Health care overhaul suffers another setback

WASHINGTON — The drive to remake the nation’s health care system suffered yet another setback in Congress on Thursday when a pivotal group of House Democrats demanded changes in legislation the leadership was drafting on a fast track.

The emerging bill “lacks a number of elements essential to preserving what works and fixing what is broken,” 40 members of the Blue Dog Coalition of moderate to conservative Democrats wrote party leaders. To win their support, they said, any legislation would need to be much more aggressive in reining in health care costs as well as in addressing a disparity in Medicare payments they said adversely affects rural providers.

A group of the moderates met into early evening with House Speaker Nancy Pelosi and Majority Leader Steny Hoyer and arranged to sit down with committee chairmen on Friday to go over proposed changes. Officials said the public release of the bill, originally set for Friday, would occur no earlier than Monday.

It was the second setback in three days for President Barack Obama’s top domestic priority, although it was unclear whether it would amount to anything more than a brief delay for a bill of enormous complexity and controversy.

There was upheaval earlier in the week in the Senate, where the Democratic leadership is intent on scuttling a proposed tax on health care benefits that has long been key to attempts at a bipartisan compromise. At the same time, Senate Majority Leader Harry Reid and others went out of their way during the day to emphasize eagerness for Republican support.

As an alternative to the benefits tax, Democrats are considering raising taxes on wealthy investors to help pay for health care legislation, along with numerous other options, according to officials who spoke on condition of anonymity. The proposal to extend the current 1.45 percent Medicare payroll tax to capital gains earned by high-income taxpayers would bring in an estimated $100 billion over 10 years.

In the House, Hoyer sought to minimize the day’s developments, which occurred as Democrats on one committee were making final decisions on provisions to pay for the legislation.

“Let me make it very clear that everybody in that room thinks we ought to pass health care reform,” the Maryland Democrat said.

One conservative Democrat, Rep. Mike Ross, D-Ark., said he believes no House vote should take place until September. That is well past a midsummer informal deadline set by Pelosi, D-Calif.

“I promised the president that we would have legislation out of the House before we went on an August break,” Pelosi said earlier in the day. “That is still my goal.”

Despite some success — the nation’s hospitals agreed to a cut of $155 billion in projected Medicare and Medicaid payments — progress has been scant and internal differences magnified.

In general, any bill that emerges from Congress is expected to follow Obama’s blueprint for reining in health care costs overall while extending coverage to 50 million who lack it.

Another objective is to make sure that insurance companies can no longer deny coverage or raise premiums to unaffordable levels to individuals with pre-existing medical conditions.

But literally hundreds of details are involved in drafting legislation, and gaining a consensus even among Democrats is proving to be remarkably — if predictably — difficult, despite their large majorities in both houses.

As an example, some Democrats are demanding legislation that permits the government to sell insurance in competition with private companies. Republicans overwhelmingly oppose such a plan, deeming it a stalking horse for universal government-run insurance, and many Democrats have concerns, as well.

Some Democrats prefer a plan for a nonprofit cooperative to take the place of government in competing with private companies. Others favor a government role only in cases in which consumers lack a choice in coverage.

Similarly, Democrats are divided on paying for the bill, some preferring more tax increases than others, some favoring more cuts in Medicare and Medicaid.

“We’ve just got a lot of question and the top of the list would be how to pay for it,” said Rep. Marion Berry, D-Ark., one of the Blue Dogs.

“I don’t think we have significant cost-containment mechanisms in the proposal yet,” said Rep. Adam Schiff, D-Calif. He said he favors provisions aimed at preventing overtreatment of patients and overpayments to doctors, hospitals and other providers.

A dispute over tax increases was at the core of upheaval in the Senate earlier in the week.

Sen. Max Baucus, D-Mont., and chairman of the Finance Committee, has been working for months with Republicans in hopes of gaining support for a bipartisan bill that can command 60 votes.

Efforts to raise money to pay for subsidizing the cost of insurance had focused on a tax on health care benefits for workers with high-cost coverage provided by their employers.

Baucus and Republican supporters argued it would also have tended to reduce the cost of health care overall, as well as offset the cost of the bill. But the Democratic leadership stepped in forcefully, citing poor public polling, opposition of organized labor and concerns about taxing middle-income workers.