By Drew Armstrong, CQ Staff

April 30, 2009 -- What's a big obstacle to getting a health care overhaul bill out of the Senate? The Congressional Budget Office (CBO), according to Finance Committee Chairman Max Baucus.

The Montana Democrat has repeatedly said he's having trouble getting congressional actuaries to score savings in the health proposals he's shown them—partly because many are new ideas without economic data to help generate a score, and in other cases because they are ideas that almost everybody believes will eventually lower spending. Apparently, the CBO's strict scoring rules won't allow for a savings-friendly interpretation.

"The slight challenge we have is getting numbers and estimates from CBO," Baucus said. Scoring savings is a necessity for offsetting a health bill's costs, and Baucus says he is continuing to push the CBO to show savings where it can.

"Otherwise, health care reform is in jeopardy," he said at a hearing today. He added that legislation would be a tough sell to the public if lawmakers and congressional actuaries can't deliver on one of President Obama's key promises—that a health care overhaul would lower spending growth.

But for now, the actuaries are a tougher sell. "The learning curve for all of us is fairly steep," Baucus said.

By David Clarke, CQ Staff

April 29, 2009 -- As President Obama marked his first 100 days in office, Congress adopted a fiscal 2010 budget resolution Wednesday that sets the stage for action on his top legislative priorities.

The House adopted the conference report on the resolution by 233–193. No Republican voted for the budget; 17 Democrats — nearly all of them conservative — voted against it.

The Senate vote about six hours later was 53–43. Again, no Republicans voted for the budget, while Democrats Evan Bayh of Indiana, Ben Nelson of Nebraska, and Robert C. Byrd of West Virginia voted against it, as did Arlen Specter of Pennsylvania, who switched his party allegiance Tuesday from Republican to Democratic.

The budget resolution is non-binding, but it sets the framework for Congress to make legislative decisions on taxes, appropriations, and entitlement programs later in the year.

The $3.56 trillion budget resolution includes reconciliation instructions that would allow Obama's proposed health care overhaul to move through Congress immune from a Senate filibuster.

Similar protection is included for legislation sought by the president that would sharply curtail the role of private lenders in the federal student aid program.

Republicans object to using the fast-track reconciliation process on a policy as sweeping as health care. Democrats say they will only use it if bipartisan negotiations break down.

The committees with jurisdiction over health care policy have until Oct. 15 to produce their reconciliation bills if they choose to use the process. But the Senate committees are aiming to produce a stand-alone health care overall in June, and leaders in both chambers hope to complete floor action by the start of the August recess.

Senate Budget Chairman Kent Conrad, D-N.D., said he had opposed inclusion of the reconciliation instructions "at every step of the way, publicly and privately," only to be overruled by top party leaders. He said he still believes it will not be used for a health care overhaul.

Sharp Partisan Divisions

Democrats heralded their budget as making key investments in health care, education, and renewable energy programs while also putting the soaring deficit on a downward trajectory.

"Today for the first time in many, many years we have a president's budget on the floor that is reflective of our national values," declared House Speaker Nancy Pelosi, D-Calif. "It is a foundation for how we go forward into the future."

She said the budget's proposals on "the three pillars of the Obama agenda"—education, health care, and energy—"are what the business community and others tell us are investments we must make in order to turn our economy around," she said.

Conrad praised Obama's performance as president after 100 days, saying he was working to "lead the country in a new, better direction."

He said budget negotiators "were able to preserve his key priorities, and I'm proud of that."

But Republicans denounced the Democrats fiscal framework as a blueprint for a huge expansion of the role of government that pushes the nation's debt to dangerous levels.

The budget resolution is "nothing short of an audacious move to a big socialist government in Washington, D.C.," said House Minority Leader John A. Boehner, R-Ohio.

Under the Democrats' budget plan, the debt held by the public would rise from $7.7 trillion in fiscal 2009 to $11.5 trillion in fiscal 2014. When measured as a percentage of the economy, the method preferred by economists, the debt would rise from 55 percent of gross domestic product to 66.7 percent of GDP.

Republicans pointed to this rise as evidence the budget was not imposing fiscal discipline.

"If this budget passes, you're going to have a hard time looking the next generation of Americans in the eye and say you're going to have a chance to do better than people who are alive here today, because what it does is it doubles the national debt," said Sen. Lindsey Graham, R-S.C.

Sen. John McCain, R-Ariz., whom Obama defeated last November, denounced the budget, warning it was "laying a path to a crisis in America that could be as severe as this one." The soaring deficits, McCain said, would lead to "hyper-inflation."

Democrats scoffed at this type of criticism, noting the debt grew sharply under the Republicans' watch during the Bush administration. Neither party has made a major effort at debt and deficit reduction in recent years.

The debt and deficit have been climbing steeply over the past year due to the economic downturn and the government's attempt to deal with its impact.

The budget assumes the deficit will drop to $523 billion in fiscal 2014 from $1.2 trillion in fiscal 2010, but deficit projections often prove to be more optimistic than reality.

The resolution gives the Appropriations committees a cap of $1.086 trillion in discretionary spending for the 12 annual appropriations bills, which is $10 billion less than the administration requested when cap adjustments are included. The budget assumes appropriators will match the president's request of $556.1 billion for defense programs while spending $10 billion less than requested on domestic programs.

Blue Dogs on Board

Although the 51 conservative House Democrats in the Blue Dog Coalition were concerned about the huge deficits envisioned in the budget, they were largely won over by a pledge by House leaders to support stricter deficit control measures going forward.

In a letter to Blue Dogs on Tuesday, Pelosi and House Majority Leader Steny H. Hoyer, D-Md., promised strict pay-as-you-go treatment for four bills expected to come up later this year. PAYGO, as it is sometimes called, requires all new tax cuts or new entitlement program spending to be offset by equivalent tax increases or spending cuts elsewhere.

The four bills would prevent the alternative minimum tax from hitting more households, increase Medicare payments to doctors, adjust the estate tax, and extend expiring middle-class tax cuts.

"The House will attach statutory PAYGO to each of the four bills mentioned above or follow the House PAYGO rule," the letter said. "The House will not consider any conference reports on these four bills or any of them directly from the Senate unless these conference reports or bills include statutory PAYGO, the bills are fully offset under traditional scorekeeping, or statutory PAYGO has already been enacted into law."

The Blue Dogs have often lost battles with the Senate over PAYGO issues. But they are betting that Obama's support for putting pay-as-you-go into law will be enough to overcome Senate opposition.

"This is something he believes in," said Hoyer, an ally of the Blue Dogs. "It is not a political stratagem for the president." 

— Drew Armstrong contributed to this story.

By Alex Wayne, CQ Staff

April 29, 2009 -- Congressional Democrats appear increasingly determined to create a government-run insurance plan to compete with private insurers as part of a health care overhaul, despite warnings by Republicans, business groups, and insurers that doing so would mean the end of employer-sponsored health insurance.

On Wednesday, 15 Senate Democrats and one independent senator who caucuses with the Democrats sent a letter to the chairmen of committees writing the health care overhaul, urging them to include a "public plan option" in the legislation. The letter suggests broad support for the idea among Senate Democrats: the signers include liberal senators such as the independent Bernard Sanders of Vermont as well as the more conservative Jim Webb of Virginia and Kirsten Gillibrand of New York.

On the other side of the Capitol, meanwhile, Democrats on the Ways and Means Committee challenged a representative of a small-business trade group, the National Federation of Independent Business, to come up with a better proposal to cover the nation's estimated 46 million uninsured people at an affordable price, or accept that a government-run plan would be part of an overhaul.

And perhaps most important, the House adopted a fiscal 2010 budget resolution Wednesday that would allow a health overhaul to advance in the Senate without threat of a Republican filibuster. The Senate was poised to follow suit, despite some uneasiness about the use of the fast-track budget process to reshape the nation's health care system.

Democrats who support a government-run plan say such an option is necessary to force the private insurance industry to price its products more competitively and offer better service and coverage to consumers. The public plan would also ensure that people who can't find insurance through their employer and aren't poor enough to qualify for Medicaid could obtain coverage.

"We don't have everybody in the Democratic Caucus convinced, but there's a lot of people who think that private insurance operates a step ahead of the sheriff," said Sen. Sherrod Brown, D-Ohio, who helped organize the Senate letter with John D. Rockefeller IV, D-W.Va. Brown said he believes more Democrats would have signed the letter had they been asked.

But Republicans and private insurers say that any government-run plan is just a back-door route to a national, government-run health system. The public plan, they say, would eventually either lure all Americans by undercutting the prices charged by private insurers, or employers would decide to let the government handle the expensive burden of providing health care to workers and discontinue their insurance benefits.

"There's obviously real concerns about the effect a public plan would have on those who have health insurance," said Rep. Dave Camp of Michigan, the ranking Republican on the Ways and Means Committee.

Bipartisan compromise, Camp said, is difficult as long as no one knows what a government plan would look like: Democrats have not put the proposal into legislative language or even outlined it in policy documents.

It's also unclear what it would cost to create a government-run plan; Medicare, which covers about 43 million people, will cost about $425 billion in fiscal 2009.

"I don't think there's unanimity on that issue among Democrats," Camp said.

Indeed, Senate Finance Chairman Max Baucus, D-Mont., told reporters at a briefing last week that he didn't consider it a priority to include a government-run plan in the health overhaul that he is writing. His legislation, he said, would result in increases in private insurance coverage and public coverage through Medicaid and Medicare.

One Senate Republican aide suggested that the Brown-Rockefeller letter was a response to Baucus' remarks, intended to keep pressure on him and Health, Education, Labor and Pensions Chairman Edward M. Kennedy, D-Mass., to include a public plan in their legislation.

By Jane Norman, CQ HealthBeat Associate Editor

April 27, 2009 -- Mandating a public plan as part of the health care overhaul will create a "nuclear minefield" that will destroy the collegiality that so far has marked this year's debate, a public plan opponent warned at a forum Monday.

Stuart Butler, vice president of domestic and economic policy studies at the conservative Heritage Foundation, said at a lunchtime forum organized by the Alliance for Health Care Reform and The Commonwealth Fund that traditional foes and allies have continued in polite conversation about the massive policy changes under consideration.

"I must say this time around, compared with a lot of previous periods, particularly during the Clinton administration, this has been a remarkably positive and collegial process of trying to figure out how to do this with the strong commitment of people across the spectrum," said Butler.

Butler said the inclusion of a government-sponsored plan would change the dynamics. "I really do believe it will break up the coalition that would otherwise achieve real change in this country," he said.

However, John Holahan, director of the Health Policy Research Institute at the Urban Institute, said the rate of growth in health care spending must be reduced and much of the problem is caused by concentration in insurance and hospital markets. He said "it's hard to see the alternative" to a public plan, though he also said the savings in administrative costs with its inclusion may be overstated.

Karen Davis, president of The Commonwealth Fund, said affordable coverage for all Americans could come through a new national insurance exchange that would offer private plans as well as a new public health insurance plan with easy enrollment, plan comparison for consumers, and reduced administrative costs. The new model could be built on employer coverage and public programs, she said, with everyone required to have coverage coupled with assistance for the poor.

Finance Committee Chairman Max Baucus, D-Mont., included a government-run insurance plan as part of his initial "white paper" proposal in November, but Republicans have been resistant, including Sen. Charles E. Grassley of Iowa, the top Republican on the committee. Baucus said Apr. 24 that a government plan is still on the table but he would rather focus first on preserving the insurance system for self-insured companies while also expanding private insurance and public programs such as Medicaid for low-income Americans.

Baucus and Grassley are set to do a walkthrough of policy options on Wednesday with committee members as they prepare for a markup of legislation by June.

More doubts about public plans were raised by Karen Ignagni, president and CEO of America's Health Insurance Plans. Ignagni displayed unpublished data she said her organization has gathered on private-plan performance in California. The analysis showed double-digit percentage reductions in 2005 and 2006 in emergency room visits, re-admissions, office visits, and hospital days for Medicare beneficiaries enrolled in Medicare Advantage plans, the managed care alternatives to traditional fee-for-service Medicare.

"No one in our community is advocating the status quo," said Ignagni, though she said, "I think there would be very little left of a private market" if a government-sponsored plan is written into law.

Watch a webcast on the public insurance option.

 

By Alex Wayne, CQ Staff

April 28, 2009 -- The Senate filled the remaining vacancy in President Obama's Cabinet on Tuesday, voting to confirm Kansas Gov. Kathleen Sebelius as Health and Human Services Secretary.

The tally was 65–31. Sebelius, 60, will lead a sprawling bureaucracy with a budget in excess of $600 billion, rivaling defense spending. Her responsibilities include the nation's biggest health and welfare programs, including the health entitlements Medicare, for the elderly and disabled, and Medicaid, for the poor.

Her most important job this year, though, will be to help shepherd through Congress the president's proposed overhaul of the health care system. Obama wants to expand insurance coverage to most of the approximately 46 million Americans who lack it, while reducing the growth of costs of care and improving quality. To those ends, he has proposed in his fiscal 2010 budget to set aside $634 billion over 10 years as a "downpayment" on an overhaul; the total cost may approach twice that figure.

"Congress needs a strong partner at HHS to pass comprehensive health reform," said Sen. Max Baucus, D-Mont. "Governor Sebelius is the right person for the job. She has the political experience, determination, and bipartisan work ethic to get the job done."

Sebelius has served as governor of Kansas since 2002; prior to her gubernatorial election, she was the state's insurance commissioner for eight years.

Sebelius was Obama's second choice to lead HHS and his health overhaul effort. Former Senate Majority Leader Tom Daschle withdrew his nomination after disclosing in January that he had paid about $140,000 in back taxes.

Sebelius had her own tax issues, though they were minor in comparison: she paid about $7,900 in back taxes and interest after an accountant she and her husband hired ahead of her confirmation hearings found errors in her returns. Senators evinced little concern about the issue.

Sebelius' position on abortion was much more problematic. She is a strong supporter of abortion rights, which was to be expected from an Obama nominee. But Sebelius submitted a report to the Senate Finance Committee that initially understated the amount of campaign contributions she had received from a Kansas abortion provider, George Tiller. She was forced to amend the report, disclosing an additional $27,000 received from Tiller, after Operation Rescue, an anti-abortion group, distributed Kansas campaign finance records documenting the contributions to reporters.

Anti-abortion groups pressured conservative Republicans to obstruct her confirmation. They succeeded in delaying it, first postponing a vote by the Finance Committee until after the Senate's two-week spring recess, and then pushing the vote by the full Senate back by a week.

In the meantime, the Kansas state legislature rapidly advanced a bill that would cause one final disruption for her confirmation. The bill, aimed at Tiller, would have imposed new restrictions on abortion providers who perform the procedure late in a pregnancy. Tiller is the only doctor in Kansas known to perform abortions in the third trimester, and one of the few in the nation.

Sebelius waited until 10 days after the measure cleared the legislature—the maximum allowed under the Kansas constitution—and then vetoed the bill on April 23. That led an early supporter, Sen. Sam Brownback, R-Kan., to announce he was reconsidering his position. Brownback, a social conservative, is expected to run for governor in 2010. Brownback voted for Sebelius on Tuesday.

Some Republicans expressed concerns about Sebelius for, they said, reasons other than abortion, or in addition to her abortion position.

Sen. Lisa Murkowski, R-Alaska, said last week that Sebelius had shown insufficient concern about the Indian Health Service in statements to the Finance Committee. Murkowski says the IHS is badly underfunded. Murkowski voted against Sebelius.

And Sen. Jon Kyl, R-Ariz., said that he was suspicious of Sebelius' position on a policy known as "comparative effectiveness research." Obama has sought to boost funding on studies of the relative value of different medical treatments and drugs. Some Republicans fear the results of the studies might be used by Medicare and other government health programs to deny payment for treatments deemed ineffective, or not cost-effective.

"She did not provide any assurance that Health and Human Services, federal health care programs, or any new government entity—such as the Federal Coordinating Council—will not use this tool to ration or deny care," Kyl said. The Federal Coordinating Council is a body created by Obama's economic stimulus law that would guide government investments in comparative effectiveness research.

Sen. Arlen Specter of Pennsylvania, who announced Tuesday that he will stand for re-election in 2010 as a Democrat, voted for Sebelius. His spokeswoman had said Monday that Specter was undecided on Sebelius' confirmation and that she had requested a meeting with him this week.

By Kathleen Hunter and Bart Jansen, CQ Staff

April 28, 2009 -- Republican Sen. Arlen Specter of Pennsylvania announced Tuesday that he is switching parties and will campaign as a Democrat in 2010, a decision that could bolster his re-election prospects and would move the Democrats closer to a 60-vote supermajority in the Senate.

"The prospects for winning a Republican primary are bleak," Specter said at an afternoon news conference. He sharply criticized the Republican Party for not doing more for moderate Republicans, and said he was not prepared to have his fate determined by a "Pennsylvania Republican primary electorate."

"I have decided to be a candidate for election in 2010 in the Democratic primary," Specter said. "This is a painful decision. I know I am disappointing many of my friends and colleagues. Frankly I have been disappointed by some of the response, so the disappointment runs in both directions."

But Specter stressed that he plans to maintain his independence.

"One item that I want to emphasize that I will not be changing my own personal independence or my own approach to individual issues," Specter said. "I will not be an automatic 60th vote."

With Specter aligning with the Democrats, Senate Democrats would control 60 votes if Democrat Al Franken is certified as Minnesota's new senator. Senate filibusters are much easier to overcome with a 60-vote majority.

Majority Leader Harry Reid said that Specter is a Democrat, effective immediately, but it was unclear when the party switch would become official.

Specter's decision followed a long courtship by Democrats including Reid and Vice President Joseph R. Biden Jr. A poll released last week showed Specter badly trailing former Rep. Patrick J. Toomey—who headed the conservative Club for Growth—in a potential Republican primary next year.

"I am ready, willing, and anxious to take on all comers and have my candidacy for re-election determined in a general election," Specter, a 79-year-old cancer survivor, said in a statement posted on his campaign Web site.

Toomey told CNN that Specter's switch was "an act of betrayal to the Republicans that have been supporting him."

"I'm stunned. I had no idea this was coming," said Republican Sam Brownback of Kansas.

Republican Pat Roberts of Kansas called it "not a good thing" that Democrats can reach the 60 votes needed to limit debate.

"I think it's most unfortunate obviously for the Republican Party," Roberts said. "I respect him. If he feels strongly about this and wants to change, obviously that's his decision."

Sen. Dianne Feinstein, D-Calif., said Specter becoming a Democrat "dramatically changes the dynamic and strengthens our party, our caucus in the United States Senate."

Specter arrived late to the Republicans' weekly policy meeting Tuesday after eating lunch with his wife Joan and his older son Shanin in the members' dining room. As he entered the room—just off the Senate floor—he was greeted with a stony silence from GOP senators. Specter left the GOP meeting after about 10 minutes and headed to a hearing on the swine flu outbreak.

Committee Shuffles

Specter said he understood that for overall seniority purposes, he would be treated as if he entered the Senate as a Democrat when he was first elected in 1980.

Senate Democrats had not completely worked out Specter's committee positions, however.

As a Republican, Specter is the ranking member of the Senate Judiciary Committee. He said he will be the No. 2 Democrat on the panel, behind Chairman Patrick J. Leahy, D-Vt., who outranks him in seniority.

Leahy said the two have been friends for 40 years and that Specter called him Tuesday morning to share the news about his party switch.

Specter also is the ranking Republican on the Senate Appropriations Labor-HHS-Education Subcommittee.

Tom Harkin, D-Iowa, is chairman of that panel, but does not outrank Specter on the seniority list. It is highly unlikely that Harkin would give up that gavel during this Congress. But Specter could rightfully claim it in the 112th Congress.

"We haven't worked that out yet," Specter said when asked about eventually taking the subcommittee chairmanship.

Courting a Moderate

Senate Minority Whip Richard J. Durbin, D-Ill., said there had been many efforts over many months to convert Specter. Durbin said he was not a part of them, "other than occasional conversations," but declined to be more specific.

A Reid spokesman said Specter was not promised anything in exchange for switching parties, though Specter said Reid and Pennsylvania Gov. Edward G. Rendell have pledged to support his re-election, as has President Obama. Specter said Rendell has arranged a meeting with Democratic Party leaders to endorse his reelection bid.

Durbin said he also didn't know whether Specter would shade his views on any issues.

"This man has been in the Senate for many years, has established a political platform, philosophy, and most of the time he found himself as a moderate Republican," Durbin said. "I don't know what he has said publicly about his view of the Republican Party today but it's clearly a much different party today than when he joined it."

Reid, D-Nev., said in a statement that he and Specter, over the years, "have had a long dialogue about his place in an evolving Republican Party. We have not always agreed on every issue, but Senator Specter has shown a willingness to work in a bipartisan manner, put people over party, and do what is right for Pennsylvanians and all Americans."

A spokesman for Reid said Specter came to see the majority leader in person on Monday to inform the majority leader about the decision.

Specter was one of three GOP moderate senators who backed the economic stimulus law pushed by Obama. White House spokesman Robert Gibbs said Obama learned Tuesday morning that Specter was becoming a Democrat and immediately phoned him to say "he had the president's full support and that he was thrilled to have him as a member of the Democratic Party."

Gibbs dodged questions about efforts to win over Specter, but acknowledged that there are people at the White House who have long relationships with the senator. Gibbs said Specter made a decision about how he could best represent the people of Pennsylvania in the Senate.

Although Specter in his statement thanked Minority Leader Mitch McConnell, R-Ky., and John Cornyn of Texas for their "forbearance," Cornyn issued a statement slamming Specter about 90 minutes later.

"Senator Specter's decision today represents the height of political self-preservation," said Cornyn, who heads the National Republican Senatorial Committee. "While this presents a short-term disappointment, voters next year will have a clear choice to cast their ballots for a potentially unbridled Democrat supermajority versus the system of checks-and-balances that Americans deserve."

McConnell spoke to reporters later.

"Well obviously we are not happy that Sen. Specter has decided to become a Democrat," McConnell said, adding that Specter visited him Monday afternoon to explain the decision to leave the GOP.

As for the prospect of Democrats having a 60-member caucus, McConnell said: "I think the danger of that for the country is that it won't automatically be an ability to restrain the excess that is typically associated with big majorities in single-party rule."

Specter, who became a Republican in 1966 after switching parties once before, said he will not change his approach to individual issues.

"I have always agreed with John Kennedy that sometimes party asks too much and if the Democratic Party asks too much, I wouldn't hesitate to disagree."

Leahy recalled the 2001 decision of Jim Jeffords of Vermont to leave the GOP and caucus with Democrats.

"I know what Jim Jeffords went through, and in my conversation earlier this morning with Sen. Specter, I think he was feeling pretty much the same—that it wasn't so much he leaving the Republican Party but the Republican Party leaving him," Leahy said.

Adriel Bettelheim, Greg Vadala, Keith Perine, Adam Graham-Silverman, Alan Ota, Richard Rubin, Joseph Schatz, and Karoun Demirjian contributed to this story.