New Senate Healthcare Reform Bill Features Public Option With Opt-Out

November 18, 2009

November 18, 2009 (UPDATED November 19, 2009) — Senate Majority Leader Harry Reid (D-NV) today unveiled a compromise healthcare reform bill that includes the controversial public option — a government-sponsored health plan — that would compete with private plans.

However, the public option is doubly optional — individual states can choose whether to make the government-sponsored plan available to their residents. The bill also calls for member-owned "co-op" health plans.

The legislation represents a blend of two bills, one crafted by the Senate Health, Education, Labor, and Pensions Committee (HELP), and the other by the Senate Finance Committee. The former committee's bill included the public option; the latter did not, but instead set forth "co-op" plans.

The opt-out clause for the public option in the new Senate bill, dubbed the Patient Protection and Affordable Care Act, attempts to placate critics who say a government health plan would force private insurers out of business, leading to a federal takeover of healthcare. Public-option supporters contend that a government plan will merely make private insurers more competitive.

The legislation follows the general outlines of the Finance and HELP committee bills. It would require most Americans to have insurance coverage, either through an employer, a government program, or an individual policy, which could be purchased through insurance marketplaces called exchanges. Those failing to obtain coverage would pay a penalty, but the government would offer subsidies to low-income individuals and families. Businesses with more than 50 employees who do not offer coverage must pay a penalty if employees obtain government-subsidized coverage. Smaller businesses could receive tax credits toward insurance premiums. Eligibility for Medicaid would be expanded. And private insurers could not deny coverage to individuals with preexisting conditions or base premiums on someone’s health.

According to an analysis by the Congressional Budget Office, the Senate bill would cost $848 billion through 2019 but ultimately shave $130 billion off the federal deficit. That’s because spending is more than offset by new revenue — such as an excise tax on high-premium insurance plans, and a 5% tax on elective cosmetic surgery — and spending cuts of $491 billion, mostly in Medicare. In all, the bill would eventually reduce the number of uninsured by 31 million, providing coverage for 94% of nonelderly legal residents.

The Quest for 60 Senate Votes

The bill bears the strong mark of Sen. Reid, who has sought the middle ground for the sake of winning 60 Senate votes. Sixty is the magic number needed to overcome any filibustering by opponents and bring the bill to the Senate floor for debate and a vote. Democrats hold 58 Senate seats; independents, two more.

"I have the responsibility of taking what the left wants and what the right wants and coming up with a package that is a moderate piece of legislation that will allow the American people to have a new structure that will control healthcare in this country," Sen. Reid said earlier this month.

A procedural vote to bring the bill to the Senate floor for consideration could come as early as this Saturday.

If passed, the Senate bill would have to be reconciled to a bill passed earlier this month by the House. The reconciled bill would then come before both chambers for a final vote.

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