Here’s a scary part of MaxTax, if I understand it correctly. MaxTax still screws employees but rewards Wal-Mart as I’ve laid out in this post and this post. Here’s the language in question:

As a general matter, if an employee is offered employer-provided health insurance coverage, the individual would be ineligible for a low income premium tax credit for health insurance purchased through a state exchange. An employee who is offered coverage that does not have an actuarial value of at least 65 percent or who is offered unaffordable coverage by their employer, however, can be eligible for the tax credit. Unaffordable is defined as 13 percent of the employee‘s income. For purposes of determining if coverage is unaffordable, salary reduction contributions would be treated as payments by the employer. The employee would seek an affordability waiver from the state exchange and would have to demonstrate family income and the premium of the lowest cost employer option offered to them. Employees would then present the waiver to the employer. The employer assessment would apply for any employee(s) receiving an affordability waiver. Within five years of implementation, the Secretary must conduct a study to determine if the definition of affordable could be lowered without significantly increasing costs or decreasing employer coverage.

A Medicaid-eligible individual can always choose to leave the employer‘s coverage and enroll in Medicaid. In this circumstance, the employer is not required to pay a fee.

But note how affordability is defined: 13% of "income."

Now look at how MaxTax defines "affordable" for individuals having to buy insurance via an exchange.

Exemptions from the excise tax will be made for individuals where the full premium of the lowest cost option available to them (net of subsidies and employer contribution, if any) exceeds ten percent of their AGI.

The individual definition of affordable uses 10% of Adjusted Gross Income. Whereas the employer’s definition of affordable uses 13% of (apparently) total income.

Now, it’s a good thing (sort of) that the affordability rate for individuals is 10% of AGI. That means a family would be able to opt out if there were no health care available at even a lower rate than I thought (for example, it might mean a middle class family could opt out if health insurance cost them $6,000 a year, as opposed to $8,000 a year). It’s a bad thing, though, because it means MaxTax would be far from universal–a lot of middle class families will pretty much have to opt out because they can’t afford coverage. 

But if your employer offers health care–even if it covers just 65% of costs–then you can’t opt-out unless you’re paying out of pocket 13% of your total income!! Oh, and to opt-out you have to go to your manager and tell him or her that you’re opting out, which means the employer will be fined; how many people do you think will be fired rather than opt-out?

I hope I’m wrong about this. But if I’m understanding this correctly, it reinforces my impression that MaxTax is an invitation to allow employers to turn their employees into captive profit centers.

Fatster found Max Baucus’ health care plan here. Use this thread to post what you find.

I’m about 1/10 of the way through. My favorite detail so far is that the Health Exchanges would take your MaxTax–your mandated payment to shitty insurance companies–as a payroll deduction.

For employed individuals who purchase health insurance through a state exchange, the premium payments would be made through payroll deductions.

This really is a tax to benefit Baucus’ donors.

This is interesting:

Individuals between 300-400 percent of FPL would be eligible for a premium credit based on capping an individual‘s share of the premium at a flat 13 percent of income. For purposes of calculating household size, illegal immigrants will not be included in FPL. Liability for premiums would be capped at 13 percent of income for the purchase of a silver plan. The share of premium enrollees pay would be held constant over time. The premium credit amount would be tied to the second lowest-cost silver plan in the area where the individual resides (by age according to standard age factors defined by the Secretary of Health and Human Services) plan.

This is the cap for premiums for some middle class people, remember. What I’m interested in is that they cap the subsidy to the second lowest-cost plan that qualifies for subsidies. The insurance companies will be gaming that system, to direct consumers into precisely what model they want to pay for, because they know that strapped middle class families will only get what they can get a full subsidy for.

I’m on page 21 now, and already there have been 3 discussions of how to make sure undocumented workers (Baucus calls them illegals) will be prevented from buying into insurance in this program. They may have reprimanded Joe Wilson, but they sure kowtowed to him.

Here’s another way Baucus is incenting employers to pay their employees shit wages:

A qualified small employer for this purpose generally would be an employer with no more than 25 fulltime equivalent employees (FTEs) employed during the employer‘s taxable year, and whose employees have annual fulltime equivalent wages that average no more than $40,000. However, the full amount of the credit would be available only to an employer with ten or fewer FTEs and whose employees have average annual fulltime equivalent wages from the employer of less than $20,000.

McJobs: It’s not just for WalMart anymore.

There’s a whole bunch of language making sure that Uncle Sam doesn’t pay for an abortion–in the mid-20s. But I’m not entirely sure what this means:

The Secretary would be required to estimate, on an average actuarial basis, the basic per enrollee, per month cost of including coverage of abortions beyond those permitted by the most recent appropriation for the Department of Health and Human Services under a basic plan. In making such estimate, the Secretary may take into account the impact of including such coverage on overall costs, but may not consider any cost reduction estimated to result from providing such abortions, such as prenatal care. In making the estimate, the Secretary would also be required to estimate the costs as if coverage were included for the entire covered population, but the costs could not be estimated at less than $1 per enrollee, per month.

I assume that insurers would want to include abortion coverage, since an abortion is cheaper than prenatal care and delivery. Is this Baucus’ way of making sure it gets included?

And this will be hard to administer:

The Secretary would ensure that in each state exchange, at least one plan provides coverage of abortions beyond those for which Federal funds appropriated for the Department of Health and Human Services are permitted. The Secretary would also ensure that in each state exchange, at least one plan does not provide coverage of abortions beyond those for which Federal funds appropriated for the Department of Health and Human Services are permitted.

The God’s Health Care Plan versus the Woman-Friendly Health Care Plan?

Is this a means to extend conscience clauses, via the exchange, to any drug store that wants it?

Current Law
Federal conscience clause laws prohibit recipients of certain Federal funds from discriminating against certain medical personnel and health care entities for engaging in or refusing to engage in specified activities related to abortion.

Chairman’s Mark
Health benefits plans participating in state exchanges would be prohibited from discriminating against any individual health care provider or health care facility because of its willingness or unwillingness to provide, pay for, provide coverage of, or refer for abortions.

Particularly given bogus claims that birth contorl pills and RU486 are abortions.

Lovely. MaxTax prohibits government entities from sponsoring Co-Ops.

It must not be sponsored by a State, county, or local government, or any government instrumentality.

Here’s MaxTax on malpractice "reform:"

The Chairman‘s Mark would express the Sense of the Senate that health care reform presents an opportunity to address issues related to medical malpractice and medical liability insurance. The Mark would further express the Sense of the Senate that states should be encouraged to develop and test alternatives to the current civil litigation system as a way of improving patient safety, reducing medical errors, encouraging the efficient resolution of disputes, increasing the availability of prompt and fair resolution of disputes, and improving access to liability insurance, while preserving an individual‘s right to seek redress in court. The Mark would express the Sense of the Senate that Congress should consider establishing a state demonstration program to evaluate alternatives to the current civil litigation system.

Why even include it if you can’t get even one Republican on board?

The newspapers (and some Senators) have apparently discovered what I pointed out a week ago. The MaxTax is completely unaffordable for the middle class.

Near the top of the list for the panel’s Democrats is worry that health insurance subsidies will not be sufficiently generous nor available to enough people despite the fact that the bill would legally require most people to obtain coverage. Beyond premiums, some Democrats are concerned that Baucus’s proposal would not do enough to protect middle-class families from high healthcare expenses.

"It’s very clear, at this point in the debate, the flashpoint is all about affordability,” said Sen. Ron Wyden (D-Ore.). “I personally think there’s a lot of heavy lifting left to do on the affordability issue.”

The healthcare bills already approved by three House committees and another Senate committee offer more generous subsidies – but at a higher cost to taxpayers.

“We’re doing our very best to make an insurance requirement as affordable as we possibly can, recognizing that we’re trying to get this bill under $900 billion total,” said Baucus, who has been courting Republican support for his measure in an attempt to guarantee that a healthcare bill can achieve the 60 votes or more needed to avoid a Senate filibuster.

“I’m going to work even harder to address any legitimate affordability concerns. I knew they were there,” Baucus said.

Just as a reminder, here are the numbers I came up with last week–showing that if a middle class family had a significant (but not catastrophic) medical event under MaxTax, it might be left with as little as $7,215 to pay transportation, utilities, school, clothing, and debt.

Here’s a very rough budget for that family making $67,000 (I’m not an accountant, so tell me where my assumptions are wrong).

Federal Taxes (estimate from this page): $8,710 (13% of income)

State Taxes (using MI rates on $30,000 of income): $1,305 (2% of income)

Food (using "low-cost USDA plan" for family of four): $9,060 (13.5% of income)

Home (assume a straight 30% of income): $20,100 (30% of income)

Bad Max Tax: $20,610 (31% of income)

Total: $59,785 (89% of income)

Remainder for all other expenses (including education, clothing, existing debt, transportation, etc.): $7,215 (or 11% of income)

(Note, there was a lot of discussion about the Federal tax figure–including whether it would be lower once you account for writing off these medical costs. Since it’s a CBO number that accounts for that kind of deduction now, I think it is probably close to real.) 

Of course, Baucus is going to insist on these bankruptcy-inducing figures, because he promised a bill that would cost less than $900 billion. But in his obstinance, he’s ignoring two other options. To put a cap on what insurance companies can charge. Or, to keep these costs lower by introducing a public option.

Which I guess demonstrates where Baucus’ priorities lie: in the insurance company profits, and not middle class survival.

I made this point in this post, but I’m going to repeat it over and over and over until it sinks MaxTax, the Baucus health care plan.

MaxTax is a plan that will use your and my tax dollars to reward companies like Wal-Mart for keeping its workers in poverty. Here’s why.

In most cases, the MaxTax fines employers up to $400 per employee if it doesn’t provide its employees with health care. The fine is absurdly small (less than half of what individuals, themselves, would be fined if they didn’t get insurance), but it could mean a company like Wal-Mart would have to pay up to $560 million if it refused to provide insurance to any of its employees.

The other option is to provide crap insurance for your employees. MaxTax gives very few requirements for this insurance (and it allows you to charge employees up to 13% of their income in premiums). But assume Wal-Mart decided to provide incredibly crappy insurance at a cost of $2,500 an employee. It would then pay $3.5 billion a year to meet its obligations under MaxTax. 

So Wal-Mart chooses between paying $560 million or $3.5 billion right?

There is another option.

The MaxTax offers this one, giant, out for corporations.

A Medicaid-eligible individual can always choose to leave the employer’s coverage and enroll in Medicaid. In this circumstance, the employer is not required to pay a fee.

In other words, the one way–just about the only way–a large employer can dodge responsibility for paying something for its employees is if its employees happen to qualify for Medicaid. Under MaxTax, Medicaid eligibility will be determined by one thing: whether a person makes less than 133% of the poverty rate. And who has the most control over how much a particular person makes? Their employer!

So if Wal-Mart wanted to avoid paying anything for its employees under MaxTax, it could simply make sure that none of them made more than $14,403 a year (they’d have to do this by ensuring their employees worked fewer than 40 hours a week, since this works out to be slightly less than minimum wage). Or, a single mom with two kids could make $24,352–a whopping $11.71 an hour, working full time. That’s more than the average Wal-Mart employee made last year. So long as Wal-Mart made sure its employees applied for Medicaid (something it already does in states where its employees are eligible), it would pay nothing. Nada, zip. Nothing. 

It would pay nothing while struggling middle class families would be forced to pay up to 31% of their incomes for health care.

Now obviously, it’s got to employ at least a few people who make more than poverty wages. But hundreds of thousands of Wal-Mart employees would qualify for and be provided for by Medicaid. Assuming that just 500,000 qualified, it would save Wal-Mart $1.25 billon of that $3.5 billion. 

A $1.25 billion reward to Wal-Mart–a competitive advantage it would have–for paying shit wages.

And who will be paying that reward to encourage Wal-Mart to continue to pay shit wages? Why, that’d be our taxes, yours and mine. 

Ezra has written a thoughtful follow-up to my complaint that discussions of the role of insurance company in writing our legislation neglect to discuss profit. I agree with parts of it and disagree with others. The most important point Ezra makes–which explains his focus on providers to the exclusion of insurance companies–is this passage:

The insurance industry is not a particularly profitable industry. To be more specific, they’re the 86th most profitable industry as measured by profit margins, with an average margin of 3.3 percent. That’s lower than drug manufacturers (16.5 percent), health information services (9.3 percent), home health care (8.4 percent), medical labs and research (8.2 percent), medical instruments and supplies (6.8 percent), biotech firms (6.7 percent), generic drug manufacturers (6.6 percent), and much else. That’s not to pretend that 3.3 percent is nothing, but it’s hard to see how that’s a primary driver of health-care spending, much less the growth in health-care spending. 

With that in mind, let’s take a step back to the question that started this series of posts–Matt Yglesias’ question, "how bad is that?" if the insurance industry writes our health care reform bill. With now several bills on the table along with the Max Tax framework and the President’s framework, how bad is it to let corporations necessarily motivated by profit maximization write the bill?

Short of our entire political system changing tomorrow such that single payer became feasible (which would make Ezra, Yglesias, and me all very happy), what we’re going to do instead is put tens of millions of people into the health insurance system who aren’t currently there. The question is, how to do it for the best outcome at lowest cost to taxpayers and individuals. Some of those people will be put into the system via Medicaid, though a great many will be put into the system directly via insurers. Importantly, those put into the system via insurance will be mandated to buy insurance. Some will be subsidized by the government, though others will not.

So the insurers will be getting tens of millions of new customers, and those new customers with financial constraints will be subsidized by the government but others will not.

Now, in his first post, Ezra wrote:

If you want cost control, though, you’re going to have to follow through on one of these strategies, and that’s going to mean making providers and patients really angry. Both like the health system better when it’s got unlimited amounts of money flowing through it. It’s actually easier for me to imagine a system with private insurers that holds costs down than a system with the current provider reimbursement rates and relatively passive insurers (be they private or public) that holds costs down.

Of course, that’s not entirely right. Patients whose health care is provided by their employer "like the health system better when it’s got unlimited amounts of money flowing through it." Patients who have to pay out of pocket–like many of the ones who will be mandated to buy insurance–don’t really like that so much. And it’s not just patients and providers that like a system that’s got unlimited amounts of money flowing through it. So do insurers (assuming you understand this to be a system as a whole). Even assuming insurance companies only make that 3.3% profit and setting aside things like huge executive incomes, the insurance companies have an incentive to have as much money flowing into the system that it can take its 3.3% profit on.

And that’s one of the baseline problems with letting the insurance companies write the bill: they have just as much incentive as providers to see that as much money gets flowing into the system as possible. And, they have an incentive to make sure that as much of the money put into the system as possible stays in their pocket. For those affected by the mandate who will not be subsidized or will only be partially subsidized, it is actually the patient, and not the insurance company, with the most urgency to cut the amount of money flowing through the system. But the patient doesn’t get to write the bill; the insurance company does, and it appears that it is with these patients that the insurance companies stand to make some of their highest profits.

That’s one of my gripes with the Max Tax. It sets out-of-pocket caps higher than other bills and sets lower amounts (73% if they are to be subsidized) that insurers have to cover. The result will be that more middle class families go into debt. As it’s written, the Max Tax (frankly, most the bills) amount to a mandate that is simply not affordable for some middle class families. But the Max Tax throws in a bit more mandated costs that will go to insurance company profitability. The extra thousand or more dollars included for insurance companies means a lot to a family otherwise faced with surviving off of less than $8,000 for utilities, transportation, education, clothing, and debt. To me, you don’t have to get any further than this money–taken from middle class families who will still go into debt under this scheme and giving it to insurance company profit–to demonstrate "how bad it is" that the insurance company wrote the bill. 

The other big difference with a bill written by insurance companies is that it includes no apparent means to challenge the insurance companies to limit how much money they ask to be put in the system in the first place–something the public option would help to do. Now, Ezra argues the exchange will be enough to bring costs down.

The answer to these problems, at least to my way of thinking, is not so much the public plan (though I think it would be a good inclusion) but the health insurance exchanges. And I do talk about them. Often. Loudly. In all different ways.

Expanding the exchanges is where insurers — both public and private — get the size for administrative efficiency and negotiated discounts. Expanding the exchanges moves us towards a system where people see how much of their money is being spent on health care and thus understand the need for cost control and the damage being done by the status quo. Expanding the exchange is even the key to a strong public plan, because the public plan is nothing without a large customer base to give it strength.

Scarecrow has written challenged the view that an exchange is enough in the past (here, here).

For me, there are two key points on this.

First, without a public option, you sacrifice one tool to keep insurers honest with regard to regulation. Now, the public option, as currently laid out, doesn’t do that. And there’s a risk that insurers will find some way to game the system and incent high cost patients to enter the public option. But the public option at least establishes a threat that insurers could lose more lucrative patients, as well. If regulation won’t be enough to prevent insurers from cherry-picking or denying coverage, competition might be. As such, the public option represents a hypothetical tool–one that would have to be beefed up to be effective–but one that may be necessary to force real compliance.

Then there’s the question of controlling total money flowing in the system. Best as I understand Max Tax and some of the other plans, while there are out-of-pocket caps on expenses, there are no hard and fast limits on premiums. As such, the pressure points to keep insurers from raising premiums are the following:

• There is virtually no pressure point to keep premiums low for those in the 133% to 400% level (particularly the 133% to 300% level), because the government will subsidize the plans.
• The pressure point for those over 400% of the poverty level is roughly 10% of their income. Once the cheapest policy (which under Max Tax would have to cover 65% of costs, including rules requiring coverage of preventative care) hits 10%, then an individual could opt out, though more affluent consumers would stand to lose savings if they didn’t carry insurance. Given that family coverage is already over 10% of the income of families at 400% of poverty level, it seems there would be a lot of middle class families who would choose to drop out.
• MaxTax taxes "Cadillac plans" 35%–but not those in the individual market (Obama last night said the tax should apply to "insurance companies most expensive policies," without specifying whether that included individuals). In the absence of such a tax on individual policies, insurance companies would have an incentive to shift group policies to lower premium lower benefit plans (they’ve got four years to prepare to do so, at a time when corporations are looking to cut health care costs anyway), while continuing to charge those Cadillac premiums in the individual market.
• The fees are actually not a big deal. At most levels of income, premiums will be more than 10% of income, which means people can just opt out. For those for whom this is not true–more affluent people–the $900 may be a much better deal than bad insurance. 

Perhaps I’m missing something. But none of these appear to be effective means to limiting how much goes into the system in the first place (indeed, subsidizing plans without any limit on that subsidy appear to be an invitation for abuse).

The public option, at least in theory, could offer one more pressure point on insurers to keep those costs down. 

All of which adds another point to my answer to "how bad is that?" By letting insurance companies write the bill, does it leave all sorts of pockets of coverage that insurance companies will exploit to maximize profit–which they will do under any scenario–without at the same time providing some means to counter that? Do those mandated, captive consumers become necessary profit points for the insurance companies, at the expense of affordability for them? To what degree does allowing the insurance companies to write the bill prevent us from limiting the total money going into the system, and as a result, move toward limiting costs all around?

And that’s all before you get into the very important question of how you cut down on those sub-industries where profit is exorbitant, like Pharma. Ezra may well be right that insurance companies will do a better job of bringing down costs given whatever share of the money in the system they get than even Medicare. I agree with Scarecrow, though, that "a well-designed Public Option could exert positive influence on how the providers dealt with cost-efficiency issues." And a public option will not have, in the first place, gamed the political system to make sure as much money flowed through the system as possible.

But let me take a step back. One reason a single payer is not feasible right now is that the health care corporations have captured our political system (the other is that we’d have to replace that part of our economy before being able to forgo one of our few healthy economic areas). One of the reasons Pharma’s profits are so high, and one of the reasons Obama felt the need to cut a deal with them on the side, is because Pharma has captured our political system. One of the reasons we have been unsuccessful in cutting Medicare rates is because providers have captured our political system.

That, to me, is the biggest reason you don’t send out a reform plan authored by a woman stuck in a revolving door between industry and Congress. Part of incrementally reforming health care (because that’s all this is) necessarily has to be incrementally retaking our political system from the industries that have captured it.  And allowing them–any of them–to take over the legislative process is not the way to do that.

We may well decide that we want to employ insurance companies to help us bring down the costs of health care. But that’s got to be on terms in which we employ them. Not in which the federal government is just a source of potentially unlimited subsidies, in which they employ the government to maximize profits.

I got to this Matt Yglesias post and this Ezra Klein post via this Joke Line post (which sends you on a wild goose chase in search of this Ezra post) via this Lawyers Guns and Money post. I’ll return to Joke Line if I get a hankering to whack a piiñata.

But in the meantime, I’m wondering why Big Media Matt and Ezra don’t ever use the word, "profit"?

Both, you see, struggle to talk about how cool insurance companies are and how they could be the route to huge cost savings. Matt, apparently taking issue with this post (which never claimed identifying Liz Fowler’s role in the Max Tax was a "big scoop"), uses two farcical hypothetical examples to suggest that it’s not a bad thing for our public legislature to be proposing legislation written by private industry. First, he argues that a plan that uses public funds to improve bus routes would make both bus riders and bus drivers happier, which would be a good use of tax dollars.

Well, for starters you would want the buses to run more frequently. That would require, among other things, additional buses and additional bus drivers. That’s something the union representing bus drivers would like, and also something that companies that build buses would like. You could even imagine such a plan being hatched in close collaboration with the Transit Worker’s Union and the insidious forces of Big Bus. That, however, wouldn’t make the plan bad for New York City bus riders. It would be good for New York City bus riders. The city would be using tax dollars to give more buses to bus riders—it’s win-win for bus riders and bus drivers and bus makers all.

Note, first of all, how hilariously in-apt this analogy is. He’s talking about NY Transit–run by the public benefit corporation MTA and ultimately accountable to elected  officials (the private parts of which, though, have a history of paying bus workers less money for the same work). He’s talking about a highly regulated monopoly. So it’d be a great example to use if we were discussing implementing a government health service, or at the very least a public plan. But of course we’re not. So in Matt’s first analogy, he can avoid discussing whether "Big Bus" (as he calls it) would have objectives that might differ from those of both the riders and the workers, as well as the clout to piggyback those objectives on top of the plan to increase route frequency.

Then Matt–a 28-year old with a steady well-paying job and, AFAIK, no family–uses his own example as a stand-in for all potential consumers of health care.

Now think about health care. The Center for American Progress offers me some pretty good health insurance through CareFirst BlueCross BlueShield. That’s pretty good for CareFirst. If CAP dropped its health plan, CareFirst would lose money. We’d be sticking it to the insurance industry. On the other hand, I’d also lose my health insurance. Which would be kind of unfortunate for me. But say CAP did decide to stick it to CareFirst by dropping my insurance. Now as an uninsured American, I can live in one of two universes. In one universe, the one we live in, it’s just not feasible to buy comprehensive health insurance on the individual market. That’s bad for me. In another universe, the one Max Baucus wants us to live in, the government will regulate the individual insurance market in a way that ensures that purchasing comprehensive individual health insurance is possible. He’s also going to make sure that many people (I make too much money though, so not me) get financial assistance from the government in order to make it more possible to afford insurance.

There’s a lot that’s wrong with this analogy, too. The depiction of CAP as the agent in this equation, not CareFirst. The neglect of the scenario in which the newly unemployed person had to get insurance. The description of health insurance–and not health care–as the ultimate objective here. 

But most of all, Matt forgets to talk about the mandate. He simply doesn’t deal with the fact that the MaxTax requires middle class families totally unlike himself in terms of income and flexibility to spend up to 13% of their income for premiums that don’t guarantee, in exchange, that they won’t go deeply into debt if they have a significant–but not catastrophic–medical event. He’s not talking about the fact that the MaxTax requires people to pay far more to insure their family than to pay their federal and state taxes. He’s not talking about the fact that for some middle class families, the government is requiring an expense that is simply not affordable. He’s not talking about how little there is in this plan to limit the amount that the federal government and captive tax payers will pay to Liz Fowler’s former employer. He’s not talking about the huge incentives Liz Fowler’s former employer will have to game a proposed system that would, ultimately, weaken the few controls on Liz Fowler’s former employer that currently exist. 

Matt’s not talking about the fact that Liz Fowler’s plan requires participation but does not offer, in exchange, any limits on the profits the health insurance companies will get under the system. 

Now move onto Ezra. Ezra’s got a great little formula claiming to account for the only ways to control costs.

As people frequently say, health-care reform won’t work if costs continue to shoot up and insurance becomes unaffordable. The cost of health insurance, however, is really another way of saying "the cost of health care." In the ’90s, insurers managed to hold costs down, as you can see in the Kaiser graph atop this post. But people hated them for it, as they perceived, not entirely inaccurately, that they were keeping costs down by making it harder to access care (which is to say, harder to give money to providers). So they stopped doing it and costs began to shoot back up.

Conversely, Medicare keeps costs down somewhat better than private insurers, though not as well as private insurers did in the ’90s, and they do it by paying providers less money. Providers hate them for it, and that’s why doctors and hospitals and drug companies and device manufacturers have been so aggressive in opposing a public plan able to use Medicare rates. It’s also why Medicare’s growth rate is totally unsustainable — Congress keeps delaying the cuts in doctor’s payments that the Medicare law requires.

If you want cost control, though, you’re going to have to follow through on one of these strategies, and that’s going to mean making providers and patients really angry. Both like the health system better when it’s got unlimited amounts of money flowing through it.

 Now, I’m really curious if Ezra has hard data to prove that the increase in the rate of cost increases came from more open access to care in the last several years.

But people hated them for it, as they perceived, not entirely inaccurately, that they were keeping costs down by making it harder to access care (which is to say, harder to give money to providers). So they stopped doing it and costs began to shoot back up.

I, for one, don’t know anyone who has more access to health care then they had in the 1990s. But maybe that’s because I live in MI. Maybe health care access really has gone up, in spite of the rising numbers of rescissions and outright denials of care. 

But skip that part and note how quickly Ezra conflates "health care" with "health insurance," thereby treating the "insurance" part as a mere pass-through that doesn’t affect cost. Note that Ezra doesn’t consider whether there’s something else–in addition to lower reimbursements to providers–that keeps Medicare’s costs (as opposed to rate of increase) lower. Note that Ezra doesn’t compare outcomes. 

Ezra claims that the only two ways to control costs are to limit access to care and/or to limit reimbursement to providers.

Because, I guess, it would be too radical an idea to limit reimbursement to insurers? Or too radical an idea to avoid paying the profit that insurers, as private companies, must charge, or paying the overhead required to make that profit?

Matt and Ezra both invent nice little stories where we shouldn’t worry or even pay attention to the role–and the profits–that the insurance companies are making here. 

But that doesn’t change the fact that insurance profits–and particularly the MaxTax unwillingness to even consider limiting them–are one of the things that makes the MaxTax fundamentally unaffordable and unworkable in terms of containing costs. 

Update: To be fair to Matt and Ezra, I am harping on their neglect of profit in this post. In other posts of theirs, they have dealt with profit (Matt hits it here, and here, for example and Ezra–in a post that pretty much makes the points I make here–here).

Update: Ezra has a very fair post on the role of profit in insurance here. Thanks, Ezra, for putting this out there. 

Well, this is interesting. Not only did Bad Max send the MaxTax plan out with the name of WellPoint’s former VP still on it, but he distributed it to the industry hacks too. Only the industry hacks.

QUESTION: The Finance Committee — well, actually, Senator Baucus’s draft has been, now, bouncing around for a few days on Capitol Hill.

First, has the president seen it (inaudible) his outline?

GIBBS: I don’t — I don’t believe — I don’t believe anybody here has — I’m — we’ve seen what we’ve read in the paper, but I do not believe that we’ve seen paper on the plan.

QUESTION: I understand it’s bouncing around K Street.

GIBBS: Not surprisingly, but I have not seen it here.

[snip]

QUESTION: What did you just mean…

(CROSSTALK)

QUESTION: I’m sorry. What did you just mean by it’s bouncing around K Street ?

GIBBS: I was told that — that K Street had a copy of the Baucus plan, meaning, not surprisingly, the special interests have gotten a copy of the plan that I understand was given to committee members today.

QUESTION: And…

GIBBS: It wasn’t cryptic. It’s who…

QUESTION: I mean, who is that a…

(CROSSTALK)

QUESTION: Are you impugning somebody here? I mean, it sounded like you were impugning, like, well, K Street has it. I mean, what…

BTW, it was none other than Chuck Todd worried that mean Robert Gibbs was "impugning" the parasites from K Street. I’m glad you’re looking out for the important issues, Chuck.

And, as Kagro X added, Bad Max didn’t share a copy with Harry Reid, either. 

Senate Majority Leader Harry Reid (D-Nev.) said he had not seen Baucus’s draft either, when asked during a briefing at the White House after a meeting with Obama, Vice President Joe Biden and Speaker Nancy Pelosi (D-Calif.). 

Now, I know that Obama and (particularly) Reid have made a career of letting people walk all over them. But this is the kind of thing that might really piss them off–particularly the control freaks at the White House. 

I mean, embarrassing the President like this, regarding the plan he’s been pitching since June? And Rahm’s lackey (and Bad Max’s former lackey) Jim Messina didn’t tell his bosses about this?  

Bad Max released this without sharing–I mean, sharing with any but his clients on K Street. I’m not entirely sure what that means, but I get the feeling that the White House was none too happy about that. 

All this time I’ve been calling Max Tax health care Max Baucus’ health care plan.

But, as William Ockham points out, it’s actually Liz Fowler’s health care plan (if you open the document and look under document properties, it lists her as author). At one level, it’s not surprising that Bad Max’s Senior Counsel would have authored the Max Tax plan. Here’s how Politico described her role in Bad Max’s health care plan earlier this year:

If you drew an organizational chart of major players in the Senate health care negotiations, Fowler would be the chief operating officer. 

As a senior aide to Baucus, she directs the Finance Committee health care staff, enforces deadlines on drafting bill language and coordinates with the White House and other lawmakers. She also troubleshoots, identifying policy and political problems before they ripen. 

“My job is to get from point A to point B,” said Fowler, who’s training for four triathlons this summer in between her long days on Capitol Hill.

Fowler learned as a sophomore at the University of Pennsylvania that the United States was the only industrialized country without universal health care, and she decided then to dedicate her professional life to the work. 

She first worked for Baucus from 2001 through 2005, playing a key role in negotiating the Medicare Part D prescription drug program. Feeling burned out, she left for the private sector but rejoined Baucus in 2008, sensing that a Democratic-controlled Congress would make progress on overhauling the health care system. 

Baucus and Fowler spent a year putting the senator in a position to pursue reform, including holding hearings last summer and issuing a white paper in November. They deliberately avoided releasing legislation in order to send a signal of openness and avoid early attacks. 

“People know when Liz is speaking, she is speaking for Baucus,” said Dean Rosen, the health policy adviser to former Senate Majority Leader Bill Frist (R-Tenn.).

What neither Politico nor Bad Max himself want you to know, though, is that in the two years before she came back to the Senate to help Max craft the Max Tax plan, she worked as VP for Public Policy and External Affairs at WellPoint.

So to the extent that Liz Fowler is the Author of this document, we might as well consider WellPoint its author as well. 

Ezra Klein has his overview of the Max Tax here. After boasting of the plan’s affordability (!), Ezra’s biggest complaint is the lack of an employer mandate:

The employer mandate is pretty much the free rider plan that the Center for Budget and Policy Priorities tore apart here. It’s bad policy. An addendum though is that individuals whose employers offer them insurance are not eligible for subsidies, unless the insurance their employer offers would cost more than 13 percent of their income. I’d feel better about that if it were lower for low-income workers, but the plan says that the Secretary of Health and Human Services must revisit this number within five years to see if it should be lowered.

I’ll go further and say the Max Tax actually incents employers to offer shit plans. Here’s the whole section on what Bad Max euphemistically calls "Employer Responsibility:"

Employer Responsibility. Employers would not be required to offer health insurance coverage. However, employers with more than 50 full-time employees (30 hours and above) that do not offer health coverage must pay a fee for each employee who receives the tax credit for health insurance through an exchange. The assessment is based on the amount of the tax credit received by the employee(s), but would be capped at an amount equal to $400 multiplied by the total number of employees at the firm (regardless of how many receive a credit in the exchange). Employees participating in a welfare-to-work program, children in foster care and workers with a disability are exempted from this calculation.

As a general matter, if an employee is offered employer-provided health insurance coverage, the individual is ineligible for the tax credit for health insurance purchased through an exchange. An employee who is offered unaffordable coverage by their employer, however, can be eligible for the tax credit. Unaffordable is defined as 13% of the employee’s income. The employee would seek an affordability waiver from the exchange and would have to demonstrate family income and the premium of the lowest cost employer option offered to them. Employees would then present the waiver to the employer. The employer assessment would apply for any employee(s) receiving an affordability waiver. Within five years of implementation, the Secretary must conduct a study to determine if the definition of affordable could be lowered without significantly increasing costs or decreasing employer coverage.

A Medicaid-eligible individual can always choose to leave the employer’s coverage and enroll in Medicaid. In this circumstance, the employer is not required to pay a fee.

Coverage offered by an employer of any size, including fully insured and self insured plans, is not required to comply with the list of benefits required of plans in the non-group and small group markets. Employers must provide first dollar coverage for prevention services (except where value-based insurance design is used), however, and cannot have a maximum out-of-pocket limit greater than that provided by the standards established for Health Savings Accounts (HSAs).

First off, if a 50-person firm decided not to offer health care, it would have to pay up to $20,000.  That’s a whole lot cheaper than the hundreds of thousands they would have to pay to insure these employees.

But let’s take a hypothetical employers–we’ll call them AlmartWay–that employs around 1.4 million people in the US.

AlmartWay pays such shitty wages that a huge proportion of their employees would actually be eligible for Medicaid, particularly with the eligibility for Medicaid boosted to 133% of poverty. So those employees could just enroll in Medicaid; AlmartWay wouldn’t pay a dime, and you and I would therefore be subsidizing the gutting of our local economy so that the descendants of Sam AlmartWay could continue to get disgustingly rich.

But say that only covers about 500,000 of AlmartWay’s employees. That would leave 900,000 employees. Enough that AlmartWay might want to offer health care to avoid the 350 million dollar fine it might get. So AlmartWay offers a plan that has a huge deductible and pays 60% of costs that employees have to buy into. According to Bad Max’s plan, after all, employer health care plans don’t have to meet any of the standards that single enrollee plans have to meet, save for making preventative care available. 

Coverage offered by an employer of any size, including fully insured and self insured plans, is not required to comply with the list of benefits required of plans in the non-group and small group markets. Employers must provide first dollar coverage for prevention services (except where value-based insurance design is used), however, and cannot have a maximum out-of-pocket limit greater than that provided by the standards established for Health Savings Accounts (HSAs).

Because of AlmartWay’s size, everyone would be automatically enrolled.

Employers with 200 or more employees must automatically enroll employees into health insurance plans offered by the employer. Employees may opt out of employer coverage, however, if they are able to demonstrate that they have coverage from another source. Additionally, states would have the option of establishing a process for auto-enrollment of individuals and families into policies offered in the non-group and small group markets

Which means AlmartWay’s employees can only get out of paying for such crap is if they can prove that they’re enrolled in something else. But unless AlmartWay’s insurance cost more than 13% of their employees’ salary, then that employee couldn’t get a subsidy they’d otherwise qualify for.

As a general matter, if an employee is offered employer-provided health insurance coverage, the individual is ineligible for the tax credit for health insurance purchased through an exchange. An employee who is offered unaffordable coverage by their employer, however, can be eligible for the tax credit. Unaffordable is defined as 13% of the employee’s income.

Hell, if I were a rapacious manager like AlmartWay’s completely hypothetical managers were, I’d turn employee health care into a profit center because (if I read this right) you could require employees to pay back 12.9% of their income for health care, and the only thing you’d really have to promise in return is preventative care. So I predict, if this bill passes in anywhere near this form, that AlmartWay will start making its own employee health care a big profit center because they will be stuck. 

By golly. This is even a health care plan Blanche Lincoln and Mark Pryor and their biggest constituent could love!! Though frankly, Bad Max’s plan is even worse than Wal-Mart itself–with a call for part time mandates and no disability discrimination–called for (though maybe Wal-Mart was thinking of the free subsidy for its Medicaid eligible employees all along). 

A bunch of outlets have now released Bad Max’s framework on health care.

Here are some ways to think of Max Tax:

Maximum amount a family of four making $67,000 would have to pay for health care, per year: $20,610 (31% of income)

Total amount that family of four would pay in fine if they did not get health care insurance: $3,800

Total amount a corporation with more than 50 employees would pay in fine if it did not offer health insurance: $400 per employee

Total amount a corporation can pay for health care plans without paying 35% tax: $8000 individual, $21,000 family