House Democrats report major progress on healthcare bill

After weeks of fractious debate that threatened to derail President Obama’s healthcare overhaul, House Democrats on Wednesday reached a critical if fragile agreement that appeared to pave the way for the chamber to vote on a package in September.

The deal, worked out between a group of fiscally conservative Democrats and Rep. Henry A. Waxman (D-Beverly Hills), chairman of the Energy and Commerce Committee, changes the way a proposed government-run insurance plan would operate in order to allay concerns that it could crowd out private insurers.

Brokered with help from the White House, the agreement also moves to cut more than $100 billion from the bill’s $1-trillion-plus price tag, according to lawmakers who worked on the deal. And it would exclude more small businesses from a requirement to provide employees with health insurance.

Democrats still face big obstacles in their quest to send legislation to the White House.

Those hurdles include mollifying liberal lawmakers, who expressed outrage at the deal reached Wednesday.

“I think they’ve had an inordinate amount of input,” Rep. Pete Stark (D-Fremont) said of the more conservative “Blue Dog” Democrats. “And every time people have given them some consideration, they want more.”

In addition, Rep. Allen Boyd (D-Fla.), a Blue Dog leader, said he thought that “the bulk” of his caucus might oppose the House bill despite the latest compromise.

But the agreement comes at a crucial time for Obama and his congressional allies. The fiscally conservative Democrats had blocked progress on the legislation in Waxman’s committee for more than a week, threatening to leave House discussions in disarray as lawmakers prepared to leave town for their August recess.

With an important Senate committee still mired in difficult negotiations on its own bill, momentum on the overhaul threatened to stall.

“This will move the bill forward,” House Majority Leader Steny H. Hoyer (D-Md.) told reporters Wednesday as news of the House deal broke.

The agreement delays a vote by the full House until September, satisfying the demands of many moderate Democratic lawmakers who wanted time to absorb the details of the complex legislation. “We’ll have a lot of time to review where we are,” Hoyer said.

Obama praised the progress Wednesday and called the work of the fiscally conservative Democrats “extraordinarily constructive in strengthening this legislation and bringing down its cost.”

He did not, however, endorse the specifics of the agreement. The president is expected to play a role in writing a version of the Senate legislation.

There is still much debate that will take place over issues at the heart of the agreement hammered out Wednesday, such as whether the government should offer its own insurance plan to compete with private insurers.

Under the agreement between Waxman and the Blue Dogs, House Democrats retained the idea of creating a government insurance program, which they believe will help drive down costs and give many consumers a new insurance option.

But the deal takes steps to ensure that the government plan would not gain advantages as a result of the federal management of Medicare, the insurance program for seniors that can negotiate low rates because of its massive size.

Originally, the government insurance plan would have paid doctors, hospitals and other providers a rate set slightly higher than Medicare’s. Insurers and hospitals, as well as many lawmakers, feared that arrangement would mean the government plan would incur lower costs than private insurers and could charge low premiums -- driving companies out of the market. Consumers, critics said, ultimately could be left with only one choice for health coverage: the government.

Under the deal struck Wednesday, the government insurance plan would have to negotiate with hospitals and other providers apart from Medicare. That could make it harder for the federally run plan to charge very low premiums.

The prospect of the government competing in the insurance market has been highly controversial. In the Senate, the idea of a government plan has been all but abandoned by a group of Democrats and moderate Republicans trying to work out their own version of the bill in the Senate Finance Committee.

Rep. Mike Ross (D-Ark.), a leading Blue Dog who worked on the House deal, called the changes to the government insurance plan “a huge win.”

But more-liberal members protested. Rep. Patrick J. Kennedy (D-R.I.) said that by limiting the government’s ability to drive insurance rates lower, the deal “lets insurance companies off the hook” for savings they had already promised the White House.

“It’s a sop to the insurance companies,” he said.

The deal addresses another issue dominating the healthcare debate: the burden placed on businesses.

The legislation includes a new mandate on employers to provide health insurance to their workers or pay a penalty -- as high as 8% of payroll for larger companies. Critics have said that could prove disastrous to many businesses during an economic downturn.

The House bill originally exempted small businesses with payrolls of less than $250,000 from the penalty. Under the new proposal, businesses with payrolls of less than $500,000 would be exempt.

The agreement also increases the amount of money states would have to contribute to expand Medicaid coverage to more people.

The House bill almost certainly will be changed before a vote, and ultimately will have to be merged with whatever the Senate produces.

A bipartisan group of lawmakers in the Senate Finance Committee is continuing to haggle over a proposal that some hope could unite Democrats and Republicans.

Sen. Max Baucus (D-Mont.), the panel’s chairman, said Wednesday that the group had received some encouraging news from the nonpartisan Congressional Budget Office. In a preliminary assessment, the budget analysts concluded that the bill would cost less than $900 billion over 10 years -- beneath the psychological benchmark of $1 trillion -- and would cover 95% of Americans.

Opposition from Republicans and from many business groups to any healthcare overhaul remains strong.

Michelle Dimarob, a lobbyist for the National Federation of Independent Business, which represents small businesses, said the changes to the bill announced Wednesday amounted to little more than “tinkering around the edges.”

“You are talking about one part,” she said, “of a very bad bill.”

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