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Deficit Plays Into Health Reform

Senate Finance Committee Chairman Max Baucus says his bipartisan plan would save the government money by 2019.
Senate Finance Committee Chairman Max Baucus says his bipartisan plan would save the government money by 2019. (By J. Scott Applewhite -- Associated Press)

The measure contains a variety of other provisions aimed at bending the soaring trajectory of federal health spending, including a tax on insurance companies that offer very high-cost policies. Such policies help to drive up health-care costs, economists say. And it would create an independent commission empowered to cut Medicare spending to meet pre-set savings targets. Both ideas are being discussed in the House as well, House Democratic aides said.

While the Baucus plan is less generous than some Democrats would like -- the proposal would offer federal subsidies to a family of four if it earns less than $66,150 a year, compared with $88,000 in the original House measure -- other Democrats and several Republicans said it is more important for the proposal to save the government money.

"You won't get a Republican to sign on if it does not," said Sen. Olympia J. Snowe (Maine), one of three Republicans involved in the Finance Committee negotiations. "At this precarious time in our nation's history, frankly, we have to be rigorous in our fiscal approach. There's just no latitude."

Snowe and other Republicans are counseling Obama to scale back his expectations, not only to cut costs but also to deflate hysteria over reform. In a meeting at the White House last week, Snowe said she urged Obama to seek "practical" changes that "don't create too much upheaval and uncertainty."

Former Senate majority leader Robert J. Dole, a champion of bipartisan health-care reform who has been urging his former GOP colleagues to "stay in the game," echoed Snowe's remarks.

"Maybe we can't solve it all this year. If they can do half of it, it would be a miracle," Dole said. "And it would go down as a great example of bipartisanship and what a new president can do when he becomes a realist."

Dole added: "Republicans don't have to do anything. They see [Obama's poll] numbers falling and people protesting." But "we are not the 'no' party," he said. "I think a lot of Republicans do want to get a bill."

Among them are Sens. Bob Corker (Tenn.) and Judd Gregg (N.H.). Both say they are closely watching the Finance Committee talks. Corker wants to see Baucus go even further to reduce future deficits by offering a solution to the thorny problem of Medicare payments to doctors, which are scheduled to be cut by 21 percent in January. The Baucus bill contains $11 billion to delay the cut for one year, but Congress would have to come up with $285 billion to fix it for the next decade.

Gregg said that it is too early to tell whether he will support the Finance Committee bill but that the group is "saying the right things," including emphasizing debt reduction. Indeed, Gregg said, the health-care debate has exposed a fresh willingness in Congress to make "tough decisions" to fix the nation's budget problems, prompting him and Sen. Kent Conrad (D-N.D.), a member of Baucus's working group and chairman of the Senate Budget Committee, to revive their proposal for an independent commission to work on Social Security and the tax code, as well as federal health programs.

Conrad said he was "cautiously optimistic" that the Finance Committee's talks would succeed. "But this effort, while necessary, is not sufficient" to solve all the nation's budget problems, he said.

The committee's goal is to reach a deal by Sept. 15. If the talks fail or bog down again, Democrats could abandon the bipartisan effort and try to pass a health bill on their own.

But even if that happens, Democrats might find that they lack the votes to pass any plan that does not make good on Obama's pledge that health reform means entitlement reform.

"When I look at the federal budget and realize that if we don't control costs on health care, there is no way for us to close the budget deficit, it will just keep on skyrocketing . . . ," Obama said at a town hall meeting Tuesday, "I say, we have to get it done."

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