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Health care reform took important steps forward in mid-July, when three of the congressional committees responsible for moving the legislation approved proposals. President Obama and lawmakers and stakeholders who support the reform efforts hailed the committee votes. Despite the progress, however, obstacles threaten to block the legislative path to reform, including escalating concern about the proposals’ costs, dissent among House Democrats and the pending August recess. Lawmakers must forge consensus before any legislation can be presented for President Obama’s signature.
Committees approve legislation
In voting to approve the Affordable Health Choices Act on July 15, the Senate Health, Education, Labor and Pensions (HELP) Committee became the first committee of the 111th Congress to approve a health care reform proposal. The committee began debating the bill on June 17 and resumed consideration after the July 4 recess. Although there were moments of bipartisan collaboration, the debate was often contentious, and the proposal was finally approved by a 13-9 party-line vote.
On July 17, two of the three House committees involved in health care reform approved different versions of America’s Affordable Health Choices Act (H.R. 3200). The House Ways and Means Committee approved the act in the early hours of July 17; later that same day, the House Education and Labor Committee approved a slightly different version of the act. In both House committees, some Democrats — mostly members of the conservative Blue Dog Coalition1 — voted against the legislation.
The HELP Committee and House proposals include some common elements. For example, both proposals would:
- Require that most individuals obtain health coverage or pay a financial penalty
- Require employers to offer coverage to employees and contribute to the cost of premiums or pay into the system (play or pay)
- Subsidize coverage for those with incomes up to 400 percent of the federal poverty level
- Reform insurance markets to ensure that everyone can purchase coverage with limited premium underwriting
- Establish a mechanism — an Exchange in the House bill and state-based Gateways in the HELP Committee proposal — to organize the market, facilitate enrollment, administer subsidies and perform other functions
- Establish a public plan option
However, important differences underlie the similarities, such as in the employer mandates. Under the HELP Committee proposal, employers would have to either contribute 60 percent of premium costs or pay $750 for each full-time employee and $375 for each part-time employee. The House proposal would require employers that offer coverage to contribute more — 72.5 percent of the premium for individual coverage, 65 percent for family coverage and prorated contributions for part-time employees. Employers that elected not to offer and contribute to employees’ coverage would pay 8 percent of payroll. Both proposals would exempt small employers.
The House Ways and Means Committee version of H.R. 3200 would establish tax parity for employer-provided health benefits to beneficiaries who are not dependents of the plan participant under the Internal Revenue Code. The provision would allow domestic partners and other eligible beneficiaries under the plan to receive benefits tax-free and to have qualified medical expenses reimbursed from health flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs), but not from health savings accounts (HSAs). In addition, the act would prohibit reimbursement of over-the-counter medications through health FSAs, HRAs or HSAs. The Education and Labor Committee version of H.R. 3200 would prohibit employers from reducing health benefits provided to retirees and their beneficiaries unless the benefit reduction also applied to active participants. Individuals could keep COBRA coverage until they became eligible for health care coverage under the Exchange. The act would provide grants for employer-provided wellness programs that met certain requirements. And, under an amendment sponsored by Representative Dennis Kucinich (D-Ohio) and backed by committee Republicans, states that established single-payer systems could opt out of the act’s requirements.
Obstacles remain
With the August recess approaching, the two remaining committees continue to deliberate health care reform. The House Energy and Commerce Committee began debating H.R. 3200 on July 16 and hopes to be done by July 24, but the committee’s Blue Dog Democrats might stand in the way. Resistance from the Blue Dog Coalition delayed release of the June 19 discussion draft by Ways and Means Committee Chair Charles Rangel (D-N.Y.), Education and Labor Committee Chair George Miller (D-Cal.) and Energy and Commerce Committee Chair Henry Waxman (D-Cal.). Coalition members were concerned about costs, the structure of the public plan option and the implications for small businesses and rural health care. Within the Ways and Means Committee, Blue Dog members Earl Pomeroy (D-N.D.) and John Tanner (D-Tenn.) voted against final passage, as did Representative Ron Kind (D-Wis.). Representative Kind is a member of the New Democrats — another coalition opposed to the current proposals. Blue Dog Democrats hold seven seats on Energy and Commerce — enough to defeat the legislation if they vote with the committee Republicans.
The Blue Dogs and New Democrats are not the only lawmakers concerned about the cost of health care reform. “Bending the cost curve” — reducing future cost increases — is one of President Obama’s stated goals. In recent appearances and in his July 18 radio address, the president said he will not sign health care reform legislation that increases the deficit during the next decade. But appreciably reducing the ranks of the uninsured, especially through expanded public programs and subsidies, will be expensive.
On July 16, CBO director Douglas Elmendorf told the Senate Budget Committee that the proposals under consideration would increase — not reduce — health care spending and the federal budget deficit. Senate Budget Chair Kent Conrad (D-N.D.) is a key negotiator on the Senate Finance Committee.
CBO cost estimates have prompted second thoughts and created holdups. A weeks-long delay at the Senate Finance Committee, which had been expected to release a proposal and commence debate in June, was caused largely by the desire among key committee members to negotiate a less expensive plan. Finding offsets for the high-cost proposal adds another layer of complexity and controversy to the discussions. Capping the tax exclusion for employer-provided benefits, limiting itemized deductions for higher-income taxpayers and imposing a surtax on sugar-sweetened beverages are among the controversial revenue-raisers under discussion. The House bill would impose a surtax on higher-income taxpayers.
Next steps
In the House, the Energy and Commerce debate continues. Differences among the three committee versions of H.R. 3200 must be reconciled before the bill moves to the House floor. House rules facilitate this process, which should make it easier to move a bill to the floor before the July 31 recess.
In the Senate, the Finance Committee must complete negotiations, release a proposal and schedule its debate. The committee’s delay could hinder the goal of approving a proposal in the Senate before the August recess. The Finance and HELP Committee proposals are likely to have important differences that must be resolved before debate on the Senate floor. Senate leaders and others hope the Senate will vote before the August recess, but a proposal might not be ready in time.
1 The Blue Dog Democrat Coalition is a group of 52 moderate and conservative Democratic Party members of the House of Representatives. The Blue Dogs promote fiscal conservatism and accountability.
July 2009
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