Vexing Questions: how do we pay for reform and what will the public plan look like?
July 10, 2009, by Jocelyn Richgels
Now the really hard decisions on health care reform are being debated in public and as is expected, there are no easy solutions. Certain key Democratic leaders, particularly Senator Max Baucus, Chair of the Senate Finance Committee, find themselves right in the middle of finding an answer to please both progressive and conservative Democrats, as well as Republicans that are engaged in negotiations over a final bill.
This week, Senator Harry Reid seemed to lay down a marker to Senator Baucus that two of the most contentious options being discussed in Senate Finance – taxing employee health benefits and not including a public plan – are off the table. A Democratic source indicated that 10 to 15 Democratic Senators may not vote for a final bill that taxes employee health benefits and does not include a public plan. At the same time, Senator Baucus is trying to negotiate with four key Republicans on his committee– Senator Chuck Grassley (IA), Senator Mike Enzi (WY), Senator Olympia Snowe (ME) and Senator Orrin Hatch (UT) - on a Finance committee bill. Those negotiations include the potential to tax employee health benefits over a certain value threshold, creating some version of a public plan that meets Republican and conservative Democratic criteria, or even excluding a public plan entirely and focusing on tightening private insurer regulations.
Recent polling suggests that taxing employee health benefits is very unpopular, with upwards of 70% of Americans opposing the idea. The Senate Finance Committee is the only committee in both the House and Senate that is considering that option and while it divides the Democratic caucus, it also divides the Republican caucus. It is not clear that any other health-related revenue options can produce enough revenue to reach the $320 billion that may be available from taxing employee benefits. A surtax on taxpayers making over $250,000 is one option that would reach that level and has never really been completely discarded as a revenue option.
The inclusion of a public plan is still just as contentious as when the reform debate began. Innovative Members of the House and Senate are working to develop ideas that would provide a source of competition to private insurers, but not be a full-blown Medicare-like public plan. Senator Kent Conrad (D-ND) has suggested health coops modeled after well-known and successful rural coops. This has attracted interest from certain Republicans but has also been considered a non-starter by progressive Democrats. Senator Olympia (R-ME) has suggested a “trigger” option that would insert a public plan only in regions where insurers fail to offer affordable plans. Often these regions are very heavily rural, but how a region is defined would be critical to whether rural is appropriately represented in the “triggering” of a public plan. The Senate HELP committee has proposed a public plan that would have to be financially independent in three months of start-up and would offer provider payments that are the average of the regional payment rates of private insurers. Senator Baucus is attempting to find that public option that will attract bipartisan support in his committee. Democratic committee member Jay Rockefeller (WV) has said that he would not vote for a bill that does not include a public plan. That makes the vote count in the Finance Committee very tenuous!
