Health reform edges forward

WASHINGTON – Senate negotiators are inching toward bipartisan agreement on a health care plan that seeks middle ground on some of the thorniest issues facing Congress, offering the fragile outlines of a legislative consensus even as the political battle over reform intensifies outside Washington.

The emerging Finance Committee bill would shave roughly $100 billion off the projected trillion-dollar cost of the legislation over the next decade and eventually provide coverage to 94 percent of Americans, according to participants in the talks.

It would expand Medicaid, crack down on insurers, abandon the government insurance option that President Barack Obama is seeking and, for the first time, tax health care benefits under the most generous plans. Backers say the bill would also offer the only concrete plan before Congress for reining in the skyrocketing cost of federal health programs over the long term.

Three Democrats and three Republicans from the Senate Finance Committee will meet with Obama today to brief him on the progress of their sometimes arduous talks, which are now set to extend through the August recess. The negotiators are holding the details close as they continue to debate key issues, and it could be a challenge for them to meet the Sept. 15 deadline set by the committee’s chairman, Max Baucus, D-Mont., for a deal.

Even if the partnership fails to result in legislation, Democratic leaders are already contemplating ways to preserve much of what it produces as they look to unite their party and pick up Republican votes when the health care debate moves to the Senate floor in the fall. The Finance Committee coalition is seeking compromise on some of the most complex issues facing Congress, including how to compel employers to continue providing coverage to their workers; how to more fairly distribute government subsidies for coverage; and who and how many should be allowed to remain uninsured.

Negotiators are even crafting provisions that would limit their own authority over Medicare by empowering an independent commission to extract savings from the program.

Many of their ideas were previewed for the first time to Senate Democrats in a closed-door meeting Wednesday afternoon. Sen. Evan Bayh, D-Ind., a centrist who spent the early part of the day with Obama at a rally in Elkhart, Ind., before hearing the briefing, said he supports reform but is worried about how it will be financed. “Call me an optimist in spite of all the evidence, but I think the chances are, you know, better than 50-50 that we’ll get this done,” Bayh told reporters after the session. “But it’s tough, it’s complex. It’s taken a little time, which is not surprising.”

Still, as the six senators continue their talks, the political debate over health care reform has become increasingly polarized.

Liberal Democrats are incensed that the Finance Committee has rejected a government-run health insurance plan in favor of a network of member-owned cooperatives – a needless concession, they believe, given the Democrats’ 60-vote Senate majority. Meanwhile, many Republicans view blocking health care reform as a smart political strategy that will help their party draw a sharp line with congressional Democrats in the 2010 elections.

Committee negotiators say the outstanding issues include how to structure a Medicaid expansion to make it fair to individual states; how to establish subsidy levels to maximize assistance to uninsured people; and how to squeeze savings from Medicare without imposing an undue burden on seniors or compromising the quality of care.

Another flashpoint is whether government insurance subsidies could be used to pay for abortions. Baucus Wednesday described “active discussions underway with all sides to try to put something together that would be acceptable.”

The group is closer to resolving other major questions and has already agreed to about $500 billion in changes to existing federal health programs, including Medicare and Medicaid. For example, negotiators would require wealthier seniors to pay more for prescription drug coverage under Medicare, and they would charge co-payments for clinical lab procedures. The lab co-pays are potentially lucrative, raising about $20 billion over 10 years.

Other new sources of revenue include new penalties on individuals who do not obtain health insurance, and a “free-rider” provision that would require employers that currently offer health insurance to continue to do so, or to reimburse the federal government for workers who switch to subsidized coverage through an insurance exchange. Both provisions could yield about $43 billion over 10 years.

The rest of the additional revenue – about $250 billion – would come from new taxes, primarily from an excise tax of up to 35 percent on insurance companies that sell extremely generous policies worth at least $21,000 a year for family coverage or $8,000 a year for individuals, according to aides involved in the discussions. About 7 percent of taxpayers hold such policies.

Lawmakers said insurance companies are likely to pass the cost of such a tax to policyholders, raising the price of those plans. That would create a strong incentive for employers to stop offering them, thus driving overall health care costs down.