Health Care Reform Bill Clears Senate; Merger With House Bill Looms

On Dec. 24, the Senate passed its health reform bill (HR 3590), setting the stage for negotiations to combine the Senate bill with the House bill (HR 3962) to begin, the Wall Street Journal reports (Hitt/Adamy, Wall Street Journal, 12/28/09).

House and Senate leaders have indicated that they want to pass the final bill by President Obama's State of the Union address in January, but they have not committed to that timeline (Wangsness, Boston Globe, 12/25/09).

The House is scheduled to return from its holiday recess on Jan. 12, while the Senate is scheduled to return on Jan. 20. By the time the two chambers formally return to work, the negotiating teams from the House and Senate "should be well along sorting out the biggest points of contention" in the two versions of the bill, CQ Today reports.

According to CQ Today, the House and Senate "have the option of using a formal conference process" that could last weeks but they are more likely to "work out a deal in private, pass the agreement in one chamber and quickly send it to the other to be cleared for the president's signature" (Armstrong, CQ Today, 12/24/09).

Following the Christmas Eve vote on the Senate's reform bill, Senate Finance Committee Chair Max Baucus (D-Mont.) said that members of the negotiating team will start discussions over the phone during the last week of 2009.

A Senate Democratic leadership aide said that conversations will fully get underway during the first week of January, when the House negotiators are expected to return to Washington, D.C., to work on the final legislation (Budoff Brown, "Live Pulse," Politico, 12/24).

Negotiation Points

Among the issues that Senate and House negotiators must find a compromise on are:

• Health insurance exchanges: The House bill calls for the establishment of a national health insurance exchange to allow those in the individual insurance market and employers to purchase coverage. The Senate bill would establish a new system of national health plans available in every state and run by the Office of Personnel Management (AP/MSNBC, 12/27/09).
• Abortion: The House legislation would prohibit insurance plans that receive federal subsidies from covering abortion services but would allow women who receive federal subsidies to use private funds to purchase a separate rider policy to cover abortion care (Boston Globe, 12/25/09). The Senate bill would allow individual states to decide whether to bar insurance plans participating in the exchange from offering abortion coverage. It also would require women who receive government subsidies to write two separate premium checks -- one check to cover the bulk of their plan and the second check to cover the cost of abortion services (California Healthline, 12/22/09).
• Public health insurance plan: The House bill includes a government-run health insurance plan while the Senate bill does not.
• Financing: One of the key mechanisms for financing reform in the Senate bill is a 40% excise tax on so-called "Cadillac" insurance plans that cost more than $8,500 a year for individuals and $23,000 for families. The provision -- which is strongly opposed by organized labor groups -- is not included in the House bill (AP/MSNBC, 12/27/09). The House bill includes a surtax on people whose annual incomes exceed $500,000 a year (Fabian, "Blog Briefing Room," The Hill, 12/27/09).
• Employer penalties: The House bill would require employers with payrolls exceeding $500,000 to offer coverage or pay a fine of 8% of their payrolls (California Healthline, 11/9/09). Under the Senate bill, large employers would be required to pay a penalty of $750 per employee if they do not receive affordable insurance and end up receiving government subsidies (Wall Street Journal, 12/28/09).

Many House and Senate leaders have said it is very likely that the final bill will reflect the Senate legislation simply because of the fragility of the 60-vote caucus that lined up to support the legislation in that chamber ("Blog Briefing Room," The Hill, 12/27/09).

Schwarzenegger, Paterson Voice Concerns With Bill

Govs. Arnold Schwarzenegger (R-Calif.) and David Paterson (D-N.Y.) have criticized the Senate bill for its plan to expand Medicaid, saying it would create significant burdens for their states which already are in financial straits, Politico reports.

The governors say the current bill penalizes states that already have expanded Medicaid coverage -- which California and New York have done -- by making them pay a disproportionately large share of the costs for expanding coverage in states that currently offer limited Medicaid programs.

In a letter to House Speaker Nancy Pelosi (D-Calif.), Schwarzenegger warned that reform legislation could add an additional $3 billion to $4 billion to California's current $20.7 billion budget deficit.

A spokesperson for Pelosi said the Speaker intends to address Schwarzenegger's concerns in ongoing negotiations to merge the Senate with the House reform bill (Isenstadt, Politico, 12/29/09).