Health care reform ran into new BIG trouble this week with a series of comments from Senate Majority Leader Harry Reid.
On Tuesday, Reid leapt into the middle of reform negotiations, telling Senate Finance Committee Chairman Max Baucus that Democratic leaders had major concerns about the draft Senate Finance bill’s proposed taxation of some health benefits and the exclusion of a strong public plan.
The immediate result was the effective suspension of bipartisan negotiations on the Senate Finance draft, with Republican Senators Chuck Grassley and Orrin Hatch both saying that bill markup would have to be delayed indefinitely until the conflict was resolved.
Yesterday, Reid tried to soften his comments in conversation with Senate Republicans, but later indicated that taxing health care benefits was still unacceptable, leaving Senate Finance members wondering how else to help pay for the trillion dollars (or more, perhaps much more) that they estimate as the ten-year cost of reform.
Reid’s comments reflect the findings of a series of straw polls in which various senators’ constituents were asked if they supported taxing health care benefits (Surprise! They didn’t want any new taxes), as well as an aggressive union-led campaign against the idea.
Reid’s intervention may very well have torpedoed reform. It leaves Senate Finance with few choices for funding reform, and virtually none that are likely to attract any bipartisan support.
Even if Senate Finance members are able to find other funding solutions, killing taxation of health care benefits will remove from the Senate Finance draft one of the very few provisions that might have resulted in slowing of overall health care cost increases. Leaving tax deductibility of benefits in place will continue to encourage the belief in those lucky enough to have generous employer coverage that health care is “free,” and in turn pander to providers eager to invest in high-priced resources that increase costs for everyone else. Meanwhile, Reid’s insistence on a strong public plan as an alternative cost control mechanism is likely to end support from moderate Republicans and centrist Democrats and to generate huge (and well-funded) opposition from insurers and providers. And, as the Clinton administration discovered sixteen years ago, any slowing of legislative momentum can be fatal to reform.
Roger Collier was formerly CEO of a national health care consulting firm. His experience includes the design and implementation of innovative health care programs for HMOs, health insurers, and state and federal agencies. He is editor of Health Care REFORM UPDATE.