Perspective
Nearing Negotiations — Reconciling Key Differences between House and Senate Reform Measures
N Engl J Med 2010; 362:e8January 21, 2010
- Article
With Republicans unanimously opposed to the Democrats' health care reform, the challenge of melding the House and Senate reform bills has fallen to House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV). To broker a deal by the end of January on the most expansive health care legislation in a generation, Democrats must reach agreement on some contentious issues and keep the total cost under the administration's limit of $900 billion over a decade. Among the key issues are how to pay for the measure, balancing the cost of premium subsidies with making coverage affordable, and coverage of abortion services.
Democrats are planning to begin face-to-face negotiations to blend the two massive bills. Because Republicans remain opposed, Democrats don't plan to engage them in these talks or to create a formal House–Senate conference committee whose members would have to be appointed through floor votes. Should a reform bill win enactment, it would be the first major measure of social reform legislation to become law through the votes of only one party. How that fact might affect the political campaigns of 2010 is uncertain, although Republicans believe that public angst over the reform's cost and scope should give them an edge.
The Senate bill will probably serve as the template for most of the final measure — “simply because we have to get the 60 votes” for passage, as Senator John D. Rockefeller (D-WV) explained last week. So administration officials participating in the negotiations will probably largely side with the Senate, which narrowly approved its reform bill by a vote of 60 to 39 on December 24.
Money is the crux of many of the issues requiring resolution. The House bill is more expensive, with a gross cost of $1.052 trillion, as estimated by the Congressional Budget Office (CBO), whereas the estimate for the Senate bill is $871 billion. Most of this money will pay for expanding insurance coverage — to some 31 million people under the Senate bill and 36 million under the House measure who would be required to carry health insurance. Revenues to pay for reform would derive largely from new taxes and fees, plus savings from reductions in the growth of Medicare and Medicaid. When the 10-year costs of reform are covered by these new revenues and savings, the CBO estimates that both bills would reduce the federal deficit — the Senate bill by $132 billion and the House bill by $109 billion.
The largest source of new revenue ($461 billion) in the House bill would be a 5.4% income-tax surcharge on couples with incomes above $1 million and individuals with incomes above $500,000. The Senate rejected this approach, instead imposing a 40% excise tax on the most costly employer-sponsored health plans, which would yield $149 billion over 10 years. The administration favors the Senate approach because, to avoid paying the tax, some employers may trim the scope of health benefits and begin to slow the growth of health care costs. But the tax is opposed by organized labor — a strong ally of the Democrats' liberal wing — and by some business organizations. The Senate measure would also increase the Medicare payroll tax on individuals with incomes over $200,000 and couples with incomes over $250,000.
Money is also the issue when it comes to public subsidies for purchasing health insurance. The House's subsidies are more generous than the Senate's, but both exceed $400 billion over 10 years. Most of the subsidies would flow through insurance exchanges to eligible people with incomes up to 400% of the federal poverty level. Larger subsidies would attract more people to insurance exchanges but would also increase the cost of reform, which could well bump up against President Barack Obama's limit of $900 billion over 10 years.
An explosive issue is that of abortion coverage. To win House approval of reform legislation, Pelosi had to accept a provision placing greater restrictions on the availability of abortion services. Representative Bart Stupak (D-MI) was joined by 63 other Democrats and 176 Republicans in approving an amendment that would prohibit insurance exchanges from selling any health insurance package covering abortion services if it was paid for with the help of public subsidies. Thanks to a bargain that Senator Ben Nelson (D-NE) struck with Reid, the Senate bill includes a less restrictive approach to abortion but one still strongly opposed by prochoice advocates: it would permit the purchase of a health plan covering abortion services but only if the purchaser paid the exchange separately for abortion coverage. How strongly advocates on both sides of the abortion debate will lobby for their preferred approach could affect the time required to reconcile the two bills.
The scope of government involvement in health care has also proved a divisive issue throughout the reform debate, and it will continue to dog the Democrats' negotiations. Both bills would impose new restrictions on the business practices of private insurers, including prohibiting the denial of coverage to people with preexisting conditions and disallowing health plans from rescinding coverage except in cases of fraud. House Democrats were emphatic that their bill would contain a public insurance option designed to compete against private carriers. When Reid blended the Senate's two reform bills, he incorporated a public option, but he stripped it out when it became clear that he could not muster support from all 60 members of the Senate Democratic caucus unless he did so. Democrats substituted what might be described as “public option light”; it directs the federal Office of Personnel Management to contract with two national or multistate health insurers — one of them a nonprofit organization — which would offer benefits through the insurance exchange. These plans would cater mainly to workers who could not afford coverage offered through their employers, but the CBO does not expect many people to enroll in such plans.
Although both bills focus on coverage expansion, they devote only limited attention to bolstering the adequacy of the health care workforce to treat millions of newly insured people. They would improve the government's capacity to monitor trends in the health care workforce and project future needs, since both bills call for the creation of advisory panels charged with developing a national health care workforce strategy. However, both bills fall far short of the recommendation of the Association of American Medical Colleges (AAMC) that the number of graduate medical education (GME) training positions funded by Medicare be expanded by 15,000. Currently, Medicare supports about 100,000 GME positions at an average annual cost of $100,000 per position.
In 1997, Congress imposed a cap on the number of advanced training positions that Medicare could fund, and neither bill adds to that number. Instead, both bills authorize the program to redistribute some 1000 GME slots that are not being used by teaching hospitals. Both bills direct Medicare to redistribute these positions in a way that favors primary care programs, to promote GME training that occurs in outpatient settings, and to fund the creation of “teaching health centers,” a concept that would favor community health centers as a locus for training (and one opposed by the AAMC, which fears that it would reduce support for training in teaching hospitals). The administration has remained largely silent regarding workforce expansion and is decidedly cool toward the idea of a large new federal investment in producing more doctors.
A much higher administration priority is the creation of an independent payment advisory board to develop recommendations for limiting the growth of Medicare spending. The recommendations would take effect automatically unless blocked by congressional action. The Senate bill would create such an advisory body, although its effect would be reduced in its early years because hospitals would be exempt from any recommendations issued. The board would also make nonbinding recommendations regarding changes in nonfederal health care programs that would slow the growth of national health care expenditures. The House bill does not include the creation of such an advisory body, and House Democratic leadership is opposed to this idea, as are organizations representing physicians, hospitals, and other provider groups. But it is one of the administration's highest priorities.
Should Congress enact a reform bill and Obama sign it into law, the measure will undoubtedly attract criticism from both the left and the right, given its price tag, scope, and likely failure to deliver a new public insurance option. What might trouble the public as much as any issue is the fact that most coverage expansions won't take effect until at least 2013. Nevertheless, the legislation would expand coverage to some 30 million people, sharply reducing the number of uninsured Americans. That fact alone may help Democrats weather the onslaught of Republican criticism that will only grow as the 2010 election approaches.
This article (10.1056/NEJMp0912964) was published on January 6, 2010, at NEJM.org.
Source Information
Mr. Iglehart is a national correspondent for the Journal.
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