Under pressure to rival the Senate Finance Committee's success in crafting healthcare legislation with a price tag deemed affordable, House lawmakers last week scrambled for ways to whittle down costs and help pay for their own bill's pricey coverage expansions.
House seeks to match affordability of Senate's bill
House Speaker Nancy Pelosi (D-Calif.) has insisted the House bill will remain budget-neutral while achieving its established goals of providing affordable options for the middle class and security for seniors, although some question whether the House will be able to meet those objectives. At deadline, leadership was gearing up to send the legislation to the Congressional Budget Office so that actuaries can crunch the numbers to come up with an estimated cost, known in the Beltway as a score.
“The House bill has been scored at over $1 trillion” previously, said Julius Hobson, a senior policy adviser at Bryan Cave Strategies, the public policy arm of law firm Bryan Cave. “It will be a challenge for the leadership to produce a bill that CBO scores as not adding to the deficit.”
While confident a forthcoming valuation “will show the House legislation is budget-neutral,” House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) was elusive on how the bill would be paid for.
Some in Congress believe the tax on high-income earners will remain a front-runner to offset costs of the bill. “I think that's the approach the House will follow,” Rep. Gerald Connolly (D-Va.) told reporters last week. An excise tax on the more generous healthcare insurance plans, sometimes called “Cadillac” plans, has lost some ground in the House (Oct. 5, p. 8), although Pelosi indicated that a “windfall tax” on insurers—a higher tax rate on certain profits—was currently under consideration as a way to help pay for the bill. Such an idea was swiftly denounced by House Republican Leader John Boehner (R-Ohio). “You tax the insurers, guess what—their customers are going to pay higher premiums to cover the cost of this tax,” he said during a news conference.
Lawmakers are also weighing their options on the much-discussed public plan, with an aim to send over three proposals on how such a plan should be constructed. At deadline, the goal was to send the CBO a so-called “robust” public option, whose rates would be set based on Medicare plus 5%. In addition, two options basing a public plan on negotiated rates would accompany the sweeping legislation. “There's no question the robust option saves the most money, $110 billion” over 10 years, Pelosi told reporters.
Negotiated rates by comparison would save less money—only $25 billion over 10 years—than Medicare plus 5%. One of the options being presented to the CBO however, would pair negotiated rates on the public plan with an expansion to Medicaid, increasing the eligibility level from 133% of poverty to 150%.
The idea is that having more people on Medicaid would be cheaper than providing the same people with subsidies under the bill's health insurance exchange, thereby increasing the savings potential of the negotiated rates option.
“We think the negotiated rates, plus increasing the eligibility for Medicaid, would get you an additional $25 billion. So the total between negotiated rates and expanding Medicaid is $50 billion,” said a Pelosi aide, though he was quick to add that these figures did not represent official CBO estimates.
The third option submitted to CBO would place a Medicare plus 5% “trigger” on a public plan based on negotiated rates, if premiums went up too quickly under this plan.
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