Lawmakers debate health 'public option'

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By Jennifer Haberkorn

The latest hurdle in crafting a health care reform bill is figuring out how to prevent employers and employees from leaving their traditional employer-based health care coverage in favor of a government plan, which would dramatically increase costs.

"That's the question -- what's fair?" said Sen. Max Baucus, chairman of the Senate Finance Committee, which held meetings with members again Wednesday. "That's not resolved yet."

One of the chief criticisms of the public option is that employers would dump their pricey health coverage if their employees would be able to easily get on the government plan. But that would break one of President Obama's chief pledges - that people who like their current health insurance program can keep it - and drive up the taxpayer tab.

To prevent that, employees may be banned from joining the government option if they have access to employer coverage or employers may face tax penalties if they don't offer coverage. The Senate Finance Committee debated much of this aspect of the bill Wednesday during its multiple meetings.

Mr. Obama, meanwhile, took his health care pitch to the states and the public Wednesday with a news conference with governors and a town hall discussion about health care on network television.

The House Democrats' bill, which was debated in hearings this week, would require employers to pay a penalty of 8 percent of payroll if they don't provide coverage. The U.S. Chamber of Commerce, the chief business lobby, has opposed the penalty and other costs that would burden business.

The Congressional Budget Office, in its report on a separate Senate bill out of the Health, Education, Labor and Pensions Committee, found that 15 million people would leave employer coverage if a public plan was established.

White House spokesman Robert Gibbs said Wednesday there have been questions to the White House about the number of so-called "free rider" employers.

"I don't know which specific bill has these firewalls in them, but in some of the pieces of legislation, there are mechanisms that prevent an individual from - prevent an employer from doing this and prevent an individual from - that already has insurance from declining their employer-based insurance in order to go onto a public option," he said.

He said health exchanges - the place were consumers can go to choose between the public option or private insurers - would be set up "to deal with those that either don't have access to a health insurance plan as part of their employer or have found that, on the individual market, it's far too complicated and far too expensive."

Employers also could face other costs if the proposal to cap the tax break on employer-provided benefits is included in a final bill.

Sen. Kent Conrad, North Dakota Democrat and member of the Finance Committee, told reporters that the committee plans to include the cap in the bill as one of the ways to reduce the total price of the bill from $1.6 trillion to $1.2 trillion, but he declined to identify the amount of the cap. A committee spokeswoman later said that the exclusion was not set in stone.

Mr. Conrad's plan for a co-op has gained momentum as negotiations continued, he said.

Republicans say they are open to the idea.

"We're working on more competition through what we call a co-op plan," said Sen. Charles E. Grassley, ranking Republican on the committee. "And this is something that we think we can get bipartisan support for. Where there's no bipartisan support for the public option as it came out of the White House or that it's in the health bill as an example, the [Health, Education, Labor and Pensions] Committee bill."

Other Republicans, such as Sen. Orrin G. Hatch of Utah, say they want to hear more about it first.