Senate's Unified Reform Bill Owes Much to Finance Committee

Ken Terry
Bnet
Nov 19, 2009

The Democrats in the U.S. Senate have finally worked out a healthcare reform package that, judging by initial reports, seems remarkably similar to the one that came out of the Senate Finance Committee last month. The Congressional Budget Office estimates the legislation will cost $848 billion over 10 years, but that it will reduce the deficit by $130 billion, because the costs will be offset by new fees and taxes and reductions in Medicare spending.

In contrast, the House of Representatives’ bill, which has much in common with its Senate counterpart, would cost about $1.2 trillion over 10 years. While the initial figure cited by House Speaker Nancy Pelosi was $894 billion, which would have cut the deficit by $130 billion over 10 years, extra provisions added at the last minute raised the price tag of the sweeping legislation.

Aside from the cost, the biggest difference between the House and Senate bills is that the former would cover about 36 million people, while the latter would extend insurance to only 31 million–just 2 million more than the Senate Finance Committee bill would have covered. That means 23 million people would remain uninsured in 2019. The insurance industry argues that anything short of near-universal coverage will lead to higher premiums if health plans are required to take all comers.

The new Senate measure also differs from the House bill in two political hot spots: First, while it includes a public option, states would be able to opt out of this public health plan, which would be offered through the government-sponsored insurance exchanges. Second, whereas the House bill bans any public funding of abortions, the Senate legislation “would segregate private premiums from federal funding if abortion coverage were offered in the public insurance plan,” according to the Washington Post. It’s unclear how the measure would treat private plans purchased partly with government subsidies.

The Senate bill imposes lower penalties on individuals who do not purchase insurance than the House measures does, and it adopts the Senate Finance Committee approach of assessing fines on employers whose employees receive government subsidies to purchase insurance through the exchanges. The House bill, in contrast, requires all employers above a certain size to provide coverage or pay into a fund.

The financing methods also differ in key respects. Whereas the House bill would impose a surtax on the wealthy to help finance reform, the Senate relies partly on taxing “Cadillac” insurance plans (which economists say would help control health costs). It also raises Medicare payroll taxes from 1.45 percent to 1.95 percent for individuals making more than $200,000 and couples earning above $250,000.

The first big test for the Senate legislation is expected to come in the next few days with a procedural vote on whether to proceed to debate on the bill. The outcome depends on whether the Democrats can maintain discipline in their ranks so they can reach the 60 votes necessary to begin debate. The Republicans have vowed to oppose the legislation at every step-and they are very disciplined.