Jan 11, 2010

House and Senate to Skip Formal Conference to Merge Health Reform Bills

State of Play: Congress started the final run on the road toward enactment of healthcare reform legislation. To date, the House passed a measure (H.R. 3962, the Affordable Health Care for America Act) on November 7 by the very narrow margin of 220 to 215 (218 are needed to pass), with only one Republican voting in favor. It was almost the same story on the other side of the Capitol on Christmas Eve, when Senate leadership eked out the minimum 60 votes they needed to approve the Senate healthcare reform bill (H.R. 3590, the Patient Protection and Affordable Care Act). With both chambers now having voted to pass legislation, they must now create a single bill that can pass both Houses and that will be sent to the President for approval.

The Process: Normally the process of merging the two bills would be accomplished by way of a conference, where the major players from both the House and the Senate would form a conference committee that would hammer out the differences between the two bills and achieve a viable compromise. This is not, however, the route chosen by the Congressional Democratic leadership. Instead, they have opted to avoid the pitfalls they see in the conference process, namely the potential for Republican -- and perhaps some Democratic -- opposition to employ tactics that would delay consideration of the bill. Instead, they will employ a "ping pong" process, whereby they will send versions of the bill back and forth between the Houses until there are no more changes or amendments.

What is likely to happen is that the President, Senate Majority Leader Harry Reid (D-NV), and House Speaker Nancy Pelosi (D-CA) will come to an agreement on the big issues dividing the House and Senate, and a merged bill will be drafted to reflect these agreements. Once the legislation has been finished, the House will vote on the bill. A majority vote (218 votes) will be needed to approve the bill in the House. Assuming the bill is approved in the House, it will go to the Senate.

Although a "ping ponged" bill is both debatable and amendable in the Senate, it is very possible that Senator Reid will not allow any amendments in that body through a device known as "filling the tree." He cannot, however, avoid the debatable nature of the bill and will need to muster 60 Senators -- that is, 58 Democrats and 2 Independents -- to again vote for cloture to end debate on the bill. If that happens, a simple majority of Senators will be needed for the final vote on passage of the legislation.

If the Senate does not vote to approve the bill that ping ponged over from the House, then the process can begin again with a new House vote on a revised bill (the true ping-ponging). An attempt likely will be made to get a bill through both chambers the first time, unless a symbolic vote is needed in the Senate to establish a lack of 60 votes on a particular issue.

The main points of contention: It seems clear that the foundation of the merged bill will be the legislation passed by the Senate. And because the Senate passed its measure with not one vote to spare, it is also apparent that there is very little "give" left for compromises in that body. The House, while pointing to the small margin of approval for their own bill, appears somewhat resigned to this state of affairs and seems to have acknowledged the reality that, for instance, there will be no public plan option in the merged bill because inclusion of such an option would lose Senate votes.

Financing: One of the greatest points of contention left between the two bills (of those provisions affecting large employers) is how to pay for the measure. The House would raise a portion of the necessary funds by imposing a surcharge on taxpayers with adjusted gross income in excess of $500,000 for single and $1 million for couples. The Senate would generate the revenue by imposing a 40% excise tax on health care premiums exceeding thresholds of $8,500 for individuals and $23,000 per year for families (known as the so-called Cadillac tax). President Obama has said that he wants the excise tax in the bill, although House antagonism -- spurred by union opposition to the measure -- seems to be growing day by day.

It seems likely that the excise tax provision will be kept in the merged bill, possibly with an adjustment to lift the thresholds of applicability so that fewer people would be captured, or possibly even to exempt collectively bargained plans altogether from the tax (which ERIC opposes). This could be coupled with the House-suggested surcharge, which could itself also be set at a higher level than the one provided for in the House bill.

Of late, there have been other suggestions to raise money to finance the bill. One of these is to expand the Medicare tax, currently imposed on payroll, to include unearned income -- possibly including capital gains, interest, dividends, estate and trust income, and rental income. It is not clear how much headway these provisions are making, although it could be attractive to leadership insofar as the additional money gained by the tax could be used to offset a key House priority of making health insurance more affordable for low and middle-income individuals.

Wellness: One provision that we had thought a near certainty to be included in a final merged bill was the provision in the Senate legislation that would permit employers to give higher rewards to employees who participate in wellness and prevention programs. Although the basic reward ceiling would be raised from 20% to 30% of the cost of employee-only coverage, the proposal would permit HHS, Labor, and Treasury to increase this amount to 50%. Over the last week, opposition to the Senate wellness provisions seems to have picked up a head of steam, possibly jeopardizing inclusion in a final legislative package.

The Timeline: Congress is not officially back from its holiday break (the House returns on Tuesday for an abbreviated work week, while the Senate returns on January 19), but House and Senate leaders, key committee chairmen, party caucuses, and President Obama have all held several meetings over the last couple of weeks strategizing and staking out positions. The president apparently is still shooting to have the legislation approved by the time of his State of the Union address; this now seems unlikely unless the speech is delayed well beyond its normal delivery time at the end of January or the first week in February or negotiators are somehow able to come up with a bill that can be quickly agreed on.

Questions or comments on health reform should be addressed to either Gretchen Young, gyoung@eric.org, or Adam Solander, asolander@eric.org.

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Websites:

House-Senate Comparison of Key Provisions

H.R. 3590

H.R. 3962

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