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HELP Committee Debates Subsidy Coverage in Health Overhaul

By Jane Norman, CQ HealthBeat Associate Editor

July 9, 2009 -- How high an income is too high when it comes to government subsidies of health insurance plans?

Republicans on the Senate Health, Education, Labor and Pensions (HELP) Committee pushed that question to the forefront Thursday as they tried to carve the top subsidy level in the health overhaul bill from the 400 percent of poverty favored by Democrats down to 250 percent of poverty.

The amendment by Sen. Michael B. Enzi, R-Wyo., failed on a party-line 10-13 vote, but allowed Republicans to make the argument that billions of dollars in subsidies would be directed toward families earning as much as $88,000 a year. Democrats countered that the subsidies level off at that high an income level compared with lower-earning families, and that the subsidy is tied to what percentage of their income families are paying for their health insurance.

Discussion on the single amendment also consumed nearly the entire morning for the committee, leading Democratic Sen. Barbara A. Mikulski to ask if time limits could be imposed on debate. "I understand there are 300 amendments pending," Mikulski said as the afternoon session began.

"It was, earlier. I think we’re down to 297," said Sen. Tom Harkin, D-Iowa, who acted as chairman of the hearing in the absence of Sen. Christopher J. Dodd, D-Conn., who was absent because of the death of his sister.

Dodd, in turn, has been filling in for ailing Chairman Sen. Edward M. Kennedy, D-Mass.

According to the Congressional Budget Office (CBO) estimate for the bill, $723 billion would go toward subsidizing the cost of health insurance plans provided through the state-level exchanges, known as gateways, beginning in 2012 and through 2019, with the annual cost at its highest in the last year at $140 billion.

The $723 billion does not include any costs that might be incurred by extending Medicaid coverage eligibility to those at 150 percent of poverty or lower, a piece of the legislation to be handled by the Senate Finance Committee.

Sen. Judd Gregg, R-N.H., said subsidies would go to those earning as much as $88,000 for families of four. "That’s no longer poverty," said Gregg. He also said that statistics show most people at that income level or just below have health insurance, so the effect could be to move people who already have insurance onto public subsidized plans. "We’re not accomplishing our goal," said Gregg. "I just don’t see the logic in this."

Sen. Tom Coburn, R-Okla., said that some 80 percent of families in the United States, excluding Alaska and Hawaii, earn less than $80,000 a year. "What we’re really saying is we’re giving subsidies to 80 percent of the people in the country," he said. "How do we do that?"

But Sen. Jeff Bingaman, D-N.M., said the subsidy would apply to families who are paying more than 12.5 percent of their incomes for their health insurance premiums. The idea is that the government should assist those who find health insurance too expensive to obtain, he said.

Harkin said he did some quick math and figured that members of Congress would be paying $20,000 a year for their health coverage if it consumed 12.5 percent of their incomes. "If every senator had to pay that, there would be a revolt on the Hill,” said Harkin. “That is a lot of money out of a person’s income."

Later in the day, Democrats turned aside on another party-line vote 10-13 an amendment by Coburn that would have allowed everyone who would be covered by Medicaid to instead receive subsidies to buy private health insurance, like those above 150 percent of the poverty level. Coburn said poorer outcomes are found for many patients on Medicaid and low-income Americans should be able to buy a policy that "takes the Medicaid stamp off their foreheads." Bingaman said Medicaid packages, though, often are tailored to meet the needs of low-income people and offer minimal cost-sharing.

The only party split on an amendment came as Mikulski proposed requirements that insurance plans provide coverage without cost-sharing for women’s preventive care and screenings, and that health insurance plans include "essential community providers" who serve low-income women. Sen. Orrin G. Hatch, R-Utah, asked if that would include abortion providers. Mikulski said it would include women’s health clinics such as Planned Parenthood clinics but "does not in any way expand a service — it does not expand nor mandate an abortion service."

Democratic Sen. Bob Casey, a Pennsylvania Democrat who has been an opponent of abortion though he said he’s also voted for family planning services, said he was nonetheless worried the provision was written too broadly. "The way it could be interpreted down the road could include abortion," he said. Hatch suggested language could be inserted specifying abortion should not be included but Mikulski was resistant. The amendment was approved 12-11.

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