Mid Week Update

Senate Finance Committee Chairman Max Baucus released today his Chairman's mark of the America's Healthy Future Act of 2009. Business Insurance reports that the mark closely resembles the outline that Sen. Baucus circulated last week. I have printed out the 223 page document and I look forward to reading through it. What strikes me as odd is that the mark is written like a committee report rather than legislation. In any event, the Chairman plans to mark up his mark beginning on September 22.

The Wall Street Journal ran an interesting story today about the impact of the Massachusetts health insurance mandate on the middle class. The article is headlined "Mandated Health Insurance Squeezes Those in the Middle." The following paragraphs from the article that really rang my bell.

Peter and Kirsten MacDonald of Brockton, Mass., are the kind of young,
healthy individuals Massachusetts needs in the system to spread the risk and
help pay for it. But the MacDonalds have calculated that they're better off
without coverage.

They bought their own insurance in 2006, after Mr. MacDonald, a 39-year-old computer consultant, lost his job and began to work as an independent contractor. Insuring the couple and their four children then cost $650 a month, or $7,800 a year, and didn't include prescription-drug coverage. It was "a lot, but something we could afford," Mr. MacDonald says.

The next year, premiums rose to $750 a month and to about $900 a month in 2008. The MacDonalds say their actual medical costs hadn't come close to the premiums they were paying. "What are we getting for it?" Ms. MacDonald says they asked
themselves before canceling.

They were getting insurance protection. My grandfather declined to buy life insurance because "nobody has been left on top of the ground yet." I followed my father's lead and bought life insurance. I pay the premium every year and I am never disappointed that it hasn't paid off yet. That's because I am insuring a risk that I don't want to occur. Mr. McDonald was not looking at the premium payments as health insurance but rather as deposits into a health savings account. Nevertheless, the article points out that he does appreciate the value of health insurance.

Now they put aside $750 a month to cover medical costs as they arise, plus the $1,068 penalty each adult would pay for going without coverage. The biggest expense came last year, when their then 4-year-old son, James, fell and cut the bridge of his nose. The five stitches and care of a plastic surgeon cost $2,000, which the MacDonalds said they were able to pay from reserves they'd set aside. Mr. MacDonald said he'd be inclined to buy insurance if he could buy cheaper catastrophic coverage, but such policies don't count in the Massachusetts plan.

However, you won't find a catastrophic plan in H.R. 3200, and I doubt that I will find a catastrophic plan in the Chairman's mark. I think that's unfortunate because that would be a fair mandate that people could understand.

Yesterday, the House of Representatives approved H.R. 22 which will give the Postal Service a break from its statutory obligation to pre-fund FEHB benefits for its retirees. According to the Federal Times the Postal Service, which is suffering a large operating deficit, would not be able to make its next payment of $5.4 billion due on September 30. The National Association of Letter Carriers issued a press release stating in part: "The one-year version of H.R. 22 passed today is a good first step toward devising a more sensible and affordable schedule for prefunding our future retiree health benefits," [NALC President] Rolando said. "The National Association of Letter Carriers urges the Senate to quickly pass H.R. 22 as passed by the House so that we can continue to work on long-term solutions."