House, Senate Negotiators Cut Costs of Health-Care Reform Bills

Senate Finance Chairman Max Baucus tells reporters that a draft of the reform package would come with a lower-than-expected price tag.
Senate Finance Chairman Max Baucus tells reporters that a draft of the reform package would come with a lower-than-expected price tag. (Linda Davidson - The Washington Post)
By Paul Kane and Shailagh Murray
Washington Post Staff Writers
Thursday, July 30, 2009

Key lawmakers on Wednesday moved to cut roughly $100 billion from the cost of health-care reform proposals as they sought to break weeks of gridlock on President Obama's signature legislative initiative before Congress departs for a month-long recess.

House Democrats reached a deal with conservatives in their caucus that would reduce the overall cost of the package and ensure more funding for rural hospitals, concessions that could allow the Energy and Commerce Committee to finish its consideration of the legislation.

Bipartisan negotiators on the Senate Finance Committee, meanwhile, announced that a draft of their reform package would come with a lower-than-expected price tag of less than $900 billion over 10 years, which would be slightly less expensive than the new target for the House bill.

But the twin movements toward compromise were not well received by all lawmakers.

As Senate conservatives pressured their Republican colleagues to back away from the emerging finance panel's package, House Democratic leaders tried to tamp down an uprising from liberals who complained that the plan's central plank -- a government-financed "public option" for insurance -- had been watered down by the deal with party moderates.

"I think failure is not an option," Rep. Henry A. Waxman (D-Calif.), chairman of the Energy and Commerce Committee, told reporters. But he agreed to postpone until Thursday the conclusion of a legislative markup of the massive bill to address the liberals' concerns.

The House proposal was modified to meet the demands of the Blue Dog Coalition, a group of Democrats from largely rural districts who hold enough votes on Waxman's committee to sink the legislation there. The new proposal includes a public health insurance option to compete against private insurers, but it does not tie the payments to Medicare's rates of reimbursement to health-care providers, something many liberal lawmakers had sought. Instead, it calls for the health secretary to negotiate rates with hospitals and doctors, just as private insurance companies do.

Rural health-care providers generally receive less in Medicare reimbursements than their urban counterparts, and delinking the public plan from Medicare was considered critical for conservative Democrats. "We have saved America's rural hospitals from closure," said Rep. Mike Ross (D-Ark.), a Blue Dog leader on the committee.

Liberals countered that the compromise would help private insurers compete against the public plan, questioning how Ross could demand $100 billion in other savings while pushing for a provision that might prove costly. "I think this completely cripples the public option," said Rep. Raul M. Grijalva (D-Ariz.), co-chairman of the Progressive Caucus.

"It's very sobering," said Rep. Anna G. Eshoo (D-Calif.), a close ally of House Speaker Nancy Pelosi (D-Calif.). Pelosi oversaw the closed-door negotiations with White House Chief of Staff Rahm Emanuel, a nearly seven-hour marathon of talks Tuesday and a lunchtime meeting Wednesday.

The Blue Dogs also received assurances that the overall legislation would cost less than $1 trillion. In addition, they won a new exemption from taxes on businesses that do not provide insurance to employees, doubling the original exemption for companies with less than $250,000 in annual payroll to $500,000.

Dozens of Blue Dog Democrats, as well as moderates representing wealthy suburban districts, remain opposed to tax provisions that call for a surtax of 1 to 5.4 percent of annual income on households earning $350,000 or more. Those provisions are expected to be adjusted upward, perhaps capturing only millionaires, by the time the bill comes to the House floor in September.

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