As I and others have been advocating, the dropping of this provision will make reform/overhaul more likely to be accomplished as it would drop the cost of the bill. The bill does make provision for state Co-ops to buy insurance with funding/loans by the federal government. The Town Hall meetings were a wake up call to moderate Democrats in the Senate that the public was nervous not only over the incredible cost of the overhaul with the public option, but also the government taking over provision of insurance.
In the Baucus framework, there are fees to insurance companies of $6 billion to help defray costs of expanded health care coverage. This would be allocated by market share, but I wonder how this will not end up being allocated to present holders of insurance polices. There will also be an excise tax on high-cost health plans of 35% on premiums for policies above $8,000 for singles and $21,000 for families.
Also beginning January 1, 2013, "health insurance plans in the individual market would be required to offer coverage on a guaranteed issue basis and would be prohibited from excluding coverage for pre-existing health conditions. Limited benefit plans and lifetime limits would be prohibited, and health insurance companies would be prohibited from rescinding health coverage."
Other fees starting in 2010: $2.3 billion on pharmaceutical companies, $4 billion on medical device makers, and $750 million annual fee on clinical laboratory companies. These fees along with the changes to how private insurance is run are why health care and insurance companies stocks were down yesterday when the rest of the market was up.