Health Care Reform Center

John K. Iglehart

With Democrats wielding their sizable majority to fend off strong Republican opposition and survive the defection of 39 members of their own party, the U.S. House of Representatives voted 220 to 215 to approve health care reform legislation after a day of contentious debate. On November 7, as midnight drew near, 219 House Democrats and 1 Republican (Representative Anh “Joseph” Cao of Louisiana) approved a measure that would extend insurance coverage to virtually all Americans by 2013. The 1990-page bill would also restructure private insurance, bolster primary care, and make countless other policy changes — but would not eliminate the scheduled 21.2% reduction in Medicare’s physician fees, a problem that Democrats plan to tackle in separate legislation before the cuts take effect January 1, 2010. Meanwhile, the action on a health care overhaul moves to the Senate, where Majority Leader Harry Reid (D-NV) has crafted a bill as a compromise between two committees’ measures and floor debate awaits only a cost estimate from the Congressional Budget Office. And President Barack Obama has weighed in, urging senators to “take up the baton and bring this effort to the finish line.”

Persuading at least 218 of 258 House Democrats to support that chamber’s reform bill took all the political skill that Speaker Nancy Pelosi (D-CA) could muster. And even those numbers were not assured until she made an 11th-hour decision to allow a vote on an amendment that would prohibit coverage of abortion by any health plan, whether public or private, that is purchased with the help of federal subsidies through newly created insurance exchanges. The cochairs of the Congressional Pro-Choice Caucus — Representatives Diana DeGette (D-CO) and Louise Slaughter (D-NY) — took strong exception to the amendment, asserting that it would “effectively ban abortion coverage in all plans, both private and public.” Yet 64 Democrats voted for the amendment, which passed 240 to 194, and then, to conclude the 12-hour debate and move reform forward, other Democrats who favor abortion rights reluctantly voted in support of the broader bill.

Making a rare weekend appearance on Capitol Hill hours before the vote, Obama urged legislators to “answer the call of history and vote yes for health insurance reform for America.” The dialogue on the House floor was expansive, both in favor of and in opposition to reform. Representative Paul Ryan of Wisconsin, the ranking Republican on the House Budget Committee, declared that the vote on reform would be “the most consequential vote each of us will take in our service here.” Asserting that the bill would create “a European welfare state,” he asked his colleagues, “What side of history do you want to be on?”

If winning House passage of a reform bill was more difficult than expected, following suit in the Senate may prove at least as challenging, given that some Democratic senators seem uncertain about how they will vote, Republicans are solidly in opposition, and independent Senator Joseph Lieberman of Connecticut has said that, as “a matter of conscience,” he will join a filibuster to block any bill that includes a public insurance option. To win cloture and defeat a filibuster, Democrats must secure 60 votes. The composition of the Senate is 58 Democrats, 40 Republicans, and 2 independents, and it is widely believed that Senator Olympia Snowe of Maine is the only Republican who may vote for the Democrats’ bill.

The bill just passed in the House would, at a cost of $1.05 trillion, extend coverage to an estimated 96% of the U.S. population (excluding undocumented immigrants), up from 83%. Expanded coverage would become available through insurance exchanges — where eligible people would receive subsidies to purchase their choice of plans — and through an expansion of Medicaid. The bill also prescribes a heavy set of regulations that would limit the ability of private insurers to deny coverage, barring them from discriminating against applicants on the basis of health status, denying coverage because of a preexisting condition, or imposing annual or lifetime limits on coverage. Through the creation of a national health insurance exchange (or possibly state exchanges), the bill would hold private carriers to greater account and require them to offer standardized benefit packages.

The House-passed bill and the measure that will soon be considered by the Senate differ in many respects. Among the most contentious questions are how to structure a public insurance plan that would compete against private carriers and what sources to tap to pay for reform. House Democrats favor a more robust public option but, succumbing to pressure applied by conservative legislators, organized medicine, and the insurance industry, Democratic leaders agreed to require the plan to negotiate its rates with providers rather than apply the administered and undoubtedly lower rates paid by Medicare. Although Reid announced that he plans to include a public option in the Senate bill, he also agreed that payment rates should be negotiated rather than imposed and said he would grant states the option of not participating in the public plan.

Unlike the Senate Finance Committee’s bill, which would tax high-end insurance plans, the House bill would raise most of its new revenue through a surtax of 5.4% on individuals earning more than $500,000 a year and couples making more than $1 million, which would yield an estimated $440 billion over 10 years. Like the Senate Finance Committee bill, the House bill relies heavily on permanent reductions in the annual updates to Medicare’s payment rates for most services other than physician services, yielding savings of about $229 billion over 10 years.

House Democratic leaders have introduced a separate bill that would replace Medicare’s current physician-payment formula and institute a policy allowing Medicare spending on physicians’ services to grow at the rate of the gross domestic product (GDP) plus 1% per year — or the GDP plus 2%, in the case of primary care and preventive services. The bill would also make permanent the current 5% bonus payment for primary care services delivered to Medicare beneficiaries and increase it to 10% for services delivered in underserved areas; it would require that Medicaid payments for primary care services at least equal Medicare payment rates and would prohibit the imposition of patient cost-sharing on recommended preventive services. Reflecting the influence of House Democratic leaders who represent urban districts and strongly support Medicare’s investment in the advanced training of new doctors, the bill does not reduce the indirect medical education payments per resident that Medicare makes to teaching hospitals. Past administrations (both Democratic and Republican) and the Medicare Payment Advisory Commission have repeatedly recommended that these payments be substantially cut.

An array of analysts, legislators, and private stakeholders have criticized the House-passed bill as well as the Senate measures for their failure to slow the rate of growth of health care costs, but the bills contain no shortage of ideas for reforming the delivery system, enhancing the quality of care, and slowing spending. Pretty much every proposed innovation found in the health policy literature these days is encapsulated in these measures. The laundry list includes the promotion of accountable care organizations, bundled payments for hospitals and physicians, incentives to reduce hospital readmissions, pay for performance, comparative-effectiveness research, gain-sharing by doctors and hospitals, and escalating the fight against waste, fraud, and abuse.

The list underscores the conviction that the status quo is unsustainable, but because the ideas are mostly offered up in the form of pilot projects, they also highlight policymakers’ uncertainty about which cost-constraining paths to pursue in search of a more efficient system. Moreover, legislators recognize that Americans have only so much tolerance for disruptive change, and they know that these limits are already being tested by the stresses of a weak economy, a mounting federal deficit, and wars in Afghanistan and Iraq. Given their diametrically opposed positions on health care reform, both political parties cannot be right, but which one will emerge triumphant is difficult to predict at this stage of the contentious debate.

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Mr. Iglehart is a national correspondent for the Journal.

This article (10.1056/NEJMp0910927) was published on November 11, 2009, at NEJM.org.