Sticking Points for a Final Plan

The Senate Finance Committee approved the so-called Baucus bill Tuesday with the vote of Sen. Olympia Snowe, the first Republican to vote for any of the bills approved by five congressional committees (three in the House; two in the Senate).

The Baucus bill is the vehicle and set point for the continuing debate, as it is merged with the bill passed by the Senate HELP committee and then moves to the Senate floor. Eventually, the House and Senate will have to agree to a compromise between what finally emerges from the Senate and from the more liberal House.

There are several key questions whose resolution will determine the outcome of the reform debate of 2009.

1 Will Republicans now see reform as inevitable and seek to constructively amend the bill instead of simply opposing? The most likely issue on which they could exact influence is medical malpractice reform. The president provided an opening in his September speech to Congress. This has long been a priority for Republicans, and if reform passes and they only oppose, they will have missed an opportunity to advance a long-term interest.

2 Will the Senate tax on high-cost insurance plans prevail over the House income tax increase? There are only so many ways to offset $900 billion over 10 years. One of these two financing mechanisms is inevitable to keep reform deficit-neutral. The Senate appears unwilling to consider an income tax increase, while many House Democrats adamantly oppose a health-insurance tax. Something must give, and it will fall to the president to navigate this intra-party dispute. If he can, there will no longer be any doubt about his deserving the Nobel Peace Prize.

3 Will some type of public insurance option pass? I have been wrongly saying for over a month that a public insurance option made available to persons purchasing insurance through exchanges was dead. However, it appears to live, and has become tied up with another important question:

4 How much discretion will be granted to states? Moderate Senate Democrats who are uneasy with a public insurance option have signaled openness if states can opt out of this provision. There seems to be movement toward more options generally for states, an idea that is firmly in the American tradition of incrementalism and federalism.

Deleting a Tax Subsidy from the Equation5 Will a Medicare Commission survive? I have expressed strong support for an Independent Medicare Advisory Commission, comprised of nongovernmental experts (physicians and others) to look comprehensively at what Medicare covers, when and how it pays for care. Medicare has been the source of all the important payment innovations in insurance over the past 30 years, and this is likely to continue. It appears that this approach is losing ground in House-Senate negotiations, which is a bad thing for cost control. I realize that it is hard to ask Congress to enact something that has at its essence an admission that Congress is incapable of successfully carrying out the detailed wonkish work of modernizing Medicare to make it sustainable for years to come. But it is.

6 Intangibles? Big "mo" is with reform, driven in large part by Democrats in Congress realizing that not addressing this issue raises doubts about the party's ability to govern. The essence of the president's challenge is to keep the most liberal and most conservative members of his own party on board, while remaining open to constructive Republican input. Every choice risks losing members of his own party.

So far, the inevitable external events have helped. Twice this fall, as the liberal-conservative roil within the Democratic Party was intensifying, outside events drove the party together to defend the developing compromise. The first was the, "you lie" incident during the president's speech. The second was the unconvincing report released by the Association of Health Insurance Plans late Sunday night, attempting to derail the Finance Committee vote Tuesday. The report came amid increasing House-Senate conflict over the tax on high-cost health insurance plans. This clumsy and ineffective attempt at influence by the insurance industry might have done more to make liberal House members consider accepting the health insurance-tax than anything the president could ever do.

Donald H. Taylor Jr. is an assistant professor of public policy. His blog is available for discussion of this article and health care reform in general. This is part of a series of articles by Donald Taylor exploring aspects of the health care reform issue originally published in the News & Observer.