Senate Finance Panel Identifies Proposals To Cut Cost of Reform
On Thursday, Senate Finance Committee Chair Max Baucus (D-Mont.) said that the committee has come up with proposals to lower the cost of its health reform bill from $1.6 trillion to $1 trillion over 10 years, which could be fully offset, the New York Times reports (Pear, New York Times, 6/26).
Baucus and other lawmakers have been working with the Congressional Budget Office to reduce the bill's estimated cost (Werner/Espo, AP/Boston Globe, 6/26). CBO has scored a number of "options" that could be included in a bill (Yoest/Vaughan, Wall Street Journal, 6/25).
After a closed session with Finance Committee members on Thursday, Baucus said, "We have ways, according to CBO today, to fully pay for this bill" (Armstrong/Wayne, CQ Today, 6/25).
According to Finance Committee aides, CBO had estimated that new options being considered could extend coverage to 97% of U.S. residents, excluding undocumented immigrants (AP/Boston Globe, 6/26).
According to Sen. Olympia Snowe (R-Maine), committee members are considering including a cap on the tax-exemption for employer-sponsored health care benefits that would generate nearly $300 billion to offset the cost of the reform package (Yoest/Vaughan, Wall Street Journal, 6/25).
Baucus refrained from discussing details, but in the past he has proposed capping the exemption at $17,240 for a family of four and $6,800 for an individual -- about 10% more than the standard insurance plan in the Federal Employees Health Benefits Program (CQ Today, 6/25).
Another option is a "free rider" provision that would impose a penalty on employers who do not offer health insurance to their workers. Employers would be required to contribute to the cost of coverage for workers who enroll in Medicaid or purchase subsidized insurance through a new health insurance exchange.
The measure aims to ensure that employers do not drop coverage and force employees into federally subsidized programs.
Snowe said that companies with fewer than 50 employees would be exempt from the fee (Yoest/Vaughan, Wall Street Journal, 6/25).
Senate Budget Committee Chair Kent Conrad (D-N.D.) said CBO found that the committee would be able to cut $200 billion in costs largely by reducing subsidies. He declined to comment on what subsidies would be targeted but noted that the goal of providing health care subsidies to families with incomes of up to 300% of the federal poverty level could be preserved (Cohn, CongressDaily, 6/25).
Senate aides said the committee is considering reducing the tax credit that small businesses would get to provide health insurance for workers (Adamy/Hitt, Wall Street Journal, 6/25).
In addition, the committee is considering delaying its proposed Medicaid expansion until 2013 (New York Times, 6/26).
Senators also have discussed including President Obama's proposal to reduce the value of itemized tax deductions for higher-income U.S. residents; however, Conrad said the health care bill could be paid for without including that proposal (Yoest/Vaughan, Wall Street Journal, 6/25).
Baucus said committee members on Thursday discussed granting more power to the Medicare Payment Advisory Commission by requiring Congress to vote up or down on the commission's provider payment recommendations. He said that there "are lots of variations on that" proposal under consideration (CQ Today, 6/25).
Committee aides and lawmakers also said the package includes substantial reductions to Medicare and Medicaid spending, the Washington Post reports.
Conrad said that no decision has yet been reached about a government-run health insurance option, but he said that discussions continue to focus on incorporating a member-owned cooperative model (Murray/Montgomery, Washington Post, 6/26).
Sen. Charles Schumer (D-N.Y.) provided a list to Baucus of what any public plan or co-op plan must include in order to be supported by Democrats. He said, "Any public option has to be available to just about everybody from the get-go as an alternative to the insurance companies" (CongressDaily, 6/25).
Baucus said that the committee is considering an "enhanced, beefed-up co-op" model that includes some ideas from Schumer. The plan would not include a mandate for employers to provide health care benefits but the "free rider" provision would act as a deterrent for employers to drop their coverage.
Also, workers would be allowed to leave their employer-sponsored plans only if the coverage was deemed unaffordable according to a formula outlined in the bill (CQ Today, 6/25).
Timeline and Bipartisanship
Conrad said, "There's not a final bill that's agreed to. What there is now is a clear path to having a bill that is paid for" (AP/Boston Globe, 6/26).
Baucus said, "We're getting a lot closer to an agreement," noting that committee members will consider the options over the July 4 recess and produce a bill shortly after Congress returns on July 6 (Washington Post, 6/26).
Baucus said, "I'm working with [Finance Committee ranking member Chuck Grassley (R-Iowa)] to dot the i's and cross the t's," adding, "I expect to be ready sooner, now that we have CBO numbers" (CQ Today, 6/25).
Baucus said, "We will not put out a mark until we are sure we have it right" (Clark, HealthLeaders Media, 6/25).
Grassley confirmed the progress but added, "There's still a lot of decisions that have to be made" (Washington Post, 6/26).
On Thursday, a bipartisan group of senators who serve on the Finance Committee released a statement saying they "are committed to continuing our work toward a bipartisan bill that will lower costs and ensure quality, affordable care for every American."
The statement was signed by Baucus, Grassley, Conrad, Snowe, Senate Health, Education, Labor and Pensions Committee ranking member Mike Enzi (R-Wyo.), along with Sens. Jeff Bingaman (D-N.M.) and Orrin Hatch (R-Utah) (Drucker, Roll Call, 6/25).
Snowe emphasized that "we have not made a deal" but that "there will be no hiatus during the recess" (New York Times, 6/26).
Following a meeting, Hatch (R-Utah) said that he is skeptical of the new CBO scoring. He said, "I'm willing to bet money there's some gimmickry going on, putting some things off so they don't get scored at this point" (Haberkorn, Washington Times, 6/25).
$1.6T Figure Examined
The $1.6 trillion price tag for the original Senate Finance bill "is not much, if any, real burden on our economy over all," Princeton University economics professor Uwe Reinhardt writes in a New York Times' "Economix" blog post.
According to Reinhardt, $1.6 trillion only is about 1% of the amount of gross domestic product that "America can reasonably be expected to produce in the next decade." The cost of health reform would not represent lost GDP but rather "a diversion of GDP -- away from other uses, and toward providing the otherwise uninsured with the peace of mind that comes with health insurance and access to timely health care," he adds, continuing, "It would represent merely a change in the composition of GDP" (Reinhardt, "Economix," New York Times, 6/26).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.