As House leaders prepare to release a sweeping health overhaul plan, they're clinging to their goal to provide a liberal counterpoint to any legislation now likely to emerge from the Senate.
On a broad array of contentious issues – from government’s role in providing insurance to the size of subsidies for lower-income Americans – the liberals who largely control the agenda in the House are holding fast to their principles. The legislation expected to be formally unveiled, perhaps as soon as today, will reflect their vision of how to insure nearly all Americans and how to pay for it – including a proposal to tax the wealthy that was announced Friday.
But the Democratic liberals face stiff challenges from moderates and conservatives in their own party on the price tag of legislation. Growing pressure to lower the cost to $1 trillion or less over ten years poses a threat to their foremost goal of guaranteeing Americans comprehensive, affordable coverage.
Peter Harbage, a fellow at the Center for American Progress, a liberal think tank, says the impact of legislation will vary sharply depending on how well it’s financed. “In terms of uninsured families, will they end up paying out of pocket between 5 percent and 8 percent of their income for health insurance, or is it going to be 17 percent and 20 percent of their income?” he asks. “If it’s 20 percent, that’s better than what some families have today, but it’s difficult to see how progressives are going to see that as a victory.”
Over in the Senate, the Finance Committee remains sharply divided over how much to spend and what taxes to impose. Although it hasn’t produced a bill, the Finance Committee appears ready to compromise on subsidies and may reject a government-run insurance option. That would put the panel at odds with the Senate Health, Education, Labor and Pensions Committee chaired by Sen. Edward Kennedy, D-Mass., whose bill is closer to the House liberals’ position.
While much of the debate in the Senate has focused on how to achieve a bipartisan agreement, the greatest challenge for Democrats may be uniting their own members. Conflicts extend beyond the usual battles over taxes and deficits. E. Richard Brown, director of the UCLA Center for Health Policy Research, says some issues, such as how to trim money from federal payments to hospitals and doctors, have created regional divisions.
"Everybody's pretty much agreed to force some reduction in provider payment rates in all this, but some of the points of where that should occur are also sources of tension," Brown said. "Sometimes it's between members who represent high-cost areas versus low-cost areas, other times it's between urban versus liberal. In other cases, it's more traditionally economic liberal and conservative positions on economic issues."
Joseph Antos, a health policy expert at the American Enterprise Institute, a market-oriented think tank in Washington, credits moderate Democrats for trying to realistically finance a package, but says they appear unable to overcome objections from the liberal members and labor unions. "Unions are big supporters of Democrats and the last thing they want to do is undermine that political base," he said.
Antos says President Obama may have to intervene, a view widely shared among Democrats on Capitol Hill. "I think the leadership has realized they can't just go into there and tell people what to do," he said.
As the Senate and House committees try to move forward this week, some of the most contentious issues waiting to be resolved are:
The public plan. A top priority of the House Democratic leadership is preserving a government-run entity operating within a new insurance exchange. It would compete with private insurers to provide reasonably priced coverage without restrictions based on applicants’ health problems.
“I think it would be extremely difficult to pass any bill in the House of Representatives without a public option,” Rep. Henry A. Waxman, a California Democrat who is chairman of the Energy and Commerce Committee, told reporters.
Howard Dean, the former Democratic National Committee chairman and a prominent liberal advocate of Obama’s health care proposals, put it more starkly in an interview: "You have to have a public health insurance plan and give the people of America the choice. If you don’t do that, it is not worth doing."
But Senate Finance Committee Chairman Max Baucus, D-Mont., hasn’t been able to sell a public insurance option to Sen. Charles Grassley of Iowa and Senate Republicans, and recently has been pushing for an alternative, possibly nonprofit insurance cooperatives. Where those efforts will lead remains uncertain.
Government Subsidies. The Finance Committee has been considering limiting subsidies to families and individuals with incomes up to three times the official poverty level. Currently, the federal poverty level is $10,830 for an individual and $18,310 for a family of three. Under the Finance bill, an individual with income of three times that amount, or $32,490, wouldn't get a subsidy. Nor would a family with an income three times that level, or $54,930 a year.
The House bill is expected to include subsidies for individuals and families making up to four times the poverty level, or $43,320 and $73,240, respectively. An analysis by the Center on Budget and Policy Priorities, a liberal think tank in Washington, noted that substantial numbers of people with incomes barely above three times the poverty level could have trouble coming up with the money to pay the full price for coverage.
The average job-based insurance policy today would cost a family of three with an income three times the poverty level about 23 percent of its income – leaving that family short of funds for housing, child care and other expenses, according to the center.
Other factors would affect the overall cost of coverage, including out-of-pocket charges. Both House and Senate bills would set limits for out of pocket expenses. Under the House proposal, for example, individuals at or below 133 percent of the poverty level, or $14,404, would pay no more than $250 a year and families would pay no more than $500 a year for coverage. The limits on out-of-pocket costs would phase out for people at four times the poverty level.
The Senate health committee bill would set caps on out-of-pocket spending for people at 150 percent of poverty, or $16,245 for an individual and $27,465 for a family of three. The caps would be $1,190 a year for individuals and $2,380 for families in the first year.
How insurance companies are permitted to set premiums on age also affects the affordability of coverage.
Under the Senate health committee and the House proposals, premiums for older people—generally those 55 to 64—could be charged no more than twice the premiums charged younger applicants. But the Finance Committee has been considering making older people’s premiums as much as five times greater.
Insurance requirements. Many experts say individuals should be required to obtain insurance and employers should be required to offer it, under the threat of penalties. But the Blue Dog Coalition, representing scores of conservative House Democrats from largely rural areas of the South and Midwest, warned House leadership in a letter last week that that an employer requirement “further exacerbates the challenges faced by small businesses.”
How Congress defines the penalties on employers that don’t comply could drastically affect not only their willingness to insure workers but who they hire, experts say. For people who don’t obtain coverage, the penalty issue is also complicated.
While subsidies would make it possible for many low-income people to buy insurance, there would be others who make a little too much to qualify for financial help yet still feel they can’t afford insurance. Experts say that letting the latter off the hook would undermine the goals of the new system: universal coverage, and ensuring that healthy as well as sick people contribute to the cost.
Cost is the critical word. Even House leaders who believe they have the votes to pass ambitious legislation could face a gut-check when it comes to reaching a deal later this year with a more cautious Senate.
"There are a lot of tough choices ahead," said Linda Blumberg, an economist and health policy expert at the Urban Institute. "Truthfully, we know a lot about how to do health care reform and do it well, and what levels of coverage are affordable. But the key is how willing are we to raise the money to do the things we recognize we need to do. That’s very much a political-will issue."
KHN reporter Jessica Marcy contributed to this article.