Fox News received the outline of the proposed health-care bill that Sen. Max Baucus, D-Mont., is expected to introduce.

After a very quick first read, I see a couple of positive developments and and a host of red flags.

On the plus side, the bill would allow states to establish compacts

to allow for the purchase of non-group
health insurance across state lines. Such compacts may exist between
two or more states. Once compacts have been formed, insurers would be
allowed to sell policies in any state participating in the compact.
Insurers selling policies through a compact would only be subject to the laws and regulations of the state where the policy is written or issued.

Such a consumer-driven proposal should be part of any health-care reforms. 

The proposal would also allow some variability in insurance rates based on tobacco use, age, marital status, and family composition. Allowable policies would be several-sizes-fits-all, though they would not give insurers full flexibility to prevent healthy people from subsidizing the care of everyone else.

There’s also no explicit “public option,” but instead a series of nonprofit “cooperatives” will be established that

must not be sponsored by a state, county, or local government, or any government instrumentality.

We’ll see whether those emerge, and if they can survive without eventually being absorbed by the government.

Among the minuses, the proposal includes: an individual mandate to buy health insurance (in Orwell-speak, “shared responsibility”); new limits on health savings accounts and flexible spending accounts; expansion of the SCHIP program for minors who come from families that earn too much to qualify for Medicaid; full coverage of prescription drugs under Medicaid; lots of new taxpayer subsidies; and I’m sure, a lot more worth objecting to.

In addition, the proposal would not ease or eliminate the preferential tax treatment given health insurance provided by employers.

This plan makes a couple of minor feints toward consumer-driven health care, but it would still give Congress significant powers to impose top-down regulations on medical insurance from Washington. 

What’s wrong with that? Harvard Business School professor Regina Herzlinger explains in this Carolina Journal TV segment: