Nov. 19 (Bloomberg) -- Senate Majority Leader Harry Reid unveiled an $849 billion health-care plan that would create new government competition for private insurers, cover almost all Americans and raise a payroll tax on the highest earners.
Reid’s proposal, the most sweeping overhaul of the U.S. health system in four decades, cleared a major hurdle when the Congressional Budget Office said it would cut the federal budget deficit by $127 billion in the first decade. That met a standard set by President Barack Obama and allows Reid to seek a vote as early as Saturday to open the way for Senate debate.
The 2,074-page Senate bill would extend coverage to 94 percent of Americans or some 31 million people, lawmakers said. The House passed its version on a vote of 220-215 on Nov. 7.
“This legislation is a tremendous step forward,” Reid told reporters at the Capitol last night. “Tonight begins the last leg of this journey.”
That last leg is full of obstacles. Senate Republicans are universally opposed to his plan and Democrats are divided over issues ranging from the new government-insurance plan to how to pay for the measure. And an even bigger battle looms when the Senate and House try to work out a compromise, each pushing for their own version of the legislation.
Calendar Threat
The calendar is also increasingly a threat. Should work spill into next year, the congressional elections and breaks in the legislative schedule may open the effort up to the same types of criticism that dogged Democrats during their August recess. Democrats in tight re-election battles might be tempted to defect from their party’s agenda.
The legislation is intended to both reduce the ranks of the uninsured and curb rising medical costs. Both the House and Senate versions require that Americans get health coverage or pay a penalty, set up online insurance-purchasing exchanges and offer government aid to help lower-income people.
The Senate legislation would reduce the deficit by $650 billion in the second decade, according to preliminary estimates from the nonpartisan CBO cited by lawmakers.
While Obama has said he wants to sign health-care legislation into law this year, Reid has cast doubt on that goal after months of setbacks and signs the Republicans want to prolong the debate by using delaying tactics.
‘Closer Than Ever’
“We’re closer than ever to enacting solutions to these problems,” Obama said in a statement released by the White House. “I look forward to working with the Senate and House to get a finished bill to my desk as soon as possible.”
Reid included a so-called public option program to compete with private insurers such as Hartford, Connecticut-based Aetna Inc. even though it’s opposed by all Senate Republicans and some Democrats. He’s gambling he can get support to start debate on a bill that’s likely to be rewritten by the full Senate.
While the House plans an income surtax on the wealthiest Americans, much of the funding for the Senate bill will come from a tax on high-end insurance. That so-called Cadillac tax would be assessed for plans valued at $8,500 for individuals or $23,000 for families, with higher thresholds for high-risk workers and people living in states with costlier premiums.
Reid settled on a Medicare payroll tax increase for some Americans, raising the rate to 1.95 percent from 1.45 percent for couples earning more than $250,000.
He also plans a new commission to help set rates paid by Medicare, the government program for the elderly.
Employer Requirement
Another new twist is Reid’s decision to put a 5 percent tax on elective cosmetic surgery. Still, much of the funding for the bill would come from cuts in future Medicare spending, largely through curbing fraud and abuse, Obama and lawmakers have said.
Reid also took steps to keep the costs down in the CBO estimate in part by delaying many elements of the bill to 2014 from 2013, including establishment of the insurance exchanges and their subsidies for the poor.
Under Reid’s bill, companies with 50 or more workers would face penalties if they don’t provide coverage and have workers who get taxpayer-funded subsidies to buy policies. It also includes a federally run long-term care insurance plan that would let workers pay premiums and then get a cash benefit later for adult day care or assisted-living expenses.
Pre-Existing Conditions
Like the House legislation, Reid’s plan would also bar insurers from denying coverage based on pre-existing conditions, and help seniors pay for prescription drugs.
New York Senator Chuck Schumer, one of the Democratic leaders, told reporters “everything looks good” for an initial vote to start debate. At least three Democrats -- Senators Ben Nelson of Nebraska, Mary Landrieu of Louisiana and Blanche Lincoln of Arkansas -- had refused to pledge their votes for that step until they could review the bill’s text.
The bill “is better in some ways than in other ways,” Nelson said yesterday. “Until I have a chance to go through it, a brief explanation is not enough” for a conclusion, he said.
Reid met with the three senators yesterday and got some help from Vice President Joe Biden, who went to Capitol Hill to lobby other senators. Former Senators Tom Daschle and Ken Salazar, who now serves as Obama’s interior secretary, also met with lawmakers.
To win passage, Reid has to keep all 60 votes controlled by Democrats together. Besides Nelson, Landrieu and Lincoln, Connecticut Senator Joe Lieberman has been critical of the public option. Lieberman, an independent who caucuses with the Democrats, said he would support the vote to start debate and work with lawmakers to strip out the government program.
Snowe’s Trigger
Maine Senator Olympia Snowe, the only Republican to vote for a health-care plan in the committee phase, said she can’t support a public option. She’s pushing for a trigger to put a government plan in effect only if there is evidence that policies offered by private insurers are unaffordable.
Senator Orrin Hatch, a Utah Republican, said it’s doubtful any Republican will vote for Reid’s plan. He also said Reid should allow enough time for debate.
“We’re talking about one-sixth of the economy,” Hatch said. “This should be a very deliberative process. And it should take more than a month and a half.”
Reid has safeguards to keep federal dollars from funding abortion, though not the restrictions adopted in the House. Abortion rights supporters have threatened to vote against a final bill if it contains the House language and have been working to keep it out of the Senate version.
If the Senate passes legislation, it would work with the House to come up with compromise legislation for a new round of votes in both chambers before a bill would go to Obama.
“We are now down to the week we have been waiting for,” Massachusetts Senator John Kerry told reporters. “This is not just a matter of months in the waiting, this has been decades in the waiting.”
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