Health Care

Baucus Changing Tax on “Cadillac” Plans

By Kate Pickert | @katepickert | September 22, 2009 | +

One provision in Chairman Max Baucus’s original Chairman’s Mark is a new tax on so-called “Cadillac” health insurance plans. The original Baucus mark calls for insurers to pay a 35% tax on plans that cost more than $8,000 for individuals and $21,000 for families. The logic here is that very expensive plans that require little or no out of pocket spending encourage overuse of health care services. The excise tax would also, of course, raise billions to help pay for the spending in the Baucus bill. The new tax would kick in in 2013 and the thresholds for plan costs would be pegged to the consumer price index, which grows significantly slower than medical spending inflation. Several senators on the committee, including Republican Olympia Snowe, have expressed concern that this excise tax would eventually encompass too many health insurance plans, affecting much of the middle class. So Baucus made a point of saying he realizes this needs to change:

In between opening statements, Baucus indicated he is open to adjusting the excise tax so it is instead pegged to the consumer price index “plus one.” This change is significant because it would mean fewer insurance plans would be taxed in the future.

A few other highlights so far:

  • Democratic Senators Ron Wyden and Max Baucus were complimenting each other on their work and Wyden warned against getting into a “bouquet tossing contest.” But on a serious note, every senator to speak so far has begun by complimenting Baucus on the monumental effort he has put forth so far.
  • Although more members are present now, at various points, as many as 10 chairs have been empty.
  • Nancy Ann DeParle, President Obama’s lead health reform adviser, arrived shortly after the markup began. She sat in the front row.
  • Democratic Senator John Kerry said he’s opposed to straight fees that would be paid by medical device makers under Baucus’s bill. Kerry said these fees would stifle innovation.
  • Democratic Senator Kent Conrad advised his “progressive friends” to read T.R. Reid’s new book, “The Healing of America,” which outlines how effective health care works in other countries without a government-run system.
Related Topics: baucus, cadillac, excise tax, health, reform, Congress, Health Care

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  • themaverickformerlyknownasbasilbrush

    Kent Conrad has no progressive friends. Surely he knows this by now.

  • Ivy_B

    Of course the countries that Reid discusses with effective health care are Japan, England, France, etc. I suspect many of us would be happy with equivalent systems. Does Conrad know anything?

  • constantweader

    Thanks so much to all three of you for your updates. I’ve tuned in & out a few times, but it’s really too sickening for the unhardened to watch, so you’re performing a great public service.

    The Constant Weader at http://www.RealityChex.com

  • gysgt213

    So, seriously no Senator has called Baucus a bought and paid for industry hack? I don’t believe. Love really is all around.

  • nflfoghorn

    “…every senator to speak so far has begun by complimenting Baucus on the momental effort he has put forth so far.”

    I’m guessing you meant MONUMENTAL but as is it’s certainly appropriate.

  • carotexas1

    Ivy I would love for Kate to ask Conrad what kind of controls are put on Insurance Companies to arrive at those results.

  • Kate Pickert

    The wifi in this room is less than ideal and it’s forcing a few typos. Thanks for the heads up – fixed now.

  • plukasiak

    The logic here is that very expensive plans that require little or no out of pocket spending encourage overuse of health care services.
    _
    Uh, have you bothered to check this “logic” against the FACTS? Apparently not, because the rest of the industrialized world manages to provide health care at LESS THAN HALF the cost per person that we do, with very little in the way of out of pocket expenses.
    _
    Of course, DOING YOUR JOB AS A JOURNALIST doesn’t seem to include differentiating right wing propaganda from facts, does it Kate?

  • rustyreturns

    “Democratic Senator Kent Conrad advised his “progressive friends” to read T.R. Reid’s new book, “The Healing of America,” which outlines how effective health care works in other countries without a government-run system.”

    .
    Did Conrad mention Geroge Soros as the main leader behind the Progressive movement by any chance?

  • rustyreturns

    And Kate, if you would be so kind. Was there a great applause from the Union section I am sure in representation that they will decrease the exicise tax or eliminate it totally from this bill?
    .
    Saying that, I mean Big Unions stand to loose the most with this remaining in the bill. More Union workers have the so-called “Cadillac Plans” in their benefit packages. You know, the ones we, the Tax Payers, are now supporting through Obama’s bailout plan for the Auto Companies and Big Union!!

  • agnomina

    Oh, Wyden, you romantic cad.
    -
    Also any thoughts on why ‘stifling innovation’ is such a common phrase now? Kerry seems to be equating ‘paying a fee’ to ‘blunt-force trauma to the frontal lobe’. I don’t think a lower bottom line is going to keep people from having ideas.

  • plukasiak

    Democratic Senator Kent Conrad advised his “progressive friends” to read T.R. Reid’s new book, “The Healing of America,” which outlines how effective health care works in other countries without a government-run system.
    _
    again, with the stenography.
    _
    T.R. Reid is a strong opponent of the for-profit health care industry, and notes that while there is a great deal of diversity in the way that other nations manage to provide health care to all of their citizens at much lower cost than here in the USA, there is one commonality—
    _
    THROUGHOUT THE REST OF THE WORLD, THERE IS NO ROLE FOR INSURANCE COMPANY PROFITS IN THE PROVISION OF BASIC HEALTH CARE. Even in those nations which rely entirely on “private insurance”, insurance companies are forbidden from making profits on basic health care (and compete only for stuff like “private rooms” and insurance for cosmetic surgery.). http://www.counterpunch.org/mokhiber04022009.html
    _
    A real reporter would actually have SOME FREAKING CLUE who TR Reid is, and what he’s actually written, and would have pointed out how badly Ken Conrad has distorted Reid’s reporting. Instead, we get stenography….

  • grape_crush

    Democratic Senator Kent Conrad advised his “progressive friends” to read T.R. Reid’s new book, “The Healing of America,” which outlines how effective health care works in other countries without a government-run system.
    .
    We’ve read it, Senator. By ‘government-run’, are you talking about the Bismarck (Germany, private insurers and providers, highly regulated), Beveridge (British, government provider), or National Health Insurance (Canadian, private providers, government insurer) models?

    ‘Cause, you know, enacting any of those systems would force you to make some tough choices that may not serve you politically.

  • grape_crush

    A real reporter would actually have…
    .
    Give it a rest, pluk. She’s just reporting on what’s being said. Call it stenography, sure, but I’m not expecting analysis from Pickert’s posts.

  • grape_crush

    Oh, and for those who want The Healing of America in a nutshell, try this 2008 Frontline series, Sick Around The World, where T.R. Reid examines various health care systems.

  • plukasiak

    She’s got wifi — so her gross ignorance is no excuse. A simple google search would tell her who TR Reid really is, and allow her to do something other than repeat false and misleading talking points.
    _
    and as far as this “first day” nonsense — if Time wanted good coverage, they’d have sent someone with a clue to cover the mark-up. Heck, stuart Z would make a great correspondent on this subject — why not hire him for a couple of days to do the job?

  • bryanfromhouston

    Now Pluk,
    Fact-checking is not what you find here. Stenography, yes. Fact-checking, no. Further, you might want to watch your tone or you might get banned or censured. :-) Lol

    But yeah, you’re right. This health-care debate is silly. It is bought and paid for. Just about every single Senator and Representative has been bought and paid for by some special interest which is not the people they represent. Then the company or industry who bought and paid for their Senator(s) or Representative(s) feeds them safe talking points that coincide with the bill that they wrote convincing people (the constituents) that what is in the bill is really in their best interest even when it is not.
    Somebody stop me when this train goes off the tracks…but I think I’m full speed ahead. It is a sick perversion of democracy if there ever was one. Thomas Jefferson and Thomas Paine are rolling in their graves.

  • grape_crush

    …if Time wanted good coverage, they’d have sent someone with a clue to cover the mark-up.
    .
    [Like Karen, maybe]? I think Jay is on this too.
    .
    She’s got wifi…
    .
    And while she’s Googling Everything There Is To Know About T.R. Reid on a slow connection, she misses something else going on. Easy to say what everyone else should be doing when you aren’t the one actually doing it, pluk.
    .
    …so her gross ignorance is no excuse.
    .
    Most of the population couldn’t tell you who T.R. Reid is, much less about the work he’s done…I don’t expect reporters and staff writers to be omniscient. If I did, I’d find myself frequently disappointed.

  • plukasiak

    And while she’s Googling Everything There Is To Know About T.R. Reid on a slow connection, she misses something else going on
    _
    since she “missed” the Democrats standing up for the public option, its pretty obvious that “misses something else going on” wasn’t on the top of her priority list.
    _
    Most of the population couldn’t tell you who T.R. Reid is, much less about the work he’s done…I don’t expect reporters and staff writers to be omniscient.
    _
    I don’t expect her to be omniscent. What I do expect is that she report responsibly, and not simply repeat the misrepresentations of a politician who is a wholly owned subsidiary of the health insurance industry.
    _
    My point is that Time shouldn’t be sending someone who demonstrates this level of ignorance to “blog” a health care reform bill mark-up — that’s why I suggested that they hire someone like stuart to do it. Maybe she’s not too stupid to “report” on the session — maybe she’s actually capable of doing the necessary fact/background checking (or maybe Time is capable of providing fact-checkers) for the web or dead-tree version of Time. But “blogging”, especially “live-blogging”, requires that you not be a complete moron on a subject — and so far, Pickert has failed to meet that criteria.

  • messenia

    The logic here is that very expensive plans that require little or no out of pocket spending encourage overuse of health care services
    .
    Why are statements like this allowed to stand without commentary. A statement isn’t “logical” just because a few people say it is. There was a piece on NPR this morning that highlighted a lawyer who pays $20K a year for his insurance. He does not have an employer-paid plan, he pays all premiums himself (and I might add, does not get to deduct the cost). Why should his plan carry an additional tax? Isn’t it more likely that much of the overuse comes from the fact that most people aren’t paying the full cost of coverage themselves?
    .
    Democratic Senator Kent Conrad advised his “progressive friends” to read T.R. Reid’s new book, “The Healing of America,” which outlines how effective health care works in other countries without a government-run system.
    .
    I would advise Senator Conrad (and everyone else in Congress) to actually read the book he is promoting. If he did, he would realize that effective public healthcare plans are not built on some sort of mythical achievements of competition among for-profit health insurance companies. He would also discover that single-payer does not mean government-run.

    I for one would be very happy with a system like France or Germany: All employers and workers contribute to a public plan and every, man, woman and child gets the same basic coverage through private providers.

  • stuartzechman

    Kate Pickert:

    The logic here is that very expensive plans that require little or no out of pocket spending encourage overuse of health care services.

    That logic includes the premise that the cost of health care stays in the stratosphere, doesn’t it?
    .
    If the “overuse of health care services” must be discouraged, lest insurers and Medicare/Medicaid/HHS subsidizers go broke, then shouldn’t the price of health care services be regulated so that Americans pay less than the current $7,421 per person?
    .
    If you have a moment, please click on this link to the US Dept. of Health and Human Services http://tinyurl.com/rcru3c , you will find this information:

    Health spending in the United States grew 6.1 percent in 2007, to $2.2 trillion or $7,421 per person. This was the slowest rate of growth since 1998 and 0.6 of a percentage point lower than the growth of 6.7 percent in 2006, according to a report by the Centers for Medicare & Medicaid Services. Health care spending, however, continues to outpace overall economic growth, which grew by 4.8 percent in 2007.

    Does the price of health care in the United States really derive from its “overuse”, or does the logic of legislating high out-of-pocket spending derive from an unwillingness to legislate price controls on a politically powerful industry, Kate Pickert?
    .
    Please forgive my having asked, if you are unqualified to answer these questions…

  • http://swampland.blogs.time.com/2009/09/22/details-on-baucuss-new-mark/ Details on Baucus’s New Mark – Swampland – TIME.com

    [...] plans: As I noted earlier, the tax on expensive health plans will not be tied directly to the Consumer Price Index. It will [...]

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