Democrats win surprise majority vote in bill to reform US health care

A key US Senate committee has endorsed a sweeping health care overhaul, gaining the support of an influential Republican. Senators voted by 14 votes to nine to pass the bill, with one Republican joining Democrats on the Senate Finance Committee in voting in favor. The proposal drafted by Chairman Max Baucus (Democrat, Montana) was designed to reduce costs, regulate insurers and expand coverage.

This means that US President Barack Obama's ambitious drive to overhaul the nation's $2.3 trillion health care system has cleared another hurdle, but more are to come. Indeed, the administration was promptly criticisized from some of the insurance industry players and moderate Democrats, calling into question the prospects for a bipartisan landmark bill.

Announcing her decision to break with her party, Senator Olympia Snowe (Republican, Maine) said: "When history calls, history calls." However, the moderate Republican said it did not necessarily mean she would support later versions of a bill, noted the UK public broadcaster, the BBC. "There are many, many miles to go in this legislative journey," she said. "My vote today is my vote today. It doesn't forecast what it will be tomorrow," she declared.

Essential features

The essential features of the bill, as analyzed by Edward Luce and Kevin Sieff of the UK's Financial Times, are first, that it would create national exchanges in which insurers would be able to pick up new customers, who would be subsidized to buy individual or family plans. The insurers would be debarred from 'cherrypicking' customers on the basis of pre-existing conditions and also be debarred from imposing annual or lifetime caps on how much can be spent on a customer.

Individuals without insurance could also opt to buy a plan from a public co-operative, which gets $6 billion of seed money under the Baucus bill. Under the much watered-down individual mandate, anyone who failed to buy insurance would be liable for a penalty of $750- $1,500 a year if their earnings were lower than 300% above the federal poverty line - the level below which you qualify for a premium tax credit. The maximum fine for those above that threshold would be $3,800 a year per household.

Under the pay or play rule, employers who failed to insure employees would be subjected to a fine amounting to a maximum of $400 a year multiplied by the number of employees. Small businesses with 25 or fewer staff would receive tax credits to help them pay for employee insurance.

In line with the White House's insistence that the bill be self-funding, it would raise $81 billion more in revenues than it would spend over its first decade. Roughly half of the revenues would come from cuts in payments to providers of Medicare services to America's pensioners. This would hit hospitals, doctors, drug companies and insurers. Roughly a quarter of the revenue would come from a new excise tax on the most expensive plans - popularly known as Cadillac plans. This would impose a 40% tax on any plans exceeding $8,000 a year for individuals and $21,000 a year for families. The remaining revenues would come from a mixture of small fees, taxes and penalties.

The panel's bill, which was drafted after weeks of at times bitterly bipartisan debate, sets out a 10-year $829 billion plan to cut health costs and provide affordable health insurance to most Americans, under what was formerly called the Healthy Future Act, and dubbed the 'Baucus Bill,' named after Senator Max Baucus who chairs the Finance Committee which voted on it. 

Senator Charles Grassley, the senior Republican on the panel, criticized the legislation and predicted that the bill would move "leftward" as it progressed through Congress. Republicans say the final draft which will be voted on is likely to be very different and more expensive than this version. They say the proposed reforms are too costly and represent too much government intrusion into health care.

PhRMA and BIO broadly support the Bill

"Today's vote represents an important step forward for the millions of Americans who don't have access to high-quality and affordable health care coverage and services. Chairman Baucus has tirelessly shepherded one of the most important pieces of legislation in our lifetime and deserves a lot of credit for reaching out to members on both sides of the aisle,' stated Pharmaceutical Research and Manufacturers of America (PhRMA) president and chief executive Billy Tauzin. "We recognize that a lot of work remains in both chambers, but we're still convinced that the Senate Finance Committee's bipartisan bill is the best blueprint for comprehensive health care reform, and we are going to do our part to try and get a bill on the President's desk this year," he added.

Representing the US biotechnology industry, BIO president and CEO Jim Greenwood applauded the commitment of Senator Robert Menendez (Democrat, New Jersey) and Chairman Baucus, as well as amendment co-sponsors Senators. Maria Cantwell (Democrat, Washington) and John Kerry (Democrat, Massachusetts), to supporting cutting-edge biomedical research.

'Senator Menendez's amendment will advance the key goal of health care reform: that all Americans have access to quality healthcare, including innovative, high-quality therapies. Pioneering, research-intensive small businesses would gain critical support through this amendment to continue their cutting-edge projects to develop advanced medicines and, ultimately, cures for the world's most debilitating diseases. The amendment would reimburse small biotechnology companies with 250 employees or less for a portion of their therapeutic development activities, including hiring scientists and conducting clinical studies, that will help ensure that our healthcare system does not lose the benefit of the most promising medical breakthroughs to treat diseases and potential global pandemics,' said Mr Greenwood.

More rules, more costs, but less health insurance

Taking a different view was Senator Mike Enzi (Democrat, Wyoming), who voted against the bill and said that it will drive up health care costs for millions of Americans and leave families with few affordable health insurance options.

'There's little in this bill for middle class Americans. The people asked us to bring down their costs, but this bill would drive their costs up. The people asked for more options so they can get the care they need, but in this bill Washington takes away their choices and decides for them. This is the wrong kind of reform,' Sen Enzi said. 'The Finance bill spends too much and does too little to bring down health care costs. People will have less insurance. Promises are not met. We need health care reform, but it has to be done the right way,' he argued.