Where's the Good in Health Care Reform

Information from Baucus's Office on Health Care Reform

September 24, 2010

This past winter, Senator Max Baucus got his health care reform bill passed and signed into law. You would think that this was a good day for Americans, but, in fact, it was a bad day. This is the day when after President Obama's claim that nothing could be worse than our current situation with health care in America, Senator Baucus proved him wrong. Not only did Senator Baucus prove the president wrong, but Senator Baucus got the President to sign something worse into law.

Vice-President Joe Biden has been ridiculed in the media and the press for his quote, "This is a big fucking deal!" to President Obama before the signing of this historic legislation. The question is, was Biden as misled as the Senate, House of Representatives, much of the American Public, and, apparently, the President, or was this an attempt to warn the President that he was about to make a huge mistake? Whatever Vice-President Biden's intent, the bill was signed.

After spending several months trying to get through to Senator Baucus, I finally went to his local office - rather upset - and was promised by Jake Maciag that if I emailed him my questions, he would get them to the Senator, and make sure someone actually followed up on it.

Mr. Maciag was true to his word, and a few days later, I received a call from Josh Gardiner. Josh was a little evasive as to whether he worked for Senator Baucus in Baucus's Washington D.C. office, or whether he worked for Senator Baucus on the Senate Finance Committee, but he assured me that he could answer my questions.

I asked Mr. Gardiner whether the new health care reform law actually addressed any of the problems with the current health care system. I was surprised to have him not even evade the question, but instead flat out stated that none of those issues were addressed.

I knew that one of them was not addressed: elimination of group policies and restriction of employers on purchasing insurance for their employees, because the new law not only fails to prohibit these kinds of plans and incentives, but actually requires them.

But what really shocked me is that Mr. Gardiner assured me that NONE of the other problems were addressed either.

Why weren't they addressed? According to Mr. Gardiner, they were not addressed because that would be too much of an impact on the way insurance companies do business. What??? Isn't that exactly what the American people were being sold in this bill? Fixing the way that insurance companies did business? Apparently that was just a big lie. And the Senator's office is proud of the fact that it was a big lie.

So, changing the way insurance companies do business is forbidden, but dramatically changing the way small businesses do business, and imposing financial burdens on small businesses and the American People is just fine? The law requires small businesses to purchase insurance for their employees. This sounds like a good idea. However, the reason small businesses do not provide health insurance for their employees is not because small businesses hate their employees, or because small business owners are unfair and greedy. It's because small business owners want to make payroll and want to eat.

Providing health insurance for their employees has been a top concern for small business owners in survey after survey for decades. Why don't they do it? Because it is unaffordable. And the prices keep going up. And the prices are expected to keep going up. In fact, this legislation has clauses and requirements designed to insure that insurance costs keep going up (and those are promoted to the American People under the guise of decreasing costs, but I'll get to that).

Since 2005 the cost of health insurance for small businesses has more than doubled according to a Montana Focus aired on April 29, 2010. Rates increase every year. According to Allegiance insurance in their solicitation calls, all the major carriers raised their rates dramatically at the beginning of 2010 in anticipation of this law passing and have scheduled rate increases for January 2011 as well.

Insurance costs have gone from unaffordable to well more than double that. Then Senator Baucus claims that this bill will not impact small businesses financially, because those small businesses can get a tax credit for providing insurance. But the tax credit is a joke. Mr. Gardiner confirmed that the tax credit is just a credit and it will cover up to 1/3 of the cost of the insurance. So, Senator Baucus claims that crediting less than 1/3 of more than twice an unaffordable amount will be a wash? I think the Senator needs to go back to 3rd grade and learn "greater than" and "less than" and figure out which one the alligator wants to eat. This law forces these small businesses to cough up money they cannot afford to cough up. That can only result in companies raising prices, cutting jobs, and/or closing.

Of course, then there's the great cop out on that argument. The thought is that only companies who employ fewer than 50 people actually can't afford health insurance (if you employ more than 50 people, you obviously make a ton of money and can afford health insurance - even at the massively inflated rates this bill requires), so companies that employ fewer than 50 people are exempt from the requirement to provide insurance.

Well, great. Except that that makes it much more difficult for companies with fewer than 50 employees to attract and retain employees, since these employees are now required to pay for their own insurance, since not having insurance will now be a crime. So, the tiny business doesn't have to provide insurance for their employees, they just need to pay their employees enough more than larger companies that the employees can get their own insurance. This is actually going to be a financially worse situation for the smaller businesses.

The Senator does not want to talk about that - or even acknowledge it.

One clause that Mr. Gardiner is really excited to reference - and apparently the only "solid" piece of the law that he can refer to as far as how the law will supposedly reduce expenses - is a requirement that health insurance providers will have to pay out 85% of what they take in in claims. That means they only have 15% for overhead, salary, wages, gifts, expenses, etc. The argument is that this will reduce the cost of health insurance.

Whoever proposed this as a means of regulating or reducing the fees charged by insurance companies obviously didn't think it through. There are four ways this math can work:

  1. Rates stay constant, payouts stay constant, salaries are cut
  2. Rates stay constant, payout increase, salaries dramatically cut
  3. Rates increase, payout stays constant, salaries stay the same
  4. Rates dramatically increase, payouts increase, salaries stay the same

Senator Baucus and Mr. Gardiner claim that magically somehow this will result in insurance being cheaper. That option is not logically possible. At best, the rates stay the same, but this requires all those executives at health insurance companies - not to mention all the employees at health insurance companies - taking pay cuts. This is highly unlikely. Since none of the issues with health insurance were addressed in this bill, there is still nothing to encourage rate cuts. In addition, the requirements that additional procedures be covered and the requirement that 85% of the revenues be sent out in payment, this can only lead to an increase in rates.

Beyond the damage this does to Main Street, as politicians are currently fold of calling it, this bill puts and additional burden on the less well to do in our country. If you can't afford health insurance, you get fined. Senator Baucus is adamant that there are no fines and there never will be fines, but it's just a case of semantics. Senator Baucus doesn't like the word "fine," but there really isn't any other explanation for it. If you don't have health insurance, you will be charged an additional, non-refundable, Medicare/Medicaid tax to cover your health insurance. Well, if it isn't refundable, and you have to pay it, it sure sounds like a fine to me. Call it what you will, you will pay money for health insurance. Even if you can't afford it. It may be a lowered salary, or it may be a deduction from your paycheck by your employer, or it may be a fine from the Federal Government handled through the IRS, but you'll get health insurance, and you'll pay for it. (And it will cost more than it does now, when you can't afford it.)

Health insurance companies are the only beneficiaries of this law. It requires people to pay them, and does almost nothing to make them help people. Even Mr. Gardiner could not provide any information on what it really does to help people. He falls back on things like web sites where people can compare prices. That doesn't help make it affordable or reasonable, or provide the right coverage. Despite what the spammers tell me every day, I'll never make $11,000 an hour by visiting a web site, and the web site will not make prices lower. It will just let me see them all. The best we can hope for from the web site is that, like gasoline, the prices at this intersection will all be the same, regardless of brand.

Mr. Gardiner also talked about Accountable Care Organizations. These are groups of doctors and other care givers that will provide you better care at a lower cost because they are groups of doctors and care givers that will provide you better care at a lower cost. Yes, that's the official explanation of this new thing created by this law. Since they're groups they'll cost less, I guess. I know that when my grandmother was in the hospital, it cost more the more people were in the room, but somehow Senator Baucus and Mr. Gardiner are convinced that more people costs less...

Mr. Gardiner also cites how much the health insurance companies fought this bill every step of the way as a sign that it is good and helpful. This just makes it apparent that he hasn't watched any of the coverage or documentaries on this bill and it's trip to law, and that he hasn't been paying any attention since it was passed. The coverage I can find of this (start with the June 15, 2010 Frontline episode) shows just the opposite - people upset and being thrown out, and health insurance companies in meetings, often behind closed doors, and though they got upset about things at times, generally in agreement with the direction things were taken. Couple that with the announcement shortly after the bill was signed that the health insurance companies would comply with the law while many States are challenging it... (And the only places reporting that the health insurance industry is contesting the bill seem to be U.S. Government web sites.)

In the long run, this law is so complicated and confusing, and so inconsistent, that probably no one really knows that it does or doesn't do - but those that are supporting it, like Mr. Gardiner, will acknowledge that it does not address any of the problems with the health insurance industry.