WASHINGTON, D.C. — In an effort to dislodge weeks of gridlock over the health-care reform bill, House Democrats made the controversial move Wednesday to cut roughly $100 billion from the cost of the legislation while redefining the terms of the oft-debated public insurance plan option.
The agreement — made between House leaders and four key members of the party’s fiscally conservative Blue Dog group — was supposed to help move the bill through its last committee before Congress leaves for its August recess this Friday.
But it could end up creating even more acrimony among the Democrats, both from Blue Dog members who do not think that the compromise goes far enough, and now from lawmakers on the left, who claim that the changes have only weakened the legislation.
“It is a deal breaker,” said Rep. Keith Ellison, D-Minn., who is a member of the Democrat’s Progressive Caucus. “I will not vote for this version of the bill.”
“I just philosophically don’t agree with what the Energy and Commerce Committee is doing in some of the areas of the bill,” said Rep. Collin Peterson, D-Minn., who is a founding member of the Blue Dogs and among those who have not supported Wednesday’s deal.
In general, the agreement would cut the overall cost of the more than $1 trillion bill by reducing eligibility for subsidies available to help the uninsured buy coverage. In other words, people with low or moderate incomes could still get federal subsidies, but they might be required to spend a greater percentage of their own income. The deal would also shift the government-run public insurance option from a plan based on Medicare rates to one in which the government would negotiate with private insurers, doctors, hospitals and other providers. In addition, it would exempt more small businesses — those with annual payrolls of $500,000 or less — from mandates that employers cover their workers or pay a new federal excise tax.
Peterson called the changes a step in the right direction, but said that a large number of Blue Dogs still found the alterations to be too minor or misguided.
“This was very controversial [Wednesday] morning in the Blue Dog meeting,” Peterson said. “From what I could tell, other than the four guys that were going to vote for it in committee, I don’t think anyone else was for it. … They are just under pressure to get it out of committee.”
Peterson’s main problem with the current plan is that the Medicare reimbursement system, which is a fee-for-service model, is still not fully addressed.
Last week, Rep. Betty McCollum, D-Minn., reached an agreement with House leaders to incorporate two studies in the bill that would move towards implementing a fee-for-quality system. While the study requirements include a timeline for enactment, Peterson said that they do not go far enough.
“There isn’t enough reform of the system,” Peterson said. “It’s all these kinds of independent studies. And having been around this place for a long time, I don’t have a lot of confidence that is going to happen.”
Currently, states that provide more health care services, like New York, New Jersey, Florida, Texas, and California, get reimbursed at higher rates. Meanwhile states that provide fewer services, but might have better quality health care, like Minnesota, Wisconsin, and Washington, get reimbursed at lower rates.
The problem, he said, is that quality of care is not a factor in setting reimbursement rates. Instead, the system rewards more tests and services regardless of outcome.
“The problem that no one wants to talk about is the money that is being paid to those high-cost, low-quality areas,” said Peterson. “The problem is that the political power is in those areas.”
Wednesday’s agreement would also expand Medicaid, but would require states to pay around 7 percent in additional costs.
According to Peterson, that is also a problem for some Blue Dogs.
“We don’t think we should let the states off the hook,” Peterson said. “That’s another cost that we don’t have to incur.”
Conflict with Blue Dogs
The Progressives, on the other hand, have their own concerns with the legislation — some in direct conflict with the Blue Dogs.
Ellison argued during an interview on Thursday that the expansion of the small business exemption would only cause employers to ditch their insurance, dumping more people into the system, and raising costs.
“It is somewhat ironic because the faction that was doing the negotiations, and insisting on the changes, has made a public case that they are trying to reduce costs,” said Ellison. “But many of their demands actually stand to increase the cost.”
Ellison added that he also thought the changes to the public option would increase costs because the plan would end up paying higher rates, which would still not be tied to quality of care.
Cash-strapped providers, however, have pushed for a system that would pay higher rates than Medicare, which currently reimburses 20 to 30 percent below the rates paid by private insurance plans.
But, it is debatable how much the agreement would substantively change the public plan. In the original legislation, the public plan could use Medicare rates for three years. After that point, the secretary of Health and Human Services would negotiate rates with providers. Now, rates would be immediately negotiated.
Still, Ellison said that the adjustment would result in higher initial costs for the consumer and would allow for the continuation of a payment structure that is divorced from quality.
In addition, Ellison said that the possible requirement that states pay a portion of the expanded Medicaid coverage would only add additional burden on their resources.
“It is a bad deal and I am disappointed that a fairly small number of people are imposing their will on the whole caucus,” Ellison concluded.
The full House, however, will not be voting on the legislation any time soon. On Thursday, House leadership made it clear that even if the deal leads to the bill passing out of the Energy and Commerce Committee this week, it will not come to the floor until September at the earliest.
Given the continued disputes and the incredible complexities of the legislation, Peterson said, that was a very good thing.
“We have three or five bills out there right now,” Peterson said. “What I hope to do over August is go out and talk to my people about all these different ideas and what they think about it.”
Cynthia Dizikes covers Minnesota’s congressional delegation and reports on issues and developments in Washington, D.C. She can be reached at cdizikes[at]minnpost[dot]com.