totally striped in the joint committee. The joint committee version will be sent to the House and Senate and voted on. They have the votes; elections have consequences. The only consolation is that the next election will produce majorities to enable impeachment.
Don’t believe the fix is in? They just voted in Baucus’s committee not to let the public view the final markup. They will vote on this and we will not be able to see what is in it.
You are supping on cake
The arrogance of these buffoons is all encompassing.

Kurt| 9.23.09 @ 9:35PM

Arrogance indeed! It leads to hubris and ensuing folly.

Klabautermann| 9.23.09 @ 7:29PM

The despot is not a man. It is the . . . correct, realistic, exact plan . . . that will provide your solution once the problem has been posed clearly. . . . This plan has been drawn up well away from . . . the cries of the electorate or the laments of society’s victims. It has been drawn up by serene and lucid minds." - Le Corbusier

We are nearing the final stages of the health care debate in congress. Still nothing can be said about "the plan" with any certainty. At the time that the president delivered his message to congress there were five congressional committees developing health plans. One committee had produced a bill over one thousand pages long. Assuming the president has his own version, what he calls "my plan," that makes six separate plans. Yet the president said, "If you misrepresent what’s in this plan, we will call you out." Perhaps this statement was more appropriate to a barroom than the halls of congress.

The president pointed out that, "the claim made not just by radio and cable talk show hosts, but by prominent politicians, that “we plan to set up panels of bureaucrats with the power to kill off senior citizens." He asserted that, "It is a lie, plain and simple." The president was correct. This is a lie, "plain and simple." Yet who were the talk show hosts and prominent politicians who said there would be, "panels of bureaucrats with the power to kill off senior citizens." There are none. Governor Sarah Palin did mention "death panels." Will there be "death panels?" We only have to point to Barbara Wagner, a beneficiary of Oregon’s "Death with Dignity Law." When faced with a $4,000 per month cancer treatment expenditure as opposed to a one time $50 expenditure, the state of Oregon chose the latter, sending her an unsigned letter. The state, of necessity, must make these decisions.

The president claimed that, "No one would be forced to choose" his plan, yet he asserted that, "Individuals will be required to carry basic health insurance." You will not be forced to enroll in his plan but you will be required to participate.

The president said, "we’ve seen scare tactics." Perhaps he was referring to his mention of "the man from Illinois who lost his coverage in the middle of chemotherapy . . .and died because of it." Or his statement that without his plan, "More families will go bankrupt. More businesses will close. And more will die as a result."

The president promised that, "I will not sign a plan that adds one dime to our deficits," and again, "The plan will not add to our deficit." This might sound very convincing to a class of college freshmen, especially to that large percentage of them who do not even know who the first president of the United States was. However, for those of us who are familiar with how government works, this is laughable. The president admits that the plan will cost $900 billion over 10 years. Much of the savings is to be recouped from the existing health care system which is "full of waste and abuse." Since he was elected, how much money has been saved by the elimination of waste and abuse. The president announced, with much fanfare, a project to eliminate $100 million from the federal budget.

Why to desire for bipartisanship? If this is such a good bill why not exclude the Republicans and take all the credit.

Kurt| 9.23.09 @ 9:52PM

Because why take all of the credit if somewhere, someone can or will accuse you of not 'playing fair.' For in the Obama world, it matters not that you F someone, as long as you talk nice and people believe that you are playing fair. bi-partisan is the golden rule of the 'global elite.' "Look at them, falling into our hands." OK Rockefeller. deny this! They love our bickering.

NJCat| 9.23.09 @ 9:49PM

Not surprised that Humana put an ad at the topo of this article. The blather coming out of the far right is nothing but a cleaver ruse by the insurance companies to protect what they got. If we can just eliminate the insurers and malpractice lawyers from the health insurance economy - we would reduce costs by at least 30%. (eg. each and every OBGYN in the northeast pays over $200K per year for malpractice insurance.) If we're serious about getting health care under 10% of GDP, thats where we start!

Kurt| 9.23.09 @ 10:11PM

No NJCat, truth be known we can't fix this until a majority understand that the only fix is no fix. In other words, numbers and statistics and brand new plans with the latest regulations mean nothing as long as the lemmings believe their GO(d)vernment can help them, and that their representative will help them to get ahead of their peers. God helps those who help themselves, government helps themselves. Is everything perfectly crystal clear?

Yosemeti Sam| 9.23.09 @ 10:58PM

LOL.

What we've got here is a - failure to land
a Moby Dick of health care reform.

Proceed, captain BHO - to your whaling
destiny; joining captains Clintons; not
to mention the aiding and abetting crew. LOL

DaveinPhoenix| 9.24.09 @ 12:20AM

So much for moving to Montana

Robert Rosencrans| 9.24.09 @ 5:52AM

Senator Baucus is like Dr. Frankenstein, bringing up the dead, then letting it loose upon a population to wreak havoc. Soon there will be pitchforks in the hands of the angry rabble as they storm the castle.

Richard Baker| 9.24.09 @ 4:14PM

Has this puke forgotten that a private company is allowed to speak? Sic Semper Tyrannis.

Brian K| 9.30.09 @ 6:17AM

Excellent article. It deals with many of the issues raised in the HCR reform debate. We have some of these issues in greater depth at takebackmedicine.org

On the issue of Baucus gag order of Humana see http://www.takebackmedicine.or.....26bb31d586

Brian K| 9.30.09 @ 6:17AM

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