Recent Developments

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What a difference a quarter makes. When Ropes & Gray issued its last edition of Health Reform Matters, momentum appeared strong for comprehensive reform legislation. Proponents were still flush from two major health care legislative victories—reauthorization of the Children’s Health Insurance Program and enactment of a stimulus package with more than $100 billion in health care spending—widely touted as a “down payment” on health reform. The House and Senate leadership had outlined orderly, systematic plans for committee and floor consideration of reform bills. The Senate Finance Committee had issued three thoughtful policy papers addressing the major areas of reform (delivery system, coverage and financing) and was preparing to poll members and assemble a bipartisan bill for Committee consideration in June. By the August recess, according to these well-laid plans, both Houses would have passed their versions of the bill, leaving August to prepare for House-Senate negotiations in September. Indeed, there was talk in the air of final enactment by the end of the fiscal year—September 30.

While one should not be too surprised that this schedule has slipped, the dramatic turn in momentum during the August recess has taken supporters aback and emboldened opponents. The increasingly strident town hall meetings held across the country by Members of Congress have dominated media coverage of health reform and supplied endless hours of punditry fodder. While the month of July was marked by intensive efforts to find common ground in the Senate among a handful of Democratic and Republican negotiators—and, on the House side, among conservative and liberal Democrats—the prospect that these negotiations will pay dividends has measurably dimmed after the long August recess.

Instead, the talk is whether the Democratic leadership will abandon efforts at bipartisanship and move to pass a bill along straight party lines, using a procedural maneuver known as reconciliation. (We described this maneuver in the last edition of Health Reform Matters.) Some are urging splitting the package into two bills—one that contains popular consensus items (such as insurance regulatory reform) passed under the regular process with 60 or more votes to overcome a filibuster, and a separate reconciliation bill with the more controversial provisions (such as a public plan option) that would need only 50 Senate votes (plus the Vice President’s) for passage. This two-step process would require that technical issues be finessed—for instance, reconciliation bills must reduce the deficit within a five-year window rather than the ten-year period under which the current bills are being scored. And the rules would allow any provision deemed “not germane” to reconciling the budget to be stripped from the bill unless 60 Senators vote to retain it. Yet as hopes of finding common ground between the parties fade, reconciliation may be the Democratic leadership’s sole remaining option for passing a bill this year.

Before the August break, three committees in the House had each passed versions of H.R. 3200, America’s Affordable Health Choices Act. While the markups in the Ways and Means Committee and Education and Labor Committee were relatively smooth and quick, the Energy and Commerce Committee encountered stiff resistance from conservative Democrats concerned about spiraling deficits. After suspending the markup for ten days, Chairman Henry Waxman (D-CA) reconvened the Committee on July 30 having reached a deal to reduce the ten-year cost to less than $1 trillion and to make the public plan optional. The Committee approved a bill the next day, just as the House adjourned for the August recess. More than 50 amendments, however, were left on the table, each of which the Chairman promised to address in September. The next step is for the three versions of H.R. 3200 to be melded into a single bill (with or without the unaddressed amendments) for floor consideration by the full House.

On the Senate side, the Health, Education, Labor and Pensions (“HELP”) Committee—the committee chaired by the late Senator Kennedy—also approved a bill in July, known as the Affordable Health Choices Act. Like the House bills, this legislation includes an individual mandate to obtain coverage with subsidies for low income individuals, the establishment of an insurance exchange through which standardized coverage can be purchased at affordable rates, insurance regulatory reform, expanded Medicaid coverage and measures intended to hold down costs and reform the health delivery system. (These bills and related information can be found at Ropes & Gray’s Health Reform Resource Center under Comprehensive Health Reform.

While the three House bills and the HELP bill were each adopted without Republican support, Senate Finance Committee Chairman Max Baucus (D-MT) has been doggedly (and, some would say, quixotically) pursuing bipartisan legislation, a goal that has proven more elusive than anticipated. With the “Gang of Six”—a group of three Republican and three Democratic Committee members—fruitlessly seeking to forge the basis for a compromise throughout July, Chairman Baucus finally had to concede that Finance would not be ready to vote on a bill before the recess. The month of August passed without any apparent breakthrough in the group's negotiations. Over the Labor Day weekend, however, Chairman Baucus released the outlines of a draft agreement, just days before President Obama is set to deliver what the White House intends as a game-changing nationally televised joint address to Congress on health reform. Given the intensifying partisanship on health reform that has built over the course of August, it is unclear whether any of these efforts will bear fruit.