Growing Chasm Separates Parties on Health Reform

A Republican alternative to the health care overhaul plans of congressional Democrats that is taking shape on Capitol Hill includes the use of new state-based insurance exchanges and tax subsidization of insurance premiums.

Republican leaders introduced the Patients' Choice Act (S 1099, HR 2520) to counter Democratic health care reform plans that have been widely discussed but had not yet been translated into legislative bills by mid June.

The Republican proposal would require each state to establish health insurance exchanges composed of private health insurance companies through which individuals could pick their coverage. The exchanges would serve as clearinghouses of available insurance plans through which individuals could compare features and prices of plans that meet a minimum benefit threshold. The legislation would provide $5,700 in tax credits to families and $2,200 to individuals to subsidize insurance premiums. An additional $5,000 tax credit would be given to low-income families. Funding for the credits would come from a new tax on employer-provided health benefits.

The measure “will finally enable Americans to own their health care instead of being trapped in the current system, which leaves people either uninsured, dependent on their employer, or forced into a government program,” said Sen. Richard Burr (R-N.C.), who cosponsored the House bill.

The plan would allow states to shift residents covered by Medicaid into private coverage. In addition, it would establish a system to automatically enroll uninsured Americans in private insurance plans at emergency departments and motor-vehicle departments and through employers.

Sen. Tom Coburn (R-Okla.), a physician and the Senate bill's sponsor, maintained that what he described as increasing government control over health care has failed to make health care more affordable or accessible.

The Republican health reform bill would “provide every American with access to affordable health care without a tax increase, more debt, and waiting lines,” Coburn said, suggesting that Democrats are working on legislation likely to produce these problems.

GOP Condemns Government Funding

The Republican plan, which supporters plan to offer as an amendment during debate on the major Democratic health care proposals planned for votes later this summer, aims to achieve universal coverage for U.S. residents while remaining budget neutral. It would not establish new government health care programs.

The Republican proposal to address rising health care costs and rates of uninsurance is in contrast to the emerging outlines of the reforms favored by Democratic leaders in Congress and by President Obama.

Senate Finance Committee Chair Max Baucus (D-Mont.) said that the GOP plan“ would destroy the insurance system in America as you know it” because it would eliminate the employer-based health insurance system. Baucus and other Democrats said businesses would cease to offer their workers insurance plans if such insurance was no longer tax deductible to employers, which would be the case under the Republican plan.

The proposals by Baucus, who is leading the reform effort in the Senate, would build on the employer-based insurance system with new programs, including a publicly funded insurance option for the uninsured—similar to Medicare. The Democratic reform effort is expected to cost at least $1.2 trillion in the first 10 years, according to Democrats, although proponents maintain that the cost savings it achieves through prevention and reducing illnesses that go untreated because of lack of insurance would eventually result in overall savings.

Partisan Divide Grows

The support among many Democrats, including Obama, for the overhaul to include a publicly funded alternative for people who are unable to qualify for private insurance has become increasingly contentious. Most Democrats, including Sen. Charles Schumer of New York, have stated that a public option would end up increasing competition by breaking the “monopoly” enjoyed by private insurers.

The public option, however, has exposed health reform's political fault lines among Democrats. The so-called Blue Dog coalition, a voting block of fiscally conservative House Democrats, issued a letter in May that said it would support only a public plan that follows the same market-competition rules that private insurers must follow. Those rules would include requirements that a public plan negotiate payment rates with clinicians, allow voluntary participation in the plan by both clinicians and patients, and require its premiums and copayments to pay for all of its operations.

However, the public option has been criticized as too limited a reform by some liberal Democrats. For instance, 78 Democrats in the House have cosponsored legislation (HR 676) to expand Medicare eligibility to all Americans and replace most private insurance.

Republicans have repeatedly stressed that inclusion of a public option would likely eliminate any health care reform support from members of their party, despite the fact that Baucus and Obama have repeatedly emphasized the need for bipartisan support to ensure a reform plan's success. Republicans base their opposition to a public insurance option on their contention that private insurers could not fairly compete with a plan that did not have to make a profit, thus driving private plans out of business.

Democratic leaders in Congress have announced that they plan to work toward passage of health care reform measures in both chambers before the August recess and to pass a bill in the fall.

Congressional health reform proposals can be accessed at<http://thomas.loc.gov> by searching on the bill numbers, HR 2520, S 1099, and HR 676.▪