Reid pushes for votes on health-care bill
CBO analysis of public option is an obstacle

By Lori Montgomery and Shailagh Murray
Washington Post Staff Writer
Friday, November 20, 2009

Senate Majority Leader Harry M. Reid worked Thursday to nail down the votes needed to move to a final debate on health-care legislation, but a tepid assessment of the public insurance plan he crafted emerged as the latest potential obstacle to the passage of the far-reaching changes.

The first test for the bill, which would extend coverage to 31 million more Americans while reducing federal deficits by $130 billion over the next decade, will come Saturday evening. That is when Democratic leaders hope to keep together all 60 of their caucus members to turn back Republican procedural objections. Reid's efforts are focused on three moderate Democrats who oppose various provisions in the measure and have not declared whether they will support efforts to advance it.

Republicans have charged that creating a government-run insurance program would amount to a federal takeover of the health-care system. But a new Congressional Budget Office analysis of the dramatically scaled-down public plan that Reid (D-Nev.) included in his $848 billion measure said it would have relatively little impact on the current system, would charge "somewhat higher" premiums than its private competitors and would draw only about 4 million subscribers.

The decision to permit states to opt out of the public plan is partly to blame for the Reid proposal's lack of reach, as it would leave about a third of the people in the country without access to the program, according to the CBO's calculation. But even the national plan approved by the House this month would attract only about 6 million people, the nonpartisan group has said, primarily because it would lack the tools to keep costs and premiums down.

"This is an example of a weak version of the public option, and it raises the question: Why are we doing this at all?" said John Holahan, director of the Health Policy Research Center at the liberal Urban Institute. "If your goal is cost-containment and lower government subsidy costs, this isn't working, and the CBO is telling them that."

Reid surprised many colleagues when he announced in late October that he would include a public option, a contentious provision favored by liberals but unpopular with some centrists. The decision was based on a simple calculation: It would be easier to negotiate with a handful of unhappy moderates than with a much larger faction of disgruntled liberals.

But Reid's proposed compromise, a public option with an opt-out clause, has gained detractors in both camps. Sen. Joseph I. Lieberman (Conn.), an independent who caucuses with Democrats, said he supports much of the measure and will vote with Democrats on Saturday to begin debate. But Lieberman has said he would vote against final passage if the bill includes any version of a government insurance plan -- forcing Reid to convert at least one Republican to advance the initiative to final negotiations with the House.

Sen. John D. Rockefeller IV (D-W.Va.), a leading proponent of the public option, said he is willing to accept Reid's opt-out clause. "I understand the reasons for it at this particular point," he said. But he added that he would "probably" offer an amendment to strengthen the public plan by requiring it to pay hospitals and other providers based on Medicare rates, which are typically much lower than those paid by private insurers.

Health policy experts said that would give the public plan a big competitive advantage over the version proposed by Reid and approved by the House. Both of those provisions would require federal health officials to negotiate rates directly with providers, a system that would leave the government generally paying the same rates paid by private insurers, the CBO said.

The public plan would probably charge higher premiums, however, because federal health officials would be unlikely to employ the sort of hard-nosed tactics private firms use to keep costs down, such as denying certain medical procedures, according to the CBO analysis. That would attract sicker people to the public plan, forcing it to charge higher premiums.

Both the Senate and the House would also strictly limit participation in the public plan to people who do not have access to affordable insurance through an employer, or those who work for small businesses and are eligible to shop in new, state-run insurance exchanges in which the public plan would be offered alongside private policies.

Working-class and middle-class people would be eligible for federal subsidies. In its analysis of the Senate bill, the CBO estimated that the exchanges would attract 30 million people by 2019. Because of the public plan's higher premiums and the state opt-out provision, the CBO said, only about one in eight in that group would be likely to choose the public plan.

Charging providers Medicare rates would cut costs substantially, the CBO has said. But that idea is strongly opposed by moderate Democrats, who are wary of such an extensive government involvement in the private insurance market, as well as Sen. Olympia J. Snowe (Maine), the only Republican who has so far voted with Democrats to advance President Obama's health-care initiative.

As it stands, Snowe said she is not happy with Reid's package, and has informed him that he will not have her vote Saturday. But Snowe said she would seek to amend the measure to lighten the financial burden it would place on small businesses whose workers received federal subsidies to buy insurance. She is also pressing for a trigger approach to the public option that would make it available only in states where private firms did not develop broadly affordable policies.

At a news conference Thursday, Reid defended his version of the public plan. He called it "an adequate and, I think, very powerful and robust public option," and expressed confidence that he will have the votes to prevail on Saturday.

Another flash point is abortion, although it remained unclear whether the issue would influence the Senate vote, as it did in the House. Sen. Ben Nelson (D-Neb.), an abortion opponent, said he was unsatisfied with the Senate language on the issue, which would permit federal health officials to offer abortion coverage through the public plan only if government accountants determined no federal money would be used to provide the service.

Nelson and fellow Democratic centrists Mary Landrieu (La.) and Blanche Lincoln (Ark.) remain the biggest question marks for party leaders as Saturday's vote approaches.

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