Senator Baucus’ latest attempt ^[1] to reach a bi-partisan agreement still misses the mark. While there may be a few elements that may be worth discussing, the vast majority of the proposal continues to take the discussion over reform in the wrong direction.

Many of the same fundamental problems plague this proposal as the other proposals in Congress.

• Centralizes power in Washington and adds new layers of federal bureaucracy. The entire bill is based on creating new federal authority over the regulation and delivery of health care. This not only pre-empts existing state authority, but it replaces it with a massive, mind-numbing new federal bureaucracy. It seems impossible to imagine the federal government doing a good job running 1/6 of the economy.
• Establishes a pseudo-public plan through the creation of a federal co-op. The Baucus co-op would set up congressionally approved co-ops with federal funds to support it. It would also disallow existing institutions from participating. What’s wrong with trusted groups and organizations offering health care to their members? This is not a consumer-based co-op, but rather another attempt to create a new government-run plan.
• Fails to protect the coverage people have today, especially benefits for seniors. While formula changes may be needed, changes to MedicareAdvantage would put the benefits millions of seniors, especially lower-income, have today at risk and the “savings” will be used to partly finance a new entitlement rather than to shore up the finances of Medicare.
• Uses the flawed and fiscally challenged Medicaid program as a platform for expansions. Medicaid can barely afford to provide care and services to those who already have it. Expanding it will not improve this fiscal scenario and will continue to balkanize segments of the populations onto to a government-run public plan rather than mainstreaming Americans into private coverage.
• Adds costs to the health care system through fees, taxes, and mandates. The proposal’s way to pay for all this is a laundry list of new fees, taxes and other hidden costs that will ultimately be passed on to the consumer. Fees on those providing health care services will encourage gimmicks and will be pushed down to the consumer. Even the employer and individual mandates are hidden taxes that individuals and workers will end up paying if their plan doesn’t meet new federal standards.

Even the elements that may have some hope – like income relating Part D benefit and tax credits – hit a wall. If Congress is going to means-test Medicare benefits, the savings should go to bring down the costs on future generations not to pay for a massive coverage expansions for others. Second, tax credits should be targeted solely to individuals, not to small businesses. Small business tax credits are inefficient and a costly proposition. Rather, tax credits should go to individuals and families – making sure the money follows the person not the company.

It is time for Congress to start over. This proposal, like the others in Congress, is not a serious attempt at building a bi-partisan framework. If Congress wants lasting health care reform, it should hit the reset button, focus on elements that can garner broad support – like promoting state-based reforms, fixing the tax treatment of health insurance, and provide assistance to help those at lower-incomes afford private health insurance.