House leaders announce $940 billion health-care compromise bill

By Lori Montgomery and Paul Kane
Washington Post Staff Writer
Friday, March 19, 2010; A01

Pushing toward a Sunday vote that could transform the nation's health-insurance system, House leaders announced a $940 billion compromise Thursday that would extend coverage to the vast majority of Americans, cut billions of dollars from Medicare, and impose new taxes on the wealthy and the well-insured.

The proposal, a rewrite of a slightly narrower health-care bill the Senate passed on Christmas Eve, would also significantly expand the federal student loan program, offering President Obama the prospect of victory on two of his most important domestic initiatives after a year of legislative stalemate. The stakes are so high and the outcome so uncertain that Obama canceled a trip to Indonesia and Australia to continue lobbying undecided lawmakers with phone calls and invitations to White House meetings.

"Our international alliances are critical to America's security and economic progress," White House press secretary Robert Gibbs said. "But passage of health-insurance reform is of paramount importance, and the president is determined to see this battle through."

House Democratic leaders hope to approve the Senate bill along with a separate 153-page package of revisions to that bill that House members are demanding. The compromise would extend coverage to an additional 32 million Americans over the next decade by expanding Medicaid eligibility and creating state-run insurance exchanges and federal subsidies for lower-income families who lack access to employer-provided coverage.

All Americans would be required for the first time to obtain insurance or face an annual penalty of $695; employers could face penalties of $2,000 per worker for not offering affordable coverage. In exchange for the new business, private insurers would be subject to an array of rules, including a ban on the practice of denying coverage to people with preexisting medical conditions and a requirement that adult children be permitted to stay on their parents' policies until age 26.

Compared with the Senate bill, the compromise would offer more generous tax credits to people who may otherwise be unable to afford insurance and would fully close the "doughnut hole" -- a gap in the Medicare prescription drug program that is costly for many seniors -- beginning with a $250 rebate for those affected this year.

It would eliminate the most politically contentious of several deals cut to win the votes of recalcitrant lawmakers by extending to all states a promise of Medicaid funding that had originally been offered only to Nebraska. And it would delay until 2018 the implementation of a 40 percent tax on high-cost insurance policies.

To cover the cost of those changes, the compromise would impose a 3.8 percent Medicare tax on investment income for wealthy taxpayers, a levy that would come in addition to a Senate-proposed increase in the regular payroll tax for those families. And it would slice an additional $60 billion from Medicare, with the privately run program known as Medicare Advantage targeted for particularly deep cuts, bringing the total reduction in projected spending on the program to more than $500 billion over the next decade.

Republicans remained unified in their opposition to the legislation, vowing to block a bill they condemn as a dangerous and budget-busting intrusion into the private health-care system. As House Republicans angled to prevent passage in the anticipated Sunday vote, Senate Republicans laid procedural traps for the package of revisions. If it survives, that measure would go to the Senate for approval next week under special rules that protect it from a GOP filibuster.

"The American people are saying 'Stop!' and they're screaming at the top of their lungs," said House Minority Leader John A. Boehner (Ohio). Republicans will "do everything that we can do to make sure that this bill never, ever, ever passes."

If Democrats prevail in the House, Obama is expected to sign the Senate version of the legislation soon after Sunday's vote, enacting the most far-reaching expansion of the nation's health-care system since Medicare was created in 1965 even if the Senate cannot pass the revision package the following week. While the major pieces of the coverage expansion would not be implemented until 2014, consumers would quickly see a variety of benefits, including a ban on insurance industry practices such as dropping people from coverage when they get sick or limiting lifetime benefits. Private insurers would also be required to fully cover preventive care without deductibles or co-payments.

House Democrats defended the new package, which received a major boost Thursday when the nonpartisan Congressional Budget Office projected that it would reduce deficits by about $138 billion over the next 10 years and by about $1.2 trillion in the decade thereafter. Republicans quickly noted that those numbers represent a tiny fraction of the huge deficits projected for that period. But House Speaker Nancy Pelosi (D-Calif.) was jubilant, calling the bill "a triumph for the American people in terms of deficit-reduction."

Pelosi's lieutenants held out hope that the numbers would sway fiscal conservatives, who formed the largest bloc of "no" votes when the House passed a more costly health-care bill in November.

Senior Democrats acknowledged, however, that the frenzy of last-minute lobbying is likely to go down to the wire, as they struggle to persuade about 30 wavering lawmakers -- mainly abortion opponents and Democrats from Republican-leaning swing districts -- to help assemble the 216 votes needed to move the package to final passage.

Throughout the day, a flurry of lawmakers announced plans to switch from one column to another. A pair of second-term Democrats -- Michael Arcuri (N.Y.) and Zack Space (Ohio) -- told House leaders they were leaning against the legislation after voting "yes" in November. Obama brought a third potential "no" voter, Rep. Stephen F. Lynch (D-Mass.), into the Oval Office for a face-to-face discussion. Before the meeting, Lynch criticized the compromise, bemoaning the lack of a government-run insurance option and calling it "a great bill if you're an insurance company."

Those losses were mitigated by a pair of converts to Obama's cause: Reps. Bart Gordon (D-Tenn.), who is retiring and faces no political repercussions from his vote, and Betsy Markey (D-Colo.), a freshman running in a suburban Denver swing district. Republicans issued a statement saying "bye bye Betsy" and predicted her defeat in the November midterm elections.

The 23-member Congressional Hispanic Caucus, meanwhile, announced that it would support the compromise despite a provision in the Senate bill that would bar illegal immigrants from buying insurance through the exchanges.

As it did in November, the final outcome could hinge on a bloc of antiabortion Democrats who voted "yes" on the House bill but fear the Senate bill would open the door to federal funding of abortion. Rep. Brad Ellsworth (D-Ind.), a bellwether among conservative Democrats, said the abortion issue had prompted much soul-searching.

"Certainly you listen to people back home. But pressure from phone calls from down the road or down the hall absolutely don't weigh into this," he said. "I have to be able to put my head on the pillow at night and say I did it in good faith. . . . And I'll sleep comfortably when I make that decision."

Staff writer Amy Goldstein contributed to this report.

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