The emerging Finance Committee bill would shave about $100 billion off the projected trillion-dollar cost of the legislation over the next decade and eventually provide coverage to 94 percent of Americans, according to participants in the talks. It would expand Medicaid, crack down on insurers, abandon the government insurance option that President Obama is seeking and, for the first time, tax health-care benefits under the most generous plans. Backers say the bill would also offer the only concrete plan before Congress for reining in the skyrocketing cost of federal health programs over the long term.
Three Democrats and three Republicans from the Senate Finance Committee will brief Obama on Thursday about the progress of their sometimes arduous talks, which are now set to extend through the August recess. The negotiators are holding the details close as they continue to debate key issues, and it could be a challenge for them to meet the Sept. 15 deadline set by the committee's chairman, Max Baucus (D-Mont.), for a deal.
Even if the partnership does not result in legislation, Democratic leaders are already contemplating ways to preserve much of what it produces as they look to unite their party and pick up Republican votes when the health-care debate moves to the Senate floor in the fall. The Finance Committee coalition is seeking compromise on some of the most complex issues facing Congress, including how to compel employers to continue providing insurance to their workers; how to more fairly distribute government subsidies for coverage; and who and how many should be allowed to remain uninsured.
Lawmakers said insurance companies are likely to pass the cost of such a tax to policyholders, raising the price of those plans. That would create a strong incentive for employers to stop offering them, thus driving down overall health-care costs. With employers paying less for insurance, tax analysts predict, they would pay workers more in wages, increasing income tax collections by as much as $180 billion over the next decade.
The Finance Committee proposal is also likely to contain a number of much smaller tax provisions, including a $2,000 cap on flexible savings accounts -- which are currently unlimited -- and a plan to improve tax compliance by requiring businesses to tell the Internal Revenue Service when they pay corporations for services.
"We've got options on the table that will pay for this fully," said Sen. Kent Conrad (D-N.D.), one of the negotiators. "It's a matter of choosing which pieces and how much of each piece is selected."
The excise tax is one of five provisions designed to slow the soaring trajectory of federal health spending, which is on track to bankrupt the country by the middle of the century absent significant reform, according to the Congressional Budget Office. Spurred by the CBO director's startling assertion last month that measures drafted by other committees would not bend the "cost curve," negotiators on the finance panel are also studying a plan to fine insurance companies that do not pay providers electronically, a plan to reduce payments to providers to force them to increase efficiency and a plan to study the comparative effectiveness of various medical treatments.
Finance Committee negotiators also want to set a target for savings through those reforms. If the target is not met, they would create a panel, called the Medicare Preservation Commission, that would recommend ways to obtain additional savings.
Baucus said preliminary estimates from the CBO, the nonpartisan arbiter of the cost of legislation, show that an early version of the plan would not only pay for itself but would begin to reduce projected budget deficits by 2019.
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