Let’s be clear: the task force’s recommendation will have absolutely no impact on the bills we in the Senate write, debate or vote on.  [HHS Secretary Kathleen Sebelius] has also assured me there that nothing in Medicare or Medicaid will change as a result of the recommendation, and that’s the way it should be.

Yet the Senate bill says explicitly that, as a part of newly proposed minimum benefits requirements, every insurer  ”shall provide coverage for … evidence-based items or services that have in effect a rating of ‘A’ or ‘B’ in the current recommendations of the United States Preventive Services Task Force.” The House bill contains a nearly identical provision.

The task force guideline recommending that women between ages 50 and 74 receive biennial routine mammograms, instead of annual checkups, received a “B” rating.

That in no way means that women wouldn’t have access to annual mammograms. Again, the essential benefits package represents the minimum coverage insurers would have to offer. The task force is clear that the ultimate decision on the frequency of screenings should be made by women and their doctors.

Still, there’s also the fear that private insurers will lean on the task force recommendations to justify a scaling back of coverage for routine mammograms. Julius Hobson, former lobbyist for the American Medical Association and now a senior policy analyst at the Washington law firm Bryan Cave, said it’s “inevitable” that private insurance companies will look at those guidelines, and may change their coverage policies based on what they see. Certainly, they would like the potential cost savings if women were getting routine mammograms every two years instead of every one.

“It’s almost inevitable that that’s going to happen,” Hobson said last week. “The government doesn’t move that fast, but the health insurers do.”

That has some members of Congress concerned about the threat to women’s health. As Rep. Jerrold Nadler (D-N.Y.) said in a phone interview last week, “Cancers can progress very far in two years.”

Senate Majority Leader Harry Reid, Speaker of the House Nancy Pelosi (WDCpix)

The Democrats downplaying the gravity of new recommendations for breast cancer screening have left out an inconvenient fact: their health care bills would automatically adopt them.

Both the House and Senate health reform proposals would force insurance plans to follow the new mammogram guidelines for women ages 50 to 74 as part of a minimum swath of services deemed by the legislation to be medically essential. The recommendations were an unexpected wildcard in the middle of an already contentious health reform debate, and they’ve caused Democrats to de-emphasize their significance at the same time that some in the party are calling for a legislative fix to nullify them.

Image by: Matt Mahurin

The mammogram episode has also revealed the influence of a previously obscure preventive-medicine panel, raised questions about the effectiveness of the Democrats’ reform proposals to weed out unnecessary medical procedures, and highlighted the potential complications when the entrenched habits of patients and providers are called into question by medical science.

“These new recommendations,” breast cancer specialist David Gorski wrote this week, “are a classic example of what happens when the shades of gray that characterize the messy, difficult world of clinical research meet public health policy, where simple messages are needed in order to motivate public acceptance of a screening test.”

The controversy ignited on Monday, when the U.S. Preventive Services Task Force, a federally appointed panel of independent medical experts, released guidelines suggesting that women should not seek routine mammograms before the age of 50 — 10 years later than current protocols dictate. The task force also concluded that annual mammograms are unnecessary for any age group, suggesting biennial screenings instead.

Critics in Congress and the medical community were quick to pounce, arguing that the recommendations would jeopardize the lives of women, particularly those aged 40 to 49. Democrats moved swiftly to divorce their health reform proposals from the new guidelines, maintaining that they merely represent a non-binding data-bank for lawmakers to consider as they craft coverage policies, both public and private.

“I don’t think there’s any general acceptance of what was proposed,” House Speaker Nancy Pelosi (D-Calif.) told NPR Thursday.

“These individuals do not determine federal policy,” Rep. Rosa DeLauro (D-Conn.) added in a statement. “They have simply made recommendations.”

Yet the health reform language moving through Congress tells a different tale. Both the House and Senate bills create an “essential benefits package” which all insurance plans would have to offer. Neither chamber’s proposal specifies what those services would be, instead, empowering the Department of Health and Human Services to make those decisions at a later date. But the bills do outline broad categories of minimum services, including a mandate to cover those recommendations of the task force rated “A” or “B.” The new biennial-screening guidelines for 50 to 74 year-olds are rated “B.”**

The 16 members currently on the panel were all appointed by the Bush administration. None specializes in oncology.

A number of Democrats have blasted the findings. Rep. Debbie Wasserman Schultz (D-Fla.), a breast cancer survivor, said the guidelines are “causing mass confusion” among women accustomed to screening more frequently and earlier in life. Rep. Frank Pallone (D-N.J.), chairman of the Energy and Commerce health subcommittee, has already indicated that he’ll hold a hearing early next month to examine the recommendations. And Rep. Jerrold Nadler (D-N.Y.) is pushing legislation to require insurance companies that cover diagnostic mammograms also to cover routine, annual mammograms to women beginning at age 40.

“Cancers can progress very far in two years,” Nadler said Friday, criticizing the panel’s recommendation for biennial screenings.

The White House has also been wary, quickly indicating that the new recommendations would have no bearing on public policy. In a statement issued Wednesday, HHS Secretary Kathleen Sebelius played down the task force as “an outside independent panel of doctors and scientists who make recommendations.”

“They do not set federal policy,” she added, “and they don’t determine what services are covered by the federal government.”

Yet they certainly can have influence. Indeed, in May, when HHS announced the controversial decision not to pay for virtual colonoscopies under Medicare, the agency leaned heavily on the judgments of the Preventive Services Task Force, which had concluded earlier that the radiation risks outweighed the benefits of the less intrusive cancer-detection procedure.

The HHS declined to comment this week on why the agency was so quick to dismiss the panel’s new mammogram recommendations.

By issuing their report in the middle of a contentious debate over health care reform, the task force didn’t do the Democrats any favors. Republicans are already blasting the reform bills for their funding of comparative effectiveness research, which compares different treatments of the same ailment to discover which work best. The critics fear that the effectiveness data could tempt insurers — both public and private — to deny coverage of certain drugs, devices and other treatments. In the eyes of the GOP, the new mammogram recommendations are just another threat to patients’ access to care.

“This is how rationing starts,” Sen. Jon Kyl (R-Ariz.) said Friday. “Delay of care … then denial of care. At first, it’s guidelines, then the insurance companies … adopt those guidelines with respect to coverage decisions.”

Private insurers, for their part, say they often use the task force recommendations to make coverage determinations. But they deny that the mammogram findings will have any effects — at least not immediately. “Whatever we do today, we’ll continue to do — as far as we can tell,” said Gloria Barone, spokeswoman for Cigna.

Susan Pisano, spokeswoman for America’s Health Insurance Plans, the industry lobby group, pointed out that the task force recommendation against routine screenings for 40-somethings is hardly an outright moratorium, instead leaving the decision to women and their doctors. “I don’t see this as limiting coverage,” Pisano said.

Under Medicaid, states have leeway to set their own coverage rules. Ann Kohler, director of the National Association of State Medicaid Directors, said state officials use the task force guidelines “often.” “However in this case,” she added, “I think they will not change their historical policy.”

Julius Hobson, former lobbyist for the American Medical Association and now a senior policy analyst at the Washington law firm Bryan Cave, suggested that the members of the task force had crunched their numbers without consideration of the broader effects of their recommendations. “They missed the psychological and social impact of what they were saying,” Hobson said.

Their timing, he added, was also a bit suspect. “You’d have to be deaf, dumb, blind and crazy not to know that Congress has spent the whole year working on health reform.”

**Clarification: An early version of this story implied that the recommendations for 40- to 49-year olds would also be adopted by the Democrats bill. That would not be the case. That recommendation is rated “C.”

Sen. Max Baucus (D-Mont.) (Jay Mallin/ZUMA Press)

It happens in every recession: Medicaid enrollment leaps at precisely the same time that states are least able to afford the additional costs. The structural flaw has left state lawmakers threatening program cuts, Congress scrambling to find emergency funds to prevent a coverage crisis, and children’s health advocates urging an overhaul in the way Medicaid is funded.

Trouble is, the Democrats’ health reform proposals do nothing to address the problem.

Image by: Matt Mahurin

“From time to time, we’re going to have these economic downturns,” Stan Dorn, senior health policy researcher at the Urban Institute, said last week during a kids’ health forum on Capitol Hill. “Rather than react in the same panicked way every single time, is there a way we can rethink how we structure the underlying program?”

The answer is yes — and lawmakers are well aware of it — but Congress isn’t acting on it. Indeed, last November, just days after the Democrats won the White House, Senate Finance Committee Chairman Max Baucus (D-Mont.) proposed to create a trigger that would automatically hike the federal share of Medicaid funding when states, which are required by law to balance their budgets, hit tough times.

“Medicaid must be strong and stable so that eligible individuals can rely on it, especially in times of economic distress,” the Baucus paper explained.

Dorn endorsed that approach, arguing that such a mechanism would “provide automatic counter-cyclical relief so that when state conditions decline, federal help is forthcoming, and when state conditions improve, federal help retracts.”

“Not only would that help states,” Dorn added, “it would mean that federal dollars, which are in short supply, … would be much more closely targeted to need.”

Yet less than a year later, when Baucus unveiled his health reform proposal — legislation featuring a Medicaid expansion up to 133 percent of the federal poverty level — the funding trigger was noticeably absent. Baucus’ office did not respond to requests for comment Tuesday, but some health policy observers say it’s likely that cost concerns kept that provision out of the final bill.

Without such a trigger, Congress has been forced to step in twice in the last decade to help states weather recessions without dumping thousands of Medicaid patients. Between 2001 and 2002, for example, Medicaid enrollment jumped 8.6 percent, while tax revenues fell 7.5 percent, according to the Government Accountability Office. The trend led Congress in 2003 to provide $20 billion in emergency funding to stabilize program enrollment.

More recently, the economic stimulus bill contained $87 billion to provide a 6.2 percent increase in federal Medicaid funds, with additional help going to those states with the highest unemployment. The money was conditional: states accepting it could not restrict their eligibility requirements. All complied — with good reason. The Kaiser Family Foundation reported last month that state Medicaid enrollment jumped by an average of 5.4 percent in the year that ended July 1.

But that extra funding expires at the end of 2010, leaving kids’ health care advocates concerned about the future — particularly in high-unemployment states like Michigan, Nevada, Rhode Island and California, where Medicaid rolls are most likely to swell most rapidly.

“We could fully expect major cuts in Medicaid if there isn’t some continuation of that fiscal relief,” said Jocelyn Guyer, co-executive director at Georgetown University’s Center for Children and Families.

Some lawmakers have the problem on their radar. The House health reform bill, for example, would extend the additional Medicaid funding through June of 2011 – a provision the Congressional Budget Office estimates will cost $23.5 billion.

Meanwhile, however, the legislative uncertainty is forcing state health officials to craft their budgets as if the funds will expire Dec. 31, 2010 — just halfway through most state budget calendars.

Nate Checketts, head of Utah’s Children’s Health Insurance Program, described the potential effect that that expiration would have on the state. Before the stimulus bill became law in February, he said on Friday, state lawmakers had worked out all the details of a plan to cut adults, including medically needy folks, from the Medicaid rolls. The stimulus bill prevented that step, but with the enhanced funding set to expire, “those items are back on the table again,” Checketts said.

The current Medicaid funding scheme also creates dilemmas of moral hazard. Checketts noted that, before the stimulus bill passed, Utah had considered creating an emergency Medicaid fund, to be fed in the good years and tapped in the lean ones. “When the stimulus funds continue to come in the bad years,” Checketts said, “it sort-of undercuts that concept of needing to have a Medicaid rainy-day fund.”

“States are beginning to act as if these funds may always come,” he added. “There needs to be a decision about whether that’s really going to happen [in the future]. If not, states need to change their behaviors.”

The saga highlights the central dilemma facing Democratic leaders as they push forward with their sweeping health reform proposals: how to cover tens-of-millions of uninsured Americans while keeping new federal costs to a minimum. The expansion of Medicaid, an essential component of both the House and Senate bills, has been an attractive way to extend that coverage precisely because it’s cheaper than other alternatives. But the low cost comes at a price.

Indeed, according to a September survey conducted by the Center for Studying Health System Change, only about 40 percent of physicians accept all new Medicaid patients — versus 58 percent for Medicare patients — while roughly 28 percent don’t accept any new Medicaid patients at all. For dental care, the figures are even worse. Less than 27 percent of dentists surveyed by the American Dental Association in 2007 said they treat Medicaid-insured patients, leading to severe access problems surrounding oral health. The trends have raised questions about the value of an insurance program that few providers accept.

The House bill tackles the reimbursement issue head on, increasing Medicaid rates for primary care services to 100 percent of Medicare rates by 2012. Initially, the federal government would pay for the entire rate hike, though states would assume 9 percent of the increase beginning in 2015. The reform doesn’t come cheap. That provision alone would cost taxpayers $28.7 billion over the next five years and $57 billion over the next 10, the CBO estimates.

In the eyes of many experts and advocates, even if the House reimbursement changes don’t pass as part of the final bill, the expansion of Medicaid represents a step in the right direction. “As bad as Medicaid reimbursement is, it’s better than zero,” Dorn said. “For low-income folks, it will certainly be better than being uninsured.”

Yet Checketts said that Utah health officials — like those in many states — are wary of the expansion, which they estimate could double Utah’s Medicaid population.

“I don’t think [doctors and dentists] would be able to handle that with the current reimbursement rates,” Checketts said. “Some sort of change will have to be made.”

The $787 billion economic stimulus bill addressed the issue, providing additional federal funding for the state-federal Medicaid program. But that extra help expires at the end of next year, when unemployment rates are expected to remain near double digits. The looming expiration has left state health officials and children’s welfare advocates anxious about the effects on kids’ health care.

Enter the House health reform bill, which would provide more than $23 billion to continue the additional federal funding for six months. The Washington Post explains:

Under the Affordable Health Care for America Act, the federal government would continue to pay a higher share of all Medicaid costs — 66 percent on average, up from 57 percent before the stimulus — for an additional six months, and erase in one fell swoop a major chunk of states’ projected shortfalls for the coming year.

“It would be a huge help — critical,” said Cindi Jones, chief deputy director of Virginia’s Medicaid program, which quickly estimated last week that it would receive an extra $360 million to $380 million next year under the bill. At a meeting last week of the nation’s Medicaid directors, Jones said the group is unanimously in favor of the provision.

That provision isn’t included in the Senate’s health reform bill, but states are hoping that it will work its way into the final bill. Of course, the temporary help is no remedy to the flawed Medicaid funding formula. It’s worth asking when Democratic leaders plan to tackle that larger problem, if not in the context of the most sweeping health reforms since the program was created.

Rep. John Dingell (D-Mich.) (WDCpix)

Nine months ago, Democratic leaders on Capitol Hill were all celebration as they hailed the renewal of the popular Children’s Health Insurance Program. Last week, they called for CHIP’s demise.

The $894 billion, 1,990-page health reform bill unveiled by House Democrats last Thursday would repeal CHIP at the end of 2013, shifting millions of kids instead into private plans contained on a proposed health insurance marketplace, dubbed the exchange.

Party leaders have been mostly tight-lipped about their motivations. But a series of factors seem to have driven their decision, according to sources on and off Capitol Hill, including hopes to get family members under the same plan, to centralize control of the state-run CHIP program, and to shift more folks into private coverage to win the support of both the insurance lobby and moderate Democrats.

Image by: Matt Mahurin

“The president has promised to build upon what works and to allow people to keep the coverage they have,” said a representative of one children’s welfare group, speaking only anonymously because of the delicate political nature of the topic. “That promise should apply to kids as well. However, there is growing concern and evidence that the health insurance exchanges will still impose higher out-of-pocket costs for families with fewer benefits for children than CHIP coverage.”

The criticisms over CHIP have raised questions about the importance of the program, with some advocates fighting for its preservation while others maintain that the coverage itself is more important than the program that provides it. The House proposal also sets the stage for a CHIP clash between House Democrats and those in the Senate, where a provision preserving the program was passed by members of the Finance Committee last month.

House lawmakers are planning to vote on their sweeping health reform proposal as early as this week.

Under the House bill, federal funding for CHIP would cease on Oct. 1, 2013, with kids permitted to remain in the program through the end of the year if funds permit. At the start of 2014, however, the program would end, with kids shuffling into private plans on the exchange. An exception would be made in those states that have opted to use their CHIP funds to expand Medicaid rather than create stand-alone CHIP programs. In those cases, children would remain in the Medicaid program.

The shift is indication that House Democratic leaders don’t envision a place for CHIP within the framework of the comprehensive health care reforms they hope to pass this year – reforms that include a broad expansion of Medicaid and subsidized coverage for folks earning below 400 percent of poverty, or $88,200 for a family of four.

The proposal also marks a reversal from the Democrats’ health policy position of the past two years. Created in 1997, CHIP was originally authorized for 10 years, leading to a political showdown between the Democratic Congress and President George W. Bush in 2007, when it came up for renewal. An expansion bill easily passed Congress, but Bush vetoed the measure twice, prompting Democrats to accuse the White House of putting politics above the welfare of kids. Leading the critics was House Speaker Nancy Pelosi (D-Calif.), who called the vetoes “sad” and “cruel.”

The bipartisan program had suddenly become partisan, and the Democrats were its champion.

After a series of short-term extensions, President Obama signed a 5-year, $33 billion CHIP extension into law in February, leaving the program to expire Oct. 1, 2013.

Pelosi’s office did not respond to calls and e-mails for comment. But another one-time CHIP champion, former Energy and Commerce Chairman John Dingell (D-Mich.), said that moving kids from CHIP to exchange plans has at least two distinct advantages: First, CHIP requires renewal every few years, leaving the program’s longevity to the whims of Congress. And second, exchange coverage could wrap kids and their parents into the same insurance plan — a strategy the Michigan Democrat says will increase enrollment of youngsters.

“The most important thing is to cover the children,” Dingell said in an email. “As effective as CHIP has been, families constantly must deal with long wait lists or block grants running out. Families in the Exchange or Medicaid will not have the same problems.”

A recent report from Inside CMS, a trade publication, points to another reason that Democrats might have proposed an end to CHIP: Moving kids to the exchange “would significantly improve the risk pools for private insurers, a boon for insurers,” the paper reported, citing an unnamed Senate Democratic aide.

Several independent analyses have questioned the wisdom of moving kids from CHIP to the exchange, warning that the transition will leave some kids without access to health care. One report, conducted by Watson Wyatt Worldwide, a financial consulting firm, found that most families living at 175 percent of poverty pay nothing to enroll their kids in CHIP, while those living at 225 percent of poverty pay about 2 percent of health care costs. By contrast, those same kids getting coverage through private insurers on the exchange would pay between 5 percent and 35 percent of treatment costs, respectively — a shift “greatly increasing their financial burden and leaving low-income children worse off as a result of health reform,” the researchers noted. The Watson Wyatt study was commissioned by First Focus, a children’s health advocacy group.

More recently, the Congressional Budget Office examined a Senate proposal to repeal CHIP, reaching the same conclusion that the increased costs to low-income families would leave some kids without any coverage at all.

“Under the mark as it was originally offered, which would have eliminated CHIP, CBO anticipated that some of those children would be eligible for subsidized coverage in the exchanges but would not be enrolled in an exchange plan (owing at least in part to the higher premiums and higher out-of-pocket costs that they would typically face in such a plan),” CBO Director Douglas Elmendorf wrote last month.

That analysis is moot, however, because Sen. Jay Rockefeller (D-W.Va.) successfully preserved CHIP during the markup of the Senate bill in the Finance Committee.

Rockefeller’s office did not respond to requests for comment for this story. But if his words during the Finance debate are any indication, the West Virginia Democrat will likely fight during the House-Senate conference negotiations to keep CHIP alive.

“I don’t believe that we can force vulnerable kids into private coverage,” Rockefeller said in the wee hours of Oct. 2. “That’s what we’d be doing. They’d lose that special kind of defined benefit that comes under Medicaid, which you can argue, I guess, in some cases, but you can’t argue on kids and particularly young kids. You cannot do that. They have requirements that you have to meet and can only be met through Medicaid, not in the exchange, where they’re at the mercy of people that will have them for lunch.”

House Democrats are not blind to those concerns. An amendment to the House bill, sponsored by Rep. Diana DeGette (D-Col.), would have blocked the transition from CHIP to private coverage unless White House health officials could certify that those youngsters would receive comparable care under the exchange plans. But after passing the House Energy and Commerce Committee earlier in the year, DeGette’s provision was diluted to remove the certification requirement. Instead, the final bill requires the Health and Human Services Department to provide Congress with a cost and benefit analysis of CHIP plans versus those on the exchange, including recommendations for a smooth transition. The report is due by the end of 2011 — 12 months before the exchange would launch.

DeGette’s office argued that the final bill retains the initial safeguards because it extends CHIP for the final three months of 2013, providing time for the exchange plans to develop, as well as additional cushion for lawmakers to examine those plans in the context of the White House recommendations. If there are concerns that the exchange plans won’t offer comparable coverage, said DeGette spokesman Kristofer Eisenla, then lawmakers can always extend the CHIP program.

Reauthorizing CHIP, however, would require yet another act of Congress — and a lot more money.

Indeed, critics are questioning the value of the HHS analysis without some guarantee that kids won’t be forced into lesser health plans. “The teeth of that amendment were what made the report matter,” said the child welfare advocate.

House Democrats are also dismissing the CBO’s analysis of the CHIP repeal, arguing that different enforcement and funding mechanisms in the House bill make Elmendorf’s statement irrelevant. “They’re like apples and oranges,” Eisenla said of the two chambers’ bills.

Dawn Horner, senior project director at Georgetown University’s Center for Children and Families, an advocacy group, applauded some of the CHIP proposals contained in the House bill. The provision to keep CHIP-funded Medicaid patients in the Medicaid program, for example, is a step above the Senate proposal, she said. Also, the House bill has better affordability protections for kids on the exchange, Horner added. The combination makes it difficult to determine whether CBO’s analysis of the Senate bill holds for the House proposal, she said.

CBO did not respond to requests for comment on the CHIP provisions of the House bill.

Still, Horner was quick to add that the House bill should go further to ensure that kids aren’t forced to move into exchange plans if those plans are deemed to be of lesser quality than CHIP. The original DeGette amendment provided that protection, she said, “but there’s nothing in there right now… The hope is to get something stronger [as the bill proceeds].”

The shuffle looks fine on paper. After all, coverage is coverage, right?

Actually, no.

As we’ve pointed out here before, expanding Medicaid might be an attractive way, in the eyes of lawmakers, to tackle the nation’s endemic uninsured problem because it’s cheaper than other insurance. But it doesn’t necessarily mean that those folks will have access to health care — for the very same reason of cost. That is, Medicaid pays doctors and hospitals at such low rates relative to other plans that many providers don’t accept Medicaid patients.

The question Democrats might want to ask as this plan moves forward, then, is this: what good is expanding a program that no one accepts?

That strategy might be the cheapest way to get more people covered under the bill, but as we’ve pointed out here before, it comes at a steep price nonetheless: Namely, because so many providers don’t accept Medicaid, expanding the program’s reach doesn’t necessarily mean that the newly covered folks will have access to care. And what good is health coverage if doctors don’t accept it?

A September study from the Center for Studying Health System Change lays out the problem. After randomly surveying more than 4,700 physicians nationwide, the group found that just 40 percent accept all new Medicaid patients — a figure that drops to about 31 percent among family doctors and general practitioners.

For dentists, the figures are worse. A 2007 survey conducted by the American Dental Association found that just 27 percent of members accept Medicaid patients — a situation that’s left a dismal gap in oral health services under the program.

Not surprisingly, the primary reason that providers are reluctant to participate is the same reason that Democrats are eying a broader expansion: Medicaid, in many states, simply doesn’t reimburse as much as other plans. If you’re a doctor, that means you get paid less. But if you’re a lawmaker, that means you have to find fewer offsets.

Two possible solutions that we’ll never see: (1) Require that, in return for the privilege of practicing medicine in the United States, all providers accept all Medicaid patients, thus spreading the cost burdens evenly. Or (2) require that all members of Congress enroll in Medicaid. You can bet you’d see those access issues change in a hurry.

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.

While official Washington and much of the media focus on the great health-care struggle, the administration’s economic advisers have been busy reviewing proposals to create jobs, aware that pressure on them will grow to deal with high unemployment that threatens to persist through Election Day next year. President Obama’s aides insist that they knew all along that the original stimulus, as one of them put it, would “never fill the full gap from the recession.” Whether or not they anticipated this, they’re planning to act, even though — for political reasons — what comes next will not be called “a second stimulus.”

Instead, Democratic leaders are eying proposals more likely to gather support on both sides of the aisle, including an extension of the $8,000 new homebuyers’ tax credit, additional funding for unemployment insurance, Medicaid and food stamp assistance, and perhaps the launch of a new tax credit for businesses that hire new workers.

It won’t be easy. While employment figures are always among the last indicators to rebound from recession, the extent of the current job losses has caught many economists off guard. Indeed, the Labor Department last week revealed that employers shed 263,000 more workers than they hired last month, bumping the country’s unemployment rate to a 26-year-high of 9.8 percent. And experts on both sides of the aisle are predicting that the numbers will remain elevated through 2010.

If those projections play out, then the thorniest debates on the campaign trail a year from now will have very little to do with health care reform.

First, Medicaid pays providers at such low rates (roughly 72 cents for every dollar Medicare pays) that a huge chunk of the nation’s physicians refuse to treat new Medicaid patients outright. The trend begs the question: What good is health coverage if no one accepts it?

And second, as The Washington Post points out today, state budgets are so squeezed already that governors are reluctant to adopt any new financial burdens, even if it means getting health coverage for more residents. (Although Medicare is subsidized exclusively by the federal government, states are on the hook for a percentage of Medicaid costs.) Indeed, many governors oppose the Medicaid expansion in the Finance bill.

“I can’t think of a worse time for this bill to be coming,” said Tennessee Gov. Phil Bredesen (D), a member of the National Governors Association’s health-care task force. “I’d love to see it happen. But nobody’s going to put their state into bankruptcy or their education system in the tank for it.”

Medicaid is difficult to analyze, because the 50 states and the District of Columbia each have different payment structures and eligibility rules. In poor states, for example, the federal government picks up a larger percentage of the tab, relieving the burden on state coffers.

Also, some states have taken it upon themselves to expand Medicaid to cover a larger portion of their low-income population. Maine, for example, covers parents up to 206 percent of the poverty level, while many other states have kept Medicaid largely focused on kids, disabled folks and pregnant woman — the populations they’re required to cover under federal law. Indeed, in 34 states, parental Medicaid eligibility is set below the federal poverty level.

The differences in programs complicate the push for universal uniform. The Finance Committee’s bill would expand eligibility enormously, in effect offering coverage to every American earning less than 133 percent of poverty ($14,404 a year), including childless adults, who are currently prohibited from participating. That provision has been skewered by those states facing the largest enrollment hikes because they don’t already cover many adults.

The Finance bill (as amended) also requires states with expanded coverage to maintain those heightened eligibility levels for pregnant woman and the disabled above 133 of poverty until state insurance exchanges become operational, which is expected to occur at the start of 2013. That maintenance of eligibility requirement has been blasted by the states with the most generous Medicaid programs, which wouldn’t have the option of dropping higher-income adults if the budget situation worsened.

The Finance Committee is expected to approve the larger health reform proposal this week. But you’d be crazy to think that the debate over Medicaid won’t resurface in a big way when the bill moves to the Senate floor.