Compromise Is Key to Health-Care Legislation

People march during a rally for affordable health care on Capitol Hill. Legislators face a difficult task over the next five weeks: piecing together a reform bill.
People march during a rally for affordable health care on Capitol Hill. Legislators face a difficult task over the next five weeks: piecing together a reform bill. (By Chris Kleponis -- Getty Images)
By Shailagh Murray and Lori Montgomery
Washington Post Staff Writers
Monday, July 6, 2009

For the next five weeks, Congress will attempt the daunting feat of turning a mishmash of half-written proposals into health-care reform legislation that can pass the House and the Senate before the August recess.

Let the trade-offs begin.

Who would benefit from expanded coverage, who would pay for it, and how extensively the insurance and health-care systems would be restructured were a few of the big questions left unresolved when House and Senate negotiators took a break for the Fourth of July recess. In the Senate, Democratic leaders face the additional tasks of merging vastly different proposals from two committees and foiling efforts to shrink or derail the bill as it advances on the floor.

Final versions of legislation rarely live up to the lofty expectations set by drafts -- as many on the left might say of the weakened climate-change bill that passed the House last month. The health-care debate may follow a similar trajectory, as policy ideals meet political and fiscal realities, and wholesale reform gives way to a more limited, if still ambitious, bill.

In the days to come, Democrats will make critical decisions that will begin to define the bill's winners and losers. One moving target: who receives insurance subsidies. The Senate Finance Committee is considering an income threshold of 300 percent of the poverty level, or $54,930 in gross annual income for a family of three, to keep the legislation's 10-year cost at $1 trillion. For example, a single person earning $35,000 per year who does not have coverage today would be required to buy it under the legislation but would probably not receive help in offsetting a policy's cost, which averaged $4,704 in 2008.

The committee also is considering provisions that could lead to higher insurance rates for adults in the 55-to-64 age category and higher out-of-pocket costs for certain people who buy their own insurance.

Meanwhile, the House is considering a national value-added tax (sometimes called a national sales tax), a tax on sodas and other sugary drinks, and an increase in alcohol taxes -- all measures that would break President Obama's campaign pledge not to raise taxes on households with annual incomes below $250,000.

"The president's going to watch the process," White House press secretary Robert Gibbs said last week of the debate. "He's going to be flexible, and we'll evaluate as we go."

While Obama may be prepared to compromise, it is not clear whether the public is ready for a less-than-perfect outcome, a key factor in determining the bill's long-term political success. "You're going to have losers, and the administration hasn't prepared people for that," said Michael D. Tanner, a senior fellow at the Cato Institute, a conservative think tank. "So far this is pain-free health-care reform."

In an analysis of the Finance Committee draft, the liberal Center on Budget and Policy Priorities found that families with modest incomes that buy the lowest-cost coverage could face steep out-of-pocket costs if they experience a serious medical problem. And families who are just outside the 300 percent subsidy threshold could face daunting bills, with no relief.

The lowest-cost plan would have an actuarial value of 65 percent, meaning it would cover 65 percent of the medical costs of a typical population, the report showed. One scenario in Congress proposes capping out-of-pocket costs at $11,600 for a family and $5,800 for an individual.

Judith Solomon, author of the report, noted that 82 percent of uninsured people have incomes below the 300 percent threshold -- meaning the Senate bill would still cover millions of new people. But, she added, households with slightly higher incomes include many "working-class people in high-cost-of-living states. And they need help, too."

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