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Obama Urges Bolder Action to Shrink Costs
Some Democrats Protest Surtax on Richest Americans

By Shailagh Murray
Washington Post Staff Writer
Saturday, July 18, 2009

President Obama sought to reassure jittery Democrats that health-care reform was within reach, although he urged his party to take bolder steps to address long-term cost concerns.

Democratic defections on two House committees yesterday underscored divisions among the party's rank-and-file over the scope of reform, along with its massive price tag. The latest rebellion stirred among newly elected Democrats who are wary of the surtax on wealthy households that the House bill would impose -- a cudgel for Republicans, who portray the tax as a killer for small businesses.

Despite the warning signs, Obama asserted yesterday afternoon from the White House, "We are going to get this done. We will reform health care. It will happen this year. I'm absolutely convinced of that."

With every new brush fire, Obama faces growing pressure to relent on his midsummer deadline for House and Senate passage. That marker was established to keep momentum going, but with two weeks remaining on the House calendar and three in the Senate before they recess, the timetable appears all but unattainable.

Yet so far, the president has refused to yield. "I realize that the last few miles of any race are the hardest to run, but I have to say now is not the time to slow down, and now is certainly not the time to lose heart," Obama said.

The Senate Finance Committee appeared yesterday to be making slow, but steady progress on its legislation, the one version of health-care reform expected to gain bipartisan support. At a meeting late Thursday, negotiators identified about a dozen remaining areas of disagreement, including a revenue gap of about $100 billion. Senate sources said committee aides would work through the weekend on outstanding questions, with the goal of producing a draft bill by Tuesday.

Congressional Budget Office Director Douglas Elmendorf sent shock waves through the Capitol on Thursday when he declared that proposals already on the table from the House and the Senate health committee would fail to achieve "the sort of fundamental changes" necessary to rein in the skyrocketing cost of government health programs, particularly Medicare.

Last night, Elmendorf had more bad news. Hours after Obama vowed that health reform would not expand the deficit over the next decade, the CBO reported that the House bill would increase the deficit by about $240 billion by 2019. A plan to expand insurance coverage to 37 million Americans would cost the government about $1.04 trillion, the CBO said. That would be partially offset by reductions in existing federal programs worth $219 billion and tax increases -- including a surtax on the wealthy -- worth about $583 billion.

The resulting deficit reflects a decision by House leaders to cancel a scheduled 21 percent reduction in Medicare payments to physicians. Maintaining doctor reimbursements would cost about $245 billion over the next decade, the CBO said, accounting for the entire gap in the House bill.

The CBO report left unclear the overall cost of the House proposal, which Democrats have estimated at about $1.2 trillion -- the cost of the coverage plan plus the Medicare adjustments for doctors.

Along with closing the uninsured gap, restraining cost growth is a primary goal of the reform effort. But Democrats have yet to agree to controversial measures needed to "bend the cost curve."

Obama announced yesterday that he would back one such step, a proposal requiring Congress to surrender authority over Medicare reform and reimbursement rates to an independent group of medical experts. Lawmakers cherish their power to adjust payments to local doctors, hospitals and other providers, and as a rule, they ignore warnings from the Medicare Payment Advisory Commission, established by Congress in 1997, to adopt drastic changes to save the program from collapse.

"What we want to do is force the Congress to make sure that they are acting on these recommendations to bend the cost curve each and every year, so that we're constantly adjusting and making changes," Obama said yesterday.

House Speaker Nancy Pelosi (D-Calif.) acknowledged concerns about the proposal, but said they could be overcome "under certain circumstances."

Senate negotiators, meanwhile, are pressing Obama to retreat from his campaign opposition to a health-insurance benefits tax that Elmendorf and other experts regard as a vital cost-containment tool. Senate tax aides are examining ways to close the tax loophole so it does not harm middle-class workers, including police officers and firefighters, who receive lucrative benefits packages.

One possible compromise would be to tax insurance companies, rather than beneficiaries, on large policies, an idea floated years ago by former senator Bill Bradley (D-N.J.). Senate aides who have studied the proposal said it could achieve the same aim of discouraging overuse of health care, but without the direct hit to beneficiaries that Obama is determined to avoid. Some Senate Democrats said they are increasingly hopeful that the White House will sign off on the idea -- especially if Congress embraces the independent commission.

Despite Obama's pep talk, new concerns arose in both chambers that underscore the legislation's complexities and the many pitfalls that negotiators will continue to encounter.

In the House, 22 freshmen and sophomore Democrats wrote to Pelosi to protest the surtax on wealthy households that the House would adopt to fund nearly half of its estimated $1.2 trillion, 10-year bill. Under the plan, a 1 percent tax would kick in at $350,000 in annual household income and rise to 5.4 percent on incomes more than $1 million, but the group expressed concern that small businesses would be hit as well.

Two signatories, freshmen Reps. Jared Polis (Colo.) and Dina Titus (Nev.), were among the three Democrats to oppose the revenue-raising portion of the House bill, approved 23 to 18 by the Ways and Means Committee early yesterday. In the Education and Labor Committee, three other Democrats voted no on a separate section of the bill, which was approved 26 to 22.

Meanwhile, in the Senate, a bipartisan group of six centrists that includes Republicans Olympia J. Snowe and Susan Collins, both of Maine and crucial swing votes on health care, appealed yesterday to Senate leaders to "resist timelines" in a debate that could impact more than one-sixth of the nation's economy.

"We support the efforts of Finance Committee members to produce a bipartisan bill," the centrists wrote to Senate Majority Leader Harry M. Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.).

Staff writer Lori Montgomery contributed to this report.

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