Baucus health care bill includes pay-offs to senators

You can call them bribes if you’d like. Sen. Max Baucus’s (D-Mont.) health care bill is filled with pay-offs, bribes and graft to other senators just to get his mark up (it’s not in legislative format yet) proposal through the Senate Committee on Finance. This post details those bribes and provides the full text of the mark up.

The Sound Off Sister got this story rolling on Tuesday this week after reading an opinion piece titled States of personal privilege in the Wall Street Journal by Kimberley Strassel on Oct. 8.

Let’s go through the points made by the Sound Off Sister and Strassel and tie them to the specific section of the Baucus mark up. I have uploaded the 2009 America’s Healthy Future Act [PDF, 1.2mb] and I’ve also embedded the document into the post below courtesy DocStoc.

From Strassel’s original piece…

Senate Majority Leader Harry Reid, who is worried about losing his seat next year, worked out a deal by which the federal government will pay all of his home state’s additional Medicaid expenses for the next five years. Under the majority leader’s very special formula, only three other states—Oregon, Rhode Island and Michigan—qualify for this perk, on the grounds, as Mr. Reid put it recently on the Senate floor, that they “are suffering more than most.”

Let’s see, that would refer to page 46. I’m referencing the PDF page numbers, not the actual page numbers. Yeah, this should pass Constitutional muster…

Those states that offer minimal or no coverage of the newly-eligible population currently would receive more assistance initially than those states that currently cover at least some non-elderly, non-pregnant individuals. Expansion states would be defined as states with coverage of parents and childless adults at or above 100 percent of FPL that is not based on employer or employment. Such coverage may be less comprehensive than Medicaid, but must be more than premium assistance, hospital-only benefits, or health savings accounts (HSA). Between 2014 and 2018, the additional assistance to expansion states and other states would be adjusted downward and upward, respectively, so that, in 2019, all states would receive the same level of additional assistance for covering newly eligibles.

Next, we have the deal for those union members with “Cadillac” health plans. Again, from Strassel…

Mr. Baucus’s legislation would tax high-value insurance plans—a 40% tax on plans that cost more than $21,000 a year. Democrats argue it is reform to make those who can afford “luxury” health care chip in for those who can’t afford any at all.

That is, unless you live in a state such as New York. That state, along with some others, has many high-value plans—in part because it boasts a lot of union members with “Cadillac” plans, in part because the state has imposed so many insurance regulations that even skimpy plans are expensive. Sen. Chuck Schumer didn’t want a lot of angry overtaxed New Yorkers on his hands, so he and other similarly situated Democrats carved out a deal by which the threshold for this tax will be higher in their states. If you live in Kentucky, you get taxed at $21,000. If you live in Massachusetts you don’t get taxed until $25,000. This carve-out is at least more sweeping, applying to 17 (largely blue) states, though that’s cold comfort if you live in Louisville.

From page 203-2004 of the Baucus plan…

For example, for an employee who elects family coverage under a fully-insured health care policy covering major medical and dental with a value of $28,000, the amount subject to the excise tax is $7,000 ($28,000 less the threshold of $21,000). The employer reports $7,000 as taxable to the insurer, which calculates and remits the excise tax to the IRS.

Alternatively, an employee who elects family coverage under a fully-insured major medical policy with a value of $23,000 and a separate fully-insured dental policy with a value of $2,000 and who contributes $3,000 to a Health FSA has an aggregate health insurance coverage value of $28,000. The amount subject to the excise tax is $7,000 ($28,000 less the threshold of $21,000).

The employer reports $5,750 ($7,000 x $23,000/$28,000) as taxable to the major medical insurer and $500 ($7,000 x $2,000/$28,000) as taxable to the dental insurer, each of which then calculates and remits the excise tax to the IRS. If the employer uses a third-party administrator for the Health FSA, the employer reports $750 ($7,000 x $3,000/$28,000) to the administrator and the administrator calculates and remits the excise tax to the IRS. (If the employer is acting as the plan administrator of the Health FSA, the employer is responsible for calculating and remitting the excise tax on the $750 to the IRS)

Page 204 has the relief for those 17 hardship states, there is no equal treatment here at all so it is completely unconstitutional! But that has not stopped them before…

Under a transition rule for health insurance plans maintained in the 17 states in which health care was least affordable for the year ended December 31, 2012, as determined by the Secretary, the threshold amount is initially increased by 20 percent. The initial 20 percent increase is reduced by half each year thereafter (e.g., to ten percent for the first taxable year beginning after December 31, 2013 and to 5 percent for the first taxable year beginning after December 31, 2014) until the additional premium amount is eliminated entirely for taxable years beginning after December 31, 2015.

Back to Strassel and tax credits for drug research and development. There are a ton of references to research dollars, but I can’t find this one right now. Hey, give me a break, it’s 223 pages!

Sen. Bob Menendez, of the Garden State, seems concerned that his home-state employers [pharmaceutical companies specifically] are going to struggle to both pay their federal liabilities and to continue to grow and innovate. Thus Mr. Menendez’s quiet deal for a $1 billion tax credit for companies investing in drug R&D.

On to reducing the costs for union members. Last quote from Strassel…

Michigan Sen. Debbie Stabenow isn’t counting on it [the plan bending down the cost curve] when it comes to her constituents. She and Massachusetts Sen. John Kerry included $5 billion in the bill for a reinsurance program designed to defray the medical costs of union members.

From page 11 and 12 of the Baucus plan…

As a condition of issuing commercial, major medical health insurance policies or administering benefit plans for major medical coverage in years 2013, 2014, and 2015, all health insurance issuers would be required to contribute to a reinsurance program for individual policies that is administered by a non-profit reinsurance entity  …

The purpose of the Non Profit must be to help stabilize premiums for individual coverage during the first few years of operation of the state exchanges when the risk of adverse selection related to new rating rules and market changes is greatest. A duty of the Non Profit must be to coordinate the funding and operation of a risk spreading mechanism that takes the form of reinsurance. …

Contributions collected by the Non Profit must total $20 billion in 2013 to 2015 in order for insurers to meet the requirement.

OK, so that’s my complete dive into Kimberley Strassel’s piece in the WSJ from Oct. 8, supplementing the Sound Off Sister’s post on Tuesday. I’m sorry this post is so damn long, but now it should be your one-stop-shop for what was taken behind closed doors about 36 hours ago by the Democrats and Rahm Emanuel. Hey, a tax is a tax is a tax. Corporations do not pay taxes … taxpayers (you and me) pay taxes.

Here are some additional goodies included in the Baucus plan that will simply increase the cost of insurance for everyone.

Page 5: Within a year of enactment, any uninsured individual who has been denied health care coverage due to a pre-existing condition can enroll in a high-risk pool. Premiums in the high-risk pool will be calculated based on the same rating factors described above and will be 100 percent of the standard premium rate for a Bronze plan (described below). Currently covered individuals must be uninsured for six months before gaining access to the high-risk pool. The high-risk pool will exist until 2013 and $5 billion in funding will be provided to subsidize premiums in the pool.

Page 217: The Chairman‘s Mark would impose a fee on any person that manufactures or imports prescription drugs for sale in the United States. Fees collected would be credited to the Medicare SMI trust fund. The aggregate fee on the sector would be $2.3 billion payable annually beginning in 2010. Under the Mark, the aggregate fee would be apportioned among the covered entities each year based on each entity‘s relative market share of covered domestic sales for the prior year. The Mark would require that the fee be paid on an annual basis.

Page 218: The Chairman‘s Mark would impose a fee on any person that manufactures or imports medical devices offered for sale in the United States. The aggregate fee on the sector would be $4 billion payable annually beginning in 2010. Under the Mark, the aggregate fee would be apportioned among the covered entities each year based on each entity‘s relative market share of covered domestic sales for the prior year. The Mark would require that the fee be paid on an annual basis.

Page 220: Under the Chairman‘s Mark, an annual fee applies to any U.S. health insurance provider with respect to health insurance.

A U.S. health insurance provider includes any company subject to Federal income tax as an insurance company under part I or part II of subchapter L of the Code, as well as any organization exempt from Federal income tax under section 501(a) of the Code that provides insurance. In addition, a U.S. health insurance provider includes (1) any insurer that sells employer-sponsored group health care coverage to employees that are either U.S. citizens or are employed in the United States, and (2) any insurer that sells health care insurance to individuals or groups of individuals (whether or not U.S. citizens) in the United States. A Federal, state, or other governmental entity is not a U.S. health insurance provider. However, a company or organization that underwrites policies for government-funded insurance is a U.S. health insurance provider for purposes of the Mark. An employer that self-insures its employees‘ health risks is not considered a U.S. health insurance provider for purposes of the Mark.

The aggregate annual fee for all U.S. health insurance providers is $6 billion. Under the Chairman‘s Mark, the aggregate fee is apportioned among the providers based on relative market share.

Page 221: The Chairman‘s Mark would impose a fee on any covered entity offering clinical laboratory services in the United States. The aggregate fee on the clinical laboratory sector would be $750 million annually, beginning in 2010. Under the Mark, the aggregate fee would be apportioned among the covered entities each year based on each entity‘s relative market share of covered domestic laboratory service revenue for the prior year. The Mark would require that the fee be paid on an annual basis.

Page 223: The Chairman‘s Mark eliminates the rule that the exclusion for subsidy payments is not taken into account for purposes of determining whether a deduction is allowable with respect to retiree prescription drug expenses. Thus, under the Mark, the amount otherwise allowable as a deduction for retiree prescription drug expenses is reduced by the amount of the excludible subsidy payments received.

Here’s the full text, remember I’ve got the full PDF too.