The Senate Finance Committee is going back to the drawing board with CBO to scrounge more savings from Medicare and Medicaid and ease the task of coming up with revenue raisers to cover a $320 billion gap in its $1 trillion healthcare overhaul. At the same time, plans to release a final House overhaul bill today came to a screeching halt as the Blue Dog Coalition raised major concerns.
The Finance Committee is forced to fill the $320 billion gap after concerns among some Democrats, including Senate Majority Leader Reid, required they back off a plan to tax employer-based health benefits.
"Obviously, the senators don't like to raise revenue, so we're doing our best to try to reduce the pressure to raise revenue and that's to look at some ways to get more savings on the spending side, basically," Senate Finance Chairman Max Baucus said.
Closing the offset gap with reductions in federal healthcare spending could open the door for senators to pare their plan to tax benefits -- for instance, capping the tax exclusion at health coverage valued at $25,000 or lower. The option would not affect as many Americans as the prior tax exclusion model under consideration but would raise just $90 billion over 10 years.
Senate Budget Chairman Kent Conrad said Thursday one of the places the Finance Committee plans to look for savings is from care coordination.
"I think we've really got to go back to the drawing board on this issue and really push it, and we've got an agreement that we're going to do that," Conrad said.
Conrad met last week with hospital leaders in his home state of North Dakota, who produced studies they have done on care coordination that portray deep savings and better health outcomes.
"We're going to make additional efforts to connect the people who have done those studies with CBO to see if some of the results of those pilot programs won't be reflected in CBO scoring of potential adoption of greater care coordination," Conrad said.
Meanwhile, senators are considering a proposal floated Thursday by Finance Democrats to apply the 1.45 percent portion of the Medicare payroll tax paid by employees to investment income, including capital gains and dividends.
Sources said the proposal would kick in for those earning more than the current limit on Social Security payroll taxes, which in 2009 is $106,800, and raise about $100 billion. One GOP aide said it would be difficult to administer and violate President Obama's campaign pledge not to raise taxes on capital gains and dividends for taxpayers earning less than $200,000 a year. "This is about JCT scores, not policy," the aide said.
Finance Democrats are giving a second look to Obama's plan to limit itemized deductions for upper-income earners, as well as a surtax favored by House Democrats.
Meanwhile, as House Ways and Means Democrats struggled to offset the House bill, the planned release of a final version today hit a major roadblock: the Blue Dog Coalition.
Forty Blue Dogs wrote leaders Thursday demanding they shave the bill's cost.
They also asked leaders to find more savings in the delivery system, particularly by moving Medicare to a value-based purchasing model that would pay providers based on quality. The coalition also has significant concerns about rural issues and cannot accept a public insurance option that pays Medicare rates, as House Democrats' draft bill does now, unless rural disparities in provider payments are addressed, the Blue Dogs' Health Care Task Force chairman, Rep. Mike Ross, D-Ark., said following a meeting Thursday evening with leaders negotiating the bill.
Looking for more? For more on the healthcare reform debate, see our Healthcare Reform page.
Ways and Means Health Subcommittee Chairman Fortney (Pete) Stark, D-Calif., said he is working on a concession with Blue Dogs on negotiated hospital rates.
Ross said Blue Dogs will meet with leaders again today, but he does not expect all the coalition's issues to be fixed then.
Other House Democrats raised concerns about a potential tax on sodas and other sugar-sweetened beverages was close to being ruled out Thursday.
A group of vulnerable freshman lawmakers, including members of the Democratic Congressional Campaign Committee's Frontline Program, raised their concerns in a meeting with House Speaker Pelosi Wednesday. They followed up with a letter to leaders Thursday.
"These taxes would most heavily impact low- and middle-income Americans and create new burdens for small retailers and grocers," 13 Frontline members -- mainly freshmen but also Reps. Michael Arcuri of New York and Leonard Boswell of Iowa -- wrote to Pelosi, Ways and Means Chairman Charles Rangel and others.
The Ways and Means Committee has been sequestered for days trying to come up with the revenues to pay for the bill. One option they appear to have settled on is a surtax on wealthier Americans earning more than $200,000 in adjusted gross income, or $250,000 in the case of joint returns.
A surtax of as much as 3 percent could raise much of the $600 billion in revenues Rangel is seeking, but leaves a hole that some had contemplated using a new excise tax on beverages to fill. A 10 cents-per-can tax on non-diet sodas could raise $112 billion, for example. House sources said a soda tax was rapidly losing steam, based on opposition from vulnerable members as well as senior lawmakers like Rep. John Lewis, D-Ga., a senior member of Ways and Means.
Through a spokeswoman, Lewis declined to comment. But Lewis' opposition could be readily understood seeing as how he represents the Atlanta area -- home to the Coca-Cola Co.
Rep. Michael McMahon, D-N.Y., a freshman representing Staten Island and Brooklyn, said he represents many corner grocers who would be affected by a soda tax that would "become a nightmare to administer." He also said he's opposed to "targeted" and "confiscatory" taxes, not to mention taxing middle-class and low-income people. In their meeting with Pelosi, McMahon said, "I got the impression she heard us and is listening to us. It's certainly not a done deal at this point."
The House bill also will not tax health benefits, and McMahon wrote to Baucus in a letter Thursday urging him to back off that approach as well. He said such a tax would disproportionately hit the firefighters, police officers, teachers and union members in his district. "Taxing employer-based healthcare benefits is flat out unfair and completely misses the mark," said McMahon. "I will not support any healthcare reform plan that includes such a measure."
This article appears in the July 11, 2009 edition of NJ Daily.