Healthcare Decision Coming Soon!

Democratic leaders are aiming to decide next week about their next move on health care, senior aides said Wednesday.

President Obama is expected to reiterate his call for a comprehensive overhaul in his State of the Union address Wednesday night. But House Speaker Nancy Pelosi (Calif.) and Senate Majority Leader Harry Reid (Nev.) still lack a game plan for moving forward, following the Democrats' surprise loss last week of a Massachusetts Senate seat, costing the party its filibuster-proof supermajority.

One problem the leaders can't seem to overcome is how to pay for whatever bill they are able to produce. Senate Democratic sources said Pelosi continues to protest the excise tax on high value insurance plans that the Senate would adopt to offset the cost of expaning coverage to the uninsured. Pelosi has urged Reid to drop the tax, or at least radically scale it back, leaving the bill with a revenue hole as large as $300 billion over 10 years. Many House Democrats oppose the excise tax because of its potential impact on union households.

Two options are on the table: pushing the Senate bill through the House, along with a companion bill of fixes; and starting from scratch with a smaller bill that includes only the most popular provisions. Reid and Pelosi are in the process of canvassing their caucuses to determine the best approach.

The Democratic leaders still believe they may be able to salvage their original effort, if at least 218 House Democrats agree to approve the Senate version of the bill. But for the House to go along, the Senate would first have to approve a special budget reconciliation bill to makes the changes House Democrats are demanding. This option is theoretically the quickest and surest route to final passage because in the Senate, reconciliation bills are protected from filibusters, meaning they require only a simple majority to pass.

The process would give House Democrats rock-solid assurance that health legislation would not take effect without the fixes they are demanding. But Senate Democratic aides estimate that about seven Democratic senators could oppose reconciliation, for fear of a political backlash.

Sen. Evan Bayh (D-Ind.) told reporters on Tuesday that voters simply do not believe that health care legislation would reduce the deficit and that pushing the package to final through reconciliation would be a fatal political error. "I think reconciliation would be very ill-advised," Bayh said.

Senate Budget Committee chairman Kent Conrad (D-N.D.), warned that Democrats could be forced to delay this year's budget process in order to accommodate reconciliation for health care, since last year's reconciliation instructions expire when a new budget resolution is adopted. Reconciliation remains fraught with other problems in the health care context, Conrad said. For example, any bill would have to cut the deficit by $1 billion over five years, but the changes the House wants to see would cut revenues and increase subsidies.

"I think the role of reconciliation would be quite limited in a health care context," Conrad said.

Other potential problems: Senators can offer unlimited amendments to a reconciliation measure, a recipe for a protracted floor debate. Some of the main flashpoints between the House and Senate bills involve issues like abortion and the design of a new insurance marketplace that may not pass muster with the Senate parliamentarian, who acts as referee during the process. All provisions must have a budgetary impact, and they cannot create new government programs.

Given the uncertainty, some Democratic lawmakers would prefer to focus their efforts on a narrower bill, possibly one that would gain Republican support. Senior Democrats listed some of the provisions that could be included: incentives for small business to offer health coverage; pilot programs that tackle Medicare inefficiencies; and an array of insurance reforms that would prevent egregious abuses and allow young adults to remain on their parents' policies.

The legislation also could include an aggressive Medicaid enrollment campaign that would capture the millions of low income individuals who are eligible for coverage under current law, but haven't signed up for it. That pool alone could include 8 million people, Democrats said.