A Compromise on Obamacare

American President Obama announced a new health care reform bill on Feb. 22. The proposed bill goes against the Republicans’ call for “ripping it up and starting over,” instead focusing on bridging the current divide between the Senate and House bills, while adopting part of the Republican position.

The American public sees the new health care reform bill and the upcoming bipartisan health care summit as Obama’s last-ditch effort to save health reform. The new bill faces heavy criticism from Republicans, yet Obama’s health care reform faces an even rockier road ahead.

How the Shape of Health care Reform Could Change

Obama set Feb. 25 as the date for the bipartisan health care summit to discuss details of health insurance reform. He hoped that Republicans would propose their own health reform bill prior to the start of the summit. Thus, the parties could use the meeting for discussion to create a compromise.

The Democrats previously had hoped to disregard Republicans, and through internal compromise, create their own version of a health care reform bill. However, at the beginning of the year, this hope evaporated with the election defeat in Massachusetts. In January, Democrats lost a Massachusetts senator in a special election, thus losing the advantage of an absolute majority in the Senate. Under these conditions, finding a way to win over a Republican to vote in their favor has become Obama’s toughest challenge in his push for health care reform; in all previous sessions on health care reform in both the House and Senate, Republicans have unilaterally casted an opposing vote.

To this end, Obama has made it clear that he wishes to cooperate with Republicans over the new bill. The White House Web site states that the new bill will draw from the Democrats’ desire to root out the waste, fraud and abuse in health insurance. However, the American media says that the new bill will be difficult to satisfy the Republicans, as the two parties are seriously divided on a few key issues.

Obama Strives for Compromise

Whether looking at the previous legislation that passed through the House and Senate or Obama’s recent proposal, both have a far-reaching scope across health insurance. Cutting spending on health care and lessening the government financial burden is a central consideration. Currently, approximately 46 million Americans are without health care; Obama’s bill would grant coverage to more than 31 million of those uninsured. Moreover, if the legislation is enacted, supporters hope that it would reduce the budget deficit by $100 billion over the first ten years and $1 trillion over the following decade.

The new bill to some extent represents a compromise on health care reform bills between the House and Senate. First of all, if the House bill came into effect, it would cost an estimated $9.5 trillion over the first ten years while the Senate bill in the same period would cost about $8.7 trillion — almost $1 trillion more. Secondly, the House and Senate’s biggest disagreement is over how to tax the wealthiest Americans to finance some of the health care reforms. On this issue, the new bill supports the Senate’s proposed tax on “Cadillac plans” but delays its implementation and raises the income threshold.

The Senate bill proposes a 40 percent tax on insurance at or above $23,000 annually for families or at or above $8,500 for individuals. And in the House version, there was a proposed additional tax for families earning greater than $1 million annually or $500,000 for individuals.

In Obama’s plan, the government will also tax the so-called “Cadillac plans,” but the initial implementation date of 2013 proposed by the Senate has been postponed to 2018. Additionally, the tax threshold has been raised to $275,000 dollars annually for families or $120,000 dollars for individuals.

As for the so-called “public option,” whether to establish a state-run health care system, Obama’s bill tacitly agrees with the Senate bill. The House bill includes content on creating a state-run health care system, with the goal of having state-run insurance openly competing with private insurance companies, providing policyholders with a cheaper option. However, this point has met strong opposition in the Senate.

Additionally, the new bill for the first time proposes establishing a “Health Insurance Rate Authority,” responsible for overseeing health insurance companies’ rate policies. The proposed authority would carry out adjustments, supervise and evaluate health insurance company rates and have the authority to reject unreasonable premium increases.

The Republicans’ Criticism

Despite Senate Minority leader Mitch McConnell saying they would attend the bipartisan health care summit, it would be unlikely that the Republican Party would propose their own version of health care reform bill prior to the meeting.

Compared with the Democrats, Republicans tend to prefer a relatively modest program of reform and make only “small adjustments” to the overall health care system. Prior to the announcement of Obama’s health care reform proposal, Republicans had remarked that they endorse the following four points of the Democrat’s plans for health care reform: 1) All Americans have the right to receive health care coverage, 2) insurance companies cannot refuse coverage or increase premiums based on prior medical history, 3) the government should provide access to medical care for the disadvantaged and 4) insurance companies must provide coverage for preventative medical care.

After Obama’s announcement on the new health care reform proposal, the Republicans continued to express their dissatisfaction. House Minority Leader John Boehner remarked that the new proposal was essentially still a government takeover of health care, weakening the credibility of the bipartisan health care summit.

McConnell called the new proposal “disappointing” and blamed the Democrats for “completely ignoring what Americans across the country have been saying.”

Analysts have said that, in the end, whether or not the Democrats and Republicans can come to a consensus on Obama’s new health care reform bill would depend on the outcome of negotiations, with particular focus on how it would benefit congressmen in the upcoming midterm elections.