During today’s mark-up of the Senate Finance Committee health bill, Sen. Chuck Grassley (R-IA) offered an amendment requiring Medicaid enrollees to submit a government issued photo ID (“identification must be authenticated with the issuing agency,” the amendment states) with the application for coverage. Democrats defended the current birth certificate requirement, claiming that the amendment created an additional obstacle to coverage for lower-income enrollees who lack a photo ID. Some studies estimated that as many as 21 million American citizens don’t have such identification.

Sen. Jeff Bingaman (D-NM) called the amendment “a solution looking for a problem.” Binagman reminded Grassley that the majority of Medicaid fraud “is provider fraud,” not applicant fraud. “It is providers who are charging for services they are not providing,” Bingaman explained. Grassley responded by suggesting that his photo ID amendment would weed claims for people who are dead, leading Bingaman to point out that dead people can’t apply for coverage:

GRASSLEY: Medicaid is paying claims for people that are dead. So you know, photo ID and ‘are you alive?’ and all that is pretty darn important, it seems to me. [...]

BINGAMAN: To the extent Medicaid is paying for people who are dead to get health care services, it’s not because people are applying for those services. It’s because providers are billing for services for people who are dead, and that’s the fraud we ought to stop.

Watch it:

Sen. Robert Menendez (D-NJ) reminded the committee that stringent verification requirements often do more harm than good, turning some citizens “into second class citizens.” The Wisconsin Department of Health and Human Services, for instance, reported that “nearly 33,000 individuals had their Medicaid denied or terminated because of the documentation requirement,” Menendez said. “In 62 percent of those cases, the sole reason for denial or loss of coverage was lack of identification. All of these individuals had provided documentation showing that they were citizens.”

The Baucus bill already includes verification requirements. Under the legislation, to obtain coverage within the Exchange, an applicant’s “name, social security number, and date of birth will be verified with Social Security Administration (SSA) data.” “For individuals who do not claim to be U.S. citizens but claim to be lawfully present in the United States, if the claim of lawful presence is consistent with Department of Homeland Security (DHS) data then the claim will be considered substantiated.”

Grassley’s amendment failed in a vote of 10-13.

The Baucus health bill maintains federal restrictions on abortion funding by preventing federal money from funding any abortions beyond reasons of life-endangerment, rape or incest. Under the mark, women wouldn’t be able to use subsidy dollars for the procedure and would finance the operation only with private premiums.

This morning, Sen. Orrin Hatch (R-UT) introduced amendment Hatch C14, requiring that “no funds authorized or appropriated under this Mark may be used to pay for any abortion or to cover any part of the costs of any health plan that includes coverage of abortion.” Under Hatch’s amendment, women who purchase comprehensive private insurance packages — that include abortion services — would have to pay for the entire cost of the package (even if they qualify for subsidies) and obtain a separate rider for abortion coverage.

Responding to Hatch’s amendment, which ultimately failed in a vote of 10-13, Sen. Debbie Stabenow (D-MI) said, “with all respect to my friend, as a woman, I find it offensive”:

In fact, with all respect to my friend, as a woman, I find it offensive that in here– any woman, any family purchasing through the exchange, if they did not receive any tax credit, would be prohibited from having the full range of health care options that they may need covered….This is an unprecedented restriction on people who paid for their own health care insurance…the assumption that somehow a woman or family would say, ‘you know some did we may have an unintended pregnancy, so we’ll get a separate rider or maybe my pregnancy is going to have a crisis, many, many crises, and so we’re going to find some other rider.’ In my judgment, I don’t even know how that would work.

Stabenow explained that Hatch’s ‘extreme’ amendment would drastically change existing law and levy an undue burden on women who want access to abortion services. Watch it:

While the Baucus amendment establishes a firewall between public dollars and private dollars for abortion services, some advocates believe that the existing language would jeopardize the abortion coverage for women moving from employer sponsored plans (the majority of which cover abortion services) to insurance within the Exchange. They point to present federal policy which subsidizes employer-sponsored plans without restricting abortion coverage.

The mark requires each state-based exchange to contain at least one plan that does not cover abortion and a separate policy that does.

Last night, in a controversial speech on the House floor, Rep. Alan Grayson (D-FL) announced that the Republican alternative health care proposals would force sick Americans to “die quickly”:

It’s my duty and pride tonight to be able to announce exactly what the Republicans plan to do for health care in America… It’s a very simple plan. Here it is. The Republican health care plan for America: “don’t get sick.” If you have insurance don’t get sick, if you don’t have insurance, don’t get sick; if you’re sick, don’t get sick. Just don’t get sick. … If you do get sick America, the Republican health care plan is this: “die quickly.”

Watch it:

No Republican wants Americans to die, but the party’s efforts to stonewall meaningful health care reform perpetuate a status quo in which 45,000 Americans die every year because they lack health care coverage and thousands more see their policies canceled or denied by private insurers that are beholden to Wall Street’s profit expectations and not patient health.

Grayson intentionally over-stated his case. It’s not that Republicans want to kill people; it’s that their opposition to meaningful health care reform and their “free market” alternatives would further deregulate insurers and allow companies to continue pushing individuals into high deductible policies that don’t provide adequate coverage and actually harm Americans who can’t afford their medical bills:

“Don’t get sick.” Under the Republican alternatives, private insurers will deny coverage to Americans who suffer from chronic illnesses like cancers or asthma and lure healthier applicants into high deductible policies that provide limited coverage once they become sick.

“Die quickly.” If Americans in these policies do fall ill, they will go bankrupt paying off their medical bills and join the 78 percent of bankruptcy filers burdened by health care expenses who had health insurance but “still were overwhelmed by their medical debt.” Grayson is facetiously suggesting that Americans would be urged to skip the “bankruptcy” part, avoid being a financial burden on their family, and simply pass away.

In other words, the Republican alternatives harm Americans by placing our fate in the hands of the very same private for-profit corporations that have created the health care crisis in the first place.

Today, several Democrats on the Senate Finance Committee (SFC) joined with Republicans to defeat a public plan that reimbursed five percent above Medicare rates and another option that competed on an equal playing field with private insurers. The failure of both provisions suggests that the Senate Finance Committee’s health care bill will leave committee without a public option. (The Committee may still consider Sen. Olympia Snowe’s (R-ME) trigger proposal, although the final text of that amendment has yet to be released.)

This development is disappointing, but not surprising. SFC is led by a chairman who feels obliged to vote like a Republican to attract Republicans and the Committee is stacked with conservative Democrats from high-cost or rural conservative states (Sens. Nelson, Conrad, Lincoln come to mind).

The public option’s best chance was always in conference. Sen. Harry Reid (D-NV) has suggested that a final Senate bill (one that merges the Senate Finance bill with the Kennedy bill) won’t include a public option and any floor amendments will likely fail.

Once in conference, negotiators will have to reconcile the Senate bill with its far more progressive House conterpart (which will include some kind of public plan). Should Reid and Pelosi stack the committee with public option advocates like Rockefeller, Schumer, or Schakowsky, the option will live another day — no Democrat would vote against a health care package simply because it includes a public option that attracts some 10 million enrollees. Conversely, if likely conferees Baucus and Conrad feel ‘constrained’ to vote with Republicans, the option will likely die.

The final legislation won’t include a Medicare-like public option that saves the government $50 to $100 billion over 10 years. Nor will the plan negotiates rates with providers and compete on a level playing field with private insurers. In fact, it won’t be a national plan at all.

Instead, the very same Democrats who defeated the national program during mark-up, will likely resurrect a discarded idea floated by the New America Foundation and momentarily embraced by the White House. That compromise will create a network of public options modeled on state employee benefit plans. The proposal could be triggered by Snowe’s amendment if reform did not meet a low affordability measure, but any state-based proposal would lack the market clout to lower overall health care spending, reform health care delivery, or hold private health insurers accountable.

Today may have been the death of the public option and the birth of state-based public options.

During this morning’s debate over Sen. Jay Rockefeller’s (D-WV) public plan amendment, Sen. Debbie Stabenow (D-MI) reminded senators that “if you go back and look at the debate on Medicare, the very same arguments were used, in the 60s. That we couldn’t have Medicare for seniors because it would destroy the private markets. It would destroy the private insurance system and that’s not what happened.” “Replay to today, same arguments again.”

Indeed, at one particularly contentious moment, Sen. Chuck Schumer (D-NY) challenged Sen. Chuck Grassley’s (R-IA) claim that the public option would lead to single payer health care. The exchange flustered Grassley. He admitted that Medicare is part of the “social fabric” of America and praised the competition between traditional Medicare and Medicare Advantage. He could not explain why younger Americans should be afforded the same choice of coverage. Watch it:

According to a Congressional Budget Office analysis of Rockefeller’s amendment — which establishes a plan that reimburses providers at 5% above Medicare rates for the first two years — the public option would save the government an estimated $50 billion. Only eight million Americans would sign-up for the program, leaving the overwhelming majority of Americans to private coverage.

For Grassley, choice is a one-way street: he wants Americans to move from public to private coverage, but would deny Americans in private coverage the right to choose a public plan. Grassley fought to preserve access to Medicare Advantage and argued that Medicaid recipients should be able to enroll in private coverage. A shift from private to public coverage, however, is unacceptable.

During the debate, several senators reminded Grassley that under Rockefeller’s amendment, the public option would be self-sustaining and charge competitive rates after the first two years. “What are we afraid of,” Sen. John Kerry (D-MA) asked, “that Americans would like a plan that pays for itself and provides a good service?” As Schumer pointed out, Republicans are against government health care, but they have introduced numerous amendments to preserve Medicare. “That’s not fair, and it does not add up,” he said.

On September 16, Sen. Jay Rockefeller (D-WV) announced that he would not vote for the Senate Finance Committee’s health care bill unless the committee replaced the network of cooperatives with a robust public option, increased the threshold on the excise tax, restored the CHIP program (the reform bill folded it into the Exchange), improved affordability measures, and regulated self-insured plans.

This last demand may be the least understood and most complicated aspect of health care reform. The Senate Finance Committee’s legislation does not require large employers that self insure to abide by the same rules and regulations as insurers operating in the Exchange or the individual health insurance markets. As Rockefeller explained during mark-up, “you are grandfathering in an unfairness in the insurance market, where you treat 50 percent of the American people in one way…and 46 percent in a very favored way without restrictions, without discipline.” “Most people don’t know that they are treated so differently. Most people don’t know that they have these restrictions on them,” Rockefeller said. Watch it:

Self-insured plans — which are regulated by a law called ERISA — do not have to accept Americans with pre-existing conditions, or remove caps on out-of-pocket or lifetime expenses. “As many as 73 million people, or 55% of those who get insurance through private-sector jobs, are covered in self-insured plans, according to the non-partisan Employee Benefit Research Institute. Workers are often not aware their plans are self-insured because employers hire insurance companies to process claims.”

Congress enacted ERISA in 1974 to allow companies operating across state lines to offer uniform benefit packages. The law establishes minimum standards for pensions, but allows self-insured companies to elude both state and federal regulations.

The initial draft of ERISA exempt employee benefit plans for health and pension from state laws, but subject self-insured companies to existing state regulations. Large corporations would have to abide by the consumer protections of the various states, or so it seemed. Before the final floor vote, Congress folded to big-business demands and inserted the so-called “deemer” clause, barring “self-funded plans from being considered insured plans subject to state insurance regulations.” Suddenly, self-insured companies were exempt from federal and state regulations. The fix was in.

Rockefeller has offered an amendment (C1) to apply health insurance market reforms to the large group and self-insured market. Large corporations are already lining up in opposition.

On Friday, the US Chamber of Commerce chief lobbyist Bruce Josten “sent out a memo this afternoon listing three ‘dangerous amendments’ the business community should weigh in on before the committee gets back to work on Tuesday.” Rockefeller C1 is the most dangerous:

This amendment will significantly and adversely impact larger employers and self-insured plans and the millions of Americans who count on their employer provided health coverage. The federal uniformity standard under ERISA (also known as the “preemption” standard) is critical to our health care system, especially the 170 million Americans receiving coverage from the employer-based system. Its hallmark feature is that it allows employers to offer uniform benefits to their employees, retirees and families without being subject to the conflicting patchwork of mandates, restrictions and costly rules that vary from state to state….This amendment would jeopardize employers’ ability to offer uniform national plans without interference by contradicting state rules. Benefits costs could soar.

But Rockefeller’s amendment would presumably subject self-insured plans to the new federal regulations, permitting large corporations to continue offering uniform plan. The Committee is expected to consider Rockefeller’s amendment this week.

On Thursday, Sen. Jay Rockefeller (D-WV) speculated that “if there’s anything which is clear, it’s that the insurance industry is not running this markup, but it is running certain people in this markup.” Indeed, in the last two and a half years, the health insurance industry has spent at least $585,725,712 lobbying Congress to protect its investments in Medicare advantage, defeat competition from a public option (or even a cooperative), and preserve policies that allow it to attract a disproportionate number of healthy applicants.

An analysis conducted by the Center for American Progress Action Fund of all 534 amendments has identified at least 48 amendments that directly reflect the industry’s wish list. And while the information below does not demonstrate a direct quid-pro-quo between an insurers’ contribution and a senator’s amendment, it raises an important question: Why are some senators so intent on protecting an industry that is partly responsible for creating the current health care crisis?

Watch a video compilation of senators arguing on behalf of the industry:

Industry ask: “We have strong concerns about the proposed funding cuts in Medicare Advantage.” [AHIP Letter, 9/21/2009]

Industry gets: At least 14 amendments that protect the 14% subsidy private plans receive for participating in the program.

Insurers ask: “We have strong concerns about the proposal for new, untested government-created health insurance cooperatives.” [AHIP Letter, 9/21/2009]

Insurers get: At least 9 amendments eliminating the mark’s network of cooperatives.

Industry asks: “We are concerned that the new national benefit standards – taking into account both the actuarial value requirements and provisions that provide unlimited access to any and all services – would impose higher costs.” [AHIP letter, 9/21/2009]

Industry gets: At least 4 amendments loosening benefits standards.

Industry asks: “Without system-wide cost containment provisions, the proposed new taxes on high cost plans and the proposed new taxes on key components of health expenditures would cause many Americans to spend more on coverage….We are concerned that these provisions will increase costs.” [AHIP letter, 9/21/2009]

Industry gets: At least 8 amendments loosening benefits standards.

Download a complete copy of the report HERE.

“At the end of the day, there will be a public option in the bill,” Rep. Jan Schakowsky (D-IL) told reporters at an early morning briefing hosted by the Democratic Women’s Working Group and attended by The Wonk Room. Schakowsky predicted that the House would pass a public option and integrate the provision into the the final bill during conference. “I see momentum building,” she said.

Schakowsky pointed to a recent poll commissioned by Health Care for America Now of 91 conservative House swing districts — including many Blue Dog and rural ones — “which concluded that the public option has solid majority support among those voters.” According to the poll, “including a public option is essential to implementing an individual mandate. Voters also already prefer the implementation of a public option, and do not see a need for a trigger.” Greg Sargent has the details:

There’s over-whelming opposition to an individual mandate when the only choices are private insur-ance, but there’s net support for a mandate when people have the choice of a public option. And swing district voters are convinced private sector healthcare has failed to make health care affordable, and prefer the public option now rather than waiting on a trigger option.

Schakowsky said that she supported a ‘robust’ public plan that reimbursed providers a set percentage above Medicare rates, but could not guarantee that this reimbursement formula will be preserved in the final bill. According to the Congressional Budget Office, “a public plan based on Medicare rates would save $110 billion over 10 years,” $85 million more than a plan that independently negotiated with providers.

Conservatives argue that Medicare, which pays providers approximately 14 percent lower than private insurers, underpays providers and shifts costs to Americans with private coverage. The bills before Congress would provide bonus payments to primary care doctors and institute payment reforms that will begin rewarding medical providers for the quality of care they deliver rather than quantity.

This afternoon, while debating an amendment to prohibit the federal government from “defining the health care benefits offered through private insurance,” Sen. Jon Kyl (R-AZ) argued, “I don’t need maternity care, and so requiring that to be in my insurance policy is something that I don’t need and will make the policy more expensive.”

Sen. Debbie Stabenow (D-MI) interjected into Kyl’s remarks to remind him, “I think your mom probably did.” Watch it:

Kyl’s amendment would prohibit the government from defining which benefits should be included in a standard benefit package and would permit health insurance companies to design policies that exclude higher-cost beneficiaries. Currently, “it is difficult and costly for women to find health insurance that covers maternity care” in the individual health insurance market. According to a survey conducted by the National Women’s Law Center, the vast majority of individual market health insurance policies “do not cover maternity care at all. A limited number of insurers sell separate maternity coverage for an additional fee known as a ‘rider,’ but this supplemental coverage is often expensive and limited in scope.”

A well defined minimum benefits package would compel health insurers to provide basic services to all Americans. The Kyl amendment, which ultimately failed, would have allowed the industry to continue profiting from discriminatory practices. As former health insurance executive Wendell Potter explained in an interview with ThinkProress, insurers would like to move us all into “these limited benefit plans that are very skimpy and don’t cover you, don’t cover what you need. That way, when you do get sick, they’re not on the hook to pay you anything. They would love to have you enrolled in these.”

UPDATE: The Finance Committee announced that the public option debate will not take place today. Instead, it is scheduled to occur on Tuesday.

Today, the Senate Finance Committee will consider replacing the health bill’s network of cooperatives with a strong robust public health insurance option. As. Sen. Chuck Schumer (D-NY) explained yesterday, “tomorrow is the opening day in our big fight, but it is going to be a fight that goes down all the way to the wire. And I’d like to make a prediction. The health care bill that is signed into law by the President will have a good, strong, robust public option.”

As Ryan Grim points out, “the Senate and the conference committee between the two chambers” are now “the final battlegrounds for the public option. While several Senate Democrats have said they oppose it, no Senate Democrat has yet said publicly that he or she would oppose any bill that included a public option.” Here is the latest on the debate:

- White House Chief of Staff Rahm Emmanuel doesn’t think the public option can pass the Senate:

ROSE: And it will not have a public option feature? EMANUEL: I’m not — that should be what the conference has to negotiate. But I don think — you know. ROSE: Can it pass with a public option feature? EMANUEL: I think the Senate’s been clear about what — the prospects there. That doesn’t mean in the House that they’re not going to come to the table and demand that…”

- Pelosi may push for a more robust public option in the House:

“Pelosi is planning to include a government-run “public option” in the House version of the healthcare bill. She wants to model it on Medicare, with providers getting reimbursed on a scale pegged to Medicare rates,” the Hill’s Mike Soraghan writes. The original House bill allowed the public option to reimburse providers at five percent above Medicare rates.

- A Medicare-like public option saves the most money:

In a bid to wrangle concessions from the Blue Dog Coalition on healthcare reform, House leaders Thursday released CBO estimates for liberals’ preferred version of the public option that show $85 billion more in savings than for the version the Blue Dogs prefer. Rep. Stephanie Herseth Sandlin (D-S.D.) a Blue Dog co-chair, said any possible new momentum toward a public option tethered to Medicare rates is, in part, ‘because of the cost issue’ and the updated CBO score.

- Blue Dogs don’t consider blocking public option a top priority:

The Blue Dogs have been surveying their membership over the last several days; coalition co-chair Stephanie Herseth Sandlin (D-S.D.) has been collecting the responses. She listed the four top priorities that have emerged: Keeping the cost under $900 billion, not moving at a faster pace than the Senate, getting a 20-year cost estimate from the Congressional Budget Office and addressing regional disparities in Medicare reimbursement rates. So, the Huffington Post asked, the public option is not a top priority? “Right, the group is somewhat split,” she said.

- The public still doesn’t understand the complexities of health reform, but they support the public option:

President Obama is confronting … an electorate confused and anxious about a health care overhaul as he prepares for pivotal battles … according to the latest New York Times/CBS News poll. … The poll found that an intense campaign by Mr. Obama to rally support behind his health care plan — including an address to Congress, a run of television interviews and rallies across the country — appears to have done little to allay concerns. Majorities of respondents said that they were confused about the health care argument and that Mr. Obama had not done a good job in explaining what he was trying to accomplish. … On one of the most contentious issues in the health care debate — whether to establish a government-run health insurance plan as an alternative to private insurers — nearly two-thirds of the country continues to favor the proposal, which is backed by Mr. Obama but has drawn intense fire from most Republicans and some moderate Democrats.”

This evening, during a hastily arranged press call with reporters, Sens. Chuck Schumer (D-NY) and Jay Rockefeller (D-WV) predicted that the final health reform package will include a public health insurance option. “The health care bill that is signed into law by the President will have a good strong public option,” Schumer said.

“We are going to be all about it,” Schumer told reporters on the call. Both senators rejected the bill’s current network of cooperatives and Sen. Olympia Snowe’s (R-ME) trigger compromise and promised to introduce amendments that would establish a national public option. “We are going to have a full blown debate in the Finance Committee,” “Don’t count it out,” Schumer said. “We are going to keep it in the center of the debate as the bill moves through Congress”:

SCHUMER: This is the starting gate. And we know it will get better and better as we move on. But having said that, we’re going to have a full blown debate in the Senate Finance Committee because the more people learn about the public option, the more they like it. And even though a public plan may be an underdog in the Senate Finance Committee, don’t count it out. We’re going to work really hard to get the public option going and started and keep it in the center of the debate as the bill, the health care bill moves through Congress….Tomorrow is the opening day in our big fight, but it is going to be a fight that goes down all the way to the wire. And I’d like to make a prediction. The health care bill that is signed into law by the President will have a good, strong, robust public option.

ROCKEFELLER: And I agree with that.

Listen:

Rockefeller insisted that “we have a good shot of getting it [the public option] out of the Finance Committee.” “A co-op is not an alternative, a co-op can’t work. The alternative is the status quo,” Rockefeller said. “Don’t rule it out. Don’t fall victim to this feeling that it’s not going to happen. You’re creating a problem for us if that’s the way you’re feeling.”

Rockefeller also praised the committee for passing Rockefeller Amendment D10, which established a MedPAC-like panel of medical professionals who “would be required to implement policies that successfully reduce cost growth in Medicare by at least 1.5 percent annually.” “We did something huge this afternoon in the Finance Committee and that was we passed a MedPac plan.” “Everybody said that there is no chance this could pass. It cannot pass. Well, it passed 15-3 this afternoon in the Senate Finance Committee. So I don’t take a dim view on what we’re able to do. That is a game changer, which is probably, in terms of policy, the largest game changer in health care so far.”

While both Schumer and Rockefeller dismissed the co-op and trigger alternatives as ineffective, it was unclear if Schumer and Rockefeller believed that they could pass a public option that linked the plan’s reimbursement rates to Medicare. A similar proposal was introduced in the House bill, but was later modified in a compromise with Blue Dog Democrats.

Chairman Max Baucus’s (D-MT) original mark of the Senate Finance Committee’s health care bill used a modified community rating formula that allowed private insurers to charge older people five times more for coverage than younger people, a ratio that far exceeded the Kennedy and House bills’ 2:1 rating. On Tuesday the Chairman modified his mark with an amendment that lowered the rating to 4:1 and sparked a harsh response from the health insurance lobby.

In fact, today, in its second letter to the Chairman, America’s Health Insurance Plans (AHIP) President and CEO Karen Ignagni criticized Baucus — who is already requiring all Americans to purchase private health insurance — for improving the affordability measure. “If age bands are narrowed or “compressed” too much, premiums will rise significantly for these individuals, making coverage unaffordable, and resulting in a smaller and less stable pool, and higher premiums for everyone,” the letter warned:

The Mark’s original age band of 5:1 already reflects compression, relative to the natural distribution of underlying health care costs across age groups, and sets a balance whereby younger individuals are cross-subsidizing the cost of coverage for older Americans…For these reasons, we respectfully urge that you restore the age band to 5:1.

Ignagni and the health insurers support modified community rating and believe that in order for insurance pools to function, younger people must subsidize the costs of the sick. But insurers are apparently concerned that a 4:1 community rating would jeopardize the industry’s ability to attract a significant number of young people into high deductible policies outside of the exchange (in the remaining individual market). A 4:1 community rating would force insurers to charge younger people higher premiums and would presumably attract fewer enrollees; a 5:1 community rating would allow insurers to charge older people more and market more “affordable” (read: high deductible) policies to young and healthy applicants who pay more in premiums than they file in claims.

As former health insurance executive Wendell Potter explained in an interview with ThinkProress, insurers would “like to move us all into high deductible plans.” “[The would like to] have high deductibles that we would all have to meet and or [move us] into these limited benefit plans that are very skimpy and don’t cover you, don’t cover what you need. That way, when you do get sick, they’re not on the hook to pay you anything. They would love to have you enrolled in these.”

Watch it:

For more on ThinkProgress’ interview with Wendell Potter, click here, here, here, and here.

Throughout the mark-up process, Republicans on the Senate Finance Committee have continuously argued that replacing the over-payments to private plans participating in Medicare Advantage with a competitive bidding process, would cause the 10 million Americans who are enrolled in the program to lose the extra benefits some Advantage programs provide.

This morning, during a heated exchange with Sen. Orrin Hatch (R-UT), committee staffer Shawn Bishop explained that under the Committee’s bill, 10 million seniors “would not be losing the extra benefits they have today.” To the contrary, some Americans in low-cost states would actually gain benefits. By 2019, the Congressional Budget Office estimates that 200,000 more Americans would be enrolled in Medicare Advantage coverage. But Hatch did not read that report:

HATCH: Here is the bottom line, will the 10 million people see a loss in their extra benefits? The answer to that of course is ‘yes.’ [...]

STAFFER: Categorically 10 million beneficiaries would not be losing the extra benefits they have today. Some would be gaining.[...]

HATCH: The fact of the matter is, the bottom line, is that these are 10 million people that are going to lose benefits. And that’s what it boils down to.

Hatch repeatedly dismissed the staffer’s explanations and insisted that all 10 million would lose their benefits. Watch it:

Bishop explained that under the legislation’s competitive bidding program — a process under which private insurers in each geographical area would bid to provide coverage to Medicare beneficiaries in a particular geographic area — Medicare Advantage plans that provide quality benefits efficiently, would receive a 5 percent bonus on top of their competitive bid to pay for extra benefits. Consequently, states with low costs, would be gaining benefits.

“So in low cost states, low fee-for-service states, today, the amount of extra benefits is very small. It’s minimal. Competitive bidding will allow good plans that coordinate care, that achieve quality rankings to earn up to 5 percent of the national average and that’s going to bring more extra benefits to low-cost states,” Bishop explained.

“So it’s not accurate Senator to say all 10 million beneficiaries are going to have less extra benefits than they do today. That’s not the case there’s going to be some with more, some with less,” she concluded.

Throughout the mark-up process, Hatch has filibustered amendments by peppering the staff with detailed queries and dismissing answers that departed from his ideology. On Tuesday, insisting that the individual mandate provision was unconstitutional, despite committee assurances to the contrary.

All eyes turned to Medicare Advantage today as Republicans on the Senate Finance Committee tried to preserve the 14% overpayments the government pays private insurers that participating in the program. Reacting to the Center for Medicare and Medicaid Services’ recent investigation into Humana’s efforts to rally its beneficiaries against health reforms that would eliminate the overpayments, Sen. Jon Kyl (R-AZ) “offered an amendment seeking to protect the First Amendment rights of private insurers who might want to criticize the proposed health care legislation.”

Sen. Pat Roberts (R-KS) — who earlier today argued that senators needed more time to consult with health insurance lobbyists — strongly defended the health industry’s right to lobby Congress and the public against policies that jeopardized its profits. “Think of what your CEO is going to do,” Roberts said, speaking directly to the health insurers:

Think of what your CEO is gonna to do. Sitting around with the board of directors and he takes a look or she takes a look at this bill and says, ‘we think that this is not legitimate, we think that this is a bad situation that will really harm our patients, and our customers, not to mention our company….We don’t feel free to contact Sen. Roberts or Sen. Kyl or for that matter Sen. Schumer…I mean this is clearly a chilling affect on the entire health care industry…This is, quite frankly, it smells like tough, hardball Chicago politics abridging the First Amendment.

Watch it:

As government contractors, however, private insurers participating in the Medicare Advantage program are explicitly forbidden from directly contacting Medicare beneficiaries. In fact, before joining Medicare Advantage, Humana signed a data use agreement that prohibited the company from distributing communications that were not approved by the Center for Medicare and Medicaid Services. The intent of the law is to protect seniors from receiving misleading information from companies that have a financial stake in the final outcome of the legislation.

The Humana debate was only part of a larger Republican effort to preserve the government’s overpayments to insurers. Under the current system, private insurers receive approximately 14% more to provide the same services as traditional Medicare, but there is little evidence that private insurers are reinvesting that subsidy into better benefits or higher quality coverage. In fact, a number of government reports and independent estimates have concluded that the extra federal dollars don’t improve health outcomes. They pad insurers’ bottom lines, raise costs for beneficiaries in the traditional Medicare program, squeeze both Medicare and the federal budget, and drain resources from more productive uses. Private fee-for-service Medicare Advantage plans have even exposed beneficiaries to serious financial risks.

The health reform bill before the Senate Finance Committee would open most Medicare Advantage plans to competitive bidding, requiring the private plans to compete on an equal playing field with Medicare. While certain Medicare Advantage plans would keep their subsidies (Sen. Bill Nelson (D-FL) amended the bill to preserves Medicare Advantage subsidies for seniors living in high cost areas where plans deliver benefits below the average cost of traditional Medicare), the committee would replace the current subsidy with a competitive bidding process. Insurers in each geographical area would bid to provide coverage, the government would average all of the bids, weigh that by the enrollment in the previous year, and pay out that amount.

Transcript: Read more

This morning, Republicans spent two hours debating an amendment offered by Sen. Jim Bunning (R-KY) that would have required the Committee put-off a vote on the health care bill until the legislative language of the bill was available on the Finance Committee‘s website for at least 72 hours. Republicans insisted that they could not vote on a final bill until the Congressional Budget Office produced a cost analysis of that final legislative language, delaying a vote for up to two weeks. “I want to know what the final number is on any bill that I vote on in this Committee….If the CBO director says he needs it for the true cost and the comprehensive cost, then that should get our attention,” Sen. Olympia Snowe (R-ME) said.

Chairman Max Baucus (D-MT) agreed that a final CBO score is needed, but argued that the CBO can use conceptual language — rather than legislative language — to score the bill. Baucus reminded senators that the Committee has traditionally relied on a final CBO score of the conceptual language to pass President Bush’s 2001 tax cuts, the Medicare drug bill, as well as other Republican initiatives. He contended that legislative language would not change the intent of the plain language mark; in fact, should any discrepancies arise, the Chairman promised to introduce a mark that would restore the original intent of the language.

Sen. Kent Conrad (D-ND) argued that plain language enhances transparency — by helping the public and the legislators better understand the intent of the legislation — and read a passage of legislative language to demonstrate its complexity. Sen. Pat Roberts (R-KS) then unintentionally underscored Conrad’s point by misunderstanding the passage. ” If members of this own committee can’t recognize what this is all about, that’s why it’s critically important why it should be in plain English,” Conrad emphasized. Watch it:

Ultimately, the Bunning amendment failed in a vote of 11 to 12. Instead, the Committee adopted Baucus’ amendment that required that the conceptual language, in plain English and a complete cost analysis by the CBO be publicly available on the finance website before the final vote. The amendment carried with a 13 to 10 vote.

During last night’s walk through of the Senate Finance bill with Committee and Congressional Budget Office staff, Sen. Orrin Hatch (R-UT) delayed and obstructed the mark-up process by asking waves of repetitive questions — that the staff had already answered throughout the hearings — and insisting that the individual mandate provision was unconstitutional.

Hatch filibustered amendments by peppering the staff with detailed queries and dismissing answers that departed from his ideology. On several occasions, Hatch lectured Chairman Max Baucus (D-MT) for allegedly caving to White House pressure and ‘rushing’ — after nine months of grueling negotiations — the legislation through committee. “At some point we ought to understand what’s in this God dong bill,” Hatch exclaimed after Baucus announced that the committee would be moving to considering amendments. “You got a conceptual bill, that really doesn’t even have the final language, doesn’t have a score to it.”

Watch a compilation:

“I know what you’re trying to do and I know you have lots of pressure from the administration and elsewhere, but this is the United States Senate. This is the most important committee in the United States Senate. And we ought to look at these things seriously and we ought to ask all the questions that we have,” Hatch insisted, before proceeding to ask staffers with no experience in constitutional law, at least four separate questions about the constitutionality of the individual mandate.

At each turn, the staff replied that they were not qualified to answer Hatch queries, and directed him to the Congressional Research Service, which had concluded that the mandate and the penalty for not acquiring insurance were indeed constitutional. In fact, as Slate’s Timothy Noah explains, the Commerce Clause — which the federal government has used to “expand its power in various ways” since the New Deal — allows the government to regulate and penalize behaviors “by defining various activities as ‘interstate commerce.’” “When a person declines to purchase health insurance, that affects interstate commerce, too, by driving up health insurance premiums for everyone else,” he explains.

“I’ve been on the committee for 15 years, I’ve never seen a circumstance where any member just got unlimited questions,” Sen. Kent Conrad (D-ND) told Hatch during a heated exchange. “Have you ever seen a bill that’s one-sixth of the American economy,” Hatch asked. “Yes, I did,” Conrad replied. “I saw it with the tax cuts in the Bush administration, affected 100 percent of the economy, and we weren’t given unlimited questions. And you know, you talk about a disaster for the country, that turned out to be.”

Baucus reminded Hatch that “the 2001 tax cut bill was a $1.3 trillion bill, we spent, I don’t know how many days on that, not too many days. This is a $900 billion bill…this committee hasn’t spent actually more than two days in mark-up for ten years. But this is a big bill and we’re just trying to find away to find the right balance here, the balance between understanding the bill on one hand, and acting on the other,” Baucus said.

The Hill newspaper is reporting that Speaker Nancy Pelosi (D-CA) is scrapping an agreement with Blue Dog Democrats that decoupled the public option from Medicare and required the plan to directly negotiate its reimbursement rates with providers.

“Pelosi is planning to include a government-run “public option” in the House version of the healthcare bill. She wants to model it on Medicare, with providers getting reimbursed on a scale pegged to Medicare rates,” Mike Soraghan writes. The original House bill allowed the public option to reimburse providers at five percent above Medicare rates:

Pelosi’s decision to abandon the agreement that was made with a group of Blue Dogs to get the bill out of committee would steer the healthcare legislation back to the left as she prepares for a floor vote. Pelosi is planning to include a government-run “public option” in the House version of the healthcare bill. She wants to model it on Medicare, with providers getting reimbursed on a scale pegged to Medicare rates….Blue Dog Democrats, many of whom represent rural districts where Medicare reimbursement rates are low, vehemently oppose tying the public option to Medicare.

The compromise initially “drew howls of protest from liberal members” who argued that a small just-established public option would be unable to negotiate lower reimbursement rates without relying on Medicare’s existing size and leverage. By reimbursing providers some percentage above Medicare rates, however, the public option could benefit from Medicare’s ability to negotiate with providers and pass on the savings to consumers, these critics argued.

Indeed, according to the Congressional Budget Office, a public option that reimburses providers at market rates would not lower premiums. In its analysis of the HELP committee bill the CBO concluded that “the public plan would pay providers of health care at rates comparable to privately negotiated rates—and thus was not projected to have premiums lower than those charged by private insurance plans in the exchanges.” As a result, that kind of public option does not “have a substantial effect on the cost or enrollment projections.”

Conversely, the House bill’s original public option “would be about 10 percent cheaper than a typical private plan offered in the exchanges,” the Congressional Budget Office concluded.

During a recent hearing before the Democratic Steering and Policy Committee Forum on Health Insurance Reform, Pelosi insisted that a robust public option would lower private premiums and hold insurers accountable. “[If reform does not include a public option], we will be passing the ‘Private Insurance Profit Perpetuation Act,’” Pelosi said. “We have no intention of doing that…We want the private sector to thrive — we don’t want our members to go into an exchange where they only have one choice, where there’s sole sourcing. But that the public option provides that competition.”

I’m live Tweeting the Senate Finance Committee’s mark-up on @wonkroom.

Sen Max Baucus (D-MT) has just released a Chairman’s amendment to his mark. The new amendment enhances the bill’s affordability measures and increases the threshold on so-called Cadillac health care plans for ‘high-risk’ Americans. The modified amendment also preserves a subsidy to certain Medicare Advantage plans.

Baucus accepted 29 Republican amendments, including 10 from Sen. Olympia Snowe (R-ME), who has indicated that she is open to voting for the Senate Finance Committee bill. Baucus did not address any public option amendments and will likely consider Snowe’s trigger proposal during mark-up.

Below are the most significant revisions:

America’s Health Insurance Plans (AHIP) President and CEO Karen Ignagni has penned a letter to Senate Finance Committee Chairman Max Baucus (D-MT), applauding the senator for proposing reforms that combine “insurance market reforms with the responsibility of individuals to obtain coverage and financial assistance for low- and moderate-income families and individuals.”

Ignagni agrees with the overall tenor of of the package, but lays out several top-line concerns. These are summarized below:

- Insurers Oppose 35% Tax On ‘Cadillac Health Plans’: The industry has long argued that it would pass any new taxes to beneficiaries in the form of higher premiums. Ignagni argues that without adequate cost controls, a growing number of policies would be affected by the tax (which is indexed to inflation, and not health care costs) and some Americans could be priced out of the market. After meeting with Democrats who oppose the tax, Baucus has said that he would raise the threshold for expensive insurance plans that would be affected by a new tax. “Given this dynamic, raising the thresholds would only impact how quickly consumers would hit the cap,” Ignagni writes.

- ‘Government Created’ Cooperatives = ‘Slower March Toward A Government-Run Plan’: Ignagni argues that cooperatives will retain certain competitive advantages. The cooperative would receive start-up funds “it would not have to be repaid” and “the government would continue to act as a “player and referee” with the Secretary of HHS serving as Chair of the “advisory board.” However, despite insurers’ concerns of increased competition the bill’s ‘network of cooperatives‘ would be unable to compete in today’s concentrated health insurance markets. As the CBO has concluded, “the proposed co-ops had very little effect on the estimates of total enrollment in the exchanges or federal costs because, as they are described in the specifications, they seem unlikely to establish a significant market presence in many areas of the country or to noticeably affect federal subsidy payments.”

- Benefit Flexibility To Allow Insurers To Design Policies That Attract Healthier Enrollees: “This means that benefit packages should give consumers flexible options to meet diverse needs and be aligned with the level of premium subsidies provided by Congress, and that the coverage requirement needs to avoid creating incentives for healthy people to forego the purchase of coverage,” Ignagni writes. The letter also expresses concerns about the new national benefit standards.

In other words, insurers want to design packages that attract healthier applicants and deter “enrollment by those in poorer health.” “For example, insurers could offer a benefits design that omits or severely limits services needed by people with serious medical conditions, while offering richer benefits in other areas such as vision care or health-club memberships.” Well-defined standard benefit packages could preclude the industry from slowly moving everyone into high deductible policies.

- Retain Government Subsidy For Plans In Medicare Advantage: The Baucus bill would eliminate the 13% overpayment to private insurance plans that provide Medicare-like benefits at a higher rate, without improving quality. Under the bill, private insurers would have to submit to a competitive bidding process. “We have strong concerns about the proposed funding cuts in Medicare Advantage,” Ignagni wrote.

Ignagni expressed support for establishing a Medicare Commission (which would oversee Medicare spending) and system-wide payment reform.

While marking-up the Kennedy health care bill, Republicans on the Health, Pensions, Education and Labor Committee (HELP) introduced at least seven amendments designed to lower subsidies for Americans who purchase coverage through the Exchange. Now Republicans on the Senate Finance Committee are pushing the same agenda, asking Chairman Max Baucus (D-MT) to accept at least 27 separate amendments to reduce the Committee’s far less generous affordability measures.

Premiums under Sen. Max Baucus’ health plan would be five times as large “as under the HELP bil” yet Republicans want to finance the repeal of health industry taxes, incentives for states to cap non-economic malpractice awards and expanded Health Savings Accounts, by slashing subsidies:

According to an analysis of the Baucus bill by the Center on Budget and Policy Priorities, families of three earning anywhere between $54,930 per year (300% FPL) and $73,240 per year ($400% FPL) would have to spend 13% of income on health care premiums or somewhere in the range of $7,141 – $9,521 per year. (Comparatively, families in this range would spend $4,339 – $9,155 under the HELP bill).

For more analysis of the Baucus amendments, click HERE. The full list of affordability amendments is available after the jump: Read more