Senate health bill released, another step toward Democratic-backed reforms

Nov 19 2009

"Senate Majority Leader Harry Reid set the stage for a climactic debate in the Senate over health care by unveiling a 10-year, $848 billion bill that would extend insurance to 31 million Americans without coverage," The Wall Street Journal reports. The proposed measure, which totals 2,074 pages in length, "is the Senate's answer to a bill that narrowly passed the House Nov. 7. The two bills have differences on taxes, abortion coverage and a public-insurance plan and would require considerable work to reconcile if Congress hopes to pass some form of health care overhaul -- the centerpiece of President Barack Obama's domestic agenda." The CBO estimated the Senate measure "would reduce the federal budget deficit by $130 billion over the next decade, and additional amounts over the second 10 years of the program. It achieves that in part through a new Medicare payroll tax and a tax on high-value insurance plans, which has aroused strong opposition." Its cost is "below the $1.05 trillion cost of the health overhaul passed by the House this month."

The Journal reports that the Senate approach "comes down mostly on the liberal side on the question of a new government-run health-insurance plan...," though under the Senate's public option, states could opt not to participate. "As in the House, the Senate plan would have the public plan negotiate payment rates directly with health-care providers, rather than tying payments to Medicare's low rates." In addition, "to ease the financial burden on workers," the bill would cap "premiums at 9.8 percent of income, down from 12 percent" (Hitt and Adamy, 11/19).

The Hill: "Reid added a new proposal to the bill that would increase the Medicare payroll tax for high-income earners by 0.5 percent to 1.95 percent of adjusted gross income. This new tax would raise $54 billion and affect individuals making more than $200,000 or families earning more than $250,000. Pharmaceutical, health insurance and medical device companies would be tapped for a combined $101.9 billion in taxes. The medical device fee was more than halved from an earlier proposal to $19.3 billion to respond to complaints from Democratic Sens. John Kerry (Mass.), Evan Bayh (Ind.) and others."

The bill "also includes extensive new insurance regulations, including those that would limit companies' ability to deny coverage or care, cancel policies for the sick, vary premiums on age, health status, gender and other factors"  (Young, 11/18).

The Associated Press reports that the bill includes a tax on cosmetic surgery and on high-value insurance policies, meant to curb the appetite for expensive care." The House bill does not include this tax or the Medicare payroll tax, instead it relies "on an income tax surcharge on the wealthy to finance an expansion of coverage." The AP also reports that the bill would delay most of the major tenets of a similar House health care reform bill by a year — until 2014 — including waiting to set up new insurance marketplaces. The House version would begin them in 2013 (Werner, 11/19).

Kaiser Health News provides details on new taxes included in the bill, its public option, and the individual mandate. "Starting in 2014, most Americans would be required to have health insurance or face financial penalties of $95 that year, growing to $750 by 2016. While employers would not be required to provide health insurance to workers, firms with 50 or more employees which did not provide health insurance would pay a penalty if workers received government subsidies to purchase coverage through the exchange." In addition, KHN reports that the bill includes and expansion of the Medicaid program eligibility to include people who make up to 133 percent of the federal poverty level would also be delayed until 2014. Also, "[a]bortion could be covered under the public plan but only if the secretary of Health and Human Services could certify that no taxpayer funds would be used, according to Senate Democratic aides" (Carey and Galewitz, 11/18). 

KHN's Mary Agnes Carey discusses the bill in an audio installment of Health On The Hill (11/19).

The Los Angeles Times: "The most expensive feature of Reid's proposal is a commitment by the federal government to provide subsidies for millions of Americans who make less than 400 percent of the federal poverty level and buy insurance in an exchange." The bill also offers tax subsidies to small businesses to help them provide health insurance. But unlike the House bill, "it would not close the Medicare drug coverage gap, known as the 'doughnut hole.'" But what will become of the legislation is an unknown. "Republicans, who have criticized the Democrats' initiative as a step toward government control of the healthcare system, are already planning a series of delaying tactics, including forcing the entire bill to be read aloud on the Senate floor. 'It's going to be a holy war,' Sen. Orrin G. Hatch (R-Utah) said Wednesday evening" (Levey and Hook, 11/19).

NPR: notes that the cosmetic surgery tax was dubbed the 'botax.'  "Doesn't matter if you pay out of pocket or have insurance coverage, the tax applies across the board. ... [It] could raise $5 billion over a decade. (Hensley, 11/19).

Meanwhile, in "seeking to fend off a major revolt by supporters of abortion rights, Democratic leaders in the Senate have infuriated abortion opponents with their new version of health care legislation," The New York Times reports. "The Senate bill drops some of the restrictive abortion language that was part of the House health care bill. But it contains an ambiguous provision that could bar any government-run insurance plan, or public option, from providing abortion coverage. The Senate bill says that no federal funding can be used to pay for abortion coverage, which is language that abortion-rights supporters have accepted for decades. But it also says that any public option could not provide insurance for abortions unless the Secretary of Health and Human Services determined that a payment plan would not use federal money," which "seems open to interpretation" (Seelye, 11/18).

The New York Times in a separate story: "In one last touch on Wednesday, Mr. Reid and his aides finally named the bill that he wrote over the last few weeks, selecting parts of bills previously adopted by two Senate committees. It is called the 'Patient Protection and Affordable Care Act'" (Pear and Herszenhorn, 11/18).