Senate finance committee nearing a proposal on a less expensive health care bill

June 26, 2:24 PMHealth Care ExaminerSheila Guilloton

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Sen. Max Baucus, Chairman of the Senate Finance Committee
announced a new proposal for health care reform is coming

Max Baucus (D-Mont), Chairman of the Senate Finance Committee, announced today that his committee has found a way to reduce the cost of the health reform bill which initially had a price tag of $1.6 trillion. 

According to reports out of the committee, the senators found a way to cut the cost of the proposed health care bill to $1 trillion over 10 years. Members also report that the bill as drafted by their committee would cover almost all Americans.

According to Mr. Baucus, the new version of the bill would be deficit neutral.   He stated  that the Congressional Budget Office (CBO), that had previously estimated the cost of the original bill to be $1.6 trillion,  confirmed that that with the options being considered,  “a $1 trillion cost could be fully paid for.”

Senate Budget Committee Chairman, Kent Conrad (D-ND) told reporters that the Finance Committee was able to reduce the overall cost of the bill by cutting subsidy levels for uninsured people.  Subsidy levels had originally contemplated assistance for families with incomes up to 400% of the poverty level or $88,200 for a family of 4. The eligibility for assistance would be lowered to 300% of the poverty level or $66, 150 for a family of 4.

As currently conceived, the $1 trillion bill would be fully funded by three things: tax increases, Medicare cuts and penalties assessed against employers who do not offer health insurance.

The Finance Committee version of the bill is said to include about $300 billion in new taxes. These taxes would be assessed against the value of employer sponsored health insurance. At this time there is no tax imposed on the value of health insurance premiums paid by an employer for the benefit of employees.  Millions of American get their health insurance through employers and have never had to include the value of those premiums as taxable income.

President Obama had campaigned against the idea of taxing premiums paid on behalf of  workers. However, most  members of Congress who are working on health care reform believe that it is a necessary part of paying for health care reform. The President is said to be open to the idea if there are no other options.

The second fiscal requirement of the new bill include substantial reductions in future spending on Medicare and Medicaid. These two federal programs are the primary health programs now run by the federal government for the care of elderly and low income citizens. Senators are considering cutting the amount of payments made by Medicare to hospital and doctors.

The final element of the new proposal would impose a penalty on employers who do not offer health insurance to their workers. Kent Conrad commented on one provision called the “free rider” provision.  This would require businesses to help finance coverage for workers who get their health insurance for another source, such as Medicare or other government program.  Conrad estimated that the free rider provision would generate almost $300 billion over the next 10 years.

The Senate is scheduled to leave Washington for the July 4th recess but at least one Senator, Olympia Snowe (R-Maine) indicated that work on the bill would continue during the recess.