Finance Panel Easily Passes Health Care Reform

The Democrats’ plans to overhaul the nation’s dysfunctional health care system took a giant step forward Tuesday when the Senate Finance Committee passed a $829 billion proposal designed to expand coverage to millions of uninsured Americans while reining in runaway health care costs.

The vote was 14 to 9, with Sen. Olympia Snowe (R-Maine) the only lawmaker on the 23-member panel to cross the aisle. Democrats for weeks had been courting Snowe, who has been the only upper-chamber Republican to express even the least bit of interest in supporting the bill.

Snowe’s support adds a hint of legitimacy to the Democrats’ claims that they’ve worked to create a bipartisan bill, although Sen. Max Baucus (D-Mont.) conceded Tuesday that it’s “not quite the degree of bipartisan support” he’d hoped for.

Snowe, for her part, said she retains serious reservations about the proposal, including provisions to penalize folks who don’t comply with a proposed individual insurance mandate, and another expanding Medicaid to include most everyone earning up to 133 percent of the federal poverty level, or $29,327 for a family of four. In the end, however, the Maine moderate said that the seriousness of the problems facing the health care system mean that Congress doesn’t have the privilege to sit on its hands any longer.

“Is this bill all that I would want? Far from it,” Snowe said. “Is it all that it can be? No. But when history calls, history calls.”

Under the legislation, insurance companies would be prohibited from denying coverage to patients based on preexisting conditions; they could no longer drop coverage after customers got sick; and they wouldn’t be allowed to cap coverage at a certain level. In exchange for those concessions, the Baucus bill provides roughly $460 billion in federal subsidies intended to provide coverage for most of the nation’s 46 million uninsured.

To pay the freight, the Finance bill would trim the growth in Medicare payments to most providers and cut more than $100 billion in federal subsidies to the private insurance plans that cover Medicare patients. The Congressional Budget Office estimates that the proposal would save the federal government $81 billion over the next decade.

There’s a long way left to go. Democratic leaders are now faced with the thorny task of combining the Finance bill with another enormous health reform proposal passed in July by the Senate Health, Education, Labor and Pensions Committee. Among the most high-profile discrepancies between the two bills, the HELP bill includes a non-profit public insurance option to compete with private companies, while the Finance legislation would create state-based health care cooperatives for the same purpose.

The chief sponsor of the co-op provision, Sen. Kent Conrad (D-N.D.), said Tuesday that the public option is “a non-starter” because rates would would be pegged to those in Medicare — a threat to North Dakota, where Medicare rates are among the lowest in the country.

But liberal Democrats are already vowing to push the public option during the looming floor debate. Last week, 30 upper-chamber Democrats sent a letter to Sen. Harry Reid (D-Nev.) urging the majority leader to include a public plan in the merged bill. On Tuesday, a number of Democrats echoed that sentiment, arguing that creating a robust public plan is the only way to keep the private insurers honest.

“To cut costs, we must have a public option in the final bill,” said Sen. Charles Schumer (D-N.Y.), whose proposal creating such a plan was shot down by the finance panel a few weeks ago.

The debate over the public option took a twist over the weekend when the health insurance lobby released a controversial report indicating that the Democrats’ health reform plans would hike Americans’ premium costs by thousands of dollars each year. Democrats, including White House officials, blasted the report as an inaccurate attempt to kill the bill. Many Democrats pointed out that premiums have skyrocketed in recent years even without health reform. “How convenient that they came forward at the 11th hour,” said Sen. Robert Menendez (D-N.J.).

Complicating the debate, CBO Director Douglas Elmendorf conceded Tuesday that his office never estimated the effects of the Democrats’ bill on insurance premiums.

In another sticking point among Democrats, Sen. Ron Wyden (D-Ore.) has vowed to push his controversial proposal allowing workers to opt out of their employer-based coverage and instead use a cash voucher to shop for insurance on a newly created marketplace, known on Capitol Hill as the exchange. Critics, most of them Democrats, argue that the proposal wold encourage workers to flee their company plans in favor of cheaper insurance, eroding the long-standing system of employer-based coverage.

All sides agree, however, that the current system is broken and needs repair. Indeed, health care costs in the United States are expected to top $2.5 trillion this year, though the health outcomes are often worse than those in other countries that spend much less. “We all understand that we cannot afford the status quo,” Baucus said.