Our guest blogger is Rep. John Conyers (D-MI), Chairman of the House Judiciary Committee and sponsor of HR 676 (“Medicare for All”).

In his speech last month, President Obama explained that his ideal health care reform plan would include a cap on out of pocket costs because “in the United States of America, no one should go broke because they get sick.” A recent study has found that health care costs contributed to 62 percent of bankruptcies in 2007 – despite the fact that three quarters of bankruptcy filers owned health insurance. The President’s call to action could not be more timely.

To its credit, Congress has taken strong steps to address this issue. In addition to providing subsidies to low-income Americans and mandating that insurance companies cover a certain percentage of a consumer’s total health care costs, both the House and Senate’s reform bills include provisions that would cap family out-of-pocket costs. Once this cap is exceeded, the health insurer would be required to pick up the tab for any remaining health care expenses.

The three versions of the House’s bill, H.R. 3200, would cap yearly in-network out-of -pocket costs at $5,000 for an individual and $10,000 for a family. Similarly, both bills currently being considered in the Senate would cap these costs at $5,950 for an individual and $11,900 for a family. While these caps are considerably better than the status quo –many employer-provided plans lack any sort of cap on out-of-pocket costs – they will likely leave many Americans vulnerable. In particular, working class families with incomes just high enough to disqualify them for subsidies would be at heightened risk to accumulate huge medical expenses.

For example, a high school teacher making approximately 500 percent of the Federal Poverty Level (FPL), or $54,150, would not qualify for subsidies and could pay up to 10 percent of his or her income on out-of-pocket costs if the House’s cap is adopted. The situation is similarly problematic for a family of three making 400 percent of FPL, or $73,240. Such a family could pay up to 14 percent of its income on out-of-pocket costs.

So what would an effective out-of-pocket cap look like? Earlier this summer, Center for American Progress Senior Fellow Elizabeth Edwards noted in testimony before my own House Judiciary Committee that “even moderate levels of out-of-pocket spending relative to family income…created medical bill problems.” A study from the Center for Studying Health Systems Change found that financial pressures on families from medical bills increased sharply when out-of-pocket spending for health care services exceeded just 2.5 percent of family income. These statements and studies seem to reaffirm what most of us have known all along: that in these difficult economic times, asking cash-strapped Americans to pay thousands of dollars in out-of-pocket costs is simply not an option.

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Emma Sandoe, a Health Care Researcher at the Center for American Progress Action Fund, contributed to this post.

Today, after nine months of negotiations and more than 80 hours of mark-up, the Senate Finance Committee reported its health care bill out of committee by a vote of 14-9. Sen. Olympia Snowe (R-ME) broke ranks with her Republican colleagues and voted in favor of the bill, telling the committee that “when history calls, history calls. And I happen to think that the consequences of inaction dictate the urgency of Congress to take every available opportunity to demonstrate its capacity to solve the monumental issues of our time.”

A committee will now merge the Senate Finance bill with the more progressive HELP bill. The latter contains a public option, better affordability standards, and a stronger employer mandate. Once voted on, Senate bill will then be merged with the House bill. Below is a comparison of all three bills:

The GOP’s rejection of a bipartisan health care bill that actually reduces the deficit should empower Majority Leader Reid to secure a progressive bill that retains Snowe’s support. After all, Repubicans have indicated that they will not support the proposal. In a statement released today, Republican Majority leader Mitch McConnell (R-KY) asserted this is not real reform. “The fact is, this proposal will never come before the Senate.”

Snowe may support an opt out public option, increased affordability credits, exchanges with negotiating power, the CLASS act, improvements employer coverage and fixes in tax treatment for coverage for older individuals. Snowe’s vote in gives key Republican moderates the cover of “bipartisanship” to vote for the bill on the floor. Some potential moderates potentially supporting the bill after it has been merged include Snowe’s Maine colleague Susan Collins (R-ME) and George Voinavhich (R-OH).

In fact, insurance industry study may help deliver an even better bill. Throughout the hearing, Democratic members used the study to substantiate the need for a public plan. John Kerry (D-MA) noted, “It’s a powerful argument, frankly, for why we ought to have a public plan and it’s a powerful argument for the attitude of an industry towards this effort.” Charles Schumer (D-NY) called the inclusion of the public option “more likely.” With increased competition and potentially lower costs, the public plan would drive down prices across the insurance industry.

Sen. Olympia Snowe (R-ME) has announced that she will vote the Baucus health care bill out of the Senate Finance Committee, making her the only Republican to support any health reform measure. Snowe explained that she had “reservations” about the Baucus bill and stressed that her vote would help the reform process move forward.

So is this bill all that I want? Far from it. Is it all that it can be? No. But when history calls, history calls. And I happen to think that the consequences of inaction dictate the urgency of Congress to take every available opportunity to demonstrate its capacity to solve the monumental issues of our time…There are many, many miles to go in this legislative journey….That is why my vote to report this bill out of committee represents. It is to continue working the process. I do it with reservations because I share my Republican colleagues’ trepidations about what will transpire on the Senate floor, what will emerge in House and Senate conference and how indeed the Finance Committee’s bill will be merged with the HELP bill.

Watch it:

Some have speculated that the recent insurance industry report encouraged Snowe to vote in favor of reform. The insurance industry attacked Snowe’s amendments to lower the penalties for Americans who don’t meet the requirements of the individual mandate and the senator harshly condemned the industry’s conclusions. “It wasn’t based on any valid assumptions,” she said. Under the legislation, the maximum penalty for a family that does not purchase coverage “would start at $200 in 2014 and rise to $800 in 2017“; people who have to pay more than 8 percent of their adjusted gross income for the cheapest available insurance plan “would not be required to purchase it.”

Snowe’s status as the only Republican to support health care reform will likely bolster her position at the bargaining table; Democrats will have to maintain Snowe’s vote as reform moves froward. Snowe will now be part of the discussions that merge the Finance bill with the HELP bill and conference. Before announcing her vote, Snowe registered her opposition to some Medicare cuts, insisted that the CBO score the final legislative language before the Senate votes on the bill, and argued that the final bill should be posted online so that Americans can review the final legislation.

Snowe preserved her leverage by stressing that her vote in committee does not guarantee that she will vote for the final bill. “I say, my vote today is my vote today. It does not forecast what my vote will be tomorrow.”

Over the weekend, America’s Health Insurance Plans (AHIP)– the lobbying arm of the health insurance industry — issued an inflammatory report warning Congress that the Baucus health care bill would increase health care costs. But critics have argued that the report is a skewed analysis that doesn’t consider the totality of reform.

As the Senate Finance Committee points out, the industry backed analysis “has not taken many of the reform provisions into consideration in reaching its numbers.” “These other reform provisions would have the opposite effect and lead to lower premiums – but those provisions were ignored,” the Committee wrote in a memo criticizing the report.

The text of the actual report legitimizes this criticism. From page 8:

The reform packages under consideration have other provisions that we have not included in this analysis. We have not estimated the impact of the new subsidies on the net insurance cost to households. Also, if other provisions in health care reform are successful in lowering costs over the long term, those improvements would offset some of the impacts we have estimated.

Last night, PricewaterhouseCoopers — the firm hired to perform the analysis — issued a statement reiterating the report’s limitations. PricewaterhouseCoopers reprinted the report’s page 8 language, leading POLITICO’s Chris Frates to interpret the statement as “Hey, we weren’t paid to evaluate the effects of the entire bill, but rather a small slice of it.”

Indeed, a more comprehensive analysis performed by MIT economist Jonathan Gruber modeled on available data from the Congressional Budget Office concludes that if one considers “delivery system reforms, new options, premium assistance, and other proposals to improve quality,” the Senate Finance bill does lower costs:

- Sizeable premium savings for young. An individual aged 25 at $19,000 in income (175% of poverty) would benefit from tax credits and would save, on average, $685. A higher income young person could always buy a “bronze” plan without tax credits for a savings of $230.

- Even larger premium savings for older individuals. A person age 60 with income at $19,000 (175% of poverty) would save, on average, $7890. A person at age 60 with income at $40,600 (375% of poverty) would continue to benefit from tax credits and would save, on average, $4100.

- Also large premium savings for a family. A family with income at $38,000 (175% of poverty) would save, on average, $8550. That same family with higher income could buy a “bronze” plan without tax credits at a savings of $2430 over current non-group prices.

As Gruber explained during an appearance on MSNBC, “I think the point that the premiums will go up, if penalties aren’t higher is exactly right. But that’s not what this report says”:

If the report had came out and said, ‘look we need stronger penalties, or premiums will go up,’ that’s a very valid point to make. But what the report says, is that it went too far. It said with the current structure, premiums will be much higher than they are today. And that’s just wrong. I mean, the non-partisan Congressional Budget Office has came out and said that for this bill, premiums in the exchange will be lower than they are in the none group market today. So they just drew the wrong comparison.

Read Gruber’s full report here.