Reid’s Health Overhaul Bill Likely to Split Senate Democrats

By Kristin Jensen and Laura Litvan

Nov. 16 (Bloomberg) -- Senate Majority Leader Harry Reid will unveil legislation to overhaul the U.S. health-care system as early as this week. The floor debate that follows is likely to divide his Democratic Party.
Reid wants to include a government-run insurance program that would let states opt out, which may cost him Senate votes. His version probably won’t require employers to cover workers and will be funded through a tax on high-end insurance plans, which would put him at odds with House Democrats.
Reid needs 60 votes to pass the legislation, and he risks losing Senator Joseph Lieberman, a Connecticut independent who caucuses with the Democrats and opposes the government insurance plan. He also hasn’t won over the two Republicans most likely to back the bill, Maine Senators Olympia Snowe and Susan Collins.
“He’s going to have to walk a tightrope in order to end up with a package that can get him 60 votes,” said former Senator John Breaux, a Democrat who now heads a lobbying firm that represents the Pharmaceutical Research and Manufacturers of America, the drug industry’s Washington trade group.
The legislation, President Barack Obama’s top domestic priority, is intended to cover tens of millions of uninsured Americans while curbing medical costs. Lawmakers’ proposals for purchasing exchanges, subsidies and a requirement that all Americans have coverage would cost more than $800 billion over 10 years and mark the biggest changes to U.S. health care in more than four decades.
House Passage
While the House passed its version on a 220-215 vote on Nov. 7, Reid has delayed unveiling his legislation while waiting for Congressional Budget Office cost estimates on various proposals drawn up by the Senate health and finance committees.
“Once we hear from CBO, we will take the legislation to the caucus and hope to start floor debate as soon as possible,” said Jim Manley, Reid’s spokesman.
The Senate health panel embraced the government insurance plan, or public option, to compete with private insurers such as Hartford, Connecticut-based Aetna Inc. The finance committee rejected the idea, with three Democrats voting against it, Senators Max Baucus of Montana, Kent Conrad of North Dakota and Blanche Lincoln of Arkansas.
Other Senate Democrats, including Nebraska’s Ben Nelson and Louisiana’s Mary Landrieu, have also been critical of the public option. And Snowe and Collins say they won’t support it either.
Changes Likely
“Reid’s bill is likely to be weakened, especially in the public option,” said John Fortier, a political scientist at the American Enterprise Institute in Washington. “How you finance it, the public option, all these things are deals to be made.”
Reid first must corral 60 votes to start debate. Later, he might do a test vote on the proposal with a public option before accepting Snowe’s plan to create a government program only if premiums aren’t affordable enough, Breaux said.
“Harry can change it and go back to maybe a trigger mechanism and see if that picks up other Democrats and possibly picks up Olympia Snowe,” Breaux said.
There are other questions. Democrats are fighting over restrictions that might be included in the bill to ensure that no federal money goes to fund abortions; some argue the House provision on the issue will end up curbing abortion rights.
If Reid loses even one Democrat, he must make it up with Republican support, an effort that’s proving difficult.
Collins’s List
Collins last week outlined a list of concerns about the Senate Finance Committee’s measure and the ideas Reid is considering. Among other things, she said, affordability of care will be hampered by new taxes and industry fees under discussion, and she sees nothing so far that gives her confidence that health-care costs will decline as intended.
“To me, we should go rewrite the whole bill,” Collins told reporters on Nov. 9.
Senate leaders are considering whether to change fees on drugmakers, medical device makers and insurers passed by the finance panel. And they’re trying to mollify Democrats who want to scale back a tax on insurers for so-called Cadillac insurance plans because they say it would hurt middle-class workers.
Reid may instead opt to raise the rate of the payroll tax used to fund Medicare, the government-run health program for the elderly, or add a new Medicare tax on capital gains, both only for wealthy Americans.
No Employer Mandate
The Nevada Democrat is likely to drop plans for a mandate that all employers offer insurance to workers or pay a penalty, a person familiar with the negotiations said late last month. Instead, companies with 50 or more workers would be subject to penalties if they don’t provide coverage and have workers who get taxpayer-funded subsidies to buy policies.
Reid is pushing to meet Obama’s goal of getting legislation finished this year and last week brought in former President Bill Clinton to encourage fellow Democrats to act. After a measure passes the Senate, it would have to be combined with the House version in negotiations before a new round of votes.
If Reid succeeds, he will have navigated “through some very treacherous seas,” Breaux said.
To contact the reporters on this story: Kristin Jensen in Washington at kjensen@bloomberg.net; Laura Litvan in Washington at llitvan@bloomberg.net