Baucus Bill More Of A Threat To Democrats Than Insurers

While I didn't expect to see insurers and agents dancing in the streets, I could have sworn I heard a collective sigh of relief from the industry after the release yesterday of a compromise health insurance reform bill by Senate Finance Committee Chair Max Baucus.

Why might the insurance industry have cause for celebration?

For one, the Montana Democrat did indeed dump the reform camp's most controversial initiative--the public insurance option--in favor of non-profit cooperatives that should pose no threat to private carriers.

He also did not include a provision opposed by agents that might have kept them out of the health insurance advice business, in favor of other, supposedly more provider-neutral "navigators."

Plus he decided to impose an individual mandate that most individuals buy health insurance, while providing tax credits to subsidize those who cannot afford the premiums, thereby creating millions of new prospects for independent agents and their carriers.

Of course, he also included a ban on any exclusion for preexisting conditions, as well as some heavy-duty fees to help finance coverage for the uninsured. But carriers will no doubt simply pass those additional costs along to policyholders.

The battle is far from over. Sen. Baucus failed in his noble but perhaps quixotic quest to draw bipartisan support--unable to convince a single Republican to sign on to his bill...at least not yet. And he has drawn fire from some bitterly disappointed members of his own party.

His bill also must be reconciled with what the House is considering, with all of the bills thus far on that side of Congress including a public option. But recent history shows that when political push comes to shove--and with President Obama determined to get a bill approved this year--it is likely the House will once again have to swallow its pride and defer to the Senate's compromises.

When all is said and done, will this bill do the trick? Will it get everyone covered at a reasonable price?

It certainly will make insurance more available and those who have it more secure--particularly for those who lose their workplace coverage along with their jobs, or who are on their own and have a history of illness.

But it is not clear whether this bill will make coverage more affordable over the long term.

That is primarily because this debate has devolved into one over the easiest target--health insurance--rather than health care delivery itself. We are arguing more over who will pay the bills, rather than who is running up the bills in the first place.

Can President Obama and company attack that sacred cow later on? Probably not until a second term, given the fact that most of the reforms in the current bill won't even take effect until after this administration is up for reelection.

In the meantime, Democrats are running the risk that if this bill passes, voters in next year's mid-term elections might be more concerned with the mandates and additional taxes involved, rather than see the big picture--assuring that everyone can be covered, no matter where they work, if they are working or if they fall ill. 

Republicans are counting on the notoriously short attention span of most voters to focus on the sacrifice being asked of Americans, rather than on the ultimate benefits to all.

By back-loading the most important parts of reform until four years down the road, Democrats may have set themselves up for a fall. But it's a leap of faith they must take to fulfill their mission to close this enormous gap in our social safety net.

What do you folks think?