Further Senate Finance Developments and the Shift of Center Stage

Aside from the rejection of the so called “public option,” many other interesting developments unfolded in Hart 216 (the room where the Committee’s markup was held).  At 2:15 a.m. Friday morning, the weary Committee finalized the language of their long awaited healthcare bill.  The final vote was delayed until next week so that Chairman Baucus has in hand the Congressional Budget Office analysis on the projected cost of the bill. The intent is to hit the $900 billion mark proposed by President Obama in his speech before the Joint Session of Congress.  In the final hours of the debate, Senators Schumer (D-NY) and Snowe (R-ME), in a show of bi-partisanship, joined together on an amendment that significantly lessened the burden for those who can not afford health insurance.

On Wednesday, Chairman Baucus boldly announced that the Senate Finance Committee, in fact, had the votes to move the mark-up out of Committee stating, “We’re coming to closure.  It’s clear to me we’re going to get this passed.” Once that is completed next week, the discussions will shift to reconciliation with the Senate HELP reform package and then to the floor for consideration by the full Senate. Senator Snowe remains as the fulcrum for all healthcare reform decisions.  I’ve been talking about her for weeks as the key Republican centrist, and she has not yet signaled how she intends to vote on the package. As the only Republican who has not announced their decision on the bill, many across Washington are speculating that Snowe will in fact support the legislation. The Friday vote seemed to be an accurate predictor of Baucus’ claim. With Snowe making an 11^th hour deal that allowed the Senate Finance Committee to move forward, the chances are very strong we will see Senator Snowe provide the needed Republican vote for crafting a bi-partisan package (albeit, with a very small number of Republicans) that can move health reform forward in the Senate.  Other key developments included:

• The Price Tag– As I have been saying for the past few weeks, the biggest bone of contention on both sides of the aisle is the projected cost of the expansive reform package. To help pay for the hefty $900 billion proposal, the Committee adopted new amendments making it more difficult to deduct medical expenses on tax returns.  Under current law, citizens can deduct expenses that exceed 7.5 percent of their income, but under the new standards the threshold was increased to 10 percent of income beginning in 2013.
• Medicare Physician Reimbursement– The bill takes out any payment increases for physicians under Medicare which would have added about $230 billion in cost to the overall package.  Payment rates under the plan will be handled separately.  In essence, it’s a bit of a sleight of hand because everyone knows that Congress will ante up when the time comes.
• Bending the Curve – Reducing overall healthcare costs is one of the overarching objectives of the legislation.  The bill begins to indirectly tax employer-provided health insurance.  The provision not only raises needed revenue for the overall program but moves us in the direction of engaging consumers in the cost of their health insurance packages.
• Pre-existing Conditions Covered– Everyone will be required to have health insurance coverage and the insurance companies will not be able to deny coverage.  Although there will no doubt be tweaking of this provision in the years to come, because of anticipated “gaming” by the industry, it is a good first step on an issue that most Americans support.
• Protecting Senior Citizens– Many, including Baucus, argue that the reforms will limit out of pocket expenses.  However, in an effort to appease many senior citizens, the Committee stipulated that those over the age of 65 will not be burdened with further medical bills. While opponents of the new changes argue that the increased out-of-pocket threshold will levy higher taxes on the younger, less wealthy members of society, Senators across the board were optimistic that the out-of-pocket provision will help defray a portion of the bill’s cost.
• Funding for Illegal Immigrants– There were multiple GOP amendments last week.  On the illegal immigrant front, two Republican amendments were voted down that would establish new standards requiring proof of citizenship in order to receive government health benefits.  The issue will no doubt arise on the Senate floor.

So, what does all of this movement portend?  While the timing is complex, if we get a vote from Senate Finance on Tuesday, the intent is to move to the Senate Floor on October 12.   I anticipate this date will slip somewhat, possibly towards the end of the week. Then, we will see three to five weeks of debate on the floor of the Senate before there’s an up or down vote.  Finally, we move to “reconciliation” between the House and Senate.  So, Thanksgiving could very well be “Thanksgiving,” or we may have to wait until Christmas for “Christmas.” 

The long and short is that center stage moves from Baucus, the “Gang of Six”, the debates in Senate Finance, and all of the other associated stories to Senators Harry Reid (D-NV) and Olympia Snowe (R-ME).  Both Senators have storied lives.  Senator Reid was raised in Searchlight, Nevada, is the son of a miner, and played football and boxed in college.  So, he’s accustomed to the front line.  Senator Snowe, on the other hand, was orphaned at an early age when her mother died of breast cancer and her father from heart disease.  She was raised by an Aunt (a barber) and Uncle (a textile mill worker) in Maine.  So, she understands firsthand the issues facing many Americans when it comes to healthcare and illness in the family. 

Clearly, as Majority Leader, Senator Reid has his hands full.  Reid needs to help craft a path for Senate Finance and Senate HELP to take their different proposals and weave together one proposal that reaches their mutual goal of insuring millions of uninsured in a way that does not increase the federal deficit nor go beyond the $900 billion mark set by President Obama.  The path to consensus will be difficult, and in today’s world, there is no strong arming by the Majority Leader like Mike Mansfield (D-MT) did back in the 1960s when Medicare and Medicaid were passed.  The rules of the Senate have changed.  The mood of the public has changed.  The economy of the US has changed.  Everything is different. 

Senator Snowe, from my perspective, is in the catbird’s seat.  With a more than 70 percent approval rating in her home state of Maine and as the leading centrist of the Republican Party, the mantra on the street is “what Olympia wants, Olympia gets.”  So, we will see her emerge as the central figure over the coming weeks.  She’s reasoned, she’s central, and everyone likes her.  In the final analysis, it’s been another wild week in healthcare, but it’s not over ‘till it’s over.  Let’s hope Thanksgiving and Christmas come early this year. 

The views and opinions expressed herein are my own and do not necessarily represent the views and opinions of Dell Services or its affiliates.