Tough debates ahead as Senate unveils health plan

Senate Majority Leader Harry Reid (D-Nev.) on Wednesday unveiled his long-awaited plan for expanding medical coverage to millions more Americans over the next decade, setting the stage for a historic Senate debate on a healthcare overhaul.

Reid’s legislation would cost less than the healthcare bill passed by the House this month, according to senior Democratic aides, who cited a preliminary estimate by the nonpartisan Congressional Budget Office. It would commit the federal government to about $849 billion in new spending over the next decade to expand coverage, compared with $1.05 trillion in the House bill.

Reid’s bill would drive down federal deficits by an estimated $127 billion over the same period, relying on cuts in Medicare spending and on new taxes on healthcare industries, high-end “Cadillac” health plans and wealthy Americans.

The bill would cover an additional 31 million people over the next decade. That would boost the percentage of nonelderly Americans with medical insurance from 83% to 94% over the next decade -- slightly less than the 96% who would be covered by the House bill.

Reid’s move capped off weeks of difficult negotiations attempting to blend two bills passed in Senate committees this year. Democratic leaders have been struggling to keep up momentum behind President Obama’s push to reshape the nation’s $2.5-trillion healthcare system by expanding coverage and beginning to control medical costs.

“This is our chance to end a journey that began more than 60 years ago, when President Truman said every man should have the peace of mind of having health insurance,” Assistant Majority Leader Richard J. Durbin (D-Ill.) said after Democrats met at the Capitol to discuss the bill.

But the fate of the legislation is far from certain.

Republicans, who have criticized the Democrats’ initiative as a step toward government control of the healthcare system, are already planning a series of delaying tactics, including forcing the entire bill to be read aloud on the Senate floor.

“It’s going to be a holy war,” Sen. Orrin G. Hatch (R-Utah) said Wednesday evening.

Reid faces a more immediate challenge on his own side of the aisle. Democratic leaders worked throughout the day Wednesday to maintain the fragile coalition of conservative and liberal lawmakers that will be needed to advance a healthcare bill.

The first test will come when the Senate takes a procedural vote to begin debate, probably on Saturday.

At a time of growing unease about federal spending, the CBO estimates may help Reid as he labors to rally Democrats to overcome Republican filibusters and push a healthcare bill through the Senate before the end of the year.

Without any GOP support, all of the 58 Democratic senators and the two independents who caucus with them must hold together to get the required 60-vote supermajority that will be necessary to move any healthcare legislation in the face of threatened filibusters.

If Democrats prevail Saturday, lawmakers could begin considering amendments after Thanksgiving and potentially vote on a final bill before Christmas. The legislation would then have to be reconciled with the bill passed in the House before it could be sent to the White House for Obama’s signature.

In a statement Wednesday, Obama praised Reid’s proposal, noting that he was “particularly pleased to see that the Congressional Budget Office has estimated that the bill will reduce the deficit.”

Most lawmakers expect that Reid’s provisions will be changed substantially long before a bill makes it to the president’s desk.

And some lawmakers -- including Sens. Ben Nelson (D-Neb.) and Joe Lieberman (I-Conn.) -- have indicated that although they may support a procedural vote to begin debate, they may not support the final bill.

Underscoring the difficult road ahead, Reid spent more than an hour in his office Wednesday afternoon meeting with Nelson and two other Senate Democrats wary of his health plan -- Blanche Lincoln of Arkansas and Mary L. Landrieu of Louisiana.

Much of the discussion has been about how to structure a new government insurance program -- or “public option” -- that would offer Americans who don’t get insurance through work an alternative to plans offered by commercial insurers.

Unlike the House bill, which would establish a national public option, Reid would give states the option to “opt out” of the government plan, a concession he made in a bid to win the support of conservative Democrats.

Reid has also been working to defuse concerns about limiting federal funding for abortion and about a new and potentially costly government program to provide insurance for long-term care.

The Senate bill would ban the use of federal funds for abortion services except in cases of rape and incest, requiring insurers that cover elective abortions to segregate money from Americans who get government subsidies.

But the Senate measure does not include the stricter House bill language, which entirely bans the public option from covering abortion services.

Like the House bill, Reid’s proposal is designed to largely preserve the employer-based healthcare system that most Americans now rely on for their health coverage.

But the bill would for the first time require insurance companies to cover all Americans, regardless of their health status, and would prohibit insurers from denying coverage to people who become sick.

Most people would have to buy insurance or face a penalty of as much as $750 per person. And large employers would have to provide employees with health benefits or contribute to the cost of insuring those who are eligible for federal assistance.

House Democrats included a much more stringent requirement on employers in their bill.

Reid’s bill parallels a provision in the House bill that would expand the nation’s 44-year-old Medicaid insurance program for the poor to all Americans earning less than 133% of the federal poverty level. Like the House’s version, it would create new insurance marketplaces for those who do not get coverage through work.

Commercial insurers, as well as the government, would offer plans in these marketplaces, or exchanges, and be required to provide a minimum set of benefits, including mental health services, maternity care and preventive care.

The most expensive feature of Reid’s proposal is a commitment by the federal government to provide subsidies for millions of Americans who make less than 400% of the federal poverty level and buy insurance in an exchange.

The bill is also designed to give relief to small businesses, with tax subsidies to help them offset the cost of offering their employees health benefits.

And the legislation would make prescriptions more affordable for many seniors, though it would not close the Medicare drug coverage gap, known as the “doughnut hole,” as the House legislation does.

To cover the cost of this expansion, Reid is relying on a new 40% tax on high-end health plans -- those worth more than $8,500 for individuals and $23,000 for families.

Individual taxpayers making more than $200,000 a year and couples making more than $250,000 would also be subject to a payroll tax that would hike the current 1.45% Medicare deduction to 1.95%.

The bill also includes a 5% excise tax on elective cosmetic surgery, which has not been in any previous health legislation.

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noam.levey@latimes.com

janet.hook@latimes.com

Kim Geiger in the Washington bureau contributed to this report.