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Grassley Says Public Insurance Option Is Thorniest Health Care Issue

By Drew Armstrong, CQ Staff

March 19, 2009 -- The top Republican on the Senate Finance Committee says the toughest single issue confronting lawmakers drafting a health care overhaul is whether to create a government-run insurance option to compete with private health insurers.

"This is a deal breaker for Republicans if it's in, and it's a deal breaker for Democrats if it's not," Charles E. Grassley of Iowa said Thursday of the public plan option. "Is there a compromise in between? I don't see one today. There might be one. If you're going to negotiate in good faith, everything's on the table. But it's one of the most difficult things, and I don't see a compromise in that area."

But it could be worse, he said. "I told you that abortion is about the only issue I know of that's not compromisable."

Grassley repeatedly said that although he cannot currently envision a way to resolve the dispute, he would not write off the public-plan option as an absolute deal breaker, in order to keep making progress. "I'm positive we can get health care reform done," he said.

Democrats have pushed for a government-run plan to be among the options available to Americans seeking health insurance, and President Obama has mentioned it as well. A public plan, as imagined, would compete with private insurance plans as a way to cover the nation's 46 million uninsured people.

Many Democrats argue that a public plan that competes with private insurers is the only way to force down overall costs. Republicans, meanwhile, argue that it would be unfair competition, eventually driving private insurers out of business. "I think it's a step to single-payer," government-run health care, Grassley said.

Grassley made his comments as part of a round table hosted by the Kaiser Family Foundation, where he laid out how discussions on a health care overhaul have been going and what issues are becoming problematic.

Senate Finance Chairman Max Baucus, D-Mont., has proposed expanding existing public programs and perhaps creating an early buy-in for Medicare, along with a public-plan option. Pete Stark, D-Calif., chairman of the House Ways and Means Subcommittee on Health, has made similar suggestions.

Still, Grassley has not wavered in pushing for fast action on health care. "I think if it isn't done this year, it won't be done for the next four years," he said.

And he reiterated a position Baucus has taken, urging regular order for a bill and not use of the fast-track budget process known as reconciliation, which would allow Democrats to circumvent a filibuster. "Politically, to have a bipartisan agreement, it's gotta be done through regular order and not reconciliation," Grassley said.

Doctors' Pay
Overhauling the way Medicare pays doctors and hospitals will almost certainly be another challenge. Repeated studies by the Dartmouth Atlas project have shown wide variation in Medicare costs to achieve the same outcomes. White House Budget Director Peter R. Orszag has pointed to such disparities as a potential source for hundreds of billions of dollars in savings.

Rearranging payments would almost certainly upset many physicians, who have proven to be a powerful lobby and one of the key constituencies in keeping a health care overhaul bill alive.

"It's probably something you can do in an overall health reform bill," Grassley said. "It's not something you can do if we don't get this bill passed. . . . It's gotta kind of be lost in the overall issue."

Tax on Health Benefits
Grassley also discussed proposals to put a cap on the tax exclusion for health benefits provided through an employer. Currently, employees pay no tax on their benefits. Some economists argue this has served to drive up health insurance costs while holding down wages.

Democrats have previously attacked proposals to cap the tax exclusion, but Baucus and other lawmakers now seem to be looking at it.

"This is an 800-pound gorilla in the room," Grassley said. "It's an issue that Sen. Baucus has spoken out on, got some criticism; it's something the White House had spoken out on and pulled back a little bit. . . . It's something that's on the table."

One solution might be to cap the exclusion for those at higher income levels and create a new tax benefit for people buying insurance on their own. Currently, they do not receive a tax break for doing so.

Baucus has also discussed putting a cap on the tax exclusion as a potential revenue-raiser and a way to keep health care costs down.

"If we do something in that area, it's got something to do with savings as well as raising money," Grassley said.

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