Health Care Reform Enters Critical Phase

After months of discussion and with a self-imposed fall deadline looming over Congress, the debate over health care reform has reached a critical juncture.

"It's time to deliver," President Obama said on Saturday. So with Washington starting to make progress on major changes to the nation's health care system, the president today heads to Wisconsin for a town hall meeting about health care -- to get the public on his side while Congress works through the sticking points of reform.

Meanwhile, Senate Democrats unveiled a draft bill on Tuesday that would require every American, except for those who cannot afford it, to obtain health insurance and that would create "health benefit gateways" through which to purchase it.

While that proposal still faces strong opposition, the 615-page document only brushes over even more contentious issues -- such as establishing a government-sponsored insurance plan (or a "public option"), and how to pay for an expansion of health care that could cost more than a trillion dollars. Senators will also have to address whether to require employers to contribute to coverage, another hot button issue, known as "pay or play," that is only mentioned the draft.

Similar legislation is in the works in the House, and a draft is expected to be available by the end of next week.

The Senate committee that issued the draft legislation is slated to hear today from no fewer than 24 health care experts -- including medical doctors, top executives from insurance companies, economists and union leaders -- in its first hearing since the text of the legislation was released.

Mr. Obama is stepping up his own involvement in the debate, with town hall meetings, speeches, and other means of promoting the principles he seeks to include in the bill: universal access to affordable and quality care, patient choice and reduced costs. The president personally appealed to grassroots mobilizers in a conference call last month hosted by Organizing for America, Mr. Obama's political arm of the Democratic National Committee. On its web site, OFA, which has its roots in Mr. Obama's presidential campaign, says the president believes health care reform "must" include a public option.

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Obama Pushes Public Health Care Option At Town Hall
House Leaders Duel Over Health Care

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Mr. Obama will also very soon reveal a plan to pay for a large chunk of his reform proposals through $200 to $300 billion in Medicare and Medicaid savings. The president's plan has been estimated to potentially cost more than $1 trillion over 10 years, and Mr. Obama has already allocated $634 billion in his budget for health care.

While the cost of his plan and his support for the public option will make it difficult for Mr. Obama to win over Republicans, he has made it clear he would like to sign a bipartisan bill. He does not have to, however, since the Democratic Congress has reserved itself the right to use the budget reconciliation process to pass health reform, which would only require 51 votes instead of 60 to break a filibuster. Congress is aiming to get a bill to the president's desk by October.

Democratic leaders in the House and the Senate are also emphatic the final bill should get bipartisan support. As they grapple with differences of opinion over fundamental principles of reform, the party must also resolve disagreements within its own ranks over how to shape the legislation.

The administration argues that not passing health care reform legislation that meets the president's goals would be a disservice to the nation. Currently about 46 million Americans are uninsured, and that number could rise if costs are not reined in. Health care expenditures account for 18 percent of GDP in the United States, Mr. Obama's Council of Economic Advisers reported, and could account for 34 percent by 2040 if costs continue to grow.

The Public Plan

Advocates for reform say the public option would help make health care more affordable for consumers. A well-cited study by the Lewin Group shows that if Medicare payment levels were used in the public plan, premiums would be up to 30 percent less than premiums for comparable private coverage. The study estimates more than 119 million people would switch from private to public insurance if the plan were open to everyone.

But a government-sponsored plan would ultimately lead to a government "monopoly" over health care, some conservatives argue, thereby stripping patients of choice.

In a letter to the president Monday, nine Senate Republicans from one of the committees responsible for health care characterized this shift in care as "119.1 million Americans losing their private coverage."

"Forcing free market plans to compete with these government-run programs would create an unlevel playing field and inevitably doom true competition," the letter says.

Sen. Ted Kennedy (D-Mass.), who has led health care reform in the Senate Health, Education, Labor and Pensions (HELP) Committee and introduced the bill now in play, has emphasized his support for a public option but acknowledged in a statement at the bill's release that "much work remains, and the coming days and weeks won't be easy."
The HELP committee will begin the "mark up" process of amending the bill on Tuesday and aims to ready the bill for a full Senate vote by the second half of July.

The Cost

Democrats and Republicans will also surely fight over the cost of health care reform -- a responsibility that falls more on the Senate Finance Committee, which is working on its own bill under the leadership of Chairman Max Baucus (D-Mont.).

Baucus has told reporters the reform package may tax a portion of employer-provided benefits, though it may only cap the current tax exclusion at a high rate, rather than eliminate it all together.

"This would be set at a high enough level where it wouldn't affect very many people," Baucus said, according to the Wall Street Journal. He said legislators are aiming to raise as much as half of the $1.2 trillion needed for reform through new taxes.

Some point out that the tax exclusion is regressive, so taxing benefits would even out the economic playing field. It could anger taxpayers, however.

Moreover, it could create a sticky political sitution for Mr. Obama, who during the presidential campaign opposed Republican John McCain's proposal to tax health benefits. Senior Presidential Adviser David Axelrod told CNN on Sunday that the president is not interested in the proposal to tax benefits and would rather see Congress limit tax deductions for the rich.

"He made a very strong case for the proposal that he put on the table, which was to cap deductions for high-income Americans, and he urged them to go back and look at that," Axelrod said on CNN's "State of the Union."

The president is insisting the health care bill be budget nuetral over the next five to 10 years, and that it implement long term cost solutions like the use of health information technology and "comparative effectiveness research."

Is There A Bipartisan Solution?

Sen. Chris Dodd (D-Conn.), a senior member of the HELP Committee, said the committee left details out of the bill about the public option and cost because, "I wanted my Republican colleagues on the committee to know I wanted to their ideas. I want to hear what they have to say." Dodd is currently leading HELP Committee efforts on the health legislation due to Kennedy's poor health, which has kept him out of Washington.

What many Republicans and Democrats have had to say so far, however, does not bode well for a compromise. While liberals in Congress have insisted reform must include a public plan, Republicans are saying just the opposite.

"A public plan is a nonstarter," Sen. Orrin Hatch (R-Utah) said Monday, according to CNN. "They're trying to come up with various ways to have a public plan without calling it that."

In fact, there is one alternative to the public plan that leaves the government out of the equation and is drawing attention on Capitol Hill. Sen. Kent Conrad (D-N.D.) has proposed setting up non-profit health care cooperatives owned by groups of residents and small businesses.

"The strength of this proposal is that it accomplishes much of what those who want a public option are calling for - that is, something to compete with private for-profit insurance companies," Conrad said, according to the New York Times.

"It's got possibilities," Sen. Chuck Grassley (R-Iowa), ranking member of the Finance Committee, said, according to the Associated Press. "There were lots of questions raised about it not outright objections in our caucus, but a lot of questions."

Liberal advocacy groups are pushing back against the idea, though. The group Health Care for America Now said Wednesday that Conrad's plan does not have the same bargaining clout to control costs or keep insurers honest that would make a public option so appealing.

Sen. Jay Rockefeller (D-W.V.), a senior member of the Finance Committee, revealed on Wednesday his own version of a public option. His legislation would enact a public option within a national health insurance exchange and set up a non-profit health insurance trust to evaluate and give ratings to all health care products in the exchange.

"Without the steady, positive influence of a public plan option in the marketplace, we will never truly solve the health care crisis in this country," he said in a statement.

In the House, some members of the Blue Dog Coalition, a group of fiscally conservative Democrats, have said that the public option should only be enacted as a last resort.

While Congress hashes out its differences, the pressure is mounting to get something done.

Pragmatically speaking, Democrats may never again have the political clout they currently have or a president with so much political capital -- making this the ideal time to push through a major overhaul of the nation's health care system. Moreover, many contend bloated health care costs have brought the nation to its breaking point on the issue.

"We know what's at stake," the president told his grassroots supporters last month. "If we don't get it done this year, we're not going to get it done."