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House health compromise has 'public option' with a catch

The new bill would require the government to negotiate healthcare costs with providers rather than set the rates itself. Liberals hope it will get conservative Democrats on board.

October 29, 2009|Noam N. Levey and Janet Hook

WASHINGTON — Paving the way for a crucial vote on healthcare legislation in the next two weeks, House Democratic leaders plan to unveil a compromise bill today that would create a nationwide government-run insurance plan but omit what many liberals consider the key to cost control.

According to senior lawmakers and aides, the so-called public option in the new compromise would not dictate what the plan can pay hospitals, doctors and other providers. Instead, the federal government would have to negotiate rates with providers, much as private insurers do.

House Speaker Nancy Pelosi (D-San Francisco) and her lieutenants made that concession in hopes of winning over conservative Democrats. Many of those lawmakers fear that payments based on lower Medicare rates -- the formula Pelosi originally supported -- would not be enough to sustain providers in rural areas.

Senior Democrats said that the concession represented real progress.

"Most of you all thought the public option was dead," said Rep. George Miller (D-Martinez), chairman of the House Education and Labor Committee and a Pelosi ally. "Rumors of its death were greatly exaggerated."

The decision to endorse the compromise ends weeks of heated and difficult debate among House Democrats. It comes just days after Senate Majority Leader Harry Reid (D-Nev.) threw his weight behind a slightly different public-option compromise that would give states the ability to opt out of a national government insurance plan.

Reid is working to persuade conservative Democrats to back his proposal -- which also would require the plan to negotiate with providers -- as Senate Democratic leaders think they are a few votes shy of the 60 they need. But with other parts of the bill still being developed, it appears increasingly unlikely that Reid will be able to move legislation through the Senate before Thanksgiving.

The House bill -- the cost of which Democrats are struggling to keep under $900 billion over the next decade -- builds on legislation introduced this year.

It will include sweeping new regulation of the insurance industry, prohibiting companies from denying coverage to sick people. And it will provide subsidies to millions of Americans to help them buy insurance in a regulated exchange, where commercial insurers would offer plans alongside the government option.

It also mandates that Americans buy insurance, and requires large employers to provide their workers with health benefits.

All Americans making less than 150% of the federal poverty level -- $16,245 for an individual and $33,075 for a family of four -- would be eligible for Medicaid, the federal-state insurance program for the poor.

Earlier versions of the legislation had limited eligibility for Medicaid, which now primarily serves poor children and their families in many states, to people making less than 133% of the poverty level.

The bill will be funded largely by a combination of cuts in Medicare -- many of them designed to make the program more efficient -- and a 5.4% surtax on individual taxpayers making more than $500,000 and couples making more than $1 million.

And after 10 years, it will boost those covered by about 35 million people, according to estimates from the nonpartisan Congressional Budget Office. That is substantially more than the more conservative bill approved by the Senate Finance Committee this month, which would have dropped the number of uninsured by 29 million.

The House bill also will include a complex mechanism for limiting the use of taxpayer subsidies for abortion services: Insurance companies that offer abortion coverage would be required to segregate funds received from consumers from subsidies provided by the federal government.

That provision has come under fire from many lawmakers who are opposed to abortion rights, and Democratic leaders continue to work on ways to resolve the issue, according to one senior aide who requested anonymity when discussing the negotiations.

Pelosi and other liberal lawmakers worked for weeks to rally support for the so-called robust public option, which would pay providers 5% more than Medicare, the federal insurance program for the elderly.

Such a plan promised to save the government tens of billions of dollars over the next decade, in part because Medicare typically pays providers less than commercial insurers do. But that stoked intense opposition from hospitals, which are important employers in many rural areas of the country represented by conservative Democrats.

Even in defeat, several leading liberal lawmakers noted Wednesday how much the prospects for a public option had improved since the summer, when many political analysts left it for dead.

And Rep. Lynn Woolsey (D-Petaluma), a leader of the influential Congressional Progressive Caucus, refused to throw in the towel.

"It's not even the fourth quarter," she said. "We will be insisting on it being as strong as it possibly can be."

Woolsey and other liberal congressional leaders are to meet with President Obama today.

"He needs to hear from us that he needs to support the public option," she said. "He's not saying it loud enough. We want to make sure he lets the Senate know he wants a public option in the bill."

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noam.levey@latimes.com

janet.hook@latimes.com

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