Update: Here’s Bad Max’s "framework." 

Bad Max Baucus’ health care plan is, best as I can tell, an attempt to turn the middle class into serfs to the health care industry.

Consider the "limits" he places on health care costs for those who make between 300% and 400% of the poverty limit (between $66,150 and $88,200 for a family of four):

Another section of Mr. Baucus’s proposal would help pay insurance premiums, co-payments and deductibles for people with incomes less than 300 percent of the poverty level ($66,150 for a family of four). It would also provide some protection for people with incomes from 300 percent to 400 percent of the poverty level (up to $88,200 for a family of four), so they would generally not have to pay more than 13 percent of their income in premiums.

So Bad Max says that he will prevent these people from having to pay more than 13% of their income in health care premiums. For the family of four making $67,000, that’s $8,710. For the family of four making $88,200, that’s $11,466. For the family of four making $90,000, apparently, there are no such limits, so they may be paying much more. For what may well be utter and total junk.

Now, frankly, there are a lot of middle class families already paying more than that. Heck, mr. ew and I are paying more than $8,700, and that’s just for two of us, and that’s before Blue Cross starts whacking us for my pre-existing condition next year.

But that’s just the premiums.

Then, Bad Max has a limit for total out-of-pocket expenses (and this appears to include everything). For that family of four–regardless of whether they make $67,000 or $88,200, that limit would be $11,900.

Mr. Baucus would impose limits on out-of-pocket medical costs — the co-payments, deductibles and similar charges for covered items and services. The limits would be $11,900 a year for a family and $5,950 for an individual. The comparable numbers in the House bill are $10,000 and $5,000.

Now, of course families would only have to pay that limit if they used enough services to reach that limit–though in Bad Max’s plan, health insurance companies are asked to cover far less of actual expenses, so in Bad Max’s plan, families are going to reach that limit relatively quickly. If Bad Max asks families to pay 35% of their costs, then that represents just $34,000 in costs, or less. [Update] Bad Max says insurance companies have to provide 73% of costs if they want to be subsidized.

And the only way to keep those costs down under Bad Max’s bill is the co-op. So what’s to stop the hospitals for charging $10,000 for you to walk through the door? Or for Pfizer to charge you $5,000 a year for your required medicine? What’s to stop the insurance companies from charging everyone that 13% rate on premiums, as a matter of course? Under Bad Max’s plan, because it requires everyone to have insurance, corporations actually have more of a guarantee (and therefore an incentive) to charge such exorbitant fees. 

So assume those two families pay the limit under Max’s plan–which they would do long before they got into catastrophic health issues.

That family of four making $67,000 would pay $20,610, or 31% of their income.

That family of four making $88,200 would pay $26,366, or 26% of their income.

Of course, both these families would be in the 25% federal tax bracket. Bad Max is asking middle class families to pay more for health care than they pay in federal taxes.

And let’s look whether it’ll solve the debt crisis so many in the middle class are experiencing.

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)

Aside from the atrocity that Bad Max thinks middle class families should pay more to his donors than they pay for housing or for their Federal taxes, assuming these middle class families come close to hitting the max in a given year (something Bad Max doesn’t do much to prevent), it would leave them just $7,215 for all the rest of their expenses. That’s simply unsustainable and would all but preclude things like college. Thus, Bad Max’s health care "reform" would basically institutionalize a condition in which the middle class continues to fall further and further behind, paying far too much for health care and/or avoiding necessary treatment. It would keep the middle class drowning under debt. It would continue to force the middle class to choose between health care and things like college or fixing the roof on their house.

It would all but ensure that we never recover from Bush’s depression. Unless, of course, we were one of Bad Max’s donors.

And that is what the Democratic Party is now entertaining as an acceptable solution.

Update: Changed figure for food cost per USDA plans, h/t Peterr.

Update: Changed tax rates per this page, lowered state rates.

Graphic by twolf

On Thursday, I pointed out how much better the health care plan presented by Max Baucus last November was than what he was proposing now. Well, Bad Max–the guy aiming to implement a giant subsidy for the insurance companies–has provided more details. Aside from the decision to tax Cadillac plans (which, the NYT points out, will probably be passed onto consumers), Bad Max hasn’t provided that many details.

But here’s what a comparison looks like so far.

Good Max
Mandate
Medical Exchange
Payroll deduction payment
Small business tax credit
Premium subsidies for <400% PL
Medicare buy-in for >55
Expand Medicaid
CHIP coverage to 250% PL
Public option
Preventative care
Payment incentives for quality
Health care IT
Patient-centered medical homes
Medical malpractice reform
Tax reform (incl taxing better plans) 

Bad Max
Mandate
Medical Exchange
Premium subsidies for <300% PL; protections for <400% PL
Expand Medicaid
No public option
Taxing better plans
<70% expense coverage
$11,900 family out of pocket

I’m warm and fuzzy for Bad Max and his plans covering less than 70% of care already.

Graphic by twolf

Steve Benen posted a follow-up to my observation that as recently as November, Max Baucus was pushing a good health care plan. Steve points out that as recently as April, Baucus was promising to work quickly.

That was Baucus in November, but let’s also not forget where Baucus was in April. At that point, he and Ted Kennedy co-signed a letter to the president, explaining that they’ve been "working together toward the shared goal of significant reforms to our health care system" for nearly a year, and they planned to "swift" action. Indeed, they saw smooth sailing ahead: "Our intention is for that legislation to be very similar, and to reflect a shared approach to reform, so that the measures that our two committees report can be quickly merged into a single bill for consideration on the Senate floor."

So, what happened? Where’d this Max Baucus go? How did the Baucus of November and April (champion of a progressive, ambitious plan) become the Baucus of June and August (leader of the Gang of Six, opponent of the public option)? Ezra Klein explains the circumstances behind the switch.

Baucus pulled a bit of a bait-and-switch. That paper proved less his plan than his effort to articulate the Democratic consensus in such a way that Democrats were comfortable with him leading the debate. In particular, Kennedy had to be happy with that paper, because Kennedy was the threat to Baucus’s leadership.

But Kennedy’s illness took him out of the game. Baucus no longer needed to worry about Kennedy stealing the leadership of health-care reform away from him, which meant he stopped looking over his left shoulder. The effect was a bit like shutting down a primary challenge against Baucus: His surprising leftward lurch stopped entirely, and he drifted back to the more centrist approaches that had defined his career. It’s hard to say how the process would have differed if Baucus had spent his days worrying about keeping Kennedy onboard, but it seems possible that the practical impact would have been to keep Baucus closer to the paper he’d written to attract Kennedy’s support.

For all the recent talk from Republicans about Kennedy’s absence undermining bipartisanship — a cheap talking point, to be sure — the real consequence of Kennedy not being able to serve is the effect it had on Baucus, who quickly embraced "bipartisanship," delayed the process, and continues to prefer to water down what was a strong proposal.

I’m not sure I buy Ezra’s explanation that Bad Max took over Good Max’s body simply because Teddy Kennedy got ill. After all, Bad Max showed up just about the same time the lobbyists did.

On May 11, "stakeholders" including the AMA, PhRMA, the hospitals and the device manufacturers delivered proposals to the White House promising to "voluntarily" reduce cost increases over the next 10 years.  In an effort to keep them "at the table," Baucus’s Chief of Staff  Jon Selib and Finance Committee staffer Russell Sullivan told stakeholders at a May 20 meeting that their participation in the process of crafting a health care bill was contingent on them "holding their fire":

Sources familiar with the lobbyist meeting described it as collegial, but they said Baucus’ aides made clear that any public opposition to the proposed financing of a reform package would be at their clients’ peril. The staffers’ message to K Street was clear: Tell your clients to let the process work and don’t torpedo it with advertisements, press releases and Web sites.

So I have two questions.

First, what explains the arrival of Bad Max? The donations?

Or did Rahm force Max into being Bad Max as cover for the sell-out of real health care reform?

Graphic by twolf

Tell me how this sounds for a health care reform plan.

• A national health care exchange
• Buy-in to Medicare at age 55
• No discrimination against those with pre-existing conditions
• No waiting period for Medicare for disabled
• CHIP covers up to 250% of poverty level
• Credits for small businesses and individuals to make health care affordable

Oh, and don’t forget this bit:

• A public option

Now, it may surprise you to learn this. But the architect of this program is none other than Max Baucus–the guy who has been pushing against a public option since the insurers were allowed to drive this debate. Here’s the language from his white paper–dated November 12, 2008–on the public option:

The Exchange would also include a new public plan option, similar to Medicare. This option would abide by the same rules as private insurance plans participating in the Exchange (e.g., offer the same levels of benefits and set the premiums the same way). Rates paid to health care providers by this option would be determined by balancing the goals of increasing competition and ensuring access for patients to high-quality health care

It’s worth reading the whole thing. It’s like a journey through the looking glass, to a time when even a conservative Democrat would openly espouse doing what’s right to truly improve health care. It’s a voyage to a time before the corporations started running this process. And it’s proof that Max Baucus doesn’t believe the option (or lack thereof) that he is currently pitching is the best for this country.