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Next Health Reform Showdown: House Versus Senate

I recently sat in on the daily meeting of a palliative care team at a hospital — doctors, nurses, a social worker, a chaplain and others, all working with seriously ill patients in extreme pain. One of the patients was a middle-aged man whose advanced cancer had destroyed a major bone in his leg. His wife had already done heroic work caring for him, and more was going to be needed in the months ahead.

Healthcare coverage and the hastle of forms
Healthcare coverage and the hastle of forms

But she had a problem: she was on the verge of using up her medical leave time. To continue caring for her husband, she would have to quit her job. If she quit her job, the couple would eventually lose their health insurance.

Both the health care bill passed by the House of Representatives and the one that the Senate seems set to pass on Christmas Eve would begin to do away with such terrible choices, by making health insurance available to most everyone. That, by itself, would be a grand achievement.

It’s not enough, though. Our health care system, as I’m sure you have heard by now, also suffers from soaring costs and uneven quality. For health reform to be a success, it needs to make major progress on those problems, too.

The Senate bill has the potential to do that. It could still stand to be improved, but it’s pretty strong. The Congressional Budget Office projects that the bill would reduce the deficit by $132 billion over the next decade and roughly $1 trillion over the following decade.

The House bill, on the other hand, fails to attack high costs and spotty quality. So the big remaining question is whether the negotiations between the House and Senate in coming weeks will water down health reform or whether, somehow, those negotiations can strengthen it.

House Speaker Nancy Pelosi and her colleagues are clearly in a tough spot. They already seem poised to yield on abortion and the public option to get a bill through the Senate. Now the Senate and the White House will be asking them to be more serious about holding down costs, too.

But the health experts I spoke to this week thought there was room for a sensible compromise. The House’s liberal leaders have a few realistic demands to make in exchange for accepting the cost-control measures in the Senate bill. Ideally, the House would also accept a couple of additional measures being pushed by John Rockefeller, Ron Wyden and other Senate Democrats.

After all, as Mr. Rockefeller and Mr. Wyden have shown, there is nothing that says liberals need to be in favor of high medical costs.

Here, then, is a guide to the coming negotiations:

  • The most important issue will be the Cadillac tax on the costliest employer-provided insurance plans. “Abortion, the public option and the tax are the three most contentious macro issues, far and away,” Senator Charles Schumer says.

Currently, health insurance is one of the few forms of compensation that is not taxed. The Cadillac tax in the Senate bill would start to change this, by taxing any family plan costing more than $23,000 a year and any individual plan costing more than $8,500. The House bill has no such tax.

Healthy Horizons -- A Special Report
Healthy Horizons -- A Special Report

What’s the argument for it? One study after another has shown that workers with Cadillac plans are no healthier than workers with merely good insurance; they simply receive more medical care. And they pay a big price for it. A dollar that an employer spends on insurance is a dollar that’s unavailable for income. This helps explain why the one period of slow growth in medical costs over the last two decades — the late 1990s — was also the one period of rapid income growth.

Without a serious Cadillac tax, President Obama’s advisers would no longer be able to claim that health reform contained a version of every major cost-control idea favored by the experts. A major reason the Congressional Budget Office projects more than a trillion dollars in deficit reduction over the next 20 years is the Cadillac tax.

  • The same is true of an independent Medicare commission. It would have the authority to nudge Medicare away from the costly fee-for-service payment model and would not be as susceptible to lobbying as Congress.

The House bill does not call for such a commission. The Senate bill does, and it has been strengthened in the last week. But it remains flawed. Mr. Rockefeller, the junior West Virginia senator and one of the commission’s champions, still holds out hope of improving it. He wants to remove the exemption that hospitals and hospices would enjoy through 2018 and knock down some of the bureaucratic hurdles in front of the commission.

  • In the final version of the Senate bill, Mr. Wyden, of Oregon, won a modest, hard-fought victory. The bill would allow a small subset of workers to turn the money that their employer contributes to health insurance into a voucher. With that voucher, the workers could choose their own plan, using the new insurance exchange for small businesses and the uninsured.

Mr. Wyden and Senator Evan Bayh of Indiana are now pushing for more — allowing any employer to give its workers the option of receiving a voucher. It would be voluntary, but anything that gives workers more choice and forces insurers to compete harder is a step in the right direction.

Doctor with stethascope
Doctor with stethascope

Obviously, none of these ideas are likely to mollify House leaders. So what can they demand?

For starters, they can hold firm to their start date for the main provisions of the bill: Jan. 1, 2013, a year earlier than in the Senate bill. That would help the uninsured. It would also help deflate the argument that health reform is going to ruin health care — just as the start of Medicare, one year after its passage in 1965, beat back the argument that it equaled socialism.

Two, the House can push for a national insurance exchange, rather than the 50 different state exchanges envisioned by the Senate. State-by-state experimentation has its place, and giving the states no say over the exchange would be a mistake. But 50 exchanges, with 50 Web sites and 50 sets of rules, seems like a recipe for duplication and waste.

Finally, if House leaders are tired of watching senators preen as fiscal conservatives (and are tired of being called profligate by pundits), the House can call out the Senate on its own weakness. The Senate, like the White House, has been somewhat deferential to hospitals, drug makers and doctors’ groups. What if the House pushed for bigger discounts on prescription drugs, as its bill calls for — saving the government $10 billion a year in the process? Or what if the House insisted on bigger penalties for hospitals that don’t do enough to prevent hospital-borne infections?

Some of these provisions might annoy the White House, which worked hard to line up industry support for health reform. But given all the uncomfortable, last-minute compromises that the House will be making, maybe it should force a few more sacrifices on the industry, in the name of good health and lower costs.

Shortly after the Senate agreed to its deal last weekend, Rahm Emanuel, the White House chief of staff, made the case that the Democratic Party had gotten religion on health costs. “What has animated the party since Franklin Roosevelt is universal coverage,” Mr. Emanuel said. “In the last year, I think the party has grabbed onto cost control and changing the incentives in the system with equal fervor.”

We’ll see. It’s certainly true that at the start of this year, many Democrats showed only modest interest in cost control. And yet on Thursday, the Senate is likely to pass a bill projected to expand coverage and reduce the deficit.

But there is some distance to go between here and a final bill. Over the next few weeks, Congress will have plenty of chances to make the Senate bill even better — or a lot worse.

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