Betting Against Obama Health Care Increases as Time Grows Short

By Ryan J. Donmoyer and Kristin Jensen

Nov. 9 (Bloomberg) -- Insurers such as WellPoint Inc. and Blue Cross Blue Shield and drugmakers are redoubling their efforts to fight proposals to overhaul the U.S health-care system, adding another obstacle as legislative hurdles mount.
The insurers oppose competition from a new government-run program that’s included in both the House and Senate plans. The trade group representing drugmakers such as Pfizer Inc. says a House provision to allow the government to negotiate drug prices for Medicare would cost tens of thousands of jobs.
House Speaker Nancy Pelosi won passage of her version of the legislation on Nov. 7 only after forcing her party’s liberal wing to make concessions and can’t count on those votes for a final version. In the Senate, time is running out to get a bill passed this year, leaving the effort vulnerable to a loss of momentum and a new backlash from Republicans in 2010.
“They know they don’t have 60 votes,” said former Senator John Breaux, who now heads a lobbying firm that represents the Pharmaceutical Research and Manufacturers of America, the drug industry’s Washington trade group. “They have to go back to the drawing board” on the plan to set up a government-run insurer, he said.
The House version passed 220-215 after Pelosi agreed to allow an ultimately successful vote that puts limits on the use of federal funds for abortion, setting up a later fight. The measure also includes a new government insurer, the so-called public option, that will pose less of a threat to private insurers than the original proposal.
Senate Outlook
Senate Majority Leader Harry Reid may have to go through a similar process in his chamber. He’s trying to placate liberals by pushing for a public option and eventually may have to give up on the idea. He’s also trying to bridge differences over how to fund the bill and whether to require employers to offer insurance, as well as tiptoe through issues including abortion.
“Because of the degree of difficulty, it wouldn’t surprise me to see it roll over into the first quarter of 2010,” said William Frenzel, a Brookings Institution scholar in Washington who was a Republican member of Congress for 20 years.
The only Republican to support any Senate proposal so far, Maine Senator Olympia Snowe, said Reid’s plan for a public option that allows states to opt out is unacceptable. And Connecticut Senator Joe Lieberman, an independent who caucuses with Democrats, reiterated his opposition yesterday.
Lieberman’s Vote
“As a matter of conscience, I will not allow this bill to come to a final vote” if the public option remains, Lieberman said on “Fox News Sunday.” Lieberman’s state is home to health insurer Aetna Inc., based in Hartford.
Without Snowe and Lieberman, Reid is at least one vote shy of the 60 he needs, and he risks losing weeks to a fruitless push for the public option. Should work spill into next year, breaks in the schedule and looming elections may open the effort up to the same types of criticism that dogged Democrats during their August recess.
“The longer any bill is hanging in the winds, the harder it is to pass,” said Sean Spicer, a former aide for the House Republican conference. “When you have a 2,000-page bill, there is always something you can find to rally opposition around.”
President Barack Obama is pushing Congress to send him legislation by the end of the year.
“Now it falls on the U.S. Senate to take this baton and bring this effort to the finish line,” Obama said yesterday.
Reid Won’t Commit
Reid last week wouldn’t commit to Obama’s timeline. He plans to recess his chamber for three days starting Nov. 11 for a Veterans Day holiday and the week of Nov. 23 for Thanksgiving.
Reid faces additional pressure because just one senator can effectively block legislation through procedural means. His colleagues say he will struggle to find enough votes to even begin a debate that senators say may last as long as six weeks.
“We are far from the end of the debate in the Senate,” said Senator Jack Reed, a Rhode Island Democrat, on yesterday’s “Face the Nation” program on CBS.
And that’s even before the House and Senate work together on a compromise, a process that would occur after a Senate vote and may take months.
Lawmakers are trying to craft a bill to cover tens of millions of uninsured Americans while curbing medical costs. Their proposals for new purchasing exchanges, subsidies and a requirement that all Americans have insurance represent the biggest changes to U.S. health care in four decades.
Insurers Speak Out
The Blue Cross and Blue Shield Association, a federation of plans that it says cover more than 100 million members, released a statement criticizing the House plan minutes after it passed. The legislation “undermines the goals of comprehensive health-care reform,” the group said.
“This legislation will significantly increase health-care costs and force many Americans to accept changes to the insurance plans they currently have and value,” said Angela Braly, chief executive officer of Indianapolis-based WellPoint, in an Oct. 28 earnings conference call.
At least on the House side, the insurers’ battle is being joined by drugmakers.
“While well-intentioned, the bill -- as passed -- would have the unintended consequences of killing tens of thousands of jobs in our industry,” said Ken Johnson, senior vice president of PhRMA, which represents New York-based Pfizer, Whitehouse Station, New Jersey-based Merck & Co. and other drug manufacturers.
Pelosi’s Fight
Pelosi lost the votes of 39 House Democrats this weekend and can’t count on all the votes she did win for a House-Senate compromise. Some Democrats who favor abortion rights and voted for the legislation said they won’t support a final bill that contains the funding restriction.
“To say that this amendment is a wolf in sheep’s clothing would be an understatement of a lifetime,” Representative Diana DeGette, a Colorado Democrat, said during the debate.
A big difference between the House and Senate bills lies in the way they pay for the legislation, which costs more than $800 billion over 10 years.
The House funds its legislation largely with a surtax on couples who earn more than $1 million a year. The Senate is planning a tax on insurers who offer high-end benefit plans.
The prospect of having the bill fail may force negotiators to include scaled-back versions of both proposals, said Clinton Stretch, a former congressional aide and principal at the Deloitte Tax LLC consulting firm in Washington.
“The political risks of failure are pretty high,” he said.
To contact the reporters on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net; Kristin Jensen in Washington at kjensen@bloomberg.net