Reid Releases Senate Health Care Reform Bill, CBO Cost Estimate
On Wednesday, Senate Majority Leader Harry Reid (D-Nev.) unveiled his chamber's health care reform bill, which would cost $848 billion over 10 years and provide health insurance to 31 million more people, according to a preliminary estimate report from the Congressional Budget Office, the Washington Post reports.
CBO projects that the bill would reduce the federal deficit by $130 billion over that period (Murray/Montgomery, Washington Post, 11/19).
The Senate bill also would cut the deficit by $650 billion over the second 10 years of the legislation, a Senate leadership aide said (Pierce/Dennis, Roll Call, 11/18). According to a Joint Committee on Taxation analysis of the bill, the measure would raise $371.9 billion in new taxes over the first decade (Young , The Hill, 11/18). The bill meets President Obama's two key objectives that the legislation not exceed $900 billion and not add to the federal deficit.
Reid crafted the bill, which he named the "Patient Protection and Affordable Care Act," using portions of the bills that were approved by the Senate Health, Education, Labor and Pensions Committee (S 1679) and the Senate Finance Committee (S 1796) (Pear/Herszenhorn, New York Times, 11/19).
Many of its provisions would begin to take effect in 2014, while the provisions in the House-passed bill (HR 3962) would take effect in 2013 (Washington Post, 11/19).
CBO's preliminary cost and coverage report of the Senate bill included the following analysis:
- Abortion services: The Senate bill diverges from the House bill in that it would establish a "firewall" that would differentiate private premiums from federal funding if coverage for abortion services is offered through a public plan, the Post reports. The House bill included an amendment that would explicitly bar a proposed public plan from covering abortion services and prohibit people who receive subsidies from purchasing private plans that cover abortion services (Washington Post, 11/19).
- 'Cadillac' plans tax: The bill would impose a new excise tax on high-cost health insurance policies offered by employers. Under the tax proposal, a 40% excise tax would be levied on insurance plans that cost $8,500 annually for an individual and $23,000 annually for families. The original tax proposal in the Finance Committee bill would have enacted the 40% excise tax on individual plans costing at least $8,000 annually and family plans costing at least $21,000 annually (New York Times, 11/19). CBO estimated that the tax would generate $149 billion over 10 years, "far less than earlier envisioned," the Wall Street Journal reports.
- Coverage: The bill would ensure insurance coverage for 94% of U.S. residents, up from the current coverage rate of 83% (Hitt/Adamy, Wall Street Journal, 11/19). However, 24 million U.S. residents still would be uninsured in 2019. One-third of the uninsured would be undocumented immigrants.
- Elective cosmetic surgery tax: The bill also includes a new 5% tax on elective cosmetic surgeries. The tax would be paid by patients to their physicians and clinics and forwarded to the government. The tax only would apply to elective procedures, not required procedures due to serious injuries, disease-related disfiguration or congenital deformities (New York Times, 11/19).
- Industry fees: The bill would impose annual fees amounting to $6 billion on health insurance companies and $2 billion on drugmakers (Edney, CongressDaily, 11/19). Medical device manufacturers also would incur new fees of about $2 billion annually, down from $4 billion annually that had been proposed in the Finance Committee bill.
- Long-term care: The bill includes a voluntary government-administered insurance plan for long-term care that would dispense cash benefits to U.S. residents who are elderly or have severe disabilities (New York Times, 11/19)
- Medicare: The bill would be funded partly through Medicare savings, but the CBO analysis did not offer an estimate for those savings, according to CQ HealthBeat. A 21% physician payment cut in 2010 would be replaced with a one-year fix that would raise the payment rates by 0.5%, while the "doughnut hole" in the Medicare prescription drug benefit would be reduced by $500 per beneficiary in 2010 (Reichard, CQ HealthBeat, 11/18).
- Medicare payroll tax: In order to make up for nearly $60 billion in lost revenue from the revised excise tax, Reid added a new Medicare payroll tax on individuals whose annual incomes are more than $200,000 and families whose incomes are more than $250,000 annually. The current payroll tax, which is equal to 1.45% of wages, would be raised to 1.95% (Washington Post, 11/19). Senate Democratic aides said the payroll tax increase would generate $54 billion over 10 years (New York Times, 11/19).
- Penalties: The bill would maintain the current employer-sponsored health insurance system, but companies that fail to provide adequate coverage options would be liable for penalty fees that the government would use to cover the employees (Wall Street Journal, 11/19). Companies that have more than 50 employees and at least one who qualified for a federal subsidy could incur up to $750 in fines per employee. Meanwhile, most U.S. residents would be required to have health insurance by 2014, after which penalties starting at $95 would be levied on them. The penalty would rise to $750 per individual in 2016, with a maximum penalty of $2,250 for a family (New York Times, 11/19).
- Public plan: The bill would include a government-run public health insurance plan with an "opt-out" clause, which would allow states to choose whether to participate. In a concession to Senate moderates, the public plan would negotiate payment rates directly with health care providers instead of tying them to Medicare rates, the Journal reports (Wall Street Journal, 11/19).
- Health insurance exchanges: Health insurance exchanges would take effect in 2014 (Roll Call, 11/18). Undocumented immigrants would be barred from obtaining insurance through the exchanges (New York Times, 11/19).
- Subsidies: U.S. residents whose incomes are below 133% of the federal poverty level would qualify for Medicaid coverage, while U.S. residents whose incomes are between 133% and 300% of FPL would qualify to receive federal subsidies to obtain coverage. U.S. residents whose incomes are between 133% and 400% of FPL would be eligible for annual caps on their premiums and out-of-pocket expenses, based on a percentage of their income (Young , The Hill, 11/18). The premiums cap would kick in at 9.8% of an individual's income, down from 12% (Wall Street Journal, 11/19).
Reid Attempts To Draw Moderate Hold-Outs
Today, Reid is expected to call up a "shell bill," which he will use as the vehicle to move forward on filing for cloture on the health bill, CQ Today reports.
In order to begin floor debate on the bill, Reid needs the support of 60 senators in a procedural vote, which could come as soon as Saturday, according to CQ Today.
However, three moderate Democratic senators in recent weeks have declined to pledge their support until they have had the chance to review the bill and CBO's score (Hunter, CQ Today, 11/18).
On Tuesday, before he publicly released the bill and CBO score, Reid met with the three senators -- Mary Landrieu (D-La.), Blanche Lincoln (D-Ark.) and Ben Nelson (D-Neb.) -- to give them an early look at the documents, The Hill reports (Young , The Hill, 11/18).
According to Politico, "the strategy seemed to be working" as both Landrieu and Nelson emerged from the meetings "more positive" about voting to begin debate on the bill.
Meanwhile, Lincoln told reporters on her way to Reid's public briefing, "We'll wait and see" (Budoff Brown, Politico, 11/18).
In a statement issued before the public briefing, Nelson suggested that his vote in favor of cloture should not be perceived as support for the bill itself. He said, "In reality, the meaning of the motion to proceed is very simple: It's a motion to commence debate and an opportunity to make changes. ... If you don't like the bill, then why would you block your own opportunity to amend it? Why would you stop senators from doing the job they're elected to do -- debate, consider amendments and take action on an issue affecting every American?" (Pierce , Roll Call, 11/18).
Bill Draws Republicans' Criticism
Senate Republicans, who have roundly rejected the Democrats' proposals for reform and are expected to mount a filibuster, on Thursday criticized the Reid bill (Pierce , Roll Call, 11/18).
Senate Minority Leader Mitch McConnell (R-Ky.) said, "This is yet another trillion-dollar experiment, but it is not what Americans bargained for. ... Higher premiums, tax increases and Medicare cuts to pay for more government -- the American people know that is not reform" (Haberkorn, Washington Times, 11/19).
National Republican Senatorial Committee Chair John Cornyn (Texas) said, "Until we have had a chance to read the full 2,074-page Reid bill, it's impossible for Americans to fully grasp what [Reid] has cooked up behind closed doors," adding, "It is my hope that Sen. Reid will afford all Americans the same courtesy that he had: ample time to study the legislation and deliberate the best way to proceed" (Pierce , Roll Call, 11/18).
AARP, Pelosi, White House Laud Bill
Meanwhile, House Speaker Nancy Pelosi (D-Calif.) praised the Senate bill as "an encouraging development" in the health reform debate, adding, "House Democrats look forward to a constructive debate in the Senate and to working together to achieve historic reforms that will make health care more affordable and strengthen our economy" (Washington Post, 11/19).
White House Chief of Staff Rahm Emanuel said that he was impressed with the bill, noting that it "meets [Obama]'s objectives, provides protection from insurance companies, contains true cost controls and extends coverage to working families" (New York Times, 11/19).
On Wednesday, AARP gave a "qualified endorsement" of the Senate bill, the Times' "Prescriptions" reports.
AARP Executive Vice President Nancy LeaMond issued a statement that stated the bill "makes progress toward achieving meaningful relief for millions of older Americans who still face challenges accessing affordable, quality health care services." LeaMond also wrote that the association "strongly supports" the bill for its plans on long-term care and access to home and community-based services for Medicaid beneficiaries. The statement also praised the measure's plan to curb insurers' age-rating practices that target older people and expressed confidence that the bill would be further improved in that area.However, AARP said that the bill would not go far enough in reducing drug costs for elderly U.S. residents who run into the doughnut hole in the Medicare prescription drug program (Seelye, "Prescriptions," New York Times, 11/18). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.