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Congress Returns To Work on Reform With Deadlines Looming

When it comes to health care reform, White House Chief of Staff Rahm Emanuel has said, “The only thing that is non-negotiable is success.”

With Congress back in session after the July 4 recess, the pressure is on to iron out the details on overhaul legislation and come closer to defining what success on health care reform will actually look like.

There has been action this week on efforts to win concessions from health care stakeholders to help cover the cost of health care reform. Today, Vice President Biden is scheduled to announce a deal with hospitals that is projected to shave $155 billion off of health care spending increases over the next 10 years.

Pharmaceutical firms reached a similar agreement with Senate Finance Committee Chair Max Baucus (D-Mont.) last month.  That deal is expected to cut about $80 billion from the nation’s prescription drug tab over a decade.

Hospitals and drugmakers were two of the groups that met with President Obama in the spring and pledged to scale back projected health care spending increases.  There hasn’t been an update on the status of talks with the other groups — America’s Health Insurance Plans, the American Medical Association, the Advanced Medical Technology Association and the Service Employees International Union — in recent weeks, but chances are good that lawmakers will be pushing them to show their cards sometime in the near future.

These deals to control cost increases are an important part of the effort to pay for reform, one of the central issues in the debate.

Another major sticking point is whether to create a government-run health plan.  Labor and other groups maintain that a public plan is integral to reform efforts.  Democrats on the Senate Health, Education, Labor and Pensions Committee and House leaders who wrote the so-called Tri-Committee proposal heard those groups loud and clear and included a public plan in their proposals.

Arguing in favor of a public plan in The New Republic, Jacob Hacker and Rahul Rajkumar asserted that a national insurance exchange and consumer cooperatives — ideas that have been offered as alternatives to a public plan — would not yield the level of reform that many groups want to see.

Researchers at the Heritage Foundation see things differently, warning that a public plan and other provisions of the House tri-committee draft health care reform proposal would “amount to federal control of the health care sector of the economy.”

Further debate along those lines can be expected when the Senate HELP Committee resumes markups of its bill this week and again next week when the House returns to the tri-committee plan. In the meantime, here’s more news on the debate over a public plan and other issues surrounding the reform debate.

Public Plan

  • Last week, the Senate HELP Committee circulated a draft proposal outlining what a public health insurance option could look like, the AP/Houston Chronicle reports. According to the draft summary, the public plan would be run by the federal government and compete with private plans through health insurance “gateways,” or exchanges, and would be subject to the same consumer protection rules as private plans (Alonso-Zaldivar, AP/Houston Chronicle, 6/30). The federal government would pay claims for the first three months using a loan, and those funds would be repaid over time. Provider payment rates would be negotiated by the HHS secretary and could not exceed the local average private rates, though they could be less, according to the draft (Gauette, Bloomberg, 7/1). Provider participation in the government-run plan would be optional (AP/Houston Chronicle, 6/30).
  • During an appearance on CBS’ “Face the Nation” on Sunday, Sen. Charles Schumer (D-N.Y.) said Congress’ health care reform legislation will include a public health insurance option regardless of bipartisan support, The Hill reports. He said, “Make no mistake about it, the president is for this strongly. There will be a public option in the final bill.” A public option is included in all three major reform bills being drafted by congressional Democrats (Young, The Hill, 7/5).  However, Senate Finance Committee ranking member Chuck Grassley (R-Iowa), who also appeared on the program, said that a government-run public option would be an “obstacle” to health reform, adding that “unfair competition” would lead to nationalized health insurance (Silvasssy, CQ Politics, 7/5).

Other Proposals on the Table

  • Some Democrats are pushing for an expansion of Medicaid that would provide coverage to about one-third of the 46 million uninsured U.S. residents, but Republicans and some conservative Democrats are pushing for subsidies for private insurance as a way to provide the coverage, Kaiser Health News/McClatchy reports. However, Medicaid’s role in health reform legislation “may be bolstered by simple math,” because some studies have indicated that it would be more cost-effective to expand the program’s coverage than to provide subsidies for private coverage, KHN/McClatchy reports (Carey, Kaiser Health News/McClatchy, 7/1).

What It’s Going To Cost

  • Although the future of health reform proposals in the House and Senate largely rests on the projected costs as estimated by the Congressional Budget Office, there is no precise, reliable way to estimate such proposals’ costs, the McClatchy/Detroit Free Press reports. Gus Faucher, director of macroeconomics at Moody’s, said that such “structural shifts are incredibly hard to predict.” CBO Director Douglas Elmendorf in a June 16 letter to senators warned, “Many of the specific changes that might ultimately prove most important cannot be foreseen today, and could be developed only over time through experimentation and learning” (Lightman, McClatchy/Detroit Free Press, 7/1).

Administration Message

  • In a Friday conference call with congressional leaders and White House Office of Health Reform Director Nancy-Ann DeParle, Obama expressed hope that groups that supported his campaign will stop criticizing individual Democratic lawmakers and work toward passing a comprehensive reform bill, according to people involved in the call, the Washington Post reports. He said, “We shouldn’t be focusing resources on each other,” adding, “We ought to be focused on winning this debate.” Obama also said that he would use his popularity among voters to push for comprehensive reform. According to the Post, a public plan, which Obama supports, has “become a litmus test for many pro-reform activists who accuse the insurance industry of failing to deliver affordable, accessible care” (Connolly, Washington Post, 7/4).
  • Last week, White House press secretary Robert Gibbs said that President Obama has refused to reiterate his campaign pledge not to tax health benefits because the president does not want to draw “bright lines that cause people to leave the table,” Roll Call reports. He also said that Obama wants to let lawmakers decide whether to use the reconciliation process to advance health reform legislation and that Obama has “confidence in the system working.” Under the budget reconciliation process, legislation can be passed in the Senate with a simple majority, rather than the usual 60 votes. In addition, Gibbs said that Obama expressed frustration last week with CBO cost estimates of health reform legislation because the agency will not score certain savings mechanisms that he believes would reduce the cost estimates (Koffler, Roll Call, 6/30).

Influencing the Debate

  • Health care firms and industry groups have hired more than 350 former government staff members and retired members of Congress in efforts to “minimize the damage to insurers, hospitals and other major sectors while maximizing the potential of up to 46 million uninsured Americans as new customers,” according an analysis by the Post. Three of every four major health care companies have tapped at least one former lawmaker or staff member for lobbying purposes, and each of these individual lobbyists represents an average of four firms or trade groups, the analysis found. Overall, health firms and groups representing them spent more than $126 million on first quarter lobbying efforts, more than any other industry, according to data from the Senate and the Center for Responsive Politics (Eggen/Kindy, Washington Post, 7/6).
  • The pharmaceutical industry has been pressuring House Democrats to support Pharmaceutical Researchers and Manufacturers of America‘s recent deal with Baucus to reduce drug spending by $80 billion, as lawmakers look for a way to fund health care reform, Politico reports.  Under the deal with the Senate, the industry promised to reduce by 50% the price of brand-name medications for Medicare drug plan beneficiaries who fall into the so-called “doughnut hole” coverage gap. House Energy and Commerce Committee Chair Henry Waxman (D-Calif.) instead wants to reduce a gap in the rebates that Medicare Part D plans and Medicaid are able to receive from drug companies (Rogers, Politico, 7/6).
  • Last week, the Laborers International Union of North America said that it will suspend ads criticizing Baucus and Sen. Kent Conrad (D-N.D.) for their support of taxing health care benefits to finance health reform, CongressDaily reports. LIUNA made the decision after Baucus requested a meeting with the union’s president to discuss the tax proposal (Dann, CongressDaily, 6/30). However, the union also announced plans to run ads criticizing Grassley on the same issue. LIUNA said it would suspend the ads if Grassley agreed to meet with union leaders (Drucker, Roll Call, 6/30).
  • Religious groups are launching radio ads on Christian and mainstream radio stations in Arkansas, Colorado, Indiana, Louisiana, Nebraska and North Carolina in support of health reform efforts, the Boston Globe‘s “Political Intelligence” reports (Rhee, “Political Intelligence,” Boston Globe, 6/30). The ads are sponsored by national and local groups, including Faith in Public Life, Faithful America, the People Improving Communities Through Organizing National Network and Catholics in Alliance for the Common Good (AP/USA Today, 7/1).


  • The inclusion of a “pay or play” employer mandate in health care reform legislation could create jobs, according to a recent study by the Goldman School at UC-Berkeley, The Hill reports. According to the study, in a “worst-case scenario,” 166,095 jobs, or about 0.1% of employed workers, could be lost.  However, that would occur based on unlikely assumptions, including not exempting small employers from the mandate and employers not opting to pay the payroll tax, according to the study. According to the study, it is more likely that new jobs will be created because of the savings for companies that lower their health care costs by paying the 8% tax and because of system-wide savings from slowing the growth in health care spending (Soraghan, The Hill, 7/4).

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