Wednesday, September 16, 2009

The Baucus Bill Really Is Bad

My post "The Disappearing Public Option" detailed how President Obama was against the public option and allowing Medicare to negotiate drug prices with the pharmaceutical industry. The Max Baucus mandates every American buy health insurance. There are income and religious exemptions. The Wall Street Journal reports there are no provisions to allow Medicare to negotiate with Big PHARMA.

The good news is the Congressional Budget Office reports the Baucus bill would reduce the deficit.

Estimated Budgetary Impact of the Chairman’s Proposal
According to CBO and JCT’s assessment, enacting the Chairman’s proposal would result in a net reduction in federal budget deficits of $49 billion over the 2010–2019 period (see Table 1). The estimate includes a projected net cost of $500 billion over 10 years for the proposed expansions in insurance coverage. That net cost itself reflects a gross total of $774 billion in credits and subsidies provided through the exchanges, increased net outlays for Medicaid and the Children’s Health Insurance Program (CHIP), and tax credits for small employers; those costs are partly
offset by $215 billion in revenues from the excise tax on high-premium insurance plans and $59 billion in revenues from other sources.1 The net cost of the coverage expansions would be more than offset by the combination of other spending changes that CBO estimates would save $409 billion over the 10 years and other tax provisions that JCT and CBO estimate would increase federal revenues by $139 billion over the same period.2 In subsequent years, the collective effect of those provisions would probably be continued reductions in federal budget deficits.

Those estimates are all subject to substantial uncertainty. Furthermore, although we understand that the published document describing the Chairman’s mark was intended to reflect the specifications provided to us, CBO and JCT have not reviewed that document to determine whether it conforms in all respects to those specifications.

There is nothing in the Baucus bill that will bring down drug or private insurance costs. If anything, the Big PHARMA and private insurers come out stronger than before. The Baucus bill kicks Co-Ops to the state level. Can we get anymore cynical?

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