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'Public Option' Talks Nearing Finish

By Alex Wayne and Edward Epstein, CQ Staff

September 25, 2009 --House Democratic leaders hope to produce a consensus version of their health care overhaul legislation over the weekend, two committee chairmen said Thursday.

Rules Chairwoman Louise M. Slaughter, D-N.Y., and Ways and Means Chairman Charles B. Rangel, D-N.Y., said party leaders—who have been meeting among themselves and with their caucus—were close to an agreement on the bill (HR 3200), which was marked up by three committees. However, rank-and-file Democrats remain divided on the bill's central, controversial proposal: to create a government-run insurance plan, popularly known as the public option, to compete with private insurers.

But Rangel said he expected that Democrats would be able to send a final bill to the Congressional Budget Office (CBO) for a cost estimate by Sept. 28. The estimate is required before the bill advances to the House floor.

"We have about reached the end of the negotiations," Rangel said. "I thought by tomorrow, but maybe Monday, we'll be ready for CBO."

Nadeam Elshami, a spokesman for Speaker Nancy Pelosi, D-Calif., said Democratic leaders "will continue to make progress while continuing discussions with members of the caucus" on the bill but have not set a timeline to finish the measure.

CBO needs about 10 days to produce an estimate, Rangel said, meaning the House would not vote on the bill until well into October.

Payment Rates

The public option was discussed at two Democratic Caucus meetings Thursday. Pelosi has said that the proposal will be in the bill, despite concerns among more conservative Democrats, but a dispute remains over the plan's structure.

In the Ways and Means version of the bill, approved in July, rates paid to doctors, hospitals and other health care providers under the public option would be pegged to Medicare. The Energy and Commerce Committee's version would require the public option to negotiate rates with providers, as private insurers do.

Tying the public option's rates to Medicare would yield greater cost savings, since the entitlement program typically pays less than private insurers do for the same medical procedures. But lawmakers from rural districts worry that their health care systems, already under strain from what they call underpayment by Medicare and Medicaid, might crack with the addition of another low-paying government program.

"I get that it saves money, but it saves money because it damages delivery systems in areas that are underpaid by Medicare," said Earl Pomeroy, D-N.D. A Ways and Means member, he voted against the bill in committee.

Pomeroy said the committee's staff should analyze whether a public option paying rates close to Medicare's would hurt rural health systems.

A House Democratic leadership aide said that based on discussions with CBO, it was believed that a public option paying rates similar to Medicare's would yield at least $80 billion more in savings over the next 10 years than a public option with negotiated rates.

To meet a demand from President Obama, Democrats are trying to drive the cost of their $1 trillion health bill down to about $900 billion.

Trigger Mechanism

Slaughter said House Democrats have dismissed the idea of including a "trigger" mechanism, which would allow for a government-run plan if private insurers are unable to meet targets to lower costs and expand coverage.

Sen. Olympia J. Snowe, R-Maine, is a strong proponent of such a mechanism, and Democrats in the Senate desperately want her vote for their legislation.

But in the House, "nobody's talking trigger," Slaughter said. "If we had a trigger, it should have been pulled 10 years ago."

Robert E. Andrews, D-N.J., said members also discussed how they might prevent insurance companies from unduly increasing premiums between the time a bill is enacted and when it would restructure insurance markets, in 2013. He cited the example of credit card companies, some of which have raised interest rates in advance of implementation next year of a new law imposing additional regulations.

"What happened in the credit card industry is a good indicator of what might happen," he said, adding that the caucus was discussing how to address the issue.

Once the final bill is presented to the caucus, probably next week, leaders will start counting votes to see if it can win a majority, said Andrews, who chairs the Education and Labor subcommittee on health. Education and Labor was the third panel to mark up the House bill.

Alan K. Ota contributed to this story.

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