Senators Hurry to Keep Health Care in Forefront

Sen. Max Baucus's position paper, "Call to Action, Health Reform 2009," is due out today. Sen. Edward Kennedy plans to have a bill by the inauguration. (By Nikki Kahn -- The Washington Post)
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"I'm very serious about this," Baucus said in an interview. "Doing nothing will be a lot more costly."

Aides have refused to indicate what direction Kennedy will pursue but have made it clear he does not intend to cede his longtime leadership role on health policy. They expect to get valuable assistance next month when Peter R. Orszag, head of the independent Congressional Budget Office, releases a two-volume report on the need for health reform and a set of policy actions that could achieve measurable savings.

Baucus shares several ideas with the Obama campaign. Most notably, he proposes a Health Insurance Exchange, which would connect individuals and employers to insurance providers. Baucus would prohibit insurers from denying coverage of preexisting conditions, and he would offer government subsidies to low-income families to afford coverage.

In the paper, Baucus calls for expanding three government health programs -- Medicare, Medicaid and the State Children's Health Insurance Program -- as well as opening Medicare to people ages 55 to 64. He also outlines new tax breaks for individuals and small businesses to offset the costs of insurance.

Baucus also discussed several possible funding sources. He argues, as many experts do, that ideas such as eliminating waste and fraud, focusing on prevention and using sophisticated data to identify the most cost-effective therapies will save money over the long term. In the short term, he advocates eliminating what Democrats have long criticized as "overpayments" to insurance companies that sell managed care plans to Medicare recipients.

The most controversial idea is Baucus's suggestion to revisit the current tax treatment of employer-sponsored health insurance. American workers today do not pay income taxes on the value of insurance paid for by their employers, a benefit valued at $245 billion annually. The tax break is considered regressive because higher-paid workers and those employed by large businesses are the primary beneficiaries.

During the campaign, Obama sharply criticized Sen. John McCain (R-Ariz.) for touting a plan to eliminate that tax exclusion and instead give individuals the tax break, a move that would have extended the benefits to more uninsured or lower-income workers. A similar approach is outlined in bipartisan legislation sponsored by Sens. Ron Wyden (D-Ore.) and Robert F. Bennett (R-Utah.), though their bill goes further than McCain in creating opportunities for individuals to buy coverage.

Baucus's plan encourages Congress to consider a middle road given the large sum of money at stake.

Wyden realizes he may be outgunned by colleagues such as Kennedy and Baucus but said his ability to collect eight Democratic sponsors and nine Republicans illustrates the salience of the issue.

"This shows it is possible to move in a bipartisan way," he said.