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White House Posts Revised Health Care Bill

By Alex Wayne, CQ Staff

Feb. 22, 2010 -- President Obama for the first time proposed legislation Monday to overhaul the U.S. health system, posting a summary of the bill on the White House's Web site ahead of a Feb. 25 summit to discuss the effort with congressional leaders.

Obama's bill, which White House officials outlined in a conference call with reporters, blends aspects of legislation passed by the House (HR 3962) and Senate (HR 3590) last year. In effect, it represents the conference report that Democratic congressional leaders have been unable to pass since Sen. Scott P. Brown, R-Mass., was elected in January, giving Senate Republicans the 41st vote they needed to indefinitely filibuster the health bill.

Obama's communications director, Dan Pfeiffer, said that the president's bill was largely based on the Senate legislation, with changes aimed at satisfying some House Democrats' concerns about the Senate bill. These include modifying a proposed excise tax on high-cost health insurance plans and increasing subsidies to help lower-income families afford insurance.

"Since the Senate passed its version of health reform on Christmas Eve, the House and Senate have engaged in a process to try to bridge the differences between those two bills, Pfeiffer said. "What we're going to put online today is our take on how to bridge those differences."

The president's bill, Pfeiffer said, was "informed" by discussions with House and Senate Democratic leaders but was written by the White House.

Obama has not previously sent Congress his own health legislation, instead offering only outlines and guidance. Many rank-and-file Democrats have complained that the president did not sufficiently lead the development of the health overhaul, but Obama and his aides have been wary of upstaging powerful congressional leaders and committee chairmen who expected a strong hand in writing the legislation. The legislative effort broke down after Brown's election, which many Democrats interpreted as a referendum on their health overhaul.

Hoyer: 'A Framework'
Congressional Democratic leaders expressed support for Obama's bill on Monday, though they portrayed it as a White House product and did not explicitly say that a final bill would mirror the proposal.

"Now is the time to move forward, and that is why the president has convened an open, bipartisan meeting and laid out an administration proposal that will serve as a framework for that discussion," said House Majority Leader Steny H. Hoyer, D-Md. "In combining elements of the House and Senate-passed bills, the president has drawn a blueprint of ideas that have been thoroughly debated and publicly examined."

Some lower-ranking Democrats were more enthusiastic. Rep. Chaka Fattah, D-Pa., who has been urging his colleagues to finish a health overhaul by clearing the Senate bill for Obama's signature, endorsed Obama's bill and said he "look[s] forward to voting it into law." Rep. John D. Dingell, D-Mich., who is the primary sponsor of the House's health bill but had little role in writing it, said: "Moving this bill over the finish line will take the leadership only a president can provide."

But some Democrats are less supportive, largely because Obama's bill omits a top priority of liberals: a new government-run insurance plan, called the public option, that would compete with private insurers. Obama's bill also would create dozens of state-based insurance exchanges to sell regulated policies to individuals and small businesses, instead of a single, federally-administered exchange that liberals believe would be stronger. Rep. Anthony Weiner, D-N.Y., called those elements of Obama's plan "concessions to Republicans . . . in the hopes of winning their support."

"This will simply not happen," he said. "We need to stop bargaining against ourselves."

Republicans, indeed, dismissed Obama's proposal. They have said that Brown's election demonstrated deep public discontent with the Democratic health legislation and that it should be scrapped. House Minority Leader John A. Boehner, R-Ohio, has not publicly committed to attend Obama's summit, although other senior congressional Republicans have.

"The President has crippled the credibility of this week's summit by proposing the same massive government takeover of health care based on a partisan bill the American people have already rejected," Boehner said in a statement.

Regulating Private Insurers
At least one provision of the Obama bill departs significantly from both the Senate and House bills: Obama proposes to give federal regulators the power to block premium increases by private insurers. The measure amounts to a legislative response to large premium increases recently announced by insurers in several states, notably Anthem in California, which has proposed a 39 percent increase for people buying individual policies.

But the proposal risks drawing opposition from governors and state insurance commissioners, who may view the measure as a federal intrusion into territory historically controlled by states — the regulation of private insurance plans. America's Health Insurance Plans, the industry's trade association, said that Obama's proposal was misguided.

"Premiums are increasing because of soaring medical costs and a weak economy that is causing younger and healthier people to drop their health insurance," said AHIP spokesman Robert Zirkelbach. "Creating a new duplicative layer of federal premium regulation on top of what states are already doing will only add regulatory complexity and increase health care costs."

While insurers are required to justify their premium increases in every state, not all states empower their regulators to block increases, as Obama's bill would. Under the legislation, according to the summary, a new federal "Health Insurance Rate Authority" would "provide needed oversight" to state regulatory efforts.

An Eye on Reconciliation
Congressional Democratic leaders have discussed a two-bill process to overcome Senate Republican opposition and finish a health overhaul. Under the plan, the Senate would use the expedited budget reconciliation process to pass a set of changes to its bill. The House would then clear the reconciliation bill, followed by the Senate bill. The president would sign the Senate bill and then the reconciliation bill.

Pfeiffer said that Obama had not endorsed that specific proposal but "believes the American people deserve an up-or-down vote on health care reform."

The president's bill, Pfeiffer said, was therefore written with an eye toward reconciliation and is "designed to ensure we can get an up-or-down vote if the opposition decides to take the extraordinary step of filibustering health reform." But the actual bill text had not been posted to the White House's Web site by noon Monday; a White House spokesman said only that the administration was "working on it."

The Numbers
The director of the White House Office of Health Reform, Nancy Ann DeParle, said that Obama's bill would lead to insurance coverage for more than 31 million Americans who would otherwise lack it and would reduce the federal budget deficit by about $100 billion in its first 10 years and by about $1 trillion in its second decade.

The plan would cost about $950 billion over 10 years, she said —more than the Senate bill, less than the House bill and more than Obama's own target of $900 billion.

The changes to the Senate bill, she said, alone would cost about $75 billion. Obama would pay for the changes by changing the bill's underlying financing.

The Senate bill's 40 percent excise tax on high-cost insurance plans, scheduled to take effect in 2013, would not be implemented until 2018 under Obama's bill. Insurance plans would not be subject to the tax until they cost $27,500 a year for family coverage, up from $23,000 in the Senate bill. The changes reflect a deal the White House struck in January with labor unions, who oppose the excise tax because they fear it would impact many of their members.

To make up for the lost revenue, Obama would expand the dedicated 2.9 percent payroll tax that finances Medicare's hospital insurance trust fund to apply to unearned income, such as investment earnings, and raise the payroll tax to 3.8 percent on wages for wealthier families. This is a controversial proposal that has been avoided by congressional Democrats.

Obama would also increase a new fee charged to brand-name drug makers, included in the Senate bill, by $10 billion over 10 years. Drug makers have already agreed to provide $80 billion toward the cost of the health overhaul, and congressional Democrats say industry lobbyists have privately indicated they might agree to a bigger contribution, but it is not clear if the proposal will draw the industry's public opposition.

A spokesman for the Pharmaceutical Research and Manufacturers of America, the industry's main trade association, said the group had no immediate comment on Obama's proposal. Drug companies have spent tens of millions of dollars on advertising in support of Democrats' health overhaul.

Medicare, Medicaid
Obama's bill would gradually close the so-called "doughnut hole" in Medicare's prescription drug benefit. Medicare stops contributing to the cost of seniors' medicines after they have spent $2,830 a year, and does not resume cost-sharing until expenditures hit $4,550. AARP, the huge elderly interest group, has made closing the hole a top priority. Under Obama's proposal, Medicare would pay 75 percent of drug costs that fall within the hole by 2020.

Obama's bill would increase federal assistance for large Medicaid expansion proposed in both the Senate and House bills, and would eliminate a provision of the Senate bill that would grant Nebraska alone full federal financing for the expansion.

Instead, all states would have full federal financing for the first four years of the expansion, from 2014 until 2018, and then 95 percent federal financing for two more years. After that, DeParle said, the federal share for the expansion would amount to about 90 percent of the cost.

Obama's bill would also increase financial penalties on both employers who do not provide health insurance and individuals who refuse to obtain coverage. Obama once thought an individual mandate unnecessary to accomplish a health overhaul, but the insurance industry says it is required if it is to stop denying people coverage based on preexisting conditions, something Obama's bill would outlaw.]

Instead of a public option, Obama endorses a Senate proposal to offer insurance plans administers by the Office of Personnel Management (OPM) nationwide, to anyone buying coverage through new insurance exchanges. OPM already administers health insurance plans for federal employees and members of Congress and their staffs.

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