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The Baucus Bill: Affordability

This hasn't really changed from the framework Baucus released last week. So let me direct you to this post, or better yet, Nick Beaudrot's terrific analysis of how the Baucus bill compares to Massachusetts, and to a hypothetical version of the Baucus bill with more money.

The basic lay of the land here is that the premium subsidies aren't where they need to be, but are pretty good, particularly for folks making up to 300 percent of the poverty line. The question is what happens when you get sick. And the answer is pretty much that people making more than 200 percent of the poverty line will be less ruined than they'd be under current law, but still facing tens of thousands of dollars in out-of-pocket expenses a year.

Medical bankruptcy, in other words, isn't going away. One fairly dramatic way to think about this is that health-care costs are so high in this country that we can talk about spending almost $900 billion helping low-income Americans afford coverage and still be left with a situation where coverage is unaffordable and illness rips through a family's savings.

By Ezra Klein  |  September 16, 2009; 1:12 PM ET
Categories:  Health Reform  
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Next: The Baucus Bill: Individual Mandates

Comments

Do any of the other bills stop medical bankruptcy? And, what are the various bills success in limiting bankruptcy?

Posted by: thescuspeaks | September 16, 2009 1:30 PM | Report abuse

Just for the record this is not a Bill at all. It does not contain actual legislative language and much of it is devoted to explaining current law and then how the Baucus Plan would change that.

I was looking forward to something I could compare line by line and section by section with the HELP Bill. This wasn't that. I don't see any way the Committee can possibly start from this particular piece of work product, somewhere there actually has to be an 800-1000 page piece of double-spaced line-numbered bill language from which the reported numbers are generated. Where is it?

Plus it is a little crazy to go the the Finance Committee web-site and still have 'Call to Action: Health Care 2009' (the Fall 2008 version of the Baucus plan which included the Public Option) still featured on the front page. Shouldn't Max tell someone to take that banner and link down? Because if you unwarily click through you would find yourself a pretty impressive piece of progressive health care language, apparently drafted before the Pod People replaced the Nice Centrist Solid Dem Max of last Fall with the Mad Repub-Appeasing Max of this summer.

Posted by: BruceWebb | September 16, 2009 1:36 PM | Report abuse

nothing stops medical bankruptcy. The only way to legislate that is to force every current and every future healthcare provider of service to accept a contracted rate whether that be from a government entity or a private insurer. Since that won't ever happen medical bankruptcy will continue forever. We may decrease the numbers but they will still continue.

Oh and Ezra, spending 900 billion dollars and not getting much for it is what government does best!

Posted by: visionbrkr | September 16, 2009 1:43 PM | Report abuse

The only way to solve this is to start taking the profit out of health care. That's what the other industrial countries do and it is why their citizens are so much better off than most of us for less money.

If big health insurance corps and the hedge funds that own them, along with hospitals and doctors, continue to be able to take advantage of people's need for health care and rip them off for their own personal gain not only are millions still going to face medical bankruptcy, but our overall health, life expectancy and ability to ward off communicable diseases are all going to suffer too. Then add in the effects of global warming, and it looks pretty bleak for the US.

I really hate to be so pessimistic, especially after the euphoria of January 20, but the entrenched interests are just so entrenched I just don't see any way out short of hauling out the pitchforks. If Baucuscare passes, I just think the younger and poorer people who voted in Obama will be much worse off and likely to feel betrayed, to the great detriment of the Dem Party.

Obama missed a real chance early this year to take a stand for the people against the powerful, but by capitulating (or deluding himself that he could "bring people together" and "change the tone") he is now not likely to get reform that would really improve the lot of enough people.

As I said, the problem is trying to reconcile health care reform with protection for some of the most gouging private interests in our society, and it ain't going to work out so well.

Posted by: Mimikatz | September 16, 2009 1:43 PM | Report abuse

thecusspeaks

Well it is a matter of degree. HR3200 would cap annual out of pocket costs in the case of a bad medical year at maybe 40-50% cheaper for people making near the median household income than does the Baucus Plan. Some people would still be driven over the financial edge but the gap would be much narrower.

For example I ended up in the hospital last year and racked up an uninsured bill of around $28,000. Which I couldn't pay. Luckily the Nuns wrote their $23,000 share off, leaving me with a stiff but manageable bill. The differences between the House Bill and the Baucus Plan are on that order, with the former you might end up with a financially miserable year but probably not with one that was unbearable.

Posted by: BruceWebb | September 16, 2009 1:49 PM | Report abuse

Correction: It is clearly the middle colass who is screwed here, as people up to 133% of poverty will be better off, maybe even to 200%. This is going to excite the resentment of the people at 200% to 300% or 400% who will feel they are screwed to give poor people more care, and the GOP will exploit this as they always do (remember welfare queens). When of course they are screwed to provide more third and fourth homes for hedge funders and health care CEOs, but no one in the media will tell them that.

Posted by: Mimikatz | September 16, 2009 1:50 PM | Report abuse

I've been trying to figure out what the out-of-pocket max for someone at 150% of FPL is. In the Massachusetts system it's about $3000. For a family of 4 earning $33K, that's real money, especially if you have to pay it every year. But to pay it once every fifteen years will not always lead you to ruin. The insurance company would accept a payment plan over a year, you'd be out $250 per month for a year, which would be highly unpleasant, but again, once every fifteen years is not catastrophic.

However it's totally unclear under Baucuscare what the out-of-pocket max is. For those who don't qualify for subsidies, I read something like 100% of HSA maximum, which is $11K for a family, which is absolutely insane, and some smaller but still insane number for people in the subsidy lane.

Posted by: NicholasBeaudrot | September 16, 2009 1:50 PM | Report abuse

It is important to remember that, for a person who has no assets, "medical bankruptcy" is a tax on creditors, not the individual. The old adage that 'You can't get blood out of a turnip' is true: the red herring of "medical bankruptcy" is far less true, making some published studies absolutely meaningless.

Consider a person who has $200K in medical bills, rents an apartment (or owns a mortgaged primary residence), makes only twice his state's minimum wage, but has $500K in an ERISA-protected retirement account. If this person declares Chapter 7 bankruptcy (due to inability to pay the $200K medical bills), what does he actually loose? Nothing!

Posted by: rmgregory | September 16, 2009 1:56 PM | Report abuse

"Medical bankruptcy, in other words, isn't going away."

This should mean then that the bill is unacceptable to Obama, no?

Posted by: slantedview | September 16, 2009 1:56 PM | Report abuse

I don't understand why "the" question is what happens when people get sick. Isn't the more general question for prospective legislation, what happens to societal welfare as a whole? At the very least, it's worth comparing the benefits to those who newly have insurance and get sick, to the costs to those who are forced to buy insurance and do not get sick. The post by Beaudrot that you cite emphasizes the latter: millions of families will now have to pay hundreds of dollars more per month. Now, it may make sense for various reasons to force such people to buy insurance (since, at least for big disasters, society already foots the bill), but in terms of social welfare, there are still a *lot* of people who, in the aftermath of this bill, will be a) still healthy, and b) significantly poorer. "Affordability" is not just a matter of looking a who gets sick, or who will or won't go bankrupt.

Posted by: Ulium | September 16, 2009 2:01 PM | Report abuse

One problem I see with Nick Beaudrot's figures is that they don't take account of more and more employers dropping health care or reducing coverage both because they can no longer afford it and because they believe their employees can buy better care individually with Baucuscare than now, so why not.

Conrad is at least right that projecting more than a few years in the future is chancy at best, though he is wrong about most everything else. I think that the health care and economic environment is apt to be worse in 5 years than now.

Posted by: Mimikatz | September 16, 2009 2:02 PM | Report abuse

The Canadian government has found that 15% of bankruptcies in Canada are medical, even with UHC, primarily because a person that sick cannot continue working. The best we can hope for is to limit medical bankruptcy; it's really difficult to make it disappear entirely.

Posted by: tomtildrum | September 16, 2009 2:34 PM | Report abuse

its IMPOSSIBLE to make it disappear entirely. Even these caps aren't true caps. What if you had the best public option available but you went to a hospital and had open heart surgery and oops, the surgeon didn't accept the public option. hello medical bankruptcy.


slantedview,

obama is not as dumb as Rockefeller and give back all he got in these bills to pull a veto. He'd be killing the chances of re-election of many Democrats in 2010 if he did that.

Posted by: visionbrkr | September 16, 2009 2:42 PM | Report abuse

=And the answer is pretty much that people making more than 200 percent of the poverty line will be less ruined than they'd be under current law, but still facing tens of thousands of dollars in out-of-pocket expenses a year.=


In other words, the fundamental issue with the American medical system isn't going away. Cheers.

=Consider a person who has $200K in medical bills, rents an apartment (or owns a mortgaged primary residence), makes only twice his state's minimum wage, but has $500K in an ERISA-protected retirement account. If this person declares Chapter 7 bankruptcy (due to inability to pay the $200K medical bills), what does he actually loose? Nothing!=

Is that after he gets to go through the horrendous experience of getting everything that isn't specifically protected spent for medical care, and after the harrowing issue of dealing with your creditors? You make bankruptcy sound like such fun.

Of course, you also miss the point of the studies, which point out that insurance was no protection against bankruptcy - a dagger at the very heart of the current health care system in America.

Posted by: guardsmanbass | September 16, 2009 2:49 PM | Report abuse

"If this person declares Chapter 7 bankruptcy (due to inability to pay the $200K medical bills), what does he actually loose? Nothing!"

Shorter rmgregory: declaring bankruptcy? Lucky duckies!

Posted by: pseudonymousinnc | September 16, 2009 3:04 PM | Report abuse

This is unacceptable.

Health insurance that does not offer protection from bankruptcy in the event of a medical emergency is not insurance, it is a scam.

Posted by: adamiani | September 16, 2009 3:06 PM | Report abuse

I think visionbrkr's open heart surgery example would be an EMTALA violation. That is, I don't think you could balance-bill.

The term "medical bankruptcy" is poorly defined, but we could certainly have much better out of pocket caps. However we have to get the health care industry to eat more of the costs for these subsidies.

Basically what's happened is the insurers have squeezed lower income workers all they can and now they're turning to the government to keep the gravy train running. It's ridiculous.

Posted by: bmull | September 17, 2009 5:35 AM | Report abuse

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