Health Care Reform Debate to Continue During August Recess

As Congress enters its August recess, health care reform legislation remains in flux. In July, four of the congressional committees responsible for moving the legislation approved proposals. Despite this progress, however, obstacles threaten to block the legislative path to reform, including escalating concern about costs — now and in the future — and dissent among House Democrats. Lawmakers plan to discuss the proposals with their constituents over the August recess, and constituents’ views will affect the negotiations when they return.

Committees approve legislation
In approving 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. Although there were moments of bipartisan collaboration, the debate was often contentious and the vote was 13-9 along party lines.

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 was the first to approve the act in the early hours of the morning. Later that day, the House Education and Labor Committee approved a slightly different version. In both House committees, some Democrats — mostly members of the conservative Blue Dog Coalition¹ — voted against the legislation.

Opposition from the Blue Dog Coalition prompted Representative Henry Waxman (D-Calif.), Chairman of the Committee on Energy and Commerce, to suspend debate to negotiate with the coalition members who serve on his committee. It took a week for Representative Waxman to reach a deal with the coalition members, and then he faced opposition from the Energy and Commerce committee’s more liberal members. Finally, early in the morning of July 31, the groups compromised and the committee approved its version of the act that evening by a vote of 31-28 — five Democrats joined the Republicans in voting against the bill.

The HELP Committee and House proposals include common elements as well as significant differences, as shown in Figure 1.

Figure 1
HELP Committee and House proposals

Source: Watson Wyatt Worldwide.

All three House committees made changes to H.R. 3200. The Ways and Means Committee version would establish tax parity for employer-provided health benefits to beneficiaries who do not qualify as tax dependents under the Internal Revenue Code. Domestic partners and other eligible beneficiaries could receive benefits tax-free and have qualified medical expenses reimbursed from health flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs) — but not from health savings accounts (HSAs). The act would also 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 with their own single-payer systems could opt out of the act’s requirements.

Among other changes, the Energy and Commerce Committee version would direct the secretary of HHS to establish a formulary for the public plan option and to negotiate prescription drug prices under Medicare’s prescription drug program.

Next steps
Congress will be in recess until after Labor Day, but health care reform discussions will continue. In the House, the process of integrating the different committee versions into a unified bill is under way. The unified bill must be able to garner the 218 votes necessary to pass. In addition to negotiating differences among different versions of the legislation, the unified House bill could include additional changes. For example, the Blue Dogs oppose a surtax on higher-income taxpayers, so negotiators might revisit the act’s revenue-raising provisions. The Energy and Commerce Committee will consider additional provisions in September and could try to add those to the House legislation as well. House leaders hope to move the bill to the floor in mid-September.

In the Senate Finance Committee, the bipartisan group will continue its negotiations and may release a proposal in mid-September. After Finance approves a proposal, it must resolve differences with the HELP Committee bill before debate can begin on the Senate floor.

¹ The Democratic Blue Dog Coalition is a group of 52 moderate and conservative Democratic Party members of the House of Representatives who promote fiscal conservatism and accountability.