Baucus Measure Would Expand Care Without Adding to Deficit
Attempt at Compromise in Senate Draws No GOP Support

By Lori Montgomery and Shailagh Murray
Washington Post Staff Writers
Thursday, September 17, 2009

A year-long effort by senators to draft a bipartisan overhaul of the nation's health-care system on Wednesday yielded the only congressional proposal that would extend coverage to millions of uninsured Americans while making good on President Obama's pledge not to add "one dime" to budget deficits.

But the $774 billion proposal has not attracted any Republican support and has drawn a lukewarm response from Democrats, who say it would require many people to buy insurance policies they cannot afford.

What some lawmakers view as stingy, however, others called laudably frugal: The nonpartisan Congressional Budget Office forecast that the plan would generate more than enough cash to expand coverage to nearly 30 million more Americans, reducing budget deficits by nearly $50 billion over the next decade and by even more after that -- a goal Obama and other Democrats have set as one of the most critical objectives of health-care reform.

Senate Finance Chairman Max Baucus (D-Mont.), the plan's sponsor, hailed it as "one of the largest pieces of social legislation in the history of our country since the Depression" and said it represents "a balanced and common-sense" approach to health-care reform that can pass Congress by the end of the year.

But after working for months on the package with three Republicans and two Democrats -- the "Gang of Six" -- Baucus stood alone at the lectern when he announced it to reporters, and he acknowledged that the full Finance Committee may substantially revise the legislation.

The White House underscored that point. Press secretary Robert Gibbs on Wednesday called the proposal "an important building block [that] gets us closer to comprehensive health reform," Obama's signature domestic initiative, but he added that the White House expects that "Republicans, certainly, on the committee will offer amendments to change the bill."

Although she decided not to endorse the measure, Sen. Olympia J. Snowe (Maine), a moderate Republican, insisted that prospects for a bipartisan deal are not dead.

"Those of us as members of the bipartisan Group of Six fully intend to keep meeting, moving forward and continuing to work with the Chairman during the committee process," Snowe said Wednesday in a statement, "toward crafting a bill that I, and hopefully other Republican members of the Finance Committee, can support."

Baucus's proposal would dramatically expand eligibility for Medicaid, the government health-care program that covers the poor. It would also set up a new system of insurance "exchanges," where millions of people without access to affordable coverage through an employer could find high-quality insurance at rates heavily subsidized by the federal government.

In a preliminary analysis, the CBO said the package would cover 94 percent of Americans by 2019, leaving 25 million people uninsured -- a third of them illegal immigrants who would not be eligible to participate in the exchanges.

To pay for expanding coverage, Baucus proposes cutting payments to hospitals and other providers that serve recipients of Medicare, the federal health-care program for the elderly, and to tax, for the first time, the nation's most generous health insurance policies. The package also would impose $93 billion in fees on insurance companies, drugmakers and other sectors of the health-care industry. And it would collect nearly $50 billion in penalties from people who do not obtain health insurance and employers who do not offer their workers affordable options for coverage.

Because the value of those provisions would grow faster than the cost of expanding coverage, the package would reduce budget deficits now and in the foreseeable future, the CBO said. But CBO Director Douglas W. Elmendorf cautioned in a letter to Baucus that "the long-term budgetary impact could be quite different" if lawmakers found a way to short-circuit the most painful provisions, as Congress has done repeatedly in the past.

Indeed, even as the package proposes to slice hundreds of billions of dollars from Medicare spending, critics noted, it also would thwart a cost-control mechanism -- enacted years ago -- that requires Medicare to reduce payments to doctors. Next year, instead of docking doctors 21 percent, Baucus proposes to give them a small raise.

"Congress can take it away, but they always end up giving back again," said Robert Moffitt, director of the Heritage Foundation's Center for Health Policy. "And that's why Medicare cuts are always a problem."

Baucus's bill would create an independent 15-member commission empowered to enforce the savings goals, and lawmakers would be required either to accept the panel's recommendations or to come up with alternative proposals to cut Medicare costs. But the commission would be prohibited from modifying Medicare eligibility or benefits, which health analysts noted would effectively confine its authority to mandating further cuts in payment rates.

"What we really need to do is reform the Medicare program, but this commission would make it more difficult to do that," said James Capretta, a health policy official in the Bush administration who is now at the nonprofit Ethics and Public Policy Center.

While budget hawks fretted about the potential impact of health-care reform on deficits, liberals expressed concern about the possible effect on people. Liberal Democrats fumed that Baucus had dropped the idea of a government-run insurance plan to compete with private insurance companies in favor of a national network of member-run cooperatives -- an alternative the CBO said seems "unlikely to establish a significant market presence in many areas of the country."

House Democrats, who would prefer to finance health-care reform with a surtax on the rich, worried that Baucus's tax on high-cost insurance plans would fall heavily on the generous policies held by many union members. And many Democrats in Congress and out said that the tax credits Baucus proposes to give low- and middle-income workers are too stingy to make insurance premiums affordable.

According to the CBO, about 18 million people would receive federal subsidies under the Baucus plan, but some would be forced to spend as much as 13 percent of their income on premiums -- more than $4,200 a year for an individual making about $32,000 a year. Other workers would be forced to buy through their employers insurance they had previously found to be unaffordable, or else face substantial penalties.

Aides to Baucus said that insurance reforms in the package should substantially lower premiums for many people, and they noted that a generous hardship waiver would keep others from paying the penalty for not obtaining insurance.

Still, Sen. John D. Rockefeller IV (W.Va.), a senior Democrat on the Finance Committee, said he would not support the bill, and he complained to Obama at a White House meeting Wednesday afternoon. Sen. Russell Feingold (D-Wis.) also pronounced himself dissatisfied: "I hope my colleagues on the Finance Committee will change the bill to ensure it is not just health-care reform in name only," he said.

The Gang of Six negotiations were intended to craft a bill that at least some Republicans could support and that the health-insurance industry could tolerate. But Baucus's plodding, methodical approach made for slow progress, maddening many of his Democratic colleagues.

Democratic leaders could not move forward without him, however. His committee's jurisdiction over health care is broad, encompassing Medicare, Medicaid and tax policy. And Baucus was the only congressional chairman making an effort to woo Republicans -- if nothing else, a vital public relations exercise for Obama that allowed Democratic leaders to draw a contrast with the Republicans' "just say no" approach.

While offering muted praise for the results of Baucus's efforts, Democrats expressed much relief that he had moved forward. Senate Majority Leader Harry M. Reid (Nev.) called the package "another important piece of the puzzle" that "brings us a step closer to having a comprehensive health insurance reform bill on the Senate floor."

Sen. Bill Nelson (Fla.), a Finance Committee member, called the bill a "starting point" and said he would seek changes that protect the many people in his state who are covered by a private plan known as Medicare Advantage. Baucus has targeted the program for $123 billion in cuts, one of the largest sources of Medicare savings in the bill.

Many Republicans, meanwhile, dismissed the proposal as a partisan effort. Sen. John Cornyn (Tex.), a member of the GOP leadership, said he had "serious concerns with many of its proposals." And House Minority Leader John A. Boehner (Ohio) called it "the wrong prescription during these tough economic times."

The full Finance Committee is scheduled to take up Baucus's proposal next week.

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