By Jeffrey Young - 07/02/09 12:53 PM EDT
Senate Democrats on Thursday unveiled their plans to create a government-run public health insurance option and require most employers to provide healthcare benefits to their workers, partially filling in the blanks on two of the biggest unsettled questions in the effort to reform the healthcare system.
According to Democrats on the Senate Health, Education, Labor and Pensions (HELP) Committee, their legislation would extend health insurance coverage to 21 million uninsured people over 10 years at a net cost of $611.4 billion. Combined with separate legislation being developed by the Senate Finance Committee, senators said their healthcare reform plan would bring the total number of newly insured people to 41 million by 2019, or 97 percent of the projected U.S. population, excluding illegal immigrants.
Importantly, the Congressional Budget Office (CBO) concluded that the number of people receiving health benefits at work would remain steady at about 160 million people over the 10-year time period, which could disarm the frequent Republican critique that Democrats' healthcare reform plans would destabilize insurance coverage for the middle class.
Under the new provisions, employers with more than 25 workers would be required to either provide "affordable" coverage or pay the government an annual fee of $750 for each full-time employee and $375 for part-timers. "It's a cost, I realize that, but a modest cost indeed," said Dodd. The business community in general, and groups representing small employers in particular, strongly oppose such requirements, though Wal-Mart this week endorsed the concept of the employer mandate.
The public option would not receive federal subsidies and would be funded through premiums. The Department of Health and Human Services would run the plan and set payment rates for medical services and products. Republicans, health insurers, many medical provider groups and big-business organizations oppose the public option, contending that a government program cannot compete fairly with private companies.
Sen. Sherrod Brown (D-Ohio) rejected that argument, noting that private student-loan providers coexist with government loans. He contended that health insurance companies need to be checked in the marketplace by a stable, not-for-profit option. "Ultimately, the public option will keep insurance companies more honest," Brown said. "We're convinced it will make both [public and private plans] better."
The coverage figures and cost estimates are considerably better than projected for an earlier draft of the bill because committee Democrats initially left out both the public option and the so-called "play or pay" mandate for employers. When the CBO analyzed the original draft, it estimated its price tag at more than $1 trillion over 10 years to extend coverage to 16 million people. Those unflattering numbers threatened to stall the momentum for the Democrats' healthcare reform plan last month.
President Obama praised the HELP Committee bill in a statement. "Today the Senate HELP Committee has produced legislation that lowers costs, protects choice of doctors and plans and assures quality and affordable health care for Americans," Obama said. "The HELP Committee legislation reflects many of the principles I’ve laid out," he said, such as the creation of a health insurance "exchange" through which people can shop for insurance, a ban on insurance companies excluding people with pre-existing conditions, and the public option.
The bill also includes a mandate that individuals obtain health coverage, a policy Obama opposed during his presidential campaign but has since indicated he would support, with possible exceptions for those who prove that having insurance would pose a financial hardship.
The Finance Committee has not announced its plans for an expansion of Medicaid, nor has the CBO scored its projected cost, but a senior HELP Committee Democratic aide said their calculations were based on an assumption that all legal U.S. residents with incomes below 150 percent of the poverty level would be eligible for Medicaid under the combined HELP-Finance legislation.
The CBO score of the HELP Committee bill does not tell the full story about how much healthcare reform will cost. The bulk of the cost-cutting and revenue-raising provisions of healthcare reform will come from the Finance Committee, which has sole authority over reducing Medicare and Medicaid spending and on raising taxes. The Finance Committee has not yet released its bill or any cost estimates.
The HELP Committee spent two weeks marking up its draft legislation before Congress broke for its July 4th recess despite the bill lacking two of the most important — and contentious — elements of healthcare reform. Even without these issues on the table, the committee's public meetings were marked by partisan rancor, despite votes to include 87 amendments offered by Republicans.
Obama and Democratic leaders in the House and Senate want healthcare reform bills passed in both chambers by the end of July, a timeline that will prove especially difficult in the Senate.
The HELP Committee must return to its markup to debate the most controversial elements of reform. The Finance Committee left for the recess without introducing a bill and the panel's expected bipartisan product will more than likely include no public option. The two committees must then consolidate their bills and the Senate must schedule floor debate. Floor time could prove precious with the Senate poised to begin considering the confirmation of Obama's nominee for Supreme Court justice, Sonia Sotomayor.
The key difference in cost of the two drafts of the HELP Committee bill is the employer mandate, which keeps companies in the business of providing health insurance —and keeps the cost of that coverage off the federal government's books. Dodd said Sen. Jeff Bingaman (D-N.M.), who sits on both the HELP and Finance committees, developed the "play or pay" provisions.
Under the CBO estimate of the earlier draft bill, roughly 15 million people were projected to move out of the employer-sponsored insurance market into other coverage. In addition, Sen. Sheldon Whitehouse (D-R.I.) said, the committee lowered the price tag by reducing the upper limit for eligibility for insurance subsidies from 500 percent of the poverty level to 400 percent.
Most of the expansion of insurance coverage would come via policies purchased on a national exchange, or gateway that would open in 2012. People who are not offered coverage through work — or whose benefits cost more than 12.5 percent of their salary — would be able to choose among accredited plans, including the public option, and people with incomes below 400 percent of the poverty level would have access to federal subsidies. According to the CBO, 27 million people would get private or public insurance through this mechanism.
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