Wild rumpus reform

September 10th, 2009

Max Baucus, the Democratic senator from Montana and chairman of the powerful Senate Finance Committee, is putting the finishing touches on his long-awaited proposal for health care reform.

An outline of his plan released over the weekend shows that it makes virtually every major concession that Republicans have asked for: there’s no public plan, there aren’t any new taxes on the rich, and as far as I can tell, there’s not even an employer mandate.

And yet, it would still manage to lay the foundation of the type of health care system that this country desperately needs.

With a mandate on most people to purchase insurance, subsidies to help lower- and middle-class citizens buy insurance, and new regulations on health insurance companies, it would cover most of the 45 million uninsured Americans.

That structure, however, is pretty standard. It’s basically what all the other health care reform plans in Congress have. But what makes this proposal interesting are three important features:

First, it would set up non-profit health insurance cooperatives which would compete with private health insurance companies. By eliminating the need to earn profits to pay shareholders, these cooperatives would be able to use any extra revenue to reduce the prices of its health insurance plans.

Second, it would set up health care exchanges, which would create a standardized market for health insurance where consumers could compare prices for similar insurance plans.

Third, it would be funded in large part by a tax on the most expensive health insurance plans, which are one of the leading drivers of the unsustainable growth of health care costs.

All these features have the potential to significantly reduce, or at least stabilize, the cost of health care. More so than any other proposal out there.

The cooperatives and exchanges, however, must not be limited to small businesses, part-time workers, or workers that don’t have access to employer sponsored health insurance, as some in Congress have proposed. In order to have a large enough share of the insurance market to effectively lower costs, they need to be available to everyone.

At an estimated $900 billion over 10 years, this plan would be the cheapest of all the proposals submitted by the Democratic leadership in Congress. Republicans have no excuse to reject a proposal like this. It’s as bipartisan as it’s going to get.

And although it’s a bit less than what some Democrats had in mind, they should embrace it nonetheless. It’s a huge step in the right direction, and the wrinkles are much easier to iron out once the fundamental structure is in place.

But public support for health care reform is sinking, and if this proposal fails to pass the Senate, the push for health care reform will likely fail with it. Simply put, this proposal will determine who in Congress is serious about health care reform.

“And now,” cried Max, “let the wild rumpus start!” Max Baucus, that is.