This afternoon, Sen. John McCain (R-AZ) introduced the first Republican amendment to the Senate’s health care reform bill. The so-called ‘motion to commit’ would send the legislation back to the Senate Finance Committee and instruct that committee to remove the $491 billion in proposed reductions from Medicare and Medicaid programs:

Madam President, simply put, this motion to commit would be a requirement that we eliminate the half a trillion dollars in Medicare cuts that is envisioned by this bill. A half a trillion dollars in cuts that are unspecified as to how and a half a trillion dollars in cuts that would directly impact the health care of citizens in this country…All of these are cuts in the obligations that we have assumed and are the rightful benefits that people have earned… I will eagerly look forward to hearing from the authors of this legislation as to how they can possibly achieve a half a trillion dollars in cuts without impacting existing Medicare programs negatively and eventually lead to rationing of health care in this country. That is what this motion is all about. This motion is to eliminate those unwarranted cuts.

Watch it:

McCain was for far more drastic Medicare cuts before he was against them. In October 2008, the McCain campaign announced that the Senator would pay for his health plan “with major reductions to Medicare and Medicaid…in a move that independent analysts estimate could result in cuts of $1.3 trillion over 10 years to the government programs.” Those cuts would have reduced Medicare and Medicaid spending by as much as 20% over 10 years and cut into benefits.

In 1997, McCain (along with many Democrats) voted for a series of Medicare cuts as part of the Balanced Budget Act of 1997. That act decreased Medicare spending by 12.7% over 10 years and instituted the kind of payment updates that the Senate bill is now recommending. In 1995, moreover, Republicans sought to cut 14% from projected Medicare spending over seven years and force millions of elderly recipients into managed health care programs or HMOs. As Speaker of the House Newt Gingrich admitted, “We don’t want to get rid of it in round one because we don’t think it’s politically smart,” he said. “But we believe that it’s going to wither on the vine because we think [seniors] are going to leave it voluntarily.”

While Republicans wanted to strip funding from Medicare to ultimately kill the program, Democrats are finding cost savings to extend the solvency of the Medicare trust fund and expand the number of seniors eligible for assistance with premiums and co-pays.

A new report from the Congressional Budget Office (CBO) has found that the overwhelming majority of Americans will pay lower premiums if the Senate’s health care legislation were to become law. The analysis — commissioned by key Democratic moderate Sen. Evan Bayh (D-IN) — analyzes the bill’s effects on premiums in 2016 and undermines almost every argument put forth by Democratic moderates and Republican critics of health care reform.

Instead of the outcomes critics have argued would result from health care reform (increased premiums, government-takeover of private coverage), the CBO report states that the new insurance regulations would generate administrative savings, the exchanges would give small businesses the advantages of large risk pools and the public option would lead to lower premiums for Americans with private coverage.

According to the budget office, under the Senate legislation, the overwhelming majority would on average pay the same or less for health care coverage. For people purchasing coverage in the none-group market, premiums savings are attached to more generous benefits than policies available today:

The report also concluded that the small business tax credit would further reduce premiums by 8%-11% for people who will receive the additional subsidy (approximately 12% of people in the small market). Small businesses that purchase coverage through the exchanges, will purchase plans with “lower administrative costs, on average, than the policies those firms would buy under current law.” The new market rules that prohibit insurers from rescinding coverage or denying coverage based on pre-existing conditions will also generate administrative savings, the report found.

Moreover, the additional competition within the exchanges would reduce average premiums “by encouraging consumers to enroll in lower-cost plans and by encouraging plans to keep their premiums low in order to attract enrollees.” The public option will lower premiums by injecting competition into the market place and covering sicker enrollees at a lower cost. While public option premiums could be slightly higher than premiums in private plans, the CBO found that average private premiums would be even higher if the people enrolled in the public plan enrolled in private plans.

The report found that the new taxes on the health industry would only slightly increase premiums and any cost-shifting from the Medicaid expansion “would be minimal.” “The fact that private insurers pay providers higher rates, on average than Medicare and Medicaid is not evidence that cost shifting occurs,” the budget office concluded.

Finally, the CBO estimates that the excise tax on high-cost plans would only effect 19% of employer-based policies in 2016. “On net, CBO and JCT estimate that the excise tax and the resulting behavioral changes [most employers would offer cheaper coverage]…would reduce average premiums among the 19 percent of policies affected by the tax by about 9 percent to 12 percent in 2016.”

This afternoon at around 2 or 3pm, Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) will kick off the Senate’s long-awaited health care reform debate with dueling opening speeches and one amendment from each side. Even if lawmakers do not take a day off until Christmas, the Senate will have just 25 days to pass a bill before year’s end, an ambitious goal, considering that Reid has yet to secure the support of moderates Sens. Mary Landrieu (D-LA), Ben Nelson (D-NE), Blanche Lincoln (D-AR), Evan Bayh (D-IN) and Joe Lieberman (I-CT).

Republicans who have publicly stated that they want to kill the bill, will still offer myriad amendments to “improve” it. “We would like to start over,” Senator Jon Kyl (R-AZ) said on “Fox News Sunday.” “There’s no way to fix this bill.” But “fix” it they shall, or at least try to. Any amendment will require 60 votes, and the GOP’s so-called message amendments or ‘poison pills’ on immigration or abortion could both stall debate and force Democrats to cast a series of votes to weaken the bill. Sen. Tom Coburn (R-OK), “perhaps the most prolific amendment writer in the Senate,” “has hundreds of amendment ideas and is looking forward to a full and open debate,” his spokesperson said.

The Senate is expected to debate the bill for 3-4 weeks, after which Reid hopes to attract 60 votes to end debate and ultimately vote to pass the bill before the Christmas vacation. If he succeeds, a conference committee made up of members from the Senate and the House will then reconcile the differences between the House and Senate bills and produce a final report that each chamber will have to approve without amendments early next year. The President could then sign reform legislation before or shortly after the State of the Union.

Here is a guide for what to expect:

PUBLIC OPTION:

Current Language:
- The legislation establishes a national public health insurance plan and gives states the option to pass a law and opt-out by 2014.

Possible Amendments:
- Sen. Tom Carper’s (D-DE) proposal to trigger a national board that will sell insurance in states where private plans don’t offer affordable options. Sen. Chuck Schumer (D-NY) may offer a similar compromise that satisfies moderate Democrats opposed to the public plan.

- Sen. Olympia Snowe’s (R-ME) proposal to trigger a public option in each state where private plans don’t offer affordable options.

- Sen. Jay Rockefeller (D-WV) will likely offer an amendment to strengthen the public plan by allowing it to reimburse providers at Medicare-like rates and giving it access to the Medicare provider network.

- A Democrat may offer a provision that would trigger a robust public option that uses Medicare-like reimbursement rates if national health expenditures increase too rapidly.

- Republicans will likely offer a series of amendments to take the public option out of the health care bill.

Challenges:
- Lieberman, Lincoln, and Nelson have promised to vote against the final health care bill if it includes a public plan, while several Democratic Senators (like Sen. Jay Rockefeller) consider the public option essential to reform. The House Progressive Caucus has also promised to veto any bill that does not include a public option. Reid will have to craft a compromise that pleases both camps and could resolve the issue in a last minute manager’s amendment.

ABORTION:

Current Language:
- Federal dollars can only be used to pay for abortions when the pregnancy threatens the life of the mother or results from rape or incest; private premiums must be used to pay for any other type of abortion, including those for health reasons. Each plan in Exchange will decide whether to cover additional abortion services and at least one plan in each market must offer abortion services and one plan must not. In the public option, the Secretary can cover abortion only if the procedure is financed with private funds.

Possible Amendments:
- Sen. Orrin Hatch (R-UT) is expected to offer an amendment to insert tough abortion restrictions in the bill. During the HELP Committee’s mark-up Hatch offered an amendment 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.

- Other Republicans may offer similar amendments, in an effort to insert Stupak-like language into the Senate bill.

Challenges:
- While the United Conference of Catholic Bishops is still looking for a Senator to introduce Stupak-like abortion language into the Senate bill, Democrats seem convinced that Republicans don’t have 60 votes to change the current abortion compromise. Pro-life Sen. Bob Casey (D-PA), who has suggested that he is satisfied with the existing abortion language, will be pressured to vote for tougher abortion restrictions and is expected to introduce amendments to prevent unwanted pregnancies.

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A new report from the Urban Institute argues that a “strong” public option triggered in the event that overall growth in national health spending exceeds a pre-determined target, may do more to control health care spending than the public option proposals offered in existing legislation:

In the absence of enough political support to pass a strong public option at this time, a “trigger” for a strong public option should be considered for inclusion in health reform legislation whether or not a weak public option is included as a political compromise. Even the threat of such a plan being triggered offers the potential to affect market dynamics between insurers and providers.

The report says that the Senate and House’s public option provisions (which require the public plan to independently negotiate rates with providers) would have little hope of lowering costs in areas of the country with high provider concentration. In areas where hospitals have “too strong a market presence to be excluded from insurer networks,” hospitals could dictate prices, stripping the public plan of its ability to negotiate cheaper rates, the report warns. According to a 2006 study, 86% “of large metropolitan areas were considered to have highly concentrated hospital markets.”

Policy makers can overcome the political challenges of enacting strong public option — one which compels Medicare providers to participate and establishes Medicare-like reimbursement rates — by placing the plan behind a trigger mechanism which “would allow private insurers the opportunity to show that they can provide affordable coverage under the new health reform rules.”

The report recognizes that “many proponents of a strong public option oppose a compromise relying on triggers because they believe that triggers would never be pulled” and suggests that structuring the trigger around overall growth in national health spending — rather than affordability — would make it more likely that a public plan would be established in the absence of meaningful cost containment.

“Opponents of a public option could argue to override the trigger by claiming that factors other than health plans’ inability to manage spending caused the lack of affordability,” the report warns. A “triggering event tied to affordability” could subject the public option “to the same controversy as now, with opponents arguing that other policies should be adopted instead of a public option and increasing the likelihood of congressional pre-emption of the trigger.”

To avoid these pitfalls, policy makers should consider basing the trigger on “overall growth in national health spending.” “An advantage of using growth in national health expenditures (NHE) is that the data are regularly and consistently reported and are directly related to the purpose of a public option—to create competition with private insurers to reduce health spending growth,” the report notes.

Canadian comedian Mary Walsh (playing the character of Marg Delahunty) attended a Sarah Palin book signing in the Midwest and asked the “thriller from Wasilla, the Alaskan Aphrodite” if she had “any words of encouragement for the Canadian conservatives who have worked so hard to try to diminish that kind of socialized medicine we have up there.” “Keep the faith and that common-sense conservatism, it needs to be plugged into Canadian policies too. Keep the faith!,” Palin called out to Walsh as four security guards pushed her out of the store.

After the event, Walsh staked out Palin in the loading dock of the Borders bookstore “close to where Palin’s bus was parked.” Palin came over and energetically encouraged Walsh to “keep the faith” and suggested that Canada needs to reform its health care system to “let the private sector take over“:

WALSH: Ms. Palin, I tried to ask you a question inside, but I didn’t hear your answer! The Canadians! Ms. Palin!

PALIN: Well, my answer was too keep the faith. My answer was to keep the faith. Cause that common sense conservatism can be plugged-in there in Canada too. In fact Canada needs to reform its health care system and let the private sector take over some of what the government has absorbed. So thank you, keep the faith.

Watch it:

In Canada, “the private sector” is already “a crucial part” of the Canadian health care system. The federal government finances the basic health care plan, (through a “Medicaid-like arrangement in which Canada’s 10 provinces and 2 territories jointly fund” the system), but care is independently organized and managed by each province or territory. Canadians spend billions on private supplemental coverage and physicians work in private practices. Everyone has access to care and patients “can see any doctor they want anywhere in the country with no copays or deductibles.”

While the system has longer waiting periods for certain elective surgeries, research suggests that Canadians do enjoy better access to care and “superior” health outcomes compared to Americans. According to a Commonwealth Fund of deaths that could have been prevented “with access to quality medical care in the leading 19 industrialized countries,” the United States ranked last and Canada came in sixth.

This morning, former Bush adviser Karl Rove pulled out a Russert-esque white board to argue that premiums would increase under health care reform in the individual market. Rove relied on a series of Congressional Budget Office (CBO) numbers and claimed that tax increases, the cost shift from Medicaid expansion and insurance reforms could raise premiums by $4,000:

Four studies by outside groups have found the likelihood of higher premiums, but they are just estimates. The most solid numbers have come out of the CBO, but even then, it was only a partial state. Outside groups estimated that insurance premiums would increase by 20% to 50% under the bill over what they would otherwise be, and the CBO report, which looked at the three bottom insurance programs, found that in 2016, without reform, those policies would cost an average of $11,000. With reforms, they would cost $15,000 or an increase of roughly $4,000.

Watch it:

Rove’s reasoning is as pernicious as his math. In its September 22nd letter to the Senate Finance Committee the CBO does project that premiums in the none group market would cost approximately $6,000 for individuals and $11,000 for families, but it also demonstrates that health premiums would be cheaper for a majority of families. Here is how:

1. Overwhelming majority of Americas will pay less than $11,000: Under the House and Senate bills, an individual who does not qualify for subsidies would pay between $5,200 and $5,300 in premiums for a health policy from an exchange (saving up to $800). Premiums for family policies would cost between $14,100 and $15,000, but over two-thirds of exchange enrolless would qualify for subsidies and would spend less than $11,000 on their premiums. In fact, MIT economist Jonathan Gruber extrapolated the CBO data to argue families could actually see savings “ranging from almost $8500 for low income families to almost $1,400 for higher incomes.”

2. More value for the premium dollar: Ultimately, it’s misleading to compare a policy in the exchange with a plan in the individual market. Policies sold in the existing market offer less benefits and even fewer consumer protections. Without reform, older Americans or anyone with a pre-existing condition would not be able to find coverage in the individual market — much less afford it. In its September 22nd letter, the CBO writes that under reform, Americans would receive more value for the premium dollar (plans sold in the exchanges would have higher actuarial values).

All of this is explained in the CBO reports, but omitted in Rove’s white board arithmetic. Rove also misrepresents the so-called “cost-shift” between public and private payers and ignores reform’s the payment increases for both Medicare and Medicaid providers.

Over at TPMDC, Brian Beutler takes apart the Republican argument that the mischievous Democrats fooled the non-partisan Congressional Budget Office (CBO) into thinking that the cost of the Senate bill is $848 billion over 10 years, when the real figure — GOP staffers discovered — is $2.5 trillion:

It appears as if the number comes from a press release from Budget Committee ranking member Judd Gregg (R-NH), written the morning after the CBO released its analysis, which reads “American taxpayers are about to see an unprecedented expansion of the federal government that will cost a staggering $2.5 trillion when fully implemented.”

On Saturday, Republicans repeated the figure over and over while debating the motion to proceed:

Moving the start date of the exchanges and most other benefit-heavy policies to 2014 helps bank more money for reform (and meet the President’s $900B limit), but the bill doesn’t exactly hoard away billions to pay for benefits. According to the CBO, between 2013 and 2015, the government takes in $54 billion, but pays out $12 billion to insure Americans who are denied coverage in the individual market and gives tax credits to small businesses that choose to offer health insurance coverage. Over that time period, the bill collects taxes from the health care industry — cuts the industry has already generally agreed to — and banks $42 billion for implementing reform and expanding the system to accommodate 31 million newly-insured Americans.

The government spends more on health care in the first 10 years but during the decade following the 10-year budget window, “the increases and decreases in the federal budgetary commitment to health care stemming for this legislation would roughly balance out, so that there would be no significant change in the commitment.” As Beutler points out, “the critique elides the fact that, whatever the federal responsibility for health care becomes as a result of this bill, it’s projected to dramatically reduce the deficit in both the near and long term.” And that’s something Republicans didn’t care for until the Democrats introduced legislation taking on the health insurance industry.

Yesterday, Rep. Debbie Wasserman Schultz (D-FL), a breast cancer survivor, accused Republicans of politicizing breast cancer. This afternoon, Sen. John Barrasso (R-WY) — a doctor who runs a private orthopedic practice and serves as Chief of Staff of the Wyoming Medical Center — proved her point. Barrasso called Fox News to register his opposition to the Senate health care bill and argue that the new mammogram guidelines would have pulled the plug on his wife:

And we just saw this past week the first step in rationing of health care in the country with this panel that they have, this preventive panel. A government panel that says women between 40 and 50 shouldn’t have mammograms. You know, my wife Bobbi is a breast cancer survivor. She was diagnosed by a mammogram, went for an operation, the cancer had already spread. The mammogram has saved her life, but yet this preventive panel that the bill says, this health care bill says, ‘oh no, they’re the ones who get to decide what preventive measures are paid for or not.’ That panel would have not allowed her to have this care.

Watch it:

Given Barrasso’s medical background and personal experience with breast cancer, his claim is especially irresponsible. It’s also completely inaccurate. The U.S. Preventive Services Task Force is an independent panel of experts first convened by the U.S. Public Health Service during the administration of President Ronald Reagan. The panel “is financed by the Department of Health and Human Services but works at arms length from it, making its decisions without consulting the agency.” Panelists are prohibited from “considering costs when they make guidelines.”

Rather than mandating “what preventive measures are paid for or not,” the task force issues recommendations that help doctors decide on a course of treatment. Providers can use the recommendations as a starting point to examine a patient’s particular needs, but the task force has no authority over coverage or treatment decisions.

Barrasso’s wife Bobbi Brown would have received a mammogram regardless of any recommendation. Wyoming, along with 48 other states, requires insurers to cover mammograms and if the Senate bill were to become law all insurers would be required to pay for the procedure.

Under the bill, health insurance issuers would offer “services that have in effect a rating of ‘A’ or ‘B’ in the current recommendations of the United States Preventive Services Task Force” without “any cost sharing requirements.” Last week’s guideline was rated ‘C,’ meaning that the panel “recommends against routinely providing the service” but stipulates that doctors should “offer or provide this service only if other considerations support the offering or providing the service in an individual patient.”

Ultimately, the Panel’s recommendations are just guidelines, not mandates. They have no authority to “decide what preventive measures are paid for or not.”

Over the weekend, the Congressional Budget Office (CBO) released new estimates for how much a typical four-person family will spend on health care under the new merged Senate legislation. Below, I’ve compared the House bill with the Senate alternative and threw in the old Senate Finance Committee (SFC) numbers to show how Majority Leader Harry Reid (D-NV) improved the affordability measures for middle class Americans.

The chart below indicates what percentage of income a family of four purchasing coverage within the new health insurance exchanges can expect to spend in 2016 on a health care plan with an actuarial value of 70% (in 2016 dollars):

Meanwhile, MIT Professor Jonathan Gruber ‘s new analysis relies on available CBO data to compare the cost of coverage within the Senate bill’s exchanges to the cost of an individual policy in the non-group market absent reform.

Even though the plan purchased under the Senate legislation would have an actuarial value of 70% — 10 percentage points higher than the policy sold in the individual market absent reform — a family would pay less for reform’s more substantial coverage than they would for a plan that offers less benefits and even fewer consumer protections in the unreformed individual market. Moreover, “the same plan that cost $6,000 without reform would cost $4,460 with reform, or 25% less,” Gruber concludes:

Analysis of the non-partisan information from the CBO suggests that for those facing purchase in the non-group market, the Senate bill will deliver savings ranging from $500 for singles to $1400 for families – even without subsidies. The savings are much larger for lower income populations that receive premium credits. This is in addition to the higher quality benefits that those in the exchange will receive, with actuarial values for low income populations well above what is typical in the non-group market today.

Correction: the original post incorrectly assumed that the CBO calculated premiums in 2009 dollars. The numbers for 2016 are actually calculated in 2016 dollars.

During an appearance on This Week with George Stephanopoulos, Rep. Debbie Wasserman Schultz (D-FL), a breast cancer survivor, strongly criticized Republicans for suggesting that the new mammogram guidelines released by the Preventive Task Force last week would restrict access to cancer diagnosis. “What’s unfortunate is that, the Republicans and Ms. Blackburn, have for the first time politicized breast cancer,” she said.

In the exchange below, Rep. Marsha Blackburn (R-TN) repeatedly misquoted the House health care bill to suggest that the Task Force’s guidelines would become law:

BLACKBURN: The guidelines that came out this week, by the Preventive Services Task Force, have a direct link to what would be offered if the House and the Senate bills were to go into law…if you go to page 1296 of the House bill, the engrossed copy…They become the law. They become the law. The mandate…. When you look at what’s going to happen with these 118 new bureaucracies on what insurances can be offered, and what’s going to be paid, you know that this is the bureaucrat in the exam room. This is how it’s going to happen. This is the first step.

Watch it:

In reality, the U.S. Preventive Services Task Force is an independent panel of experts in primary care and prevention. The panel offers evidence-based guidelines and issues recommendations on a scale of A to D (and even I) for providers to consider when treating patients. Grades A and B indicate that “there is high certainty that the net benefit is substantial” and suggest that providers “offer or provide this service.” Grade C “recommends against routinely providing the service” but stipulates that doctors should “offer or provide this service only if other considerations support the offering or providing the service in an individual patient.” Generally, all of these guidelines are a single piece of scientific data that could help guide physicians in treating individual patients. They are not binding.

The House and Senate health care bills only include “services recommended with a grade of A or B by the Task Force on Clinical Preventive Services” in standard benefit packages, but even these guidelines could be expanded by the Secretary of Health and Human Services. Last week’s mammogram guideline would not be included in the packages. It received a ‘C’ rating from the Task Force.

Ultimately, as Congresswoman Wasserman-Schultz points out, Republicans are manipulating the Task Force decision to scare women into opposing a health reform package that expands access to screenings. The legislation requires insurance companies to cover mammograms and other cancer screenings at no additional cost, ends unfair insurer price discrimination against women and guarantees that all health insurers provide women with the health care services they need.

This morning on Fox News Sunday, host Chris Wallace selectively quoted the Congressional Budget Office analysis of the merged Senate legislation to suggest that the Senate health legislation would increase government outlays on health care over 20 years and bend the cost-cure upward:

WALLACE: According to the nonpartisan Congressional Budget Office, federal outlays for health care would increase during the 2010-2019 period and the government run health insurance plan would typically have premiums that were somewhat higher than the average premiums for the private plan. So here’s the question. The Democratic plan by the CBO’s own scoring fails to bend the famous health care cost curve at all over the course of these 10 years, and could you name a single Congress that has ever cut Medicare by half a trillion dollars as this legislation would?

Watch it:

As Sen. Arlen Specter (D-PA) pointed out, the $848 billion bill “would save $130 billion in the first 10 years and projected to have $650 billion saved in the second 10 years.” Page 16 of the CBO report does predict that “federal outlays for health care would increase during the 2010-2019 period,” but the last paragraph of that same page also notes that “during the decade following the 10-year budget window, the increases and decreases in the federal budgetary commitment to health care stemming for this legislation would roughly balance out, so that there would be no significant change in the commitment.”

As a result, the federal government would be spending less on health care in the decades following the initial 10-year window, despite the expansion in coverage:

Wallace’s claim that the bill “fails to bend the famous health care cost curve” is also inaccurate. The legislation establishes an Independent Medicare Advisory Board (IMAB)– which is required to “recommend changes to the Medicare program to limit the rate of growth in that program’s spending” — and places a 40% excise tax on insurers that offer expensive policies. While the budget office did not analyze the effect of the legislation on national health expenditures, the CBO is predicting that spending per Medicare beneficiary would decrease, as compared to the growth rate of the past two decades (from 8% growth rate to 6% growth rate).

As for the public option, the CBO did conclude that the plan could attract sicker enrolles and charge slightly higher premiums, but it would still reduce average premiums “and hence federal subsidies for premiums.” “That’s because average premiums would be even higher if the people enrolled in the public plan enrolled in private plans.” In fact, the CBO has concluded that the Senate’s public option would save the government $3 billion over 10 years.

Finally, Congress did pass a series of Medicare cuts as part of the Balanced Budget Act of 1997 that were actually deeper than anything being considered today. That act decreased Medicare spending by 12.7% over 10 years and instituted the kind of payment updates that the Senate bill is now recommending. The Senate health care bill would cut Medicare by some 5-6% over 10 years. Specter voted for that bill, with many of his then Republican colleagues.

This afternoon, Sen. Blanche Lincoln (D-AK) announced that she would vote for cloture on the motion to proceed but promised — at least 3 different times — to filibuster reform if it includes a public option. “I’m prepared to vote against moving to the next stage of consideration as long as a government-run public option is included,” she said. But Lincoln hasn’t always opposed a public plan. In July, Lincoln wrote in the Arkansas Democrat-Gazette: “Individuals should be able to choose from a range of quality health insurance plans. Options should include private plans as well as a quality, affordable public plan or non-profit plan that can accomplish the same goals as those of a public plan.”

In fact, that language is still up on her Senate website:

By September 1, Lincoln changed her mind. “I would not support a solely government-funded public option,” Lincoln said at an event in Little Rock. “We can’t afford that.” This afternoon, Lincoln expressed concern that the option could ignore the letter of the law and charge premiums that would not cover the cost of the program. (H/T Jon Walker)

NOTE: We are live-tweeting the Senate vote for cloture on the motion to proceed at @wonkroom.

In a dramatic and long winded speech on the floor of the Senate, Sen. Blanche Lincoln (D-AR) announced today that she would provide the 60th vote “in support of cloture on the motion to proceed” to the health care reform bill. But Lincoln also stressed that she is “opposed to a new government administered health care plan as a part of health care reform and will not vote on the health care proposal introduced by leader Reid as it is written”:

I’ve already alerted the leader, and I’m promising my colleagues, that I’m prepared to vote against moving to the next stage of consideration as long as a government-run public option is included. The public option as a part of health insurance reform has attracted far more attention than it deserves. While cost projections show that it may reduce costs somewhat, those projections don’t take into account who pays if it fails to live up to expectations. If in fact premiums don’t cover the cost of the public plan, it is taxpayers in this country who are faced with the burden of bailing it out.

Watch a compilation:

The Senate bill requires that “the premiums for the public plan be set to fully fund expenditures for medical claims, administrative costs, and a contingency reserve” and instructs the Secretary of Health and Human Services to negotiate reimbursement rates with physicians. The Senate’s public option would save the government $3 billion over 10 years, the Congressional Budget Office has concluded.

Lincoln, who supported giving Americans the choice of enrolling in a public option as recently as July, is arguing that the option could ignore the letter of the law and charge premiums that would not cover the cost of the program. Her skepticism may be well-founded, but it’s also short-sighted and inconsistent. She is doubting the integrity of the public option, while tacitly assuming that private insurers — who have a long-standing practice of exploiting loopholes in the law and skimming on coverage for beneficiaries to increase profits — will follow the new benefit and rate regulations. Lincoln supports ‘building on the current system’ and regulating private insurers without questioning their commitment to “live up to expectations.”

Ultimately, if she’s is worried that the language of the health care bill won’t be properly implemented, she should encourage the Senate to establish a federal oversight mechanism that could force private health insurance companies and the public plan to abide by the new rules of reform. As it stands now, her objection to the public plan sounds rather manufactured and hypocritical.

NOTE: We are live-tweeting the Senate vote for cloture on the motion to proceed at @wonkroom.

This afternoon, Sen. Mary Landrieu (D-LA) took to the Senate floor to announce that she would vote on a motion to proceed with the Patient Protection and Affordable Care Act. Landrieu is the 59th Senator to commit to voting to open debate on the floor. Senate Majority Leader Harry Ried (D-NV) would still have to secure the support of Sen. Blanche Lincoln (D-AK) to begin considering the legislation.

In her remarks, Landrieu stressed that she was concerned about the bill’s costs to small businesses and individuals, the possible premiums spikes families could face in the time between when the bill passes and its reforms are implemented, and reiterated her opposition to a public health insurance option:

My vote today to move forward on this important debate should in no way be construed by the supporters of this current framework as an indication of how I might vote as this debate comes to an end. It is a vote to move forward to continue the good, and essential, and important and imperative work that is underway….We must enhance and expand tax credits that are in this bill that are for small businesses, particularly those of 25 and less and if we can expand it between 25 and 50, that would be a great help…I will continue to fight for more tax equity for the 27 million Americans who are currently self employed…in order to really deliver on our promise to lower costs for families focus on ways for premiums to be excessively raised between the time this bill is enacted and the time these provisions go into affect … I remain concerned that the current version of the public option included in this bill could shift significant risk to tax payers over time, unnecessarily…I’ve suggested that a free-standing community option…

Watch a compilation:

Landrieu also directly responded to “some very partisan Republican bloggers” who suggested that she agreed to support the bill only after Reid included “an extra $100 million in federal aid for low-income people in her state. “The Louisiana money is intended to adjust the percentage of federal payments to the state for Medicaid to avert a scheduled cut in U.S. assistance in 2011 for the program, which provides medical care for the poor. Louisiana had a bump in per capita income from the post-Katrina construction boom, which would force the decline in federal aid.”

Landrieu explained that following the hurricane, “some of those one-time recovery dollars were calculated into our per-capita income” and inflated the state’s income. As a result, the state is scheduled to receive less matching fund for the Medicaid program. “It is the number one request of my Governor, who is a Republican and it is unanimously supported by every member of our delegation, Democrat and Republican. I’ m proud to have asked for it. I’m proud to have fought for it, and I will continue to,” she said.

Senate Majority Leader Harry Reid (D-NV) has agreed to include a watered-down version of Sen. Ron Wyden’s (D-OR) ‘Choices Amendment’ in the merged Senate bill. Wyden, an ubiquitous presence on cable television, has been hawking his idea of instantly opening up the insurance exchanges to Americans in employer-sponsored coverage for months. He introduced the amendment in the Senate Finance Committee just hours before it ended its marathon mark-up session, but withdrew it for later consideration.

Under this compromise, a small sliver of the population — individuals and families under 400% of the federal poverty line who receive employer-sponsored coverage and spend 8-9.8% of their income on premiums — could “convert their tax-free employer health subsidies into vouchers that they can use to choose a health insurance plan in the new health insurance exchanges.” Currently, individuals in employer-based coverage who have to spend more than 9.8% of the incomes on premiums aren’t required to purchase health insurance and don’t quality for affordability credits if they enter an Exchange:

“As I have long said, empowering Americans to choose the health insurance that works best for them and their family is the single best way to hold health insurance companies accountable,” Wyden said in a statement. “While this is just one step in the direction of guaranteeing choices for all Americans, it is a major step because – for the first time – it introduces the concept of individual choice to a marketplace where it has long been foreign. This is a significant step toward real reform.”

The theory of instantly “empowering Americans to choose the health insurance that works best for them” is sweeter than the reality. The merged senate bill establishes a time line that more or less allows everyone to choose a plan from an exchange by 2017. In this way, the legislation builds on the current structure but also sows the seeds for an eventual transition to a more ‘individualistic’ system — or what Wyden calls “real” reform.

This ‘time release’ approach — to borrow a pharmaceutical term — is intentional. Opening the exchanges only to small businesses, individuals and the self-insured for a limited period preserves the employer contribution in the health care system and allows the exchanges to build a capacity for covering more people over time. It helps the Exchanges find their footing without being overrun by millions and millions of new applicants from the employer market. Care continuity is also better preserved.

In short, the existing legislation accomplishes the main goals of Wyden amendment on a more realistic timetable. Wyden was concerned that it didn’t have his name stamped all over it. Now it does.

Over at FiredogLake, Jon Walker points out that the merged merged Senate bill would “create two exchanges per state. There would be an exchange for individuals and a “Small Business Health Options Program” know as the SHOP exchange for businesses.” “This is, pure and simple, a dumb idea,” he writes. “The more customers using one exchange the larger the risk pool and the better the bargaining power.”

It’s unclear why the Senate separates the individual and small business markets rather than follow the Massachusetts model of combining the two markets. Under the Senate bill, insurers would pool risk for all policies in the individual market (inside and outside of the exchange) and all small business policies (inside and outside of the exchange) but couldn’t combine the risk unless the state voluntarily merges the two markets.

As Sarah Lueck explains, allowing multiple exchanges to participate in the same geographic area would increase administrative costs and “diminish the ability of an exchange to improve efficiency by creating a well-functioning marketplace”:

If there were multiple exchanges in the same area, the exchanges would have to spend money on marketing and advertising in order to attract customers….Also, permitting multiple exchanges in a single area would require a vastly more complex risk-adjustment system. Risk adjustment provides higher payments to insurers enrolling higher-cost beneficiaries, while lowering payments to plans enrolling healthier individuals with lower-than-average costs. In areas with multiple exchanges, the risk-adjustment mechanism would have to compensate for risk differentials across the various exchanges, as well as among the insurers within each exchange. This would make it more difficult to risk-adjust accurately.

One possible reason for the separation, a source suggests, is the reluctance of some insurers operating in the small group market to expand their options to individuals. The may not want to change their business model or cover a potentially sicker crop of newly insured individuals.

The so-called SHOP-exchanges have also been promoted by the National Federation of Independent Businesses (NFIB) and championed in the Senate by Sens. Dick Durbin (D-IL), Blanche Lincoln (D-AK) and Sen. Olympia Snowe (R-ME). But why they’re still necessary in the broader context of health reform is somewhat of a mystery.

SHOP may not make policy sense, but it may help win the support of a few moderate lawmakers.

Cosmetic surgeons and some conservative lawmakers are mischaracterizing that the new 5% “botox tax” on cosmetic surgeries and procedures in the merged Senate health reform bill. The tax, which would raise an estimated $5 billion over the next decade to help fund health reform, is narrowly tailored towards voluntary cosmetic procedures. But some critics, like long-time contrarian Sen. Tom Coburn (R-OK), are suggesting that the reform bill would also tax more serious operations, like breast reconstruction surgery following cancer:

Just yesterday — the day before yesterday, U.S. preventive task forces, services, recommended because it’s not cost effective that women under 50 not get mammograms unless they have risk factors. Well, you tell that to the thousands of women who were diagnosed with breast cancer lat last — last year under 50 with a mammogram. You tell them it’s not cost effective. Also in this bill is a 5% tax on the breast reconstruction surgery after they had a mastectomy. They’re going to tax having your breast rebuilt after your breast is taken off because it is elective plastic surgery. It is elective cosmetic surgery. We’re going to have a tax on it because we’ve taxed elective cosmetic surgery. We’re in trouble as a nation because we’ve taken our eye off the ball.

Coburn may be one of only two doctors serving in the Senate, but he’s no more knowledgeable about what constitutes ‘elective cosmetic surgery’ under reform legislation, than the average layman. Section 9017 of the merged Senate bill relies on the IRS definition of ‘cosmetic surgery,’ which defines the procedure as “any procedure which is directed at improving the patient’s appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease.”

The Senate bill doesn’t tax all cosmetic operations. Surgeries to “ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or disfiguring disease” are excluded from taxation.

Under that standard, surgery performed to reconstruct a woman’s breast after cancer — a disfiguring disease — would not be taxed:

The tax is intended to discourage consumers from undergoing unnecessary surgeries or procedures. As much as one-third of nation’s health care expenditures are spent on procedures that don’t improve health outcomes. Capturing some of that spending and re-investing it into health care reform would help to slow the growing rate of health care spending, finance reform, and ultimately reduce costs for everyone. In short, the tax would help fill the wrinkles in America’s broken health care system.

The Senate Finance Committee’s health care reform bill and the House legislation require insurance issuers to meet certain basic benefit standards, but grandfather all existing insurance plans for a period of 5 years (the House bill only applies this restriction to current employment-based health plans) . If insurers do not comply with the new federal requirements after the 5-year grace period, they would no longer be able to offer health care coverage.

The merged Senate bill takes a different approach. Section 1251 eliminates the 5-year period and allows enrollees to remain in their insurance plans for as long as the coverage remains available:

By 2017, most Americans will have the option of purchasing comprehensive insurance coverage within the Exchange and would theoretically abandon plans that offer sub-prime benefits and high-deductibles. Insurers that want to minimize their administrative overhead and standardize their plans, may also modify all existing policies to meet the new federal guidelines.

Under the Senate bill, individuals under 30 years of age or those who are exempt from the individual mandate, could still chose to enroll in a catastrophic plan that covers essential health benefits.

The Congressional Budget Office analysis of the recently released Senate health bill has concluded that compared to the Senate Finance Committee’s bill, the merged legislation makes a stronger contribution towards deficit reduction even though it includes (among other things): 1) more affordability credits for middle class families and a public option, 2) a strong individual requirement to purchase coverage, 3) and a lower threshold for the excise tax on so-called Cadillac health plans. An increase in the payroll tax for individuals/families earning $200,000/$250,000 makes up for the loss in revenue from the excise tax, while the later implementation date (the bill moves the start dates for the individual mandate, exchanges, and employer penalties from July 1, 2013 to January 1, 2014) helps increase the deficit savings in the merged legislation.

Despite these changes, the merged bill still lowers health care spending over the long term. The legislation establishes an Independent Medicare Advisory Board (IMAB)– which is required to “recommend changes to the Medicare program to limit the rate of growth in that program’s spending” — and places a 40% excise tax on insurers that offer expensive policies. While the budget office did not analyze the affect of the legislation on national health expenditures, the CBO is predicting that spending per Medicare beneficiary would decrease, as compared to the growth rate of the past two decades (from 8% growth rate to 6% growth rate). As a result, the federal government would be spending less on health care in the decades following the initial 10-year window, despite the expansion in coverage.

Below is an examination of how the merged Senate bill evolved from the Senate Finance Committee’s proposal:

Here is how the merged Senate bill compares to the legislation passed in the House. The merged Senate legislation has lower affordability standards, covers less people, invests less in prevention, does not require all large employers to provide health insurance, and includes a weaker public option. But the bill goes further in controlling health care spending and reducing the deficit:

Moments ago, Senate Majority Leader Harry Reid (D-NV) released the merged Senate health care bill. According to preliminary CBO analysis, the Senate bill costs $849 billion over 10 years and reduces the deficit by $127 billion over 10 years. The legislation could further reduce the deficit by up to $650 billion cut over the following decade, the budget office says.

The bill –which includes a national public health insurance plan with the option for states to pass a law and opt-out — reduces the uninsured by 31 million Americans and covers 98% of Americans by 2019.

The bill increases the threshold for the so-called Cadillac tax, raises the payroll tax by 0.5% on individuals who earn more than $200,000 and families earning more than $250,000 a year, and cuts waste from Medicare. The payroll tax increase would only apply to employees (not employers) and generate $54 billion.

The bill maintains the Senate Finance Committee’s immigration language and preserves much of the more moderate Capps-abortion compromise. Federal dollars can only be used to pay for abortions when the pregnancy threatens the life of the mother or results from rape or incest; private premiums must be used to pay for any other type of abortion, including those for health reasons. Each plan in Exchange will decide whether to cover additional abortion services and at least one plan in each market must offer abortion services and one plan must not. In the public option, the Secretary can cover abortion only if the procedure is financed with private funds.

Since the Exchanges don’t open open until 2014, the bill offers immediate insurance reforms for Americans purchasing coverage in the individual market. Insurers will no longer be allowed to rescind coverage or impose life-time or annual limits and will be required to meet a medical-loss ratio of 85 percent. Americans who are denied coverage because of a pre-existing condition would participate in a national high-risk pool program until the Exchanges are established. Young Americans can stay on their parents’ policies until they turn 26. Small businesses will receive a tax credit.

Below is a comparison of the relevant provisions in the House and Senate legislation: