Baucus Refocusing Health Reform Discussions

April 28, 2009 ( - At a meeting with reporters on Friday, Senate Finance Committee Chair Max Baucus (D-Montana) said he will temporarily set aside talks on a new public insurance option to focus on maintaining employer self-insurance plans.

CQ Todayexplains that self-insured companies qualify for tax exemptions through the Employee Retirement Income Security Act. The federal law allows firms to create their own tax-exempt insurance plan — a means of cutting costs by taking on the risks themselves — as long as the plans meet federal standards laid out by ERISA. Firms contract with private insurers to administer the plans.

According to the news report, Baucus said he would aim to preserve this self-insurance system while expanding private coverage and public programs such as Medicaid. However, he said the creation of a new public insurance option is still “on the table.”

Baucus indicated he would support a “system similar to Massachusetts,” which allows residents to buy coverage through a “connector” offering plans that meet government-established benefit minimums. “I think the whole system should be more national, and the benefits have to be more national. You can’t have benefits be one level in one state, and another level in other states,” he stated, according to the news report. However, he said his goal is not to disrupt employer-sponsored plans.

“The system I envision is where self-insured companies, ERISA companies, can keep their own plans and manage health insurance in the way that they have. We’re not going to change the ways self-insured companies handle health care for employees,” Baucus said. As for workers at smaller firms that do not offer insurance and other people buying insurance on their own, he proposes they could purchase insurance through the exchange that would be similar to the Federal Employees Health Benefits Program.

One of the problems facing progress on health reform legislation is that it is “hard to get numbers” from the Congressional Budget Office on costs and savings related to potential changes in health care delivery, because “this is fairly new,” according to Baucus. Experts have said hundreds of billions of dollars could be saved by reducing the cost of care in certain geographic areas and bringing those costs in line with the costs of more efficient areas. “Our job is to transfer that more broadly to the rest of the country, mostly through Medicare,” Baucus said.

According to The Hill, on Wednesday Finance Committee members will meet to discuss Baucus’ proposals for reforming the health care delivery system. Two more “walk-throughs” in May will focus on extending insurance to more U.S. residents and how to pay for an overhaul. The committee hopes to have a bill marked-up by June and a final version passed by August.