Senate Finance Committee discusses funding for health reform in final 'walk through' meeting

May 22 2009

The Senate Finance Committee met Wednesday to discuss potential funding mechanisms for health reform legislation but indicated that no concrete decisions had been reached, The Hill reports.

The meeting was the third of three scheduled to "walk through" various aspects of health reform. Previous talks focused on the care delivery system and coverage. Finance Committee Chair Max Baucus (D-Mont.) has said that he hopes for a bill to be approved for full Senate consideration by the end of July. He said of the talks so far, "We've got a lot of work ahead of us," adding, "Soon we have a mark up, soon we have a bill, and that realization is forcing us to make decisions." He also said, "Nothing's pushed off the table. We're looking at it all."

Funding mechanisms discussed Wednesday included taxes on sugary and alcoholic beverages, as well as a limit on the tax-exempt status of employer-provided health insurance (Young, The Hill, 5/20). One proposal would raise the federal alcohol excise tax by 145% for beer, 233% for wine and 20% for hard liquor (Hurt, New York Post, 5/21). The committee also mulled a three-cent tax per 12-ounce container of sugary drinks, which would raise an estimated $50 billion over 10 years (Alonso-Zaldivar, AP/Houston Chronicle, 5/21). Baucus said he supports placing a cap on the employer coverage tax exemption based on income or the cost of premiums, or both. Congress estimates that about $194.2 billion in revenue is passed up each year by forgoing taxes on the insurance plans.

The committee also discussed decreasing Medicare spending on home care, durable medical equipment, medical imaging and prescription drugs, as well as addressing regional disparities in health care costs (The Hill, 5/20). Members also brought up the possibility of charging higher-income seniors higher premiums for the Medicare prescription drug benefit (Wayne, CQ Today, 5/20). Members also discussed introducing new standards for not-for-profit hospitals that would require them to provide more no-cost care and serve more low-income patients in order to keep their tax-exempt status. In addition, they discussed cutting special Medicare payments to teaching hospitals, as well as requiring drugmakers to give larger discounts to state Medicaid programs (Pear, New York Times, 5/21).

Baucus noted "convergence" on some issues, such as the need to include complete funding in a reform package, as well as the need to establish insurance exchanges that would facilitate the purchase of public or private insurance (The Hill, 5/20). Committee ranking member Chuck Grassley (R-Iowa) said, "There was a greater understanding of the issues we have," but there are "a lot of members who still want some more understanding." Grassley also said, "There's just a lot of questions; there are -- I wouldn't say misunderstandings, but there's got to be a lot of understanding about what you're talking about" (CQ Today, 5/20).

Chances of Bipartisan Bill

Baucus during a press conference Thursday predicted a 75% to 80% percent chance that his panel will be able to create a bipartisan bill, according to The Hill. When asked what were the chances he would succeed in winning the support of senators from both parties, Baucus responded: "Very high. Very, very high. If you want me to put a percentage on that, I'd say it's about 75, 80 percent. It's very high" (Young, The Hill, 5/21.)

A podcast and video of the press conference are available online at kff.org.

Groups Criticize Tax Proposals

Labor unions have begun speaking out against a potential tax on employer-provided health benefits, expressing concern that they would deteriorate the system through which most U.S. residents younger than 65 are covered, the New York Times reports. The National Education Association, United Food and Commercial Workers and the American Federation of State, County and Municipal Employees ran ads in Oregon cities this week stating that Sen. Ron Wyden's (D-Ore.) suggestion to "tax the health care benefits we get at work as if they were income ... doesn't make sense." Baucus defended the tax proposal, saying that the exemption disproportionately benefits people with higher incomes. He said, "It's too regressive" and "just skews the system."

Producers of sodas and alcoholic beverages also spoke out against the tax proposals affecting their products. The Distilled Spirits Council of the United States said the tax would put many jobs at risk, from manufacturers and wholesalers to retailers and food service workers (New York Times, 5/21).

Senate HELP Committee's Plan

Sen. Orrin Hatch (R-Utah) on Wednesday said the overhaul bill being developed by the Senate Health, Education, Labor and Pensions Committee, of which he is a member, resembles the "Massachusetts [plan] on steroids." The Massachusetts Health Insurance Law of 2006 requires that everyone obtain health insurance and established an exchange through which residents can select from a menu of public and private health plans, with subsidies provided to eligible individuals. He said of the HELP plan, "I think that it's driven by the White House, and if it is driven by the White House, then it's certainly not going to be very bipartisan."

House

The House Ways and Means Committee on Wednesday also met to discuss health reform. Members avoided contentious issues and instead talked about physician shortages and ways to change payment systems to emphasize quality, according to CongressDaily. Although some Democrats said they would not dismiss Republicans' proposals to tax employer health benefits outright, others said they could not support such plans. Rep. Artur Davis (D-Ala.) said, "You talk about sticker shock; that's a tax people are not accustomed to paying. It's very hard to justify the change if people are going to be hurt economically by other things, like the cap-and-trade debate."

Ways and Means Chair Charles Rangel (D-N.Y.) said the panel will focus on completing work on health reform legislation before moving on to climate change initiatives (Edney, CongressDaily, 5/21).