Senate and House in search of health-care compromise

By Lori Montgomery and Alec MacGillis
Washington Post Staff Writer
Thursday, December 24, 2009; 8:10 AM

Now that the Senate has passed landmark health-care legislation with a rare Christmas Eve vote, the hardest work of all will begin: reckoning with long-standing differences between the House and Senate versions of reform and uniting behind a single bill that can be sent to the president.

Democrats are already outlining a strategy to achieve a final compromise that can satisfy the more liberal House without upsetting the painstakingly assembled coalition of 60 Senate Democrats and independents who gave final passage to their bill Thursday morning.

Central to those compromise talks, House leaders said, will be the search for an acceptable substitute for a government-run insurance plan that those without medical coverage could purchase, a provision the House designed to compete with private insurers and force them to rein in costs. While the Senate has decisively rejected the "public option," House leaders say they will demand other concessions to ensure that Americans can afford the insurance they will be required to buy if the bill becomes law.

"We have to be absolutely convinced that this is going to accomplish the goal of holding down the cost of health insurance. The American consumer cannot be left hostage to the whims of private insurance," said Rep. Chris Van Hollen (D-Md.), a member of the House leadership. "We're asking every American to share some responsibility in getting health insurance; we need to ensure that every American can afford it."

House Speaker Nancy Pelosi (D-Calif.) has signaled approval for the Senate's solution: the creation of at least two nationwide insurance plans run by private companies but overseen by the Office of Personnel Management, the same federal agency that handles health insurance for members of Congress. In a conference call Wednesday, Pelosi also assured rank-and-file Democrats that they would not be asked to rubber-stamp the Senate bill and began soliciting ideas to improve it.

Among the options under discussion: pressing the Senate to increase the federal subsidies that would be offered to low- and middle-income people who do not have access to affordable coverage through an employer; having a single national marketplace for people buying insurance, rather than 50 state-based exchanges, as the Senate prefers; and moving up the launch date of those marketplaces and subsidies to 2013, one year earlier than under the Senate bill.

With Democrats racing to finish work in time for President Obama's first State of the Union address in late January or early February, those changes promise to increase the cost of the $871 billion Senate package, which is already bumping up against the $900 billion cap Obama set this year.

"The tension is, the more you move toward the House bill, the more you have to pay for that," said Drew Altman, president of the Kaiser Family Foundation. "There isn't a lot of wiggle room financially, and there isn't a lot of wiggle room politically in any of this."

Other contentious issues must also be resolved in talks between the two chambers, including how to handle abortion coverage and whether to permit undocumented immigrants to use their own money to buy insurance on the exchanges. The House and Senate also differ on which taxes to raise to pay for the most dramatic expansion of insurance coverage since the 1965 creation of Medicare and how to enforce nearly $500 billion in proposed payment cuts to Medicare providers, another major source of financing.

The outlines of a compromise may be emerging on the financial issues. Obama said Wednesday that he expects the Senate's tax on high-cost insurance policies to be included in the final bill, despite persistent opposition in the House and among labor unions, which have bargained away wages for better coverage over the years. Economists say the "Cadillac tax" promises to control health-care costs by encouraging people to buy less luxurious coverage.

House leaders have proposed a surtax on millionaires, but aides say they may settle for an expanded version of the Senate's proposal to raise the Medicare payroll tax on annual income exceeding $200,000 for individuals and $250,000 for families, a less confrontational approach to taxing the wealthy.

The White House has also endorsed the Senate's plan to create an independent advisory board with broad powers to cut Medicare spending. Territorial House leaders are reluctant to relinquish congressional authority over the federal health program for retirees, but aides say they may be ready to broker a deal on that front as well.

Pelosi and Senate Majority Leader Harry M. Reid (D-Nev.) plan to talk next week about how to move forward, with the most likely course being informal negotiations rather than a formal conference committee. That would give negotiators more flexibility to come up with new policies in service of a compromise and eliminate some complicated procedural obstacles.

Negotiators from both chambers could rewrite the Senate bill and send it to the House for a vote. The Senate then would give it final approval. Pelosi has asked key House chairmen to return to Washington in the first week in January to launch that effort, with the full House due back a week later. The Senate is out until Jan. 19, leaving little time to push through a final bill.

Senate Republicans have vowed to fight the Senate bill with every parliamentary weapon they can muster. Over the past week, they have forced the Senate to work virtually round the clock, holding votes at odd hours, to finish the Senate bill by Christmas. Late Wednesday afternoon, the Senate voted 60 to 39 to turn back the third and final Republican filibuster attempt.

"We stand on the doorstep of history," Reid said afterward.

Clearly exhausted, Reid told reporters to expect further details on reconciling the two bills "after I go home to Searchlight," his desert home town in Nevada. "But for the time being," he said, "I'm going to focus on this bill passing in the morning. And for a few days after that, frankly, I am going to just sit back and watch my rabbits eat my cactus."

With Thursday's vote, both chambers of Congress will have given preliminary approval to health packages that share remarkably similar visions of reform, despite the remaining differences. Both seek to extend coverage to millions of Americans, in part by establishing insurance exchanges operated by government officials who would be empowered to monitor price increases and the quality of coverage, and to negotiate with insurers. That job would fall to each state in the Senate bill and to the federal government in the House bill.

Both bills also call for the biggest expansion of Medicaid since its creation, guaranteeing public insurance to everyone in the nation under a certain income level, regardless of family status. The House bill is more generous, offering Medicaid eligibility to anyone who earns less than 150 percent of the federal poverty level (a little more than $16,000 a year for an individual), compared with a 133 percent cap in the Senate bill.

Both bills would create a system of insurance subsidies for people who earn less than 400 percent of the federal poverty level (about $88,000 for a family of four) to limit the share of income they would have to spend on premiums. The House bill is more generous to people at the lower end of the scale, while the Senate would offer more assistance at the upper end, capping premium costs at 9.8 percent of income compared with 12 percent in the House bill.

The House bill would cover more people, as many as 36 million, according to congressional budget analysts, compared with 31 million under the Senate bill. But it would cost more than $1 trillion over the next decade, compared with the Senate's $871 billion package.

Many health policy experts are urging the House to press for its national version of the exchange, arguing that state officials would be less likely to enforce new insurance regulations and seek out the best deals for consumers.

"There are hundreds of thousands of decisions that need to be made as these things are being put into place that affect access and costs in a very significant way," said Linda Blumberg of the Urban Institute. "There's a lot at stake here, and we need to be defaulting on the side of uniformity."

The national exchange may also have a political advantage, by appealing to frustrated supporters of the government-run insurance option, who believe they have sacrificed too much.

"It's the last big bone for the liberal camp to build up a more significant role for the federal government, to have a structure to build on for the future," Altman said.

Staff writer Shailagh Murray contributed to this report.

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