Senate's 10-year health fix would cost $856 billion

WASHINGTON -- Sen. Max Baucus on Wednesday brought out the much-awaited Finance Committee version of an American health-system remake -- a landmark $856 billion, 10-year measure that starts a rough ride through Congress without visible Republican backing.

The bill by Baucus, Democratic chairman of the Senate panel, would make major changes to the nation's $2.5 trillion health care system, including requiring most people to purchase insurance coverage or pay a fine and prohibiting insurance companies from charging more to people with more serious health problems.

The bill would extend insurance to about 29 million Americans who now lack it. Most of the features in the measure wouldn't take effect until 2013, after the next presidential election.

"This is a unique moment in history where we can finally reach an objective so many of us have sought for so long," said Baucus, of Montana. "The Finance Committee has carefully worked through the details of health care reform to ensure this package works for patients, for health care providers and for our economy."

Consumers would be able to shop for and compare insurance plans in a new purchasing exchange. Medicaid would be expanded, and limits would be placed on patients' yearly health care costs. The plan would be paid for with $507 billion in cuts to government health programs and $349 billion in new taxes and fees, including a tax on high-end insurance plans and fees charged to insurance companies and medical device manufacturers.

But the bill fails to fulfill President Barack Obama's aim of creating a new government-run insurance plan -- or option -- to compete with the private market. It proposes instead a system of nonprofit member-owned cooperatives, somewhat akin to electric co-ops that exist in some areas of the country. That was one of many concessions meant to win over Republicans.

In other ways, including its overall cost and payment mechanisms, the bill tracks closely with the priorities Obama laid out in his speech to Congress last week.

White House press secretary Robert Gibbs called the legislation an "important building block" that "gets us closer to comprehensive health care reform."

Baucus is still holding out hope for GOP support when his committee votes on the bill, probably as early as next week.

"This is a good bill. This is a balanced bill," he told reporters at a Capitol Hill news conference. Earlier, Senate Majority Leader Harry Reid, D-Nev., said, "Everyone should understand it's just the beginning, but it's a good beginning."

The measure represents the most moderate health care proposal in Congress so far, compared to legislation approved by three committees in the House and the Senate's health panel. Obama's top domestic priority is to revamp the health care system to provide coverage to nearly 50 million Americans who lack it and to rein in rising costs.

The bill includes provisions to keep illegal immigrants from obtaining health coverage through the new insurance exchanges -- reflecting the White House's newly stringent stance on the issue after a Republican House member interrupted Obama's speech last week to accuse him of lying about it.

The bill also would prevent federal funds from being used to pay for abortions except in cases of rape, incest, or if the life of the mother would be endangered. It's all but certain that the Baucus provisions will not be the last word on either of those volatile issues.

The bill would set up a verification system to make sure people buying insurance in the exchanges are U.S. citizens or legal immigrants, using Social Security data and Homeland Security Department files. The bill would impose penalties for fraud and identity theft.

While only legal residents would be able to buy coverage through the exchanges, illegal immigrant parents would be able to get insurance for their U.S. born children.

The bill would prohibit abortion from being included in any minimum benefits package. However, plans in the exchange could offer unrestricted coverage for abortions, provided that no funds from government subsidies are used to pay for them. Women who want coverage for abortions would have to pay for it with their own money.

Wednesday's bill release follows months of negotiations among Baucus and five other Finance Committee senators dubbed the "Gang of Six" -- Republicans Chuck Grassley of Iowa, Mike Enzi of Wyoming and Olympia Snowe of Maine, and Democrats Kent Conrad of North Dakota and Jeff Bingaman of New Mexico.

Enzi said he couldn't support the Baucus bill and preferred an incremental approach.

In the end, Democrats believe Snowe may be the only Republican to support the bill, though she wasn't ready to commit her support.

"This is a first step in the process," Snowe said as she promised to continue to work with Baucus and Democrats on coming up with bipartisan legislation.

The bill drew quick criticism from Republican leaders.

"This partisan proposal cuts Medicare by nearly a half-trillion dollars, and puts massive new tax burdens on families and small businesses, to create yet another thousand-page, trillion-dollar government program," said Senate Minority Leader Mitch McConnell, R-Ky. "Only in Washington would anyone think that makes sense, especially in this economy."

Many liberals and labor groups also have concerns. Some wanted Baucus to include a public option, while others fear that, in his effort to hold down the price of his bill, Baucus didn't do enough to make health coverage affordable to working-class Americans. Sen. Jay Rockefeller, D-W.Va., a member of the Finance Committee, said that he couldn't support the bill in its current form.

Gerald McEntee, president of the American Federation of State, County and Municipal Employees, called it "deeply flawed."

Baucus' plan, released as a detailed 223-page summary, aims to make health insurance more affordable for self-employed people and those working for small companies, who now have the biggest problems in getting and keeping coverage.

People insured through large employers would not see major changes, but some of their health care benefits would be nicked to help pay for the cost of the plan. The Baucus proposal would limit to $2,000 a year the amount people can contribute to flexible spending accounts, which are used to cover copayments and deductibles not paid by their employers. That provision would raise $16.5 billion over 10 years.

Everyone covered through an employer would learn the full costs of their health benefits, which starting next year would be reported on employees' W-2 tax forms. Although family coverage averages about $13,000 a year most workers don't know how much their employer is paying.

Not carrying insurance could result in a steep fine, as much as $3,800 per family, or $950 for an individual. People who can't afford their premiums would be exempted from the fine.

The plan proposes a $6 billion annual fee on health insurance providers, which would recoup some of the profits the companies expect to make from millions of new taxpayer-subsidized customers.

Unlike the health care bill written by majority Democrats in the House, which permanently rolls back scheduled cuts in Medicare payments to doctors, the Baucus plan only suspends the reductions for one year. That trims more than $100 billion from the cost of the bill, but has already led to criticism from the American Medical Association.

The legislation makes no changes in medical malpractice laws. It does incorporate Obama's call for federal funds for state experiments on alternatives to malpractice lawsuits.

Democratic leaders are aiming for votes in the full House and Senate this fall.