11/22/2009 05:12 am ET Updated May 25, 2011

Baucus Muzzles Misleading Insurance Companies

As Republicans in the Senate steadily drift away from Max Baucus (D-Mont.), the finance committee chairman is beginning to move the opposite direction. After getting pounded by progressives for a bill that required middle-class Americans to purchase unaffordable health care from private insurance companies (as no public option would be available), Baucus revised the proposal to make the mandated coverage more affordable and reduced the cost of the penalty for not buying it.

At the same time, Baucus fired a shot across the bow of the insurance industry, urging the Centers for Medicare & Medicaid Services to go after insurance companies who are sending letters to seniors with frightening warnings about supposed Democratic attempts to cut their benefits. (See Dawn Teo's reporting on this here.)

CMS responded by muzzling the insurance companies and threatening legal action, writing that "we are instructing you to immediately discontinue all such mailings to beneficiaries and to remove any related materials directed to Medicare enrollees from your websites."

They made clear they weren't playing around: "Please be advised that we take this matter very seriously and, based upon the findings of our investigation, will pursue compliance and enforcement actions."

The Wall Street Journal op-ed page hit the roof, complaining that Bacucus' "latest bullying tactics are hard to believe." And the insurance industry trade group, America's Health Insurance Plans, denounced the "gag order."

"Seniors have a right to know how the current reform proposals will affect the coverage they currently like and rely on," said AHIP spokesman Robert Zirkelbach.

Minority Leader Mitch McConnell (R-Ky.) took the Senate floor Tuesday to decry the CMS move. "'Shut up,' this gag order says," McConnell said. "'Be quiet and get in line.'" Sen. Lamar Alexander (R-Tenn.) followed him and read the First Amendment on the Senate floor.

Baucus insists that the insurers have no right to mislead seniors into believing that Medicare benefits would be cut. And CMS has a say over the companies' communication with seniors, because it foots the bill.

"It is wholly unacceptable for insurance companies to mislead seniors regarding any subject -- particularly on a subject as important to them, and to the nation, as health care reform," said Baucus.

Baucus is free to swing away at the insurance industry with little risk because he has fewer and fewer Republicans to woo.

Sen. Charles Grassley (R-Iowa), the committee's ranking Republican and a member of the erstwhile Gang of Six, made clear just how distant he is from the negotiating table during his opening statement Tuesday, when he accused the Baucus bill of providing federal funds for abortion.

(The bill is clear that no federal funds can be used for abortion, and insurance companies are able to distinguish which services are covered by federal dollars and which aren't. PolitiFact has called Grassley's claim "false.")

And the top Republican target for a pro-reform vote, Maine Sen. Olympia Snowe, has been critiquing the Baucus bill from a liberal direction, citing concerns about the affordability of the required coverage.

In her opening statement Tuesday morning, she reiterated her concern about mandating that people purchase coverage that might not be affordable. During Gang of Six negotiations, she had often pushed for more generous subsidies, balanced by her worry about paying for them with cuts or tax hikes elsewhere. Snowe also struck a note that resonates with progressives, arguing that where private insurance faces no competition and is unaffordable, consumers should have access to a public health insurance option.

Snowe has long backed a "trigger" proposal that would implement a public option if private insurers showed they were unable to provide affordable access after a predetermined amount of time.

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