Snowe, Democrats unite on crucial healthcare deal

The Senate Finance Committee leaped over a considerable hurdle to passing its sweeping healthcare reform legislation late Thursday night via a bipartisan amendment designed to make health insurance more affordable for people with moderate incomes.

Democratic Sen. Chuck Schumer (N.Y.) -- a key liberal vote -- and Republican Sen. Olympia Snowe (Maine) -- the panel’s only GOP swing vote -- joined forces on an amendment that would significantly lessen the burden on people who cannot afford health insurance.

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The amendment, which passed with one dissenting vote, partially addresses the biggest misgivings expressed by Snowe and the committee’s Democrats about the bill, which was authored by Chairman Max Baucus (D-Mont.).

“This is the major amendment on affordability,” Schumer said.

“It’s about making sure that we can create an affordable healthcare system in this country,” Snowe said.

The alliance between Snowe and Democrats on the committee could be a positive harbinger for the success of healthcare reform, President Barack Obama’s signature domestic policy initiative.

For months, Obama and Senate Democrats have heavily courted Snowe, who has long been seen as the Democrats’ best hope of brining a Republican aboard. Snowe’s support for a reform bill would give Democrats a hint of the bipartisanship Obama insists is his first choice and provide political cover to centrist Democratic senators such as Ben Nelson (Neb.) to vote for the legislation.

After more than two weeks of debate, the Finance Committee is set to vote on its healthcare bill early next week. Though the committee has been working long hours, the affordability issue has loomed over the proceedings without concrete actions being taken. The Schumer-Snowe amendment marked the first break in that stalemate.

Though Snowe and committee Democrats made clear they are not yet satisfied that the Baucus bill does enough to ensure that people with moderate incomes can afford the health insurance the legislation would require them to purchase.

Snowe and most of the committee’s Democrats have expressed grave concerns about Baucus’s legislation from the moment he introduced it. In particular, they complained that the tax credits in the bill would be inadequate to pay for insurance. Moreover, they maintained, the financial penalty for not obtaining insurance would be too severe.

During the debate on the Schumer-Snowe amendment and other Democratic amendments related to affordability, Snowe and Democrats such as Sens. John Kerry (Mass.) and Jay Rockefeller (W.Va.) made clear they believed the bill needed more work to satisfy their concerns.

Democrats and Snowe also want to increase the size of the tax credits that would be made available for people from 133 percent of the federal poverty level and 300 percent and to expand eligibility to 400 percent of poverty.

“That was not fiscally possible for us within the constraints of this committee,” Schumer said.

Baucus and the Democrats on the panel were not able to find a way to achieve that goal while keeping Obama’s pledge that healthcare reform would require no more than $900 billion over 10 years and would not increase the budget deficit.

Schumer indicated that work would wait until after the Finance Committee completes its mark up. Senate Majority Leader Harry Reid (D-Nev.) will take charge of combining the Finance Committee’s bill with a measure already approved by the Health, Education, Labor and Pensions Committee, which includes more generous insurance subsidies for more people, in preparation for a floor debate later this month.

The Schumer-Snowe amendment would exempt more people from the individual mandate to obtain health coverage. The Baucus bill would exempt from the mandate anyone who could not find an insurance plan that costs less than 10 percent of their income. The amendment reduces that threshold to 8 percent of income. During the presidential campaign, Obama opposed individual mandates but has since indicated that he could accept a mandate that included such a waiver.

In addition, Schumer and Snowe’s language would postpone and reduce the financial penalty individuals would have to pay if they fail to get health insurance.

Under the original bill, anyone who did not have health insurance coverage starting in 2013 would have to pay an penalty of up to $950 or up to $1,900 for a family, except those who would qualify for the hardship waiver. The original draft of Baucus’s bill established a maximum penalty of $3,800. The penalties rise to the maximum based on income.

Under the changes proposed by Schumer and Snowe, there would no penalty during the first year the healthcare reform bill took effect. In 2014, the penalty would be $200 and would slide up to $750, or a family maximum of $1,500, in 2017. Those penalties also would be indexed to income.

People who do not comply would not be subject to criminal or civil penalties beyond the financial penalty and the government would only collect the money by the “withholding of federal payments due.” 

Schumer and Snowe also made the case that the result of the amendment would be insurance companies reducing the prices of their basic health plans so that people who are exempt from the mandate would buy coverage anyway. The Congressional Budget Office told the senators that the amendment would save a small but unspecified amount of money and result in 2 million fewer people getting insurance than the 29 million originally estimated in the Baucus bill.

The amendment also requires the Government Accountability Office (GAO) to present a report on health insurance costs to Congress in 2014 and require Congress to act on its findings if affordable coverage is not available to enough people.

Senate Minority Whip Jon Kyl (R-Ariz.) voted against the amendment because he objected to the language instructing Congress to write legislation in response to the GAO report.

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