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Senate Debate on Health Reform Hinges on Affordability

September 22, 2009 at 12:00 AM EST
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As the Senate Finance Committee opens debate on the so-called Baucus plan for health care reform, the issue of affordability remains a key sticking point. After a recap of Tuesday's hearing on the bill, Susan Dentzer of the journal Health Affairs takes a closer look at costs with Judy Woodruff.
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BETTY ANN BOWSER, NewsHour correspondent: A line of would-be spectators snaked out the hearing room door this morning as the full Senate Finance Committee began work on its long-awaited health care reform bill.

Chaired by Montana Democrat Max Baucus, the panel is the last of five congressional committees to tackle legislation. For months, Baucus sought support of more Republicans, but that looked unlikely when he unveiled his proposal, or so-called mark, this morning.

SEN. MAX BAUCUS, D-Mont.: The mark before us today is a balanced, commonsense plan that takes the best ideas from both sides. It’s designed to get the 60 votes that it needs to pass. Now the choice is up to us.

BETTY ANN BOWSER: In their opening remarks, senators fell largely along party lines. Republicans complained the bill has too many new taxes that would hurt the middle class, something President Obama promised he would not allow when he ran for president.

Utah’s Orrin Hatch.

SEN. ORRIN HATCH, R-Utah: As our deficit continues to rise and our debt triples in the next decade, all these taxes will continue to rise. This bill is laying the seeds. We are giving Washington a whole new checkbook.

BETTY ANN BOWSER: Ranking Republican Charles Grassley.

SEN. CHARLES GRASSLEY, R-Iowa: This bill has new taxes on everything from Q-Tips to pacemakers and cancer screening to pregnancy tests. There’s even a $60 billion across-the-board health plan tax. Experts and economists say that all of these health care taxes will be passed on to consumers.

BETTY ANN BOWSER: Grassley also criticized the White House. He said President Obama’s team had forced an arbitrary deadline on the committee, while he and other members of the so-called gang of six were trying to come up with a bipartisan bill.

SEN. CHARLES GRASSLEY: Here we are, the cry of impatience has won out, and the artificial deadline was put in charge of this process. They have put moving quickly over moving correctly.

BETTY ANN BOWSER: The Finance Committee took a break before plowing through a seeming blizzard of amendments, more than 500 in all. But only a handful will get serious consideration, including those that deal with delivery of care, financing, and expansion of insurance coverage.

For some Democrats and one key Republican, the biggest concerns about the bill are whether it has adequate subsidies for some uninsured and the fact that it does not allow a public option. West Virginia’s Jay Rockefeller.

SEN. JAY ROCKEFELLER, D-W.Va.: We need to provide families with the option of enrolling in a public health insurance plan. I wish it weren’t called a public health insurance plan, but just a family health insurance plan, then I think that there would be a different reaction to it. But the word “public” is not a good word these days, but that doesn’t mean that the idea is not a good one.

BETTY ANN BOWSER: Maine’s Olympia Snowe is the one Republican on the committee that may vote for the bill.

SEN. OLYMPIA SNOWE, R-Maine: … the mark before us is a solid starting point, but we are far from the finish line. We simply cannot address one-sixth of our economy and a matter of such personal and financial significance to every American on the legislative fast track.

BETTY ANN BOWSER: Snowe has offered an amendment making government-run public insurance an emergency option, if coverage remains too expensive for some Americans. The so-called trigger option would set up a government-run plan in any state where affordable coverage was not available to 95 percent of residents.

LEN NICHOLS, New America Foundation: She’s very much engaged and on board with where they are.

BETTY ANN BOWSER: Health care economist Len Nichols, who heads the health policy program at the New America Foundation, says Senator Snowe could be the lynchpin for more Republican support.

LEN NICHOLS: I think Senator Snowe’s idea of a trigger — that is to say, a possible kind of competing plan that might be brought into some markets, not all, but some markets, if there aren’t two competing plans that offer affordable premiums to people, I think that’s an idea that might find traction on both sides of the aisle.

BETTY ANN BOWSER: This afternoon, Baucus announced modifications to his draft, designed to keep liberal Democrats happy and appease fiscally conservative members of his own party, who’ve worried about the cost of reform.

Among the 36 pages of changes: Subsidies for moderate-income Americans would be increased to make coverage more affordable, for a family of four making up to $88,000 a year and individuals making up to $43,000.

There would be lower penalties for those who do not buy health insurance — $1,900 for a family of four, instead of $3,800 — and fewer high-cost or so- called Cadillac plans would be taxed.

The Senate Finance Committee is expected to continue working on the bill this week.

JIM LEHRER: And to Judy Woodruff.

The uninsured landscape

JUDY WOODRUFF: As we heard in Betty Ann's report just now, one of the central issues in the health care debate now is whether insurance would be affordable for those who don't currently have it.

We take a closer look at those questions with the help of Susan Dentzer, editor-in-chief of the journal Health Affairs and an occasional analyst for the NewsHour.

Susan, it's good to have you back with us.

SUSAN DENTZER, editor, Health Affairs: Great to be with you, Judy.

JUDY WOODRUFF: Remind us again how many Americans don't have health insurance at all, the group that we're talking about, and I think roughly by a category of income.

SUSAN DENTZER: We have, in terms of Americans -- that is to say, citizens -- without health insurance in this country by the latest census numbers, probably around 36 million. There are another 10 million non-citizens. That includes some undocumented immigrants, refugees, legal permanent residents, et cetera.

But to talk about Americans, it's 36 million. I think we've got a chart that shows how these break out. Now, if you take a look at that purple slice of that pie there, that's people at $88,000 and above in family income for a family of four. That's 400 percent of the federal poverty level.

JUDY WOODRUFF: Still without health insurance.

SUSAN DENTZER: Still without health insurance. Let's take out that slice of the pie, though, because it's generally presumed that people with that much income could afford to buy insurance themselves. So if you take away that purple slice of the pie and you talk about what's left -- the blue, the green and the orange -- you get about 30 million people distributed across those three categories.

And the biggest single category, as you see, or at least the significant-sized category is that blue slice. Those are people who are at or below the federal poverty level, $22,000 of income for a family of four this year. And what is underway now is an attempt to put together various modes of covering those people in various ways through various pies, pots, et cetera.

Insurance for low-income earners

JUDY WOODRUFF: Well, let's start with the lowest income group. If they're not on Medicaid, which is, of course, a government program, what is the Baucus plan? What do the Democrats propose to do about those folks in that lowest level?

SUSAN DENTZER: Well, surprisingly enough, those people in that blue part of the pie are uninsured, so those are people who are poor, but not in Medicaid. Now, why? Because Medicaid eligibility rules vary from state to state, and there also are some provisions of federal law that keep certain poor people off of Medicaid.

For example, adults who don't have dependent children do not qualify, except in some states, for Medicaid coverage. So the bills all across the board -- the Democratic bills -- would all raise the level of eligibility for people in Medicaid. It would go up to 133 percent of the poverty level and put on a lot of those so-called childless adults.

So that part of the safety net would be swelled. It would grab all of those people in that blue part of the pie and a little bit merging into the green part of the pie.

JUDY WOODRUFF: Involving subsidies from the government?

SUSAN DENTZER: Directly paid for, the Medicaid program, so the Medicaid program, which now covers 63 million individuals, would grow by a substantial margin.

Now, for others up the income scale, those folks would not go into Medicaid. They instead would be the population eligible to buy insurance coverage through the new health insurance exchanges that would be set up in all the states, at least under the Baucus bill, a combination of state and federal government under some of the other bills.

Those individuals, as we can see, still are not that high income, even the people who are up at 300 percent of the federal poverty level, so they need subsidies to help them buy coverage. And in the bills, they're referred to as affordability credits. These are tax credits that people would get in advance so they could actually take the money, kind of like a voucher, and go to buy health insurance coverage.

Now, the amount of these subsidies and whether they're generous enough is what's in dispute, as Betty Ann said in her piece. So, basically, if you step back and say, "What are people going to be required to do?" Well, there's the mandate that's going to require them to have coverage.

JUDY WOODRUFF: Right.

SUSAN DENTZER: It's going to require people to go to the exchange. How big is the insurance package that they're going to have to buy, is one issue. How much of their income do they have to pay out for the premium, is another issue. How much do they have to pay in deductibles and co-payments, is an issue. And where's the out-of-pocket limit on their costs? All of those things determine the affordability.

Help for the middle class

JUDY WOODRUFF: And part of what we were watching today was Senator Baucus moving to make it more affordable for some of these people in the middle-income group to be able to get insurance.

SUSAN DENTZER: Yes.

JUDY WOODRUFF: So it's going to cost the government more under his proposal.

SUSAN DENTZER: Well, it is. He basically took $50 billion more and spread it around to make these affordability credits more generous. He offset that with some changes on the tax side.

As Betty Ann mentioned, he also lowered the penalties at the high end for the -- if you don't oblige with the mandate. And then he changed the numbers on the high cost excise tax on insurance, as Betty Ann said, but he also lifted the rates. Those rates now go from 30 percent to 40 percent. So lots of moving pieces around to make this package hang together.

JUDY WOODRUFF: And underlying all this is, we know Senator Baucus' desire to keep that overall number as low as possible. He wants it under $900 billion, which is what the president has talked about, even as he tries to make this more affordable for middle-income people.

SUSAN DENTZER: Yes. And, in fact, still he believes it is still budget neutral. That is to say, at the end of the 10th year, it will not be adding to the budget deficit. It will not be adding to the budget deficit substantially in most of the years to come. It will, in effect, largely be paid for.

Of course, it's now up to the Congressional Budget Office to look at what he's done and put all the numbers together and see if they work out quite that way, but at least that's the supposition.

JUDY WOODRUFF: And, finally, Susan, it's now really going to be up to mainly to the Democrats. I mean, they're still trying to get that one Republican vote or more, Olympia Snowe. But it's mainly going to be up to the Democrats for Senator Baucus to satisfy the more liberal Democrats on his committee.

SUSAN DENTZER: That's right, and looking for that special combination that will get enough of them on board. It's important to say that the House bill was substantially more generous in terms of these subsidies available to people. The Senate HELP Committee bill was much more generous.

So a lot of the more liberal Democrats are looking at those two bills as the baseline. Of course, they cost much more. But Baucus, on the other hand, is trying to keep more of the Republicans happy by not having the bill cost so much, so it really is a considerable balancing act that he's engaged in at the moment.

JUDY WOODRUFF: A balancing act, indeed. Susan Dentzer, thanks very much.

SUSAN DENTZER: Nice to be with you, Judy.