By Evan Falchuk

Last week, the Senate Finance committee finally released the initial description of Senator Baucus’ long-awaited “America’s Healthy Future Act.”

There is a lot to digest in the 223 pages of text, and others have given good summaries of the high points.

Here are my “quick six” reactions to it.

1.  It’s a win for big insurance companies.

First, Senator Baucus allows for  “national plans,”  a new type of insurance that may be sold in multiple states at the same time.  The only companies that can really take advantage of this are the big plans that have a presence in multiple states.  Second, the federal mandate to buy insurance means tens of millions of new customers.  Since these same big insurers already dominate their markets, they are poised to scoop them up.  Third, a plan to create a new, not-for-profit, government-sponsored reinsurance company means that although insurers won’t be able to deny coverage for pre-existing conditions, they can put the cost of the sickest insureds on to the government.  How else do I know it’s a win for the big insurers?  In the last few weeks, as the Finance Committee plan has been coming into focus, the average stock price of the biggest health insurers has gone up nearly 7.5%.

2.  The wellness incentive programs won’t work.

Senator Baucus wants incentives for Medicare beneficiaries to improve their health, saying we should target high blood pressure, high cholesterol, smoking, obesity, diabetes and “falls.”  He’s right:  these problems lead to hundreds of billions of dollars in avoidable health care costs.  But he only wants to spend $20 million a year on it.  And he doesn’t want to start until January 2011.  The paltry sums and late start make even less sense when you realize that wellness incentive programs are one of things that have worked for major employers as a way to improve employee health and control health care costs.

3.  In America, no one should….get more than $8,000 a year worth of health benefits.

Starting in 2013, there would be a 35% excise tax on any health benefits worth more than $8,000 to an individual, and $21,000 to a family.  Here’s how it works:  add up the premium value of your health insurance, dental insurance, vision coverage, and supplementary health benefits.  Add in any money your employer gives you in a tax advantaged account like an FSA.  If the total is more than $8,000, your employer has to pay 35% on the difference.  It’s not clear why they picked $8,000.  But if current trends continue, average health insurance premiums could be close to $8,000 a year by then.  Are they trying to force employers to stop providing health benefits?

UPDATE: Today’s Wall Street Journal says that Senator Baucus is already planning to raise the limits above $8,000 / $21,000.

4. Why take $4 billion a year out of the medical device market?

Senator Baucus creates a $4 billion annuity from people who make or import medical devices.  Four billion dollars is a small amount of money for the federal government, but in terms of what these companies could do with $4 billion a year in research and development it’s a lot.  Why take that money away from this important industry?  The good news: if you make medical devices for animals, you’re not subject to this fee (seriously).

5.  These are the dying days of state insurance regulation.

The Baucus plan doesn’t dispense with America’s system of state-by-state insurance regulation, but in health insurance it comes close.  The “national plan” is just one piece of the story.  To participate in one of the state insurance exchanges Baucus creates, an insurer would have to provide one of four types of products, designed at the federal – not state – level.  He directs state regulators to create new, uniform standards for participation in these exchanges, which would pre-empt state law.  He leaves the state insurance regulators in place, but mostly as a kind of local insurance police force.  The days of state legislatures creating thousands of health insurance mandates would be over, with that role being taken over by the federal government.  But how long will it be until insurers in other lines of business ask the federal government for national rules for their products, too?  And what do the state regulators think of all of this?

6.  Great news for health care bloggers: this is a long way from being done.

As of Friday, there had been 564 amendments proposed to the Baucus plan.  So this shouldn’t take long.  Senator McCaskill thinks it won’t be until Christmas.  It’s hard to believe a lot of people thought this could be done by August 1.