Competing Health Care Bills Face Difficult Merger

House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) (WDCpix)

Ironing Out Health Reform

After months of marathon hearings, partisan bickering and fiery floor debate, Democrats in both the House and the Senate have passed expansive health care reform bills. Now comes the hard part.

Although the two Democratic bills share the central goals of controlling health care costs and covering millions of uninsured Americans, they diverge, in key places, over how to go about it. Some of the differences concern the very topics that have been most contentious throughout the debate, including whether to create a public insurance option, what to do with illegal immigrants and how to ensure that federal funds don’t subsidize abortions. The disparities leave Democratic leaders with the unenviable task of merging the proposals while preserving the backing of the fragile coalitions that ushered the bills to passage in November and December. As difficult as it was for Democratic leaders then to unite their party behind the most sweeping health care reforms since the 1960s, the final step may prove the slipperiest yet.

[Congress1] The Money Must Come From Somewhere

Unlike the Republicans’ sweeping health reforms of 2003, which were unfunded, the Democrats have proposed to pay for the cost of their health care overhaul. But the two chambers would do it differently. House leaders are pushing a 5.4 percent payroll tax hike on the nation’s wealthiest people — individuals making more than $500,000 per year and families earning more than $1 million. Senate Democrats have proposed a similar mechanism, hiking Medicare’s payroll tax by 0.5 percent on individuals pulling in more than $200,000 and families earning more than $250,000. But a larger chunk of funding under the Senate bill would come from an excise tax on high-cost insurance plans — a provision that’s wildly unpopular among a key Democratic constituency: organized labor.

Kids’ Care

Few federal programs have been as successful as the Children’s Health Insurance Program, or CHIP, which was enacted 12 years ago and now covers roughly 10 million people. Yet House Democrats have proposed to terminate the program at the end of 2013, shifting those kids into either Medicaid or private plans found on a proposed insurance marketplace, dubbed the exchange. The Senate bill, on the other hand, would reauthorize CHIP through 2019 and provide funding for it through 2015.

Many children’s welfare advocates have put their weight squarely behind the Senate approach, fearing that the move to exchange plans will lead to higher out-of-pocket costs for some of the country’s lowest-income families — a barrier discouraging those parents from buying their kids insurance at all, thereby threatening to reduce kids’ coverage in the name of expanding it.

Closing the Doughnut Hole

Democratic leaders in both chambers have vowed to close the coverage gap in Medicare’s prescription drug benefit — known as the doughnut hole — but only the House bill actually does it. The trouble is that the lower chamber would fund that provision by allowing states to haggle directly with drug makers on behalf of their lowest-income seniors — a proposal that Senate leaders and the White House have promised not to support as part of an $80 billion deal cut with the pharmaceutical industry earlier in the year.

That leaves conference negotiators with two choices: Break the deal with Big Pharma or find some other way to fund the elimination of the doughnut hole. A third choice — not to close the coverage gap fully — seems unlikely from a Democratic Party hoping to win over a skeptical senior population in the run-up to the 2010 elections.

Anti-Trust

Democrats have long eyed a repeal of the anti-trust exemption enjoyed by the insurance industry, and the House bill would do just that, overturning a 64-year-old law that allows companies to share cost and coverage information without federal scrutiny. The provision didn’t fly in the Senate, however, due to the opposition of Sen. Ben Nelson (Neb.), the moderate Democrat whose close ties to the insurance industry include a stint as CEO of the Omaha-based Central National Insurance Group. Although an earlier version of the Senate bill would have eliminated the anti-trust exemption, Senate leaders later bowed to Nelson by plucking that language from the bill.

Abortion Coverage

Concerned that taxpayer dollars would be used to subsidize abortion coverage on the exchange, Rep. Bart Stupak (D-Mich.) led a group of moderate Democrats in threatening to kill the House bill unless it explicitly prohibited exchange plans from covering abortion. And they won.

The Senate restrictions aren’t quite so severe, allowing women to buy abortion coverage from exchange plans if they write two separate premium checks — one for abortion services and one for all other treatments. Though it was seen as a less stringent form of the Stupak amendment, the Senate language has still alienated many liberals who say it goes too far to restrict women from getting comprehensive care. Stupak, meanwhile, says it doesn’t go far enough. Satisfying both camps will require some delicate wording.

Illegal Immigration

Both the House and Senate bills would prevent illegal immigrants from getting taxpayer subsidies for insurance coverage on the exchange. But the Senate bill is the more restrictive of the two, prohibiting undocumented folks from buying exchange plans even if they pay full price. That provision has angered a number of liberal and Hispanic lawmakers, who have questioned how letting workers buy a product from U.S. companies with U.S. dollars could be a threat to the country’s well-being. The Senate provision, critics point out, would also encourage illegal immigrants to use emergency rooms for primary care services. Still, with the 2010 elections looming, Democrats will be tempted to go with the Senate provision for simple fear of lending campaign ammunition to Republican challengers.

Public Option

It’s been the most prominent of the hot-button issues surrounding health care reform from the start, and observers of the conference negotiations will be watching closely to see what Democrats will finally do with the proposal to create a public insurance option to compete with private companies. The House bill includes such a provision, but Senate leaders were forced to yank a similar proposal when Sens. Nelson and Joe Lieberman (I-Conn.) threatened to withhold their support. Many liberal lawmakers have said that the public plan is vital to reforming a health care system made more dysfunctional by for-profit insurance companies whose incentive is to deny care rather than pay for it. But with no sign that either Nelson or Lieberman will have a change of heart, negotiators will have little choice but to pluck the House provision for the sake of passing the larger bill.

“I expect the final bill will be pretty much the Senate bill,” Sen. Jay Rockefeller (D-W.Va.) told The Charleston Gazette last week, “simply because we have to get the 60 votes.”