Senate Majority Leader Reid released an $849 billion healthcare overhaul bill Wednesday that includes a public option and will extend coverage to 31 million uninsured Americans, though a few Democrats are still on the fence over whether they will vote to proceed to the bill.
The bill would extend insurance to 94 percent of eligible Americans.
The measure, which would reduce the deficit $127 billion over a decade, creates an insurance exchange where people can compare and purchase coverage; allows insurance co-ops to be formed; expands Medicaid to those earning 133 percent of the federal poverty level; and offers federal subsidies to help those without employer-sponsored coverage purchase insurance.
The public option would allow states to opt out if they choose. Sen. Christopher Dodd, D-Conn., shepherded a more comprehensive public option through the Health, Education, Labor and Pensions Committee but called the opt-out version a strong public option.
The overhaul also includes an individual mandate with penalties reaching $750 per person for noncompliance by 2016. Employers that do not offer coverage will pay a fine for each of their employees who receive federal subsidies to purchase insurance in the exchange of as much as $750 per employee at the company, a senior Democratic aide said.
The bill is paid for in part through Medicare cuts; an increase in the Medicare payroll tax for individuals making $200,000 or more and couples earning $250,000 or more to 1.95 percent; and a tax on high-cost “Cadillac” insurance plans valued at $8,500 for individuals and $23,000 for families. The Medicare payroll tax will bring in $54 billion and the Cadillac tax raises $149 billion in revenue.
The income thresholds triggering the 0.5 percent increase in the Medicare payroll tax are not indexed for inflation, meaning it will ensnare more people each year. The House bill’s “surtax” on the wealthy is not indexed for inflation, and critics will likely note this case can be compared to the alternative minimum tax. Congress has to pass a costly AMT fix almost every year because it was never indexed for inflation.
The medical device tax has been cut in half to $2 billion annually to appease Minnesota, Indiana and Massachusetts senators. A fee on insurers remained at $6 billion a year as well as a fee on drugmakers at $2 billion annually.
The bill includes a new 5 percent excise tax on elective cosmetic surgeries that would raise $5.8 billion. An earlier 10 percent tax floating around during initial Finance Committee talks was written off by senators at the time, who said no one was seriously considering such a tax.
Democratic Sens. Ben Nelson of Nebraska, Mary Landrieu of Louisiana and Blanche Lincoln of Arkansas were undecided on how they would vote on the motion to proceed, but Landrieu sounded more positive than she has to this point.
“I am now neutral because he gave me some assurances that there would be opportunity for amendments and improvements to the bill,” Landrieu said after the three met with Reid.
She said she has concerns with the bill’s focus on driving down cost and with the public option. “I understand proponents of the public option think it’s necessary to keep insurance companies honest,” she said. “I want to reform the insurance industry. I do not want to eliminate them.”
Landrieu also met with Interior Secretary Salazar Wednesday, where she said they talked mostly about climate issues but also about health reform.
Democratic leaders’ arguments for backing the motion to proceed hinge on their plans to move to a shell bill that will be filled in with the actual bill, Senate Majority Whip Durbin said. Durbin said he will argue that Democrats should agree to move to the bill and hash out disagreements through the amendment process.
A senior Democratic aide said they expect to vote on the motion to proceed Saturday. Senate Finance Chairman Max Baucus was absent from the bill unveiling to be in Montana with his ailing mother. That raises questions whether the vote could be held as planned. “His mom is doing better today,” Reid said. “We’ll get him back here when we need him.”
While Landrieu appeared near conceding to Durbin’s strategy, Lincoln avoided reporters Wednesday, and Nelson said he could not make a decision based on the information he had, though he did say he believes the real test will come on the vote to end debate after the amendment process.
The bill includes a long-term insurance program known as the CLASS Act that some senators have concerns with, saying its early savings would eventually be eaten up by benefits paid to enrollees. Reid attempted to appease them by not applying the $75 billion in savings from the program to the offsets.
On abortion, the bill attempts to extend current law, prohibiting federal funds from being used for abortions by requiring those funds be segregated by private insurers that offer abortion coverage. The HHS secretary would determine if the public option will cover abortion.
That sets up a conflict with the more restrictive House bill. It also might face challenges via amendments from anti-abortion senators on both sides of the aisle.
Republican attacks began immediately. “The healthcare reform plan revealed … reaffirms the intentions of the majority party in Congress to grow the size of our government exponentially, explode federal spending, and provide lower quality, government-run health care for all Americans,” Senate Budget ranking member Judd Gregg said in a statement. “Though this plan may claim to be deficit-neutral, it uses sleight-of-hand budgetary tricks by assuming unrealistic tax increases and Medicare cuts that members of Congress will not be willing to follow through on.”