THE GOOD news in yesterday’s Senate Finance Committee vote for health care reform was that Republican Senator Olympia Snowe of Maine joined the effort and rewarded the push for bipartisan backing by President Obama and committee chairman Max Baucus. The bad news was the bill itself - a small step forward, but too skimpily funded to make the kind of difference that the public is counting on.
In addition to lacking a public insurance plan as a low-cost option for consumers, the bill does not provide adequate subsidies for low- and middle-income workers who cannot get coverage at the workplace but who will, under the legislation, be obliged to buy insurance on their own. Recognizing that the subsidies are insufficient, the bill’s authors decided they could not in good conscience levy severe penalties on those who fail to get coverage.
Yet these concessions only create a new problem. The bill also requires insurers to take all comers, including those with preexisting illnesses. With a weak penalty for failing to get insurance, many young, healthy consumers will choose to pay the penalty rather than fork over thousands of dollars that they can’t afford, leaving large numbers of families uncovered and the insurance pool top-heavy with older, sicker purchasers. Since insurers will be required to cover them and prohibited from charging extra for their preexisting conditions, premiums for everyone will rise.
The Senate could fix this by offering subsidies generous enough to justify slapping those who fail to buy insurance with fairly tough penalties, as Massachusetts does. But this would call for new revenue sources beyond the ones the Baucus bill lays out: a tax on insurers offering “Cadillac’’ plans, smaller federal subsidies for insurers’ own Medicare plans, and modest taxes on pharmaceutical and medical-device companies.
Congress should keep the bill’s revenue sources and look at others, including the House proposal for a surtax on the very rich, as a way to make subsidized insurance so affordable that Congress will no longer shrink from hitting healthy insurance scofflaws in the pocketbook. At that point, tougher penalties can make the “young and invincible’’ convincible.