July a Banner Month for Health Care Reform: Three Bills, Big Debates Loom

Three groups in Congress have been working for months to refashion America’s ailing health care system. Soon they’ll announce their different solutions and then the real challenge will begin—melding all those ideas into legislation that can be passed and can be on President Barack Obama’s desk by October.

The Senate Health, Education, Labor and Pensions Committee is closest to finishing its bill, which is drawing criticism from Republicans who contend that it’s too expensive and injects too much government into the doctor-patient relationship.

The Senate Finance Committee has taken a different approach—trying to work across party lines to come up with a more moderate bipartisan proposal.

In the House, Democrats on all three of the committees with jurisdiction over health care are writing their proposal together, but Republicans say their approach is also too expensive and could lead to rationing of health care.

After this week’s Fourth of July recess, the Senate Finance Committee and the three House committees are expected to start to debate and pass their measures, while the Senate health committee will finish voting on its bill.

What’s at stake for older Americans

As Congress weighs the three approaches to reform, older Americans have a lot at stake. The final health care bill is likely to limit how much extra insurance companies can charge older Americans for their premiums. Currently, many pay five or even 10 times more than younger policy holders. That change would be a real improvement, according to John Rother, AARP’s director of policy and strategy.

And the insurance industry has offered to stop denying coverage to people with preexisting conditions, and to stop charging them more based on gender or health conditions—changes that could benefit the 7 million uninsured Americans ages 50 to 64, many of whom have been denied coverage or forced to pay higher premiums because of chronic conditions.

Any health care reform legislation also is expected to provide relief for millions of Medicare beneficiaries who fall into the notorious Part D prescription drug coverage gap known as the doughnut hole. Obama recently announced a deal with major drug manufacturers to cut in half the prescription drug expenses of those who fall into the hole. They would only pay 50 percent of the costs of their brand-name medications in the gap instead of the 100 percent they pay now. AARP’s CEO A. Barry Rand said the new benefit will mean “the doughnut hole will be substantially filled for millions of middle-income Americans as part of health care reform.”

But older Americans also could be affected by other changes to Medicare. President Obama has proposed more than $900 billion in savings from Medicare and Medicaid. These include reducing waste and fraud; changing the system of payments to doctors and hospitals to reward them for quality of care rather than the number of patients they see or the tests they prescribe; cutting federal payments to Medicare Advantage health plans; and charging wealthy seniors more for Medicare drug coverage.

Although the three groups in Congress differ on some important issues, they agree that more poor families should become eligible for Medicaid, moderate income families should get subsidies for health insurance and everyone should be required to have some form of insurance.

“There’s agreement on about 80, 85 percent of the bill. That’s something we’ve never had before,” said Ron Pollack, head of Families USA, and a longtime proponent of health care reform.

Karl Marx, Adam Smith or Darth Vader

So many are trying so hard to reform health care because lawmakers seriously believe the current system is unsustainable—it costs too much for government, employers and individuals and leaves an estimated 47 million people with no coverage. But how to cover those 47 million, improve the quality of care and reduce skyrocketing medical costs is a complicated question for Congress.

The Senate health committee bill, the first detailed reform package, drew mostly criticism from Republicans. Sen. Judd Gregg, R-N.H., said it looked like it had been created by “Rube Goldberg, Ira Magaziner [a Clinton health care aide] and Karl Marx.”

But Sen. Barbara Mikulski, D-Md., countered that the current system could have been cobbled together by “Adam Smith, Darth Vader and invasion of the body snatchers.”

Paying for health care reforms

Much of the argument now is over how to pay for expanding health care coverage, whether employers should be required to help finance health care, and whether a government insurance plan should compete with private insurers to provide insurance for people who have trouble affording coverage.

Advocates say a public plan will prod insurance companies to reduce premiums and ensure that struggling families have an affordable option for care. Opponents say it would drive private insurance companies out of business, eventually leaving Americans with one government-run insurance option. Gregg calls it a “greased slide” toward nationalized health care.

President Obama backs the idea of a public plan. But in a recent news conference he passed on the chance to say it’s nonnegotiable. “We are still early in this process, so we have not drawn lines in the sand other than that reform has to control costs and that it has to provide relief to people who don’t have health insurance or are underinsured,” Obama said.

While the Senate health committee and House bills both include the public plan, the Senate Finance Committee is considering other options, such as private cooperatives that offer group coverage to people who previously couldn’t afford to buy insurance individually, or a public plan that is only created if the private insurance market fails to offer affordable options.

Bipartisan suggestions

Three former Senate majority leaders proved a bipartisan agreement is possible both from a policy and a political standpoint, says Mark McClellan, who heads up the Engelberg Center for Health Care Reform at the Brookings Institution and was the head of the Centers for Medicare and Medicaid Services under President George W. Bush.

On the sticky issue of a public plan, the two Republicans, Robert Dole and Howard Baker, along with Democrat Tom Daschle, proposed letting states decide whether to offer government-run state plans instead of a national plan.

Another flash point—taxes on health benefits. Workers now pay no taxes on the premiums their employers pay out for their health coverage. As lawmakers scramble for ways to pay for reform, they may tax wealthier employees on their premiums or tax anyone whose premium is above a certain average dollar amount.

The big bill

Finding the money to pay for reform likely will be a major focus of the July debate. Widespread agreement that the health care system needs to change met with sticker shock in June as the Congressional Budget Office started parsing out how much each proposal would cost over the next 10 years.

Although the Senate Finance Committee hasn’t released details of its bill yet, Sen. Max Baucus, D-Mont., said the cost is now below $1 trillion. An early version of the Senate health bill was pegged at $1 trillion even without some expensive portions of the proposal.

But McClellan, the former Bush health care aide, says the bill will likely cost $1 trillion to $1.5 trillion. And though that sounds like a lot, he says, the country will spend more than $30 trillion on health care during the next 10 years. The allure of reform done right, he notes, is that it can reduce the growth in health care costs.

“It’s a big part of the economy,” he says, “and costs are going to be very high if we don’t do anything.”

Tamara Lytle was a correspondent and Washington bureau chief for the Orlando Sentinel from 1997 to 2008.