Overview

Finance Chairman Max Baucus released a health plan on Tuesday of last week.  On Wednesday, the President's speech to Congress clarified his position and rallied Democrats, but did not change the strategic situation. Senate Democrats (who have 59 votes including Independent Joe Lieberman (CT) and the ailing Robert C. Byrd (WV)) need to secure the support of at least one Republican (most likely, Senator Olympia Snowe of Maine) to move health reform in the Senate with the 60 votes needed to overcome a Republican filibuster. However, if they lack 60 votes, Democrats will be ready with a fallback "budget reconciliation bill."  A reconciliation bill would require only 50 votes (because it is filibuster-proof); the downside is that a reconciliation bill is restricted to "budgetary" provisions--which significantly limits the scope of the bill.    See Health Reform Side-by-Side below.

Baucus Outlines Plan, Schedules Mark-up

Senate Finance Committee Chairman Max Baucus (D-MT), after months of closed door negotiations with a bipartisan "Gang of Six" committee members, sought to move the process forward last week, releasing an outline of a forthcoming health plan.  Baucus plans to release a more detailed "chairman's mark" this week, and begin a committee mark-up next week (the week of September 21).  In general, the Baucus plan would: require individuals to have health insurance (or pay a penalty); require employers--except for small businesses--to offer insurance (or pay a fee per worker); prohibit insurers from denying coverage due to pre-existing conditions or dropping coverage due to illness; expand Medicaid coverage for people at or near the poverty level; provide tax credits (to people with incomes up to 400% of poverty level) to help the uninsured obtain insurance; set up state-based exchanges to promote access and establish non-profit co-ops to spur competition; cost $900 billion over 10 years and offset costs by taxing high cost insurance plans, imposing a series of fees on providers, and implementing Medicare and Medicaid reforms.  For more details, see the health reform side-by-side below.   Full text of Baucus health reform outline

Snowe Says Public Plan is Effectively "Off the Table"

Sen. Olympia Snowe (R-ME), the Republican Senate Finance Committee member most likely to provide Democrats with the "60th vote" they need to overcome a filibuster of health reform legislation said on Sunday's "Face the Nation" that the President's health reform public option is "universally opposed by all Republicans in the Senate."   Snowe said that discarding the public option "could give real momentum to building consensus on other issues."  However, Snowe left open the possibility of supporting a provision that would trigger-in a public option in the event that other measures are unable to slow the growth of private insurance premiums.

President Outlines Plan

 President Obama outlined in a September 9th address to a joint session of Congress the key elements he would like to see in included in health reform legislation:

• Make it illegal for insurance companies to deny coverage based on pre-existing conditions, or limit coverage through annual or lifetime caps.
• Limit out-of-pocket expenses.
• Require insurance companies to cover routine checkups and preventive care.
• Create insurance exchanges to expand coverage, provide tax credits to make insurance affordable, and offer a public plan as one of the choices to spur competition
• Individual mandate (individuals required to have health insurance)
• Employer mandate (cover employees or pay into the system, often know as "pay or play")
• Deficit Neutral: "I will not sign a plan that adds one dime to our deficits -- either now or in the future." 
• But the President goes on to say, "not a dollar of the Medicare trust fund will be used to pay for this plan," asserting that sufficient savings can be found in Medicare "waste and fraud" and Medicare Advantage (private insurance) subsidies. 
• Fill the Medicare Part D (prescription drug coverage) doughnut hole.
• Excise taxes on high cost insurance policies.
• Demonstration projects on capping medical malpractice awards to deter defensive medicine.

Full Text of President's Address

President's Health Care Plan

House to Combine Three Bills

While keeping a close eye on developments in the Senate, House Democrats are working to reconcile differences among the three versions of the "tri-committee" health reform bill passed by the Ways & Means, Education & Labor, and Energy & Commerce Committees.

• The Ways & Means Committee passed health reform legislation on July 17.
• The Education & Labor Committee passed health reform legislation on July 17.
• The Energy & Commerce Committee reported a partial bill on July 31 (by a vote of 31-28), and will resume its health reform mark-up in September to consider 55-60 amendments still pending.

The House Rules Committee will have to meld the three committee bills together, along with any further amendments adopted by the Energy and Commerce Committee.  The House committees may also have to develop a reconciliation bill by October 15 if the Senate goes that route (see above). 

Outyear Deficits Pose Major Hurdle; CBO to Score Finance Bill Over 20 Years

President Obama, in his speech to Congress, said: "I will not sign a plan that adds one dime to our deficits -- either now or in the future."  Fulfilling this vital commitment poses a major challenge to White House, Senate, and House negotiators.  For example, in July, Senate Budget Committee minority staff released an estimate for the House Tri-Committee health reform bill (HR 3200) projecting $1.2 trillion in additional deficits for the second 10 years (2020-2029).  This follows a CBO letter on July 26 stating that "relative to current law, the (House Tri-Committee health reform bill) would probably generate substantial increases in federal budget deficits during the decade beyond the current 10-year budget window." Senate Budget Committee Republican staff projections   In general, negotiators are likely to find it more difficult to pay for the second 10-year period than the initial 10-year period due to the phase-in of benefits during the first 10 years and the growth of costs in the second 10 years.  Article about additional estimates of the House bill by the Lewin group.   Full text of the Lewin study

In a related and important development, Congressional Quarterly reports that the Congressional Budget Office will likely provide a cost for the Finance Committee's health reform plan over 20 years -- not just the usual 10 years.  From a fiscal responsibility perspective, this is quite significant since the costs of health reform are likely to ramp up when it is fully phased in, i.e., beyond the intial 10 years.

Following the President's health care speech to a joint session of Congress last week (discussed above), the White House posted the President's health reform plan on the White House website.

Among the bullet points setting forth the plan is the following:

• "Creates an independent commission of doctors and medical experts to identify waste, fraud and abuse in the health care system.  The President's plan will create an independent Commission, made up of doctors and medical experts, to make recommendations to Congress each year on how to promote greater efficiency and higher quality in Medicare. The Commission will not be authorized to propose or implement Medicare changes that ration care or affect benefits, eligibility or beneficiary access to care. It will ensure that your tax dollars go directly to caring for seniors."

Medicare is one of the fastest growing programs in the Federal budget due to the rapid rise in health care costs, the retirement of the baby boom generation, and longer life spans.  There is a broad consensus that bringing Medicare growth under control is central to reversing the unsustainable growth in federal deficits. 

Consequently, there has been considerable debate this year about transforming Congress' Medicare Payment Advisory Commission (MedPAC) into an executive branch commission with authority to propose and implement, subject to congressional disapproval, policy changes to rein in the growth of Medicare spending.  For example, the Baucus health reform plan includes the following: 

• "Medicare Commission. This provision would establish an independent Medicare Commission (MC) that would submit proposals to Congress to extend Medicare solvency and improve quality in the Medicare program. Congress would have an opportunity to amend the proposal or pass an alternative proposal with an equivalent amount of budgetary savings. Should Congress not pass an alternative measure, the Secretary of HHS would be required to implement the provisions included in the original MC proposal."

The President's proposal could be interpreted as contradicting the Senate proposal with regards to the scope of the commission, depending on how the Administration defines the terms "benefits, eligibility...(and) beneficiary access."   It is important that ongoing negotiations clarify this issue and allow the Commission to find savings in the Medicare program to improve its long-term solvency and contribute to paying for health care reform.

Concord Coalition issue brief on the importance of an independent Medicare Commission

One of the most common phrases heard during the current health care reform debate has been "bending the curve," which refers to slowing the projected rate of growth in health care costs.  The current fast pace of health care cost growth -- much faster than projected economic growth -- has led to projections of unsustainable deficits in the public sector and crushing costs on the private sector and individuals.

A new report funded by the Robert Wood Johnson foundation lays out a 4-part strategy for health care cost containment:

1. Invest in better health information technology.
2. Reform payment systems that reward providers for delivering lower-cost, high-quality care.
   
3. Establish health insurance exchanges that pool risk and promote competition.
4. Support and encourage better individual choices.
   

Full Text of the Report

Currently pending are three major health reform measures at various stages of development, as well as a set of principles laid out by the President in addressing Congress last week (9/09/09):

1. A tri-committee House plan (Ways & Means/Rangel, Energy & Commerce/Waxman, and Education and Labor/Miller).  
   • CBO Cost Estimate    JCT Revenue Estimate   
   • Ways & Means Committee     CBO Letter to Ranking Member
   • Education & Labor Committee 
   • Energy & Commerce Committee
2. A Senate HELP Committee Democratic plan (Kennedy-Dodd-Harkin) was voted out of committee on July 15, 2009.  HELP Committee Summary


3. A plan released by Senate Finance Committee Chairman Max Baucus (D-MT) based on bipartisan negotiations among the "Gang of Six," also including ranking Republican Chuck Grassley (IA), Senator Kent Conrad (D-ND), who also chairs the Budget Committee and Senator Jeff Bingaman (D-NM); and Republican Senator Olympia Snowe (R-ME) and Senator Mike Enzi (R-WY), who is ranking Republican on the HELP Committee. 

Click here for a Concord Coalition side-by-side comparison of the four plans