WASHINGTON – After weeks of fractious debate that threatened to derail President Barack Obama’s health care campaign, House Democrats reached a critical but fragile agreement Wednesday that appeared to pave the way for the chamber to vote on a health care overhaul in September.
The deal, worked out between a set of fiscally conservative Democrats and Rep. Henry Waxman, D-Calif., chairman of the Energy and Commerce Committee, changes the way a proposed government-operated insurance plan would operate to allay concerns that it could crowd out private insurers.
Brokered with help from the White House, the deal also moves to cut more than $100 billion from the bill’s price tag of more than $1 trillion, according to lawmakers who worked on the pact.
And it would exclude more small businesses from a new requirement to provide employees with health insurance.
Democrats on Capitol Hill still face big obstacles in their quest to send Obama the legislation. Those include mollifying liberal lawmakers, who expressed outrage at the deal reached Wednesday.
But the agreement comes at a critical time for the president and his congressional allies.
The fiscally conservative Democrats, known as Blue Dogs, had blocked progress on the legislation in Waxman’s committee for more than a week, threatening to leave House discussions on health care in disarray as lawmakers prepared to leave town for their August recess. With an important Senate committee still mired in difficult negotiations on its own bill, momentum on the health care overhaul threatened to stall.
“This will move the bill forward,” House Majority Leader Steny Hoyer, D-Md., told reporters Wednesday as news of the House deal broke.
The agreement delays a vote by the full House on the legislation until September, satisfying another demand of many moderate Democratic lawmakers, who wanted time to absorb the details of the complex legislation.
Obama praised the progress Wednesday and called the work of the fiscally conservative Democrats “extraordinarily constructive in strengthening this legislation and bringing down its cost.” The president did not endorse the specifics of the agreement. He is expected to play a role in writing a version of the Senate legislation next month.
And it appears likely that there will be much more debate about critical issues at the heart of the agreement hammered out Wednesday.
One is whether the government should offer its own insurance plan, competing with private insurers.
Under the agreement between Waxman and the Blue Dogs, House Democrats retained the idea of creating a new government insurance program, a core piece of the party’s health care agenda. But the deal takes steps to ensure that the government plan would not gain advantages from the federal management of Medicare, the insurance program for seniors that can negotiate low rates for services because of its size.
Originally, the new government insurance plan would have paid doctors, hospitals and other providers a rate set slightly higher than Medicare rates.
Many Republicans and moderate Democrats – as well as insurers and hospitals – believe that arrangement would mean the government plan incurred lower costs than private insurers and could charge low premiums, driving private insurers from the market and leaving consumers with only one choice for health coverage: the government.
Under the deal struck Wednesday, the new government insurance plan would have to negotiate with hospitals and other providers apart from Medicare. That could make it harder for it to charge very low premiums.
The prospect of the government competing in the insurance market has been highly controversial. In the Senate, the idea of a government plan has likely been abandoned by a group of Democrats and moderate Republicans who are trying to work out their own version of the bill in the Senate Finance Committee.
The deal worked out Wednesday also addresses a second major issue dominating the health care debate: what burden might be placed on businesses.
The legislation includes a new mandate on employers to provide health insurance to their workers or pay a penalty. Critics have said this could prove disastrous to many businesses during an economic downturn.
The House bill originally exempted small businesses with payrolls under $250,000 from the penalty, which could be as high as 8 percent of payroll for larger businesses.
Under the new proposal, businesses with payrolls under $500,000 would be exempt.
The agreement would also increase the amount of money that states would have to contribute to expanding Medicaid coverage to more Americans.
The House bill will almost certainly be changed again before a vote this fall and will ultimately have to be merged with whatever the Senate produces.
In the House, the Blue Dogs – a 52-member caucus composed largely of lawmakers from conservative-leaning districts – had led a revolt against the largely liberal health care bill developed by senior Democrats.
Founded 15 years ago as Democrats lost control of the House, the Blue Dog caucus has become powerful force. The group’s members frequently challenge the Democratic Party’s more liberal base and have pushed party leaders to accommodate their demands for more fiscally conservative legislation.
Rep. Allen Boyd Jr., D-Fla., a Blue Dog leader, said that the most important concession wrested from the leadership was an agreement to postpone the House vote until the fall, giving lawmakers and the public more time to assess the complex bill. House Speaker Nancy Pelosi, D-Calif., had been pushing for an earlier vote, infuriating many members of her caucus.
Even that agreement does not guarantee smooth sailing for the legislation.
Many liberals were angry about the concessions made to their conservative colleagues.
“I think they’ve had an inordinate amount of input,” said Rep. Fortney H. “Pete” Stark, D-Calif. “And every time people have given them some consideration, they want more.”
Opposition remains strong from Republicans and many business groups.
Michelle Dimarob, a lobbyist for the small-business group National Federation of Independent Business, said the changes to the bill amounted to little more than “tinkering around the edges.”
“You are talking about one part of a very bad bill,” she said.
Boyd, meanwhile, said that “the bulk” of the Blue Dog caucus still opposes the bill.