Obama’s team weighs in on healthcare overhaul

The Obama administration delivered to Congress its first detailed proposal for a piece of the healthcare overhaul Friday, suggesting that a new independent board make the decisions on how Medicare pays hospitals and doctors.

Until now, the president has carefully deferred to lawmakers developing healthcare legislation, in part because many believe that the Clinton administration’s decision to write its own healthcare bill 15 years ago alienated Congress and contributed to that initiative’s failure.

But pressure has been growing on the administration and its congressional allies to do more to restrain the nation’s $2.5-trillion healthcare tab. And many specialists believe one key to curbing costs is to remove reimbursement decisions, which are now made by Congress, from the political process.

In addition, a growing number of Democratic lawmakers want President Obama to get more directly involved in the legislative process, in part to offer them the protection of his popularity. Many are concerned about the direction of the legislation rapidly moving through Congress. Two House committees and one Senate panel approved bills this week that would greatly expand coverage, and pay for it with higher taxes on the wealthy and cuts in Medicare and Medicaid reimbursements.

Obama offered encouragement Friday. “I realize that the last few miles of any race are the hardest to run,” he said. “But I have to say: Now is not the time to slow down, and now is certainly not the time to lose heart.

“Make no mistake: If we step back from this challenge at this moment, we are consigning our children to a future of skyrocketing premiums and crushing deficits,” he added. “There’s no argument about that.”

On Friday, a group of freshman House Democrats traveled to the White House to talk with Obama about their opposition to provisions in the House bill to raise taxes on wealthy Americans.

“The way we are paying for health reform would put a lot of strain on small business, which is particularly dangerous during a recession,” said Rep. Jared Polis (D-Colo.), a leader of the group.

The House bill would impose a surtax on individuals who make more than $280,000 a year and couples who make more than $350,000. (Senate lawmakers have shown little interest in such an approach).

At the same time, a group of moderate “Blue Dog” Democrats in the House have been stepping up their demands that the legislation do more to increase the healthcare system’s efficiency.

This week, the director of the Congressional Budget Office warned lawmakers that the bills now under discussion would not slow the growth of healthcare spending.

Obama wants lawmakers to pass bills in the House and Senate before their summer recess so that the legislation can be combined when they return in September.

Many strategists believe that this ambitious timeline is key to completing work on the legislation before electoral politics begin to consume Washington in 2010.

But House and Senate panels are still working away on separate bills. And six mostly centrist lawmakers, including two Republicans, sent a letter to their leaders Friday expressing concerns about the push to move a healthcare bill through the Senate by August.

Pelosi and other senior Democratic lawmakers joined Obama in downplaying the tussling on Capitol Hill on Friday.

“This is the legislative process,” Pelosi said at a midday news conference. “As the bill takes shape, people say, ‘OK.’ . . . They say, ‘Here are some suggestions. We have to go to the next step.’ This is the wholesome dynamism of what we do here.”

In an interview later, the House speaker indicated that she would be open to adjusting the bill, including limiting the new surtax to individuals making more than $500,000 and couples making more than $1 million.

Pelosi and Senate Majority Leader Harry Reid (D-Nev.) talked by phone with Obama on Friday morning about the need to work with moderate Democrats and to speed up work in the Senate, according to an aide briefed on the conversation.

With its new Medicare proposal, the White House is also stepping up efforts to shape the legislation to attract more votes.

Under the proposal, which administration officials began discussing with lawmakers earlier this week, a new independent agency would be established to set reimbursement rates for hospitals and doctors -- a process that is now controlled by Congress and highly politicized.

The plan, championed by Sen. John D. Rockefeller IV (D-W.V.), would allow Congress to stop the cuts only by passing a joint resolution in a process akin to how the federal government handled the politically sensitive closure of military bases around the country.

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n oam.levey@latimes.com

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House Democrats’ healthcare proposals

Here are details of the House Democrats’ healthcare overhaul bill. Two House committees -- Ways and Means, and Education and Labor -- finished their portions of the $1.5-trillion, 10-year bill on Friday. A third committee, Energy and Commerce, is aiming to complete the legislation by Wednesday:

Who’s covered: About 94% of nonelderly residents (those not covered by Medicare, which kicks in at age 65) would be covered -- compared with 81% today. Nearly half of the 17 million nonelderly residents who remain uninsured would be illegal immigrants.

Cost: About $1.5 trillion over 10 years.

How it’s paid for: Revenue-raisers include $544 billion over the next decade from new income taxes on single people making more than $280,000 a year and couples making more than $350,000; $37 billion in business tax increases; about $500 billion in cuts to Medicare and Medicaid; and about $200 billion from penalties paid by individuals and employers who don’t obtain coverage.

Requirements for individuals: Individuals must have insurance, enforced through tax penalties, with hardship waivers. The penalty is 2.5% of income.

Requirements for employers: Employers must provide insurance to their employees or pay a penalty of 8% of payroll. Companies with payroll of less than $250,000 annually are exempt. Employers could apply for a two-year exemption from the mandate if they can prove that the requirements would result in job losses that would hurt their communities.

Subsidies: Individuals and families with annual incomes of as much as 400% of the poverty level (which is $88,000 for a family of four) would get sliding-scale subsidies to help them buy coverage. The subsidies would begin in 2013.

How you choose your health insurance: Through a new health insurance exchange open to individuals and small employers; it could be expanded to large employers over time. States could choose to operate their own exchanges in place of the national exchange if they follow federal rules.

Benefit package: A committee would recommend an essential benefits package that would include preventive services, mental health services, oral heath and vision for children. Out-of-pocket costs would be capped. The new benefit package would be the basic package offered in the exchange and over time would become the minimum-quality standard for employer plans. Insurers wouldn’t be able to deny coverage based on preexisting conditions.

Government-run plan: A new public plan available through the insurance exchanges would be set up and run by the secretary of Health and Human Services. On average, it would pay Medicare rates plus 5% to doctors.

Changes to Medicaid: The federal-state insurance program for the poor would be expanded starting in 2013 to cover all nonelderly individuals with incomes of as much as 133% of the federal poverty level (which is $14,404).

Sources: AP research, Congressional Budget Office, House Ways and Means Committee