Biggest Shift in U.S. Health Care Needs 45-Day Sprint (Update1)

By Nicole Gaouette and Laura Litvan

June 17 (Bloomberg) -- The largest expansion of U.S. health care since the creation of Medicare in 1965 may emerge from legislation designed to reshape the medical industry and change how Americans receive and pay for care.

Congress today began crafting legislation that Democratic leaders plan to push through both chambers by their August recess. The measure may require all Americans to get medical insurance, force insurers to accept all patients and end the tax break for employer-paid health benefits. These changes may be hammered out with unprecedented speed at the urging of President Barack Obama, who four days ago said “this is the moment.”

Obama has made a health-care overhaul his top domestic priority, using his February budget proposal to call it a “moral” imperative to extend coverage to the country’s 46 million uninsured. Obama also tied the long-term fiscal soundness of the U.S. to controlling medical costs. Health care consumes 18 percent of the U.S. economy and may rise to 34 percent by 2040, the White House Council of Economic Advisers reported June 2.

“I don’t think we’ve ever had anything this large in American history aimed to go this quickly that touches everybody’s lives,” said Robert J. Blendon, a professor of health policy and political analysis at Harvard University in Cambridge, Massachusetts, in a telephone interview. “They’re moving at a pace we’ve never seen before.”

‘Moment is Right’

The U.S. will spend more than $2 trillion this year on health care, the Health and Human Services department reported in February. Today, the Senate Health committee began debating a bill that includes “gateways” where consumers may compare coverage plans. Senate Finance Committee will unveil a bill that among its provisions will call for taxes on health benefits, and House committees later this week are scheduled to release a draft of their own comprehensive measure that would create a government-backed plan to compete with private insurance.

“We know the moment is right for health care reform,” Obama told the American Medical Association in Chicago in a speech June 15. “We know this is a historic opportunity we’ve never seen before and may not see again.”

The coming weeks will be pivotal if the House and Senate are to meet their goal to send Obama a single bill in October, said Drew Altman, president of the Henry J. Kaiser Family Foundation, based in Menlo Park, California, one of the nation’s largest private foundations devoted to health.

‘Planets Are Aligned’

“We have these big debates about comprehensive health reform every 19 or 20 years in our country, and we’ve failed every time,” Altman said by telephone. “This time, the planets are aligned as they’ve never been aligned before, but there still are a lot of obstacles before we’ll know whether they’ve pulled it off or we’ve failed again.”

The Democratic timetable stalled today when Finance Committee Chairman Max Baucus of Montana, who has been seeking a bipartisan compromise, said his proposal won’t be put before the committee next week as he anticipated. Republicans in the Senate have been pushing for more time to assess the costs of the various proposals and Baucus said he needs more time to reduce spending in his plan to less than $1 trillion over 10 years.

A portion of the health committee bill, proposed by its chairman, Democrat Edward Kennedy of Massachusetts, and fellow Democrat Christopher Dodd of Connecticut, may cost as much as $1 trillion over 10 years while covering just 16 million more people, the Congressional Budget Office said June 15.

Republican Criticism

Health committee Republicans criticized the cost and the pace of the bill’s consideration at today’s meeting.

“This is the most incredible markup I’ve ever been in,” said Senator John McCain of Arizona, referring to the committee’s effort to mark up, or formally debate and write the legislation. “We have this bill with no estimate of how much it’s going to cost. How can we possibly reasonably assess this bill without accounting for some way to pay for it? It is a joke.”

The Senate Democratic Leader, Harry Reid of Nevada, scoffed yesterday at Republican criticism of the schedule: “We are moving too fast on health care, we’re moving far too fast, in their mind, on energy, and certainly we’re moving too fast” on Supreme Court nominee Sonia Sotomayor. “Is there anything that we’re moving just right?”

Previous Efforts

Presidents from Harry Truman to Bill Clinton have tried and failed to reshape the health-care system, running into opposition from industry and doctors. Truman’s efforts to provide insurance for all Americans in the 1940s were criticized by the U.S. Chamber of Commerce as a step toward “socialized medicine.” The American Medical Association shared that assessment.

President Lyndon Johnson defeated similar opposition in 1965 when he pushed Medicare, the government’s health program for the elderly and disabled, through Congress. Johnson benefited from a landslide victory for Democrats in the 1964 elections and U.S. attention to widespread poverty.

Unlike Clinton’s 1993 attempt to change medical care, when industry opposed attempts to rework the system, insurers, drug- and device-makers, doctors and hospitals have committed to cut costs over a decade in support of Obama’s agenda.

As details of the bills emerge, the health-care groups will take positions, said Altman, of the Kaiser Family Foundation.

‘Real Debate’

“The real debate will only begin when we have legislation on the table,” he said in the interview. “Then we learn which interest groups are at the table and which ones aren’t. As hot as this has gotten, we haven’t seen real opposition yet.”

In the House and Senate, Democratic leaders are trying to push proposals through on a six-week timetable more often seen with bills dealing with a national crisis rather than broad- based social policy.

In the Senate, the health committee started what it expected to be at least two weeks of deliberations on the Kennedy-Dodd plan. Baucus said today he still hopes the Finance Committee still can approve a measure before the week-long Independence Day recess begins June 29.

The Democratic schedule calls for the two committees to merge the proposals after the recess and put a single bill before the Senate.

Republican Senator Jon Kyl of Arizona said the delay in getting Baucus’s proposal to the Finance Committee may complicate efforts to pass legislation by the August recess.

“That was always an ambitious time frame,” Kyl said.

Challenge in Senate

The packed schedule will be a particular challenge for the slower, more deliberate Senate. Democrats, who control 59 votes, must be able to secure the backing of 60 senators to overcome the possibility of a filibuster. The fast pace also may be an asset, said Senate historian Donald Ritchie.

“Sometimes there’s an advantage in setting a short schedule,” Ritchie said. “That gets people responding to the bill, it’s easier to schedule votes, people are more willing to cut a deal and compromise. Leadership around here often gets their best work done here before a recess when everyone has a plane ticket in their pocket.”

In the Democratic-controlled House, three committees working on the same legislation plan to release a detailed draft outline later this week. Representative Charles Rangel of New York, chairman of the House Ways and Means Committee, said his panel may release an outline of health policy changes first, followed days later with the details of the necessary tax increases and spending cuts.

Rangel said he wants the more popular aspects of the health-care overhaul, such as expanding coverage to the uninsured, before spelling out the way to pay for the changes that will cause “heartburn” for many lawmakers.

Employer Benefits

One issue is taxing employer-provided health benefits, which Obama opposed during his presidential campaign. In an interview yesterday with Bloomberg News, Obama said he wouldn’t rule out such a proposal.

“I don’t want to predetermine the best way to do this,” he said. “I’ve already put forward what I think is the best way. Let me see what comes out of the Hill and we’ll have that debate then.”

Rangel’s panel and the other two House committees - Energy and Commerce and Education and Labor -- may hold hearings next week before the July break, said Nadeam Elshami, a spokesman for House Speaker Nancy Pelosi.

All three panels would then work to approve the legislation in July and the full House would take it up by month’s end.

The Democratic leadership in both chambers plan to use the summer recess and early fall to put together one package that can pass the Senate and House and go to the president.

“The president wants a bill by Oct. 15,” Baucus said in an interview yesterday. “He’ll get it.”

To contact the reporters on this story: Nicole Gaouette in Washington at ngaouette@bloomberg.net ; Laura Litvan in Washington at llitvan@bloomberg.net

Last Updated: June 17, 2009 13:38 EDT

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