Baucus Aims to Increase Affordability in Senate Health Care Plan

The changes, announced Tuesday as the full committee began hearings on the bill, would increase the subsidies available to people making up to four times the poverty level, or about $88,000 per year for a family of four.

The subsidies would ensure that the cost of health insurance premiums would not exceed a sliding-scale percentage of income for people at those income levels. At the low end, individuals and families at the poverty level would not have to spend more than 2 percent of their income on premiums, while families at the top end — making three to four times the poverty level — would have to pay up to 12 percent of their income.

In the original bill the sliding scale ranged from 3 to 13 percent.

Changes to the bill would also reduce the penalty fee on people who fail to get health insurance, from $3,800 to $1,900 for families making more than three times the poverty level.

The new version would also lower the threshold at which employer-provided insurance is considered “affordable,” and would allow people whose employer-provided insurance premiums cost them more than 10 percent of their income to shop for cheaper coverage in the new health insurance exchange that would be available mainly to small businesses and the self-employed. The previous threshold was 13 percent.

The bill will also exempt workers in high-risk fields from a new tax on so-called “Cadillac” health-insurance plans.

Critics of the original bill say that the changes are an improvement.

“We think the changes definitely move in the right direction,” said Edwin Park, a senior fellow at the Center on Budget and Policy Priorities, a liberal-leaning think tank that released a statement last week saying that the original Baucus plan had “insufficient subsidies” to help lower- and middle-income workers.

But the changes don’t go as far as others would like, including some liberal senators. Sen. Charles Schumer of New York has pushed for premium caps at 10 percent of income levels for families earning three to four times the poverty level, and Sen. Debbie Stabenow of Michigan has proposed a 6.5 percent cap.

Other analysts point out that when considering affordability, more than insurance premiums must go into the equation. The new amendments to the Baucus bill will also lower the caps placed on these expenses.

But Linda Blumberg, a health economist at the Urban Institute think tank, says that the amendments don’t go far enough, because the combination of premiums and out-of-pocket costs is still too high.

Under the original Baucus plan, out-of-pocket costs for a family earning three times the poverty level, or $66,000, would have been capped at $11,900. Under the new amendments, that cap would be set at $7,973.

So a family that earned $66,000 could be responsible for up to $15,893 in health care costs, if they hit their maximum out-of-pocket expenses — although healthy people with few out-of-pocket expenses would pay much less.

Blumberg believes those numbers don’t hit the affordability bar.

“These are improvements that [Baucus has] made, but in my opinion we can do more. There doesn’t seem to be a strong political will for spending more money, and that’s what you need to do.”