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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