Latest Developments |
- The bill taken up by the Senate Finanace Committee would cut Medicare payments to insurance companies that care for more than 10 million older Americans. Sept. 24
- Democrats expressed confidence that their effort to remake the nation's health care system was gaining momentum. But Republicans sharpened their attacks on a requirement that most Americans carry insurance. Sept. 23
- Senator Max Baucus said that he would modify his health care bill to provide more assistance to moderate-income Americans to help them buy insurance. Sept. 22
- Senator Max Baucus, leader of the Finance Committee, must try to stop his fellow Democrats from shifting the health care bill so hard to the left that they chase away Senator Olympia Snowe, who could provide the crucial 60th vote. Sept. 21
- President Obama pushed back against the argument from liberal Democrats that the leading health care bill would place a financial burden on the middle class, saying that insurance would be made affordable through a competitive exchange and subsidies. Sept. 21
OVERVIEW |
For more than 75 years, Democrats have dreamed of creating a comprehensive national health insurance program. With the election of President Obama, it appeared that they had the best chance in a generation to accomplish that goal. As drafting of the legislation began, the difficulties of what started as a pair of gargantuan tasks -- expanding coverage and reining in spiraling costs -- became ever more evident.
By the start of August 2009, Democrats on one Senate committee and three House committees had approved bills, while the Senate Finance Committee struggled to find a compromise that would win even a few Republican votes.
President Obama delivered a major speech on health care to a joint session and the nation in September intended to boost flagging public support. Meanwhile, outside groups on both sides stepped up advertising campaigns in an increasingly heated battle. But the conflict, and the growing public unease over the proposed overhaul, obscured a new, broad bipartisan consensus on a number of important changes.
Max Baucus, Democrat of Montana and the chairman of the Senate Finance Committee finally introduced his bill in September 2009. The bill is less costly but less expansive than the others, and there is no government insurance plan, also known as the public-plan option. Still, not a single Republican signed on. And the hard bargaining began.
Lawmakers of both parties agree on the need to rein in private insurance companies by banning underwriting practices that have prevented millions of Americans from obtaining affordable insurance. All insurers would have to offer a minimum package of benefits, to be defined by the federal government, and nearly all Americans would be required to have insurance.
Lawmakers also agree on the need to provide federal subsidies to help make insurance affordable for people with moderate incomes. For poor people, Medicaid eligibility would be expanded. Members of both parties in both chambers want to create health insurance exchanges, where people could shop for insurance and compare policies.
There is also broad, bipartisan agreement on proposals to squeeze hundreds of billions of dollars out of Medicare by reducing the growth of payments to hospitals and many other health care providers. There is a commitment to rewarding high-quality care, by paying for the value, rather than the volume, of services.
Details of the major House and Senate bills differ, but most employers would have to provide insurance or contribute to the cost of coverage for employees, with exceptions for some small businesses. Democrats also agree that Congress should create some type of government insurance plan or nonprofit cooperative, which would compete with private insurers. Mr. Obama said the public plan would keep insurers honest, but Republicans said it could eventually drive private insurers from the market, leaving consumers with fewer choices.
Seeking broad popular support, the president and Congressional leaders have played between the 40-yard lines of the health policy spectrum. Those who favor a single-payer, government-run insurance system have been marginalized, along with those who would unleash the system to the free market.
In the legislation now being considered, there is broad Democratic consensus on mandating that almost all Americans have coverage, expanding eligibility for Medicaid, subsidizing insurance for the working poor, establishing an insurance marketing exchange and requiring insurers to cover those with pre-existing conditions.
But there are profound disagreements on other proposals, including the Medicare cuts, tax increases to pay for the subsidies, and the public-plan option, which virtually all Republicans oppose and which insurers regard as a threat to their existence.
BACKGROUND
The Democrats' desire for universal access to health insurance runs deep. President Franklin D. Roosevelt hoped to include some kind of national health insurance program in Social Security in 1935. President Harry S. Truman proposed a national health care program with an insurance fund into which everyone would pay. Since then, every Democratic president and several Republican presidents have wanted to provide affordable coverage to more Americans.
President Bill Clinton offered the most ambitious proposal and suffered the most spectacular failure. Working for 10 months behind closed doors, Clinton aides wrote a 240,000-word bill. Scores of lobbyists picked it apart. Congressional Democrats took potshots at it. And Republicans used the specter of government-run health care to help them take control of Congress in the midterm elections of 1994.
One of the most significant differences between 1993-94 and 2009 is that employers and business groups, alarmed at the soaring cost of health care, are now among the most ardent advocates for change.
Insurance companies, which helped defeat the Clinton plan, now say they accept the need for change and want a seat the table. Insurers say they are willing to accept all applicants for coverage, regardless of illness or disability, if Congress requires everyone to have insurance. Without such a requirement, insurers say, many people will not buy health insurance until they need it.
Two of the biggest, most contentious issues are the cost of any plan and the role of government. Most proposals to expand coverage, offered by Republicans and Democrats alike, assume that private insurers will continue to operate, under stricter regulation. The proposals also assume that the federal government will offer subsidies, tax credits or other assistance to help people buy insurance.
Insurance companies have been adamantly opposed, however, to Democratic proposals to create a government-run insurance plan as an alternative to their offerings.
In his 2010 budget, Mr. Obama gave an indication of the scope of his ambitions on health care reform when he asked Congress to set aside more than $600 billion as a down payment on efforts to remake the health care system over the next 10 years, partly by limiting the income tax deductions that the most affluent taxpayers claim.
But after sending Congress his budget plan, Mr. Obama's White House, displaying a surprisingly light touch, encouraged Democrats in Congress to make the hard decisions while the administration held forums around the country to hear suggestions from ordinary citizens.
By the end of March 2009, the chairmen of five Congressional committees had reached a consensus on the main ingredients of legislation, and insurance industry representatives had made some major concessions. The chairmen, all Democrats, agreed that everyone must carry insurance and that employers should be required to help pay for it. They also agreed that the government should offer a public health insurance plan as an alternative to private insurance.
On May 11, representatives of doctors, hospitals, drug makers and insurance companies came to the White House to voluntarily offer $2 trillion in cost reductions over 10 years. But in the days following the event, representatives of the groups who attended began to hedge or pull back from the bold announcement, saying they had not committed themselves to specific year-by-year reductions.
In another sign of the difficulty that can lie in the fine print, officials said that not all insurers were willing to extend the commitment they had made for big changes in the individual insurance market to the market for small business coverage.
THE THREE BILLS
Democrats worked on three separate paths to develop legislation in the summer of 2009, but received a setback in July, when the director of the Congressional Budget Office, Douglas W. Elmendorf, testified that none of the plans being discussed would curb the overall rise in health care spending, which he called "unsustainable.'' His words reinforced a growing fear among conservative Democrats that the package would end up being too costly.
On June 14, House Democratic leaders introduced their bill, which in addition to a public plan included efforts to slow the pace of Medicare spending, a tax on high-income people and penalties for businesses that do not insure their workers.
Starting in 2011, a family making $500,000 would have to pay $1,500 in additional income tax to help subsidize coverage for the uninsured. A family making $1 million would have to pay $9,000. Employers who do not provide health insurance to workers would generally have to pay a fee or penalty to the government. The fee would be equal to 8 percent of wages for an employer with an annual payroll of more than $400,000.
A partial, preliminary estimate by the Congressional Budget Office said it would cost slightly more than $1 trillion over 10 years to expand coverage as provided in the House bill. Democrats said the cost would be fully offset by proposed savings in Medicare and other health programs and by revenue-raising changes in federal tax laws. The budget office said that by 2019 the bill could reduce the number of uninsured by 37 million, leaving 17 million still without coverage, about half of them illegal immigrants.
Republicans and business groups attacked the bill, which they said cost too much and would discourage small businesses from hiring.
Seven members of the Blue Dog Coalition, made up of fiscally conservative Democrats, threatened to block the House bill. After a 10-day impasse, an agreement was reached that would cut the bill's cost and exempt many small businesses from having to provide health benefits to workers. The bill was passed by the House Committee on Energy and Commerce on July 31 by a vote of 31 to 28, with five Democrats joining all the panel's Republicans in opposition.
Under the House agreement, the federal government would still establish a public insurance plan to compete with private insurers, but would negotiate rates with health care providers instead of using Medicare fee schedules to pay doctors and hospitals. States could, in addition, set up nonprofit cooperatives to offer coverage to individuals, families and small businesses.
In the Senate, the Health, Education, Labor and Pension committee, led by late Senator. Edward M. Kennedy of Massachusetts and Senator. Christopher J. Dodd of Connecticut, worked on a bill with a public insurance plan, while the Senate Finance Committee, led by Senator Max Baucus, Democrat of Montana, worked on a bill that sought to avoid one.
Both Senate bills sought to expand coverage by offering subsidies that could be used to purchase policies through insurance exchanges, new regulated markets in which consumers could pool their purchasing power.
On July 2, the Senate health committee put forward its bill. Under the proposal, employers with 25 or more workers would have to provide coverage or pay the government an annual fee of $750 for each full-time worker and $375 for each part-timer. The government would pay the start-up costs for the public insurance option as a loan to be repaid, and premiums would be set up so that the option was ultimately self-sufficient.
The bill was passed July 15 by the health committee on a party-line vote of 13 to 10, with all Republicans opposing the package. Both Republicans and Democrats acknowledged that the health committee bill was just part of what will eventually be a single Senate measure.
THE BATTLE OVER PUBLIC OPINION
In a primetime press conference on July 22, Mr. Obama sought to rally support for reform, arguing that the public would be better off with a new health plan than the current system, and urged Congress not to delay.
But the next day the Senate majority leader, Harry Reid of Nevada, announced that no floor vote would be scheduled in the Senate before the recess scheduled to begin Aug. 8, meaning in practical terms that no action would be taken by either chamber
With the congressional recess the White House found itself suddenly at risk of losing control of the public debate over health care reform. As conservative protests mounted, the White House began playing defense in a way administration officials have not since the 2008 campaign.
Democratic Party officials acknowledged that the growing intensity of the opposition to the president's health care plans - likened on talk radio to something out of Hitler's Germany, lampooned by protesters at Congressional town-hall-style meetings and vilified in television commercials - had caught them off guard and forced them into an August counteroffensive.
Conservative group seemed to find a rallying point on health care. The issue helped them speak to a constituency that had managed to gain significant anti-Obama attention in 2009, the fiscally hawkish "tea party" activists opposed to the president's spending. They dismissed Mr. Obama's promises that his plan would be fully paid for through offsetting spending cuts or increased taxes, and cast the plan as a costly takeover of health care by the government.
On Aug. 23, Senate Democrats said they were fleshing out plans to pass health legislation, particularly the option of a new government-run insurance program, with a simple majority, instead of the 60 votes that would ordinarily be needed to overcome a filibuster. They said they were increasingly confident that they could legislate creation of a public plan in a way that would withstand challenges expected from Republicans.
On Sept. 9, President Obama confronted a critical Congress and a skeptical nation, decrying the "scare tactics" of his opponents and presenting his most forceful case yet for a sweeping health care overhaul that has eluded Washington for generations.
When Mr. Obama said it was not true that the Democrats were proposing to provide health coverage to illegal immigrants, Representative Joe Wilson of South Carolina yelled back, "You lie!" Mr. Wilson apologized but his outburst led to a six-day national debate on civility and decorum, and the House formally rebuked him on Sept. 15.
The president placed a price tag on the plan of about $900 billion over 10 years, which he said was "less than we have spent on the Iraq and Afghanistan wars."
He also announced a new initiative to create pilot projects intended to curb medical malpractice lawsuits, a cause important to physicians and Republicans.
THE BAUCUS BILL
The chairman of the Senate Finance Committee, Max Baucus, introduced his long-awaited plan in September 2009. The bill closely resembles what Mr. Obama said he wanted, except that it does not include a new government insurance plan to compete with private insurers.
Mr. Baucus's bill is the least expensive of five major health care bills moving through Congress, with a cost of $774 billion over 10 years, compared with price tags of more than $1 trillion for the other measures.
Like the other bills, Mr. Baucus's proposal would require most Americans to have health insurance, with financial penalties for those who flout the requirement.
However, instead of creating a new government health plan, Mr. Baucus would set up nonprofit insurance cooperatives in every state. His plan offers subsidies to help low- and middle-income people buy insurance, but eligibility is more limited.
Unlike the other bills, the Baucus plan would impose a new excise tax on insurance companies that sell high-end policies.
The bill would not require employers to offer coverage. But employers with more than 50 workers would have to reimburse the government for some or all of the cost of subsidies provided to employees who buy insurance on their own.
The Baucus bill is likely to be modified as it lurches through the committee to the Senate floor and then, presumably, on to negotiations with the House.
