Cost Conscious

The health reform bill sponsored by Senator Max Baucus has billions of dollars in new taxes and cost cuts, but it doesn't go far enough, according to an analysis by Kaiser Health News.

The $774 billion bill in the Senate Finance Committee, which Baucus chairs, is the template for the president's health reform, and it's considered the best option for getting widespread support among Democrats and possibly one or two Republicans. But the bill isn't aggressive enough in cutting costs, and there is a fear that additional accommodations made to business, labor, and other special-interest groups will result in a measure that comes up short.

"Baucus clearly cares about bending the cost curve, but his plan doesn't do enough, and the risk is that it gets watered down even more," says government watchdog Maya MacGuineas, president of the Committee for a Responsible Federal Budget. "The plan gets two thumbs up in going further than any of the other plans, but it just shows you how big the challenge is that it doesn't go nearly far enough—especially with this aggressive effort to expand insurance coverage."

Baucus already is making concessions to appease labor on taxes of gold-plated insurance plans. And Kaiser notes another possible compromise that would reduce the amount of revenue the bill aims to raise: cuts to the Medicare advantage plans offered by insurance companies. The insurance lobby is protesting Baucus' plans to cut payments to the privately run Medicare plans by about $123 billion over the next 10 years. If seniors start getting vocal about the plans, expect a revision in that plan.

Princeton University economist Uwe Reinhardt tells Kaiser: "All of the bills that have emerged from Congress have had only very weak gestures toward cost control. The Baucus bill is no exception."