Jubilant Democrats move ahead, but still face many obstacles on reform

After weeks of painstaking talks, Democrats celebrated breakthroughs on health care overhaul on both sides of the Capitol. Yet many lawmakers and health care experts said that yesterday's events marked only one step on the very bumpy road to a final deal that President Barack Obama might sign into law.

The most pressing question is whether there is a consensus on fundamental questions such as the government's role in health care and the challenge of expanding coverage while controlling costs. Even after months of intense debate, sharp disagreement remains on whether there should be a public insurance plan to compete with private insurers; whether employers should be required to provide insurance to their employees; the best way to reimburse doctors and hospitals, especially given wide regional variations, and how to slow the growth of health care spending, now $2.4 trillion a year.

Yesterday in the House, marathon negotiations including White House Chief of Staff Rahm Emanuel produced an agreement with conservative Blue Dog Democrats that paves the way for completion of committee action on major health care legislation before Congress departs for the August recess.

In the Senate, meanwhile, Finance Committee Chairman Max Baucus, D-Mont., hailed a new analysis by the nonpartisan Congressional Budget Office showing that his panel's emerging health care plan would cost less than $900 billion over the coming decade while providing health coverage to 95 percent of uninsured Americans by 2015. Even if the panel reaches agreement in coming days, the Senate won't take up the bill until after Labor Day.

House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., crowed that the developments moved Congress closer to passing historic health reform. Others were more restrained. An agreement among a small group of senators or a House committee, "doesn't mean that these proposals will sail through the House or the Senate," said Urban Institute president Robert Reischauer.

"There is no issue harder to deal with" than health care, he added, nothing that it makes up one-sixth of the national economy, impacts the livelihood of millions of people, and "affects all Americans in a very personal kind of way."

Meantime, Republicans and industry groups opposed to the Democrats' approaches to health care legislation are gearing up for a summer of media assaults and speeches to try to undermine Obama's effort to enact legislation by the end of the year. 

Robert Moffit, director of the Heritage Foundation's Center for Health Policy Studies, said lawmakers will "get an earful" when they go home for the recess, not just about health care but also about the federal budget deficit.

In the House, the deal struck between Democratic leaders and the Blue Dogs involves revising the previous bill's approach for negotiating reimbursements for hospitals and doctors, exempting many small businesses from a mandate to provide insurance to workers and requiring the states to share in the cost of expanded coverage under Medicaid, the state-federal health program for the poor.  Under the previous version, the government would have paid for the Medicaid expansion indefinitely.

That change, in particular, may draw the ire of lawmakers and governors alike. States would eventually have to cover 7 percent of the costs of expanding Medicaid coverage to 133 percent of the federal poverty level, said Rep. Mike Ross, D-Ark., who chairs the Blue Dogs' health reform taskforce.

How rank-and-file members will react to the agreement won't be clear until the legislation is taken up by the Energy and Commerce Committee this morning and reaches the floor in September. But already there are questions being raised by both liberal and conservative lawmakers.

Liberal Democrats, including Rep. Barbara Lee of California, the leader of the Congressional Black Caucus, are concerned that the negotiated changes might undercut aid to lower-income people. "We have to find out who wins and who loses," she said.

Meanwhile, three of the seven Blue Dogs involved in the negotiations declined to support the agreement. Rep. Jason Altmire, D-Pa., a Blue Dog member of the Ways and Means Committee who voted against the bill when it came before that panel, said he's still not sure whether he will ultimately support the measure.

"I want to squeeze out the inefficiencies and achieve whatever level that is -- $600 billion to $700 billion [of cost savings] - and then that's what you have to work with to bring insurance access in," he said. "The fundamental disagreement we're having between the right of our party, centrists and the left is whether to do access first or cost containment first. I want to do cost control first. I want to fix the delivery system before we bring 50 million new people into it."

Under the deal with the Blue Dogs, the House bill would be revised in the following ways: 

--It would exempt businesses with payrolls of $500,000 or below from a requirement to provide insurance to employees or pay a penalty. The existing bill set the level at $250,000. The penalty would hit businesses with payrolls between $500,000 and $750,000 on a sliding scale before kicking in fully at 8 percent of payroll.

--It would provide subsides to families and individuals to help them buy insurance after spending 12 percent of their incomes on premiums, rather than 11 percent in the existing bill.

--On payments to hospitals and doctors that treat patients under a new public plan, rates could be negotiated with the secretary of Health and Human Services right away, rather than being tied to Medicare rates.

--In addition to the public plan, states would have the option of setting up health care co-ops. 

Ross said that, all told, the revised bill would cost $100 billion less over 10 years, although precisely how that would be accomplished will be unclear until the CBO prepares a cost analysis of the overall bill. House senior Democratic aides said that the demands for revised reimbursement rates and more protection for small businesses would actually add $100 billion to the cost of the bill, and would have to be offset with savings elsewhere.

Meanwhile, in the Senate, six Democratic and Republican senators including Baucus are negotiating the Finance Committee bill in secret, and a number of prominent lawmakers including Sen. Jay Rockefeller, D-W.Va., have complained about being excluded from the talks.

That suggests there might be trouble on another front: combining the Finance bill will with a more-liberal measure from the Senate Health, Education, Labor and Pensions Committee. The health panel legislation includes an employer mandate and a government-run health insurance option, two elements not expected to be in the final Finance package.

Beyond that, the Finance legislation is likely to have considerably less generous subsidies for uninsured workers to buy insurance on proposed insurance exchanges than either the Senate health or House Democrats' bills.

Meanwhile, with advertising on health care reform ratcheting up, public opinion expert Bob Blendon of Harvard University said polls are showing anxiety that the legislation may raise insurance premiums, taxes or both.

"Middle-income Americans believe there's a severe recession and most of them are not prepared to pay anything substantially in taxes at this moment for a health reform bill," he said. He added that the challenge for lawmakers is to align their message with what the public generally assumes health reform will mean: lower premiums and medical payments.

Correspondent Julie Appleby contributed to this report

By Mary Agnes Carey and Eric Pianin, The Kaiser Family Foundation