http://www.marketwatch.com/story/house-readies-for-historic-health-care-vote-2009-11-07
The Democrats' bill would be financed by about $500 billion in cuts to Medicare and Medicaid, as well as new taxes on high-income earners. Employers and individuals who don't buy coverage would also be required to pay fines.
Paying for the legislation is a key difference between the House and Senate measures. While the House bill would tax families making more than $1 million a year, the Senate's would tax insurers offering high-value plans.
__________
For a copy of the House bill, see http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h3962ih.txt.pdf
For a summary of the Republican proposal, see http://gopleader.gov/UploadedFiles/Summary_of_Republican_Alternative_Health_Care_plan.pdf
Saturday, November 7, 2009
New round of bank closures to cost FDIC $1.5 billion
http://www.marketwatch.com/story/five-bank-closures-to-cost-fdic-fund-15-bln-2009-11-07
SAN FRANCISCO (MarketWatch) -- A California-based bank that focused on the Chinese-American market was the largest of five failures on Friday that cost U.S. taxpayers more than $1.5 billion.
United Commercial Bank of San Francisco, whose parent company was UCBH Holdings Inc. (UCBH 0.84, -0.02, -2.33%) , was shut down by federal banking regulators late Friday, along with four other banks. The shutdown of the five banks brings the number of bank failures for 2009 to 120.
The 63 U.S. branches of United Commercial were set to reopen Saturday under the ownership of Pasadena, Calif.-based East West Bancorp Inc. (EWBC 8.65, +0.27, +3.22%) . United Commercial, which specialized in serving the Chinese community throughout the U.S. and American companies doing business in China, had assets of $11.2 billion and deposits of $7.5 billion as of Oct. 23.
The seizure of the bank by regulators comes after it had already received $299 million in federal financial aid last year. Its closure will cost the insurance deposit fund $1.4 billion, said the Federal Deposit Insurance Corp.
The company had a banking license in China, a branch in Hong Kong and a subsidiary in Shanghai, and those will be assumed by East West Bancorp. The Hong Kong Monetary Authority said deposits at UCB Hong Kong will be fully covered, according a report on Saturday by the Xinhua news agency.
East West said in a statement that the United Commercial transaction will create the largest bank in the U.S. focusing on the Asian American community, and the second-largest independent bank based in California. East West operates 137 branches throughout the U.S. and China.
"This is a transformational event for both institutions and represents an exciting growth opportunity for East West," East West Chairman and Chief Executive Dominic Ng said in a statement.
The closures of United Security Bank of Sparta, Ga.; Home Federal Savings Bank of Detroit; Gateway Bank of St. Louis and Prosperan Bank of Oakdale, Minn., will cost the deposit insurance fund an estimated $132.7 million.
SAN FRANCISCO (MarketWatch) -- A California-based bank that focused on the Chinese-American market was the largest of five failures on Friday that cost U.S. taxpayers more than $1.5 billion.
United Commercial Bank of San Francisco, whose parent company was UCBH Holdings Inc. (UCBH 0.84, -0.02, -2.33%) , was shut down by federal banking regulators late Friday, along with four other banks. The shutdown of the five banks brings the number of bank failures for 2009 to 120.
The 63 U.S. branches of United Commercial were set to reopen Saturday under the ownership of Pasadena, Calif.-based East West Bancorp Inc. (EWBC 8.65, +0.27, +3.22%) . United Commercial, which specialized in serving the Chinese community throughout the U.S. and American companies doing business in China, had assets of $11.2 billion and deposits of $7.5 billion as of Oct. 23.
The seizure of the bank by regulators comes after it had already received $299 million in federal financial aid last year. Its closure will cost the insurance deposit fund $1.4 billion, said the Federal Deposit Insurance Corp.
The company had a banking license in China, a branch in Hong Kong and a subsidiary in Shanghai, and those will be assumed by East West Bancorp. The Hong Kong Monetary Authority said deposits at UCB Hong Kong will be fully covered, according a report on Saturday by the Xinhua news agency.
East West said in a statement that the United Commercial transaction will create the largest bank in the U.S. focusing on the Asian American community, and the second-largest independent bank based in California. East West operates 137 branches throughout the U.S. and China.
"This is a transformational event for both institutions and represents an exciting growth opportunity for East West," East West Chairman and Chief Executive Dominic Ng said in a statement.
The closures of United Security Bank of Sparta, Ga.; Home Federal Savings Bank of Detroit; Gateway Bank of St. Louis and Prosperan Bank of Oakdale, Minn., will cost the deposit insurance fund an estimated $132.7 million.
- United Security Bank had total assets of $157 million and total deposits of $150 million as of Sept. 14, according to the FDIC. Ameris Bank of Moultrie, Ga. agreed to assume United Security's deposits, and will pay the FDIC a premium of 0.36% of all the deposits.
- Home Federal Savings Bank as of Sept. 24 had total assets of $14.9 million and total deposits of $12.8 million. Liberty Bank and Trust Co. of New Orleans did not pay a premium to assume the deposits.
- Gateway Bank had total assets of $27.7 million and total deposits of $27.9 million as of Sept. 25. Central Bank of Kansas City didn't pay a premium for Gateway's deposits.
- Prosperan Bank had total assets of $199.5 million and total deposits of $175.6 million. Grand Forks, N.D.-based Alerus Financial will pay the FDIC a premium of 1.02% to assume all Prosperan's deposits and agreed to purchase $173.9 million of the failed bank's assets.
Thursday, November 5, 2009
Senate extends home buyer tax credit
http://www.examiner.com/x-12378-Consumer-News-Examiner~y2009m11d4-Update-Firsttime-home-buyer-tax-credit
November 4, 6:24 Consumer News Examiner Broderick Perkins
Rushing to escrow to take advantage of the waning federal first-time home buyer tax credit?
Relax.
If you miss the Nov. 30 deadline, you'll likely get a reprieve.
An extension and expansion of the popular tax credit is expected to give both new and move-up buyers a tax incentive to buy a home until at least April 30, 2010, longer for military personnel.
And it could come as early as this week.
An overwhelming 85 to 2 roll call vote in the U.S. Senate this week to cut off debate on the first-time home buyer tax credit measure and others pretty much seals the deal on legislation President Obama has already agreed to sign.
If passed into law, the new tax credit would extend the existing credit for first-time homebuyers, worth up to $8,000, and offer a new credit of up to $6,500 for some existing homeowners.
The reduced credit would be available to all homebuyers who have been in their current residence for a consecutive five-year period in the past eight years.
The new rule also raises the qualifying income limits to $125,000 for single taxpayers and $250,000 for joint taxpayers, from the current $75,000 and $150,000.
The maximum allowed home purchase price would be $800,000.
A home buyer must have a sale agreement in hand by April 30 and close escrow by June 30, 2010.
Military personnel, deployed overseas for a minimum of 90 days in 2008 or 2009, would have until April 30, 2011 to claim the tax credit.
That's all good news for the housing market.
The National Association of Realtors says as many as 400,000 resale transactions (1.2 million for both new and resale homes) were completed specifically because of the first-time home buyer tax credit, since it began, and that put a dent in the housing inventory.
Home sales also add property and sales tax revenues to the coffers of local governments as reduced inventory helps boost prices and home values.
Fortunately, the first-time home buyer tax credit's availability has coincided with mortgage rates often hanging below 5 percent, according to Jeff Howard, CEO of Erate.com.
As the Nov. 30 tax credit deadline neared, reports from the Commerce Department, revealed new home sales slipped 3.6 percent in September and were down 7.8 percent from September 2008.
Tax credit history
As part of the Housing and Economic Recovery Act of 2008, Congress first created a $7,500 first-time home buyer tax credit for those who purchased a home between April 8, 2008, and July 1, 2009.
Later, under the American Recovery and Reinvestment Act of 2009, Congress extended the credit and raised it to an$8,000 tax credit for those who purchased homes by the current Nov. 30, 2009 expiration date.
By October 9, 2009, more than 1.2 million tax returns had claimed about $8.5 billion in the refundable tax credit, for both new and resale homes - according to the Treasury Inspector General for Tax Administration (TIGTA).
A TIGTA audit also revealed last month that nearly 90,000 taxpayers -- including nearly 600 children -- may have fraudulently enjoyed the credit, hoodwinking the government out of more than $600 million.
The new legislation includes provisions to stifle fraud after the Internal Revenue Service identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit.
Cheating the IRS is a federal felony that comes with a fine of up to $250,000 and three years in a federal pen, or both.
To combat fraud, a HUD-1 Settlement Statement will have to be attached to the tax return to secure the credit.
November 4, 6:24 Consumer News Examiner Broderick Perkins
Rushing to escrow to take advantage of the waning federal first-time home buyer tax credit?
Relax.
If you miss the Nov. 30 deadline, you'll likely get a reprieve.
An extension and expansion of the popular tax credit is expected to give both new and move-up buyers a tax incentive to buy a home until at least April 30, 2010, longer for military personnel.
And it could come as early as this week.
An overwhelming 85 to 2 roll call vote in the U.S. Senate this week to cut off debate on the first-time home buyer tax credit measure and others pretty much seals the deal on legislation President Obama has already agreed to sign.
If passed into law, the new tax credit would extend the existing credit for first-time homebuyers, worth up to $8,000, and offer a new credit of up to $6,500 for some existing homeowners.
The reduced credit would be available to all homebuyers who have been in their current residence for a consecutive five-year period in the past eight years.
The new rule also raises the qualifying income limits to $125,000 for single taxpayers and $250,000 for joint taxpayers, from the current $75,000 and $150,000.
The maximum allowed home purchase price would be $800,000.
A home buyer must have a sale agreement in hand by April 30 and close escrow by June 30, 2010.
Military personnel, deployed overseas for a minimum of 90 days in 2008 or 2009, would have until April 30, 2011 to claim the tax credit.
That's all good news for the housing market.
The National Association of Realtors says as many as 400,000 resale transactions (1.2 million for both new and resale homes) were completed specifically because of the first-time home buyer tax credit, since it began, and that put a dent in the housing inventory.
Home sales also add property and sales tax revenues to the coffers of local governments as reduced inventory helps boost prices and home values.
Fortunately, the first-time home buyer tax credit's availability has coincided with mortgage rates often hanging below 5 percent, according to Jeff Howard, CEO of Erate.com.
As the Nov. 30 tax credit deadline neared, reports from the Commerce Department, revealed new home sales slipped 3.6 percent in September and were down 7.8 percent from September 2008.
Tax credit history
As part of the Housing and Economic Recovery Act of 2008, Congress first created a $7,500 first-time home buyer tax credit for those who purchased a home between April 8, 2008, and July 1, 2009.
Later, under the American Recovery and Reinvestment Act of 2009, Congress extended the credit and raised it to an$8,000 tax credit for those who purchased homes by the current Nov. 30, 2009 expiration date.
By October 9, 2009, more than 1.2 million tax returns had claimed about $8.5 billion in the refundable tax credit, for both new and resale homes - according to the Treasury Inspector General for Tax Administration (TIGTA).
A TIGTA audit also revealed last month that nearly 90,000 taxpayers -- including nearly 600 children -- may have fraudulently enjoyed the credit, hoodwinking the government out of more than $600 million.
The new legislation includes provisions to stifle fraud after the Internal Revenue Service identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit.
Cheating the IRS is a federal felony that comes with a fine of up to $250,000 and three years in a federal pen, or both.
To combat fraud, a HUD-1 Settlement Statement will have to be attached to the tax return to secure the credit.
Wednesday, November 4, 2009
IRS Issues Guidance on Minimum Distribution Waiver
http://www.webcpa.com/news/IRS-Issues-Guidance-Minimum-Distribution-Waiver-52346-1.html
Congress decided last year to waive required minimum distributions from retirement savings plans for 2009, but there is still some confusion about how to apply the waiver.
The Worker, Retiree, and Employer Recovery Act of 2008 waived the required minimum distributions for 2009 from defined-contribution plans such as 401(k) and 403(b) plans, as well as IRAs (see Congress Kills Minimum Distributions for 2009). The legislation came in response to the financial crisis, which severely reduced the savings of many retirees.
Notice 2009-82 provides two sample plan amendments that sponsors of individually designed or pre-approved plans may adopt or use to amend their plans to either cease making 2009 RMDs unless a participant or beneficiary elects otherwise, or continue making 2009 RMDs unless a participant or beneficiary elects otherwise.
The IRS has granted transitional relief for plans for the period Jan. 1, 2009, to Nov. 30, 2009; therefore, if a plan’s operation conflicts with the adopted sample amendment during this period, the IRS will not consider it an operational failure.
Individuals may roll over any amount they receive from a DC plan or an IRA that, in 2009, would have been an RMD for 2009 but for WRERA, if it meets the definition of an eligible rollover distribution. For plan participants and IRA owners who have already received their 2009 RMDs, but the 60-day rollover period has expired, the IRS has extended the rollover period for these distributions until Nov. 30, 2009. However, because of the special one-rollover-per-year rule for IRAs, which was not changed by WRERA, an IRA owner may be able to make only one rollover if their 2009 RMDs were paid in installments.
Congress decided last year to waive required minimum distributions from retirement savings plans for 2009, but there is still some confusion about how to apply the waiver.
The Worker, Retiree, and Employer Recovery Act of 2008 waived the required minimum distributions for 2009 from defined-contribution plans such as 401(k) and 403(b) plans, as well as IRAs (see Congress Kills Minimum Distributions for 2009). The legislation came in response to the financial crisis, which severely reduced the savings of many retirees.
Notice 2009-82 provides two sample plan amendments that sponsors of individually designed or pre-approved plans may adopt or use to amend their plans to either cease making 2009 RMDs unless a participant or beneficiary elects otherwise, or continue making 2009 RMDs unless a participant or beneficiary elects otherwise.
The IRS has granted transitional relief for plans for the period Jan. 1, 2009, to Nov. 30, 2009; therefore, if a plan’s operation conflicts with the adopted sample amendment during this period, the IRS will not consider it an operational failure.
Individuals may roll over any amount they receive from a DC plan or an IRA that, in 2009, would have been an RMD for 2009 but for WRERA, if it meets the definition of an eligible rollover distribution. For plan participants and IRA owners who have already received their 2009 RMDs, but the 60-day rollover period has expired, the IRS has extended the rollover period for these distributions until Nov. 30, 2009. However, because of the special one-rollover-per-year rule for IRAs, which was not changed by WRERA, an IRA owner may be able to make only one rollover if their 2009 RMDs were paid in installments.
Healthcare provision seeks to embrace prayer treatments
http://www.latimes.com/features/health/la-na-health-religion3-2009nov03,0,2239900.story
A little-noticed measure would put Christian Science healing sessions on the same footing as clinical medicine. Critics say it violates the separation of church and state.
By Tom Hamburger and Kim Geiger
November 3, 2009
Reporting from Washington - Backed by some of the most powerful members of the Senate, a little-noticed provision in the healthcare overhaul bill would require insurers to consider covering Christian Science prayer treatments as medical expenses.
The provision was inserted by Sen. Orrin G. Hatch (R-Utah) with the support of Democratic Sens. John F. Kerry and the late Edward M. Kennedy, both of Massachusetts, home to the headquarters of the Church of Christ, Scientist.
The measure would put Christian Science prayer treatments -- which substitute for or supplement medical treatments -- on the same footing as clinical medicine. While not mentioning the church by name, it would prohibit discrimination against "religious and spiritual healthcare."
It would have a minor effect on the overall cost of the bill -- Christian Science is a small church, and the prayer treatments can cost as little as $20 a day. But it has nevertheless stirred an intense controversy over the constitutional separation of church and state, and the possibility that other churches might seek reimbursements for so-called spiritual healing.
Phil Davis, a senior Christian Science Church official, said prayer treatment was an effective alternative to conventional healthcare.
"We are making the case for this, believing there is a connection between healthcare and spirituality," said Davis, who distributed 11,000 letters last week to Senate officials urging support for the measure.
"We think this is an important aspect of the solution, when you are talking about not only keeping the cost down, but finding effective healthcare," he said.
The provision would apply only to insurance policies offered on a proposed exchange where consumers could shop for plans that meet standards set by the government.
But critics say the measure could have a broader effect, conferring new status and medical legitimacy on practices that lie outside the realm of science.
Annie Laurie Gaylor, co-president of the Freedom From Religion Foundation, a group of atheists and agnostics that promotes separation of church and state, said the opportunity to receive payment for spiritual care could encourage other groups to seek similar status.
"This would be an absolute invitation to organize," Gaylor said.
The Christian Science Church, which was founded in Boston in 1879, has pushed throughout its history to secure official recognition for its paid prayer practitioners. Their job, as outlined by the church's founder, Mary Baker Eddy, was to pray for healing and charge for treatment at rates similar to those of medical doctors.
In the early 20th century, the church sought recognition from state regulators so the practitioners would not be prosecuted for practicing medicine without a license. Criminal courts have convicted Christian Scientists in cases where children have died after visiting prayer healers instead of receiving conventional medical care. The church says no such incidents have occurred for two decades.
About 90 years ago, private insurance companies began paying for Christian Science prayer treatments, but more recently, managed-care insurers declined reimbursements, insisting on paying for care that produced proven medical results.
The Internal Revenue Service allows the cost of the prayer sessions to be counted among itemized medical expenses for income tax purposes -- one of the only religious treatments explicitly identified as deductible by the IRS. Some federal medical insurance programs, including those for military families, also reimburse for prayer treatment.
The spiritual healing provision was introduced in the House by Rep. John Shimkus (R-Ill.), whose district includes a Christian Science school, Principia College.
Two committees in the House voted to include the measure in their versions of the overhaul, but Speaker Nancy Pelosi (D-San Francisco) stripped it from the consolidated House bill last week after a few members argued it was unconstitutional.
Erwin Chemerinsky, dean of the UC Irvine School of Law, said the provision raised serious questions about government support of religion.
"I think when Congress mandates that health companies provide coverage for prayer, it has the effect of the government advancing religion," he said.
The legal issue, however, may not be cut and dried.
A little-noticed measure would put Christian Science healing sessions on the same footing as clinical medicine. Critics say it violates the separation of church and state.
By Tom Hamburger and Kim Geiger
November 3, 2009
Reporting from Washington - Backed by some of the most powerful members of the Senate, a little-noticed provision in the healthcare overhaul bill would require insurers to consider covering Christian Science prayer treatments as medical expenses.
The provision was inserted by Sen. Orrin G. Hatch (R-Utah) with the support of Democratic Sens. John F. Kerry and the late Edward M. Kennedy, both of Massachusetts, home to the headquarters of the Church of Christ, Scientist.
The measure would put Christian Science prayer treatments -- which substitute for or supplement medical treatments -- on the same footing as clinical medicine. While not mentioning the church by name, it would prohibit discrimination against "religious and spiritual healthcare."
It would have a minor effect on the overall cost of the bill -- Christian Science is a small church, and the prayer treatments can cost as little as $20 a day. But it has nevertheless stirred an intense controversy over the constitutional separation of church and state, and the possibility that other churches might seek reimbursements for so-called spiritual healing.
Phil Davis, a senior Christian Science Church official, said prayer treatment was an effective alternative to conventional healthcare.
"We are making the case for this, believing there is a connection between healthcare and spirituality," said Davis, who distributed 11,000 letters last week to Senate officials urging support for the measure.
"We think this is an important aspect of the solution, when you are talking about not only keeping the cost down, but finding effective healthcare," he said.
The provision would apply only to insurance policies offered on a proposed exchange where consumers could shop for plans that meet standards set by the government.
But critics say the measure could have a broader effect, conferring new status and medical legitimacy on practices that lie outside the realm of science.
Annie Laurie Gaylor, co-president of the Freedom From Religion Foundation, a group of atheists and agnostics that promotes separation of church and state, said the opportunity to receive payment for spiritual care could encourage other groups to seek similar status.
"This would be an absolute invitation to organize," Gaylor said.
The Christian Science Church, which was founded in Boston in 1879, has pushed throughout its history to secure official recognition for its paid prayer practitioners. Their job, as outlined by the church's founder, Mary Baker Eddy, was to pray for healing and charge for treatment at rates similar to those of medical doctors.
In the early 20th century, the church sought recognition from state regulators so the practitioners would not be prosecuted for practicing medicine without a license. Criminal courts have convicted Christian Scientists in cases where children have died after visiting prayer healers instead of receiving conventional medical care. The church says no such incidents have occurred for two decades.
About 90 years ago, private insurance companies began paying for Christian Science prayer treatments, but more recently, managed-care insurers declined reimbursements, insisting on paying for care that produced proven medical results.
The Internal Revenue Service allows the cost of the prayer sessions to be counted among itemized medical expenses for income tax purposes -- one of the only religious treatments explicitly identified as deductible by the IRS. Some federal medical insurance programs, including those for military families, also reimburse for prayer treatment.
The spiritual healing provision was introduced in the House by Rep. John Shimkus (R-Ill.), whose district includes a Christian Science school, Principia College.
Two committees in the House voted to include the measure in their versions of the overhaul, but Speaker Nancy Pelosi (D-San Francisco) stripped it from the consolidated House bill last week after a few members argued it was unconstitutional.
Erwin Chemerinsky, dean of the UC Irvine School of Law, said the provision raised serious questions about government support of religion.
"I think when Congress mandates that health companies provide coverage for prayer, it has the effect of the government advancing religion," he said.
The legal issue, however, may not be cut and dried.
Tuesday, November 3, 2009
Two-Thirds of Individual Taxpayers Now E-file
http://www.webcpa.com/news/Two-Thirds-Individual-Taxpayers-Now-E-file-52278-1.html
By WebCPA Staff
Electronic tax filing set a new record this year, with 95 million individual federal income tax returns e-filed, up nearly 6 percent from last year’s total of nearly 90 million.
Approximately two out of three taxpayers filed electronically this year, said the IRS. Out of the 141 million returns filed so far this year, over 67 percent were e-filed, compared to 59 percent last year.
Each year, more taxpayers choose to e-file their tax returns. While the total number of tax returns has increased 10 percent during the past decade, the number filed electronically has increased by 168 percent.
Taxpayers who file electronically from a home computer continue to be an increasingly significant segment of those who e-file, the IRS noted. This year, for the first time, more than a third of e-filers filed their returns themselves from a home computer, accounting for approximately 34 percent of all e-filed returns from individuals. More than 32 million returns were e-filed from home computers, up almost 20 percent from last year’s record of 27 million.
Nearly 73 million refunds were electronically deposited into taxpayer accounts this year. These taxpayers received their refunds at least a week sooner than those receiving a paper check.
Direct deposit refunds accounted for 66 percent of all refunds, up from 62 percent of refunds last year. Overall, the IRS issued 110 million refunds, averaging $2,753 per refund; direct deposit refunds averaged $2,997 per refund.
More than 3 million taxpayers filed their tax returns for free through the IRS Free File program. This year, for the first time, taxpayers could also file directly to the IRS by completing a Form 1040 on IRS.gov; 273,000 taxpayers used this new way to file.
By WebCPA Staff
Electronic tax filing set a new record this year, with 95 million individual federal income tax returns e-filed, up nearly 6 percent from last year’s total of nearly 90 million.
Approximately two out of three taxpayers filed electronically this year, said the IRS. Out of the 141 million returns filed so far this year, over 67 percent were e-filed, compared to 59 percent last year.
Each year, more taxpayers choose to e-file their tax returns. While the total number of tax returns has increased 10 percent during the past decade, the number filed electronically has increased by 168 percent.
Taxpayers who file electronically from a home computer continue to be an increasingly significant segment of those who e-file, the IRS noted. This year, for the first time, more than a third of e-filers filed their returns themselves from a home computer, accounting for approximately 34 percent of all e-filed returns from individuals. More than 32 million returns were e-filed from home computers, up almost 20 percent from last year’s record of 27 million.
Nearly 73 million refunds were electronically deposited into taxpayer accounts this year. These taxpayers received their refunds at least a week sooner than those receiving a paper check.
Direct deposit refunds accounted for 66 percent of all refunds, up from 62 percent of refunds last year. Overall, the IRS issued 110 million refunds, averaging $2,753 per refund; direct deposit refunds averaged $2,997 per refund.
More than 3 million taxpayers filed their tax returns for free through the IRS Free File program. This year, for the first time, taxpayers could also file directly to the IRS by completing a Form 1040 on IRS.gov; 273,000 taxpayers used this new way to file.
Sunday, November 1, 2009
CBO Rebuts Pros, Cons of Public Option
http://online.wsj.com/article/SB125694764832619997.html
OCTOBER 31, 2009
By JANET ADAMY
A report issued by the nonpartisan Congressional Budget Office highlights faults with both sides of the argument to create a public health-insurance plan.
The CBO said only six million Americans would enroll in the public plan proposed in the 1,990-page health bill unveiled by House Democrats, according to findings issued late Thursday. That undercuts foes' claims that such a plan would lead to a government takeover of the health-care system.
One reason, according to CBO director Douglas Elmendorf's report: the public plan "would typically have premiums that are somewhat higher than the average premiums for the private plans" offered alongside it. That suggests the House bill could fall short of one of its major goals -- lowering insurance costs -- and presents those who back a public plan with a fresh challenge.
Under the House bill, the new public plan would negotiate rates it pays hospitals, doctors and other health-care providers. It would be available starting in 2013, alongside private insurance sold through new government-run insurance exchanges.
The CBO projects that 30 million people would get their insurance from the exchanges by 2019, but only six million of those would choose the public plan.
The House bill says the public plan would be designed so that the premiums paid by participants would cover the plan's benefits and administrative costs. In other words, it is supposed to be self-sustaining rather than rely on annual government subsidies, although the government would provide as much as $2 billion of start-up funding.
For its first few years, the plan would be available only to people who buy insurance without the help of an employer, or businesses with as many as 100 employees. Later, it would be open to larger employers. In the Senate, Democrats plan to include a public plan in their health bill, though they are structuring it more narrowly so fewer people could participate and states would have the right to opt out.
The House's public plan would save money by having lower administrative costs than private plans, according to the CBO's findings. But several other factors would drive up its costs, the report said.
The plan would attract less healthy enrollees, and would probably engage in less effective management of what the CBO calls "utilization," or how much treatment customers get. The payment rates the government negotiates with health-care providers would, on average, be comparable to those paid by private insurers, eliminating a cost-saving advantage many Democrats aimed to give the plan. The CBO says its findings aren't conclusive.
Supporters of the public plan said it was a pessimistic conclusion that left out important factors. Insurance prices vary widely by state. So while the public plan may be more expensive for consumers in some states, they said, it could be a cheaper option for those in states where private insurers charge disproportionately higher premiums.
"I think you can make a case -- a credible case -- that a public option is going to be at least as interested in reducing costs as any other private health plans," said Len Nichols, director of the health-policy program for the New America Foundation, a left-leaning Washington think tank.
Mr. Nichols predicts that private insurers, fearing they will have to absorb sicker patients through the insurance exchanges, will demand higher prices in the first year of the program.
New payment models in the bill would give the government an incentive to manage care more efficiently. And, Mr. Nichols said, the government won't have to spend as much on advertising as private insurers since "the country's going to be talking about the public option."
It also is possible that the government would drive a tougher bargain with doctors and hospitals than the CBO predicts, which would allow the public plan to offer lower premiums. That would give consumers a powerful incentive to abandon private insurance for the public plan. This is a scenario Republicans warn about when they say that a public plan threatens to drive private insurers out of business.
The bill says payments couldn't be lower than those of certain other government health programs, though it doesn't spell out the details.
"We're concerned that the floor becomes the ceiling," said Rich Umbdenstock, chief executive of the American Hospital Association. "It looks like these are going to be based in part on Medicare rates, and that concerns us."
Write to Janet Adamy at janet.adamy@wsj.com
__________
Here is an excerpt from Washington Post:
http://www.washingtonpost.com/wp-dyn/content/article/2009/10/30/AR2009103002904.html
There are still concerns from moderates over the (House) bill's cost - $1.055 trillion over 10 years - and long-term spending implications, and disputes to be resolved on how to block federal funding of abortions and prevent illegal immigrants from getting taxpayer-funded care.
House liberals fear what will happen to their bill's version of the government-run plan when time comes to merge it with whatever the Senate passes.
Sen. Harry Reid, D-Nev., said earlier this week that the Senate bill would have a new federal insurance plan with negotiated payment rates. Unlike the House bill, though, states could opt out of the plan. It's not clear the proposal commands enough votes in the Senate to survive, and it could be replaced by a standby system pushed by moderates that would not go into effect until it was clear individual states were experiencing a lack of competition among private companies.
OCTOBER 31, 2009
By JANET ADAMY
A report issued by the nonpartisan Congressional Budget Office highlights faults with both sides of the argument to create a public health-insurance plan.
The CBO said only six million Americans would enroll in the public plan proposed in the 1,990-page health bill unveiled by House Democrats, according to findings issued late Thursday. That undercuts foes' claims that such a plan would lead to a government takeover of the health-care system.
One reason, according to CBO director Douglas Elmendorf's report: the public plan "would typically have premiums that are somewhat higher than the average premiums for the private plans" offered alongside it. That suggests the House bill could fall short of one of its major goals -- lowering insurance costs -- and presents those who back a public plan with a fresh challenge.
Under the House bill, the new public plan would negotiate rates it pays hospitals, doctors and other health-care providers. It would be available starting in 2013, alongside private insurance sold through new government-run insurance exchanges.
The CBO projects that 30 million people would get their insurance from the exchanges by 2019, but only six million of those would choose the public plan.
The House bill says the public plan would be designed so that the premiums paid by participants would cover the plan's benefits and administrative costs. In other words, it is supposed to be self-sustaining rather than rely on annual government subsidies, although the government would provide as much as $2 billion of start-up funding.
For its first few years, the plan would be available only to people who buy insurance without the help of an employer, or businesses with as many as 100 employees. Later, it would be open to larger employers. In the Senate, Democrats plan to include a public plan in their health bill, though they are structuring it more narrowly so fewer people could participate and states would have the right to opt out.
The House's public plan would save money by having lower administrative costs than private plans, according to the CBO's findings. But several other factors would drive up its costs, the report said.
The plan would attract less healthy enrollees, and would probably engage in less effective management of what the CBO calls "utilization," or how much treatment customers get. The payment rates the government negotiates with health-care providers would, on average, be comparable to those paid by private insurers, eliminating a cost-saving advantage many Democrats aimed to give the plan. The CBO says its findings aren't conclusive.
Supporters of the public plan said it was a pessimistic conclusion that left out important factors. Insurance prices vary widely by state. So while the public plan may be more expensive for consumers in some states, they said, it could be a cheaper option for those in states where private insurers charge disproportionately higher premiums.
"I think you can make a case -- a credible case -- that a public option is going to be at least as interested in reducing costs as any other private health plans," said Len Nichols, director of the health-policy program for the New America Foundation, a left-leaning Washington think tank.
Mr. Nichols predicts that private insurers, fearing they will have to absorb sicker patients through the insurance exchanges, will demand higher prices in the first year of the program.
New payment models in the bill would give the government an incentive to manage care more efficiently. And, Mr. Nichols said, the government won't have to spend as much on advertising as private insurers since "the country's going to be talking about the public option."
It also is possible that the government would drive a tougher bargain with doctors and hospitals than the CBO predicts, which would allow the public plan to offer lower premiums. That would give consumers a powerful incentive to abandon private insurance for the public plan. This is a scenario Republicans warn about when they say that a public plan threatens to drive private insurers out of business.
The bill says payments couldn't be lower than those of certain other government health programs, though it doesn't spell out the details.
"We're concerned that the floor becomes the ceiling," said Rich Umbdenstock, chief executive of the American Hospital Association. "It looks like these are going to be based in part on Medicare rates, and that concerns us."
Write to Janet Adamy at janet.adamy@wsj.com
__________
Here is an excerpt from Washington Post:
http://www.washingtonpost.com/wp-dyn/content/article/2009/10/30/AR2009103002904.html
There are still concerns from moderates over the (House) bill's cost - $1.055 trillion over 10 years - and long-term spending implications, and disputes to be resolved on how to block federal funding of abortions and prevent illegal immigrants from getting taxpayer-funded care.
House liberals fear what will happen to their bill's version of the government-run plan when time comes to merge it with whatever the Senate passes.
Sen. Harry Reid, D-Nev., said earlier this week that the Senate bill would have a new federal insurance plan with negotiated payment rates. Unlike the House bill, though, states could opt out of the plan. It's not clear the proposal commands enough votes in the Senate to survive, and it could be replaced by a standby system pushed by moderates that would not go into effect until it was clear individual states were experiencing a lack of competition among private companies.
Nine U.S. banks seized in largest one-day haul
http://www.reuters.com/article/newsOne/idUSTRE59U05420091031
Sat Oct 31, 2009 5:44am EDT
By Sam Mircovich and Edwin Chan
LOS ANGELES (Reuters) - U.S. authorities seized nine failed banks on Friday, the most in a single day since the financial crisis began and the latest stark sign that substantial parts of the nation's banking industry are being crippled by bad loans.
The move brought the total number of failed banks in 2009 to 115 -- their highest annual level since 1992 -- with analysts expecting more to come. Among the lenders seized Friday was Los Angeles-based California National Bank, in what was the fourth-largest U.S. bank failure this year.
The largest institution to fail in the current financial crisis was Washington Mutual, which boasted $307 billion in assets when it was shuttered in September 2008.
U.S. Bancorp on Friday acquired the nine banks that had been held by FBOP Corp, picking up $18.4 billion in assets and $15.4 billion of deposits.
Visibly worried employees lined up to file into Cal National's head offices in the heart of a deserted downtown Los Angeles on a chilly Friday evening, where they had their employers' fate explained to them, regulators said.
"We're getting ready to turn everything over to U.S. Bank," said Roberta Valdez, a spokeswoman for the Federal Deposit Insurance Corp, which helped supervise the transfer of FBOP's assets. "They will continue to operate as normal in the interim," she added, referring to lenders acquired from FBOP.
U.S. Bancorp -- which has been buying up distressed assets this year -- is picking up the lenders once owned by FBOP, a private Illinois group with over $18 billion in assets that owned banks in Texas, Illinois, Arizona and California.
Cal National is FBOP's largest bank by branches. Others that will now go under the U.S. Bancorp umbrella included BankUSA, Citizens National Bank, Madisonville State Bank, North Houston Bank, Pacific National Bank, Park National Bank, San Diego National Bank, and the Community Bank of Lemont.
"This transaction is consistent with the growth strategy that we have outlined many times in the past, which includes enhancing our existing franchise through low-risk, in-market acquisitions," said Rick Hartnack, vice chairman of consumer banking for U.S. Bancorp.
"This transaction adds scale to our current California, Illinois and Arizona footprints."
NEXT BIG HEADACHE
In the "near future," all nine lenders' branches will be re-branded U.S. Bank, which is the California-focused unit of U.S. Bancorp's that operates a network of more than 770 branches across Illinois, Arizona and California.
U.S. Bancorp did not specify what would happen to the new employees it inherits.
Cal National operates 68 branches across Southern California with more than $7 billion in assets. As of June 30, the lender maintained five times as much foreclosed property on its books and twice as many non-current loans as it had a year earlier, according to the Los Angeles Times, which first reported news of its evening takeover on Friday.
Cal National lost about $500 million on heavy investments in Fannie Mae and Freddie Mac preferred shares, the newspaper added, referring to securities rendered nearly worthless by the government takeover of the mortgage firms last year.
According to FDIC data, Cal National was the fourth biggest bank failure this year in terms of assets, just edging out Corus Bank, seized Sept 11 with a flat $7 billion of assets.
A bank official who answered the main number at Cal National's headquarters said they could not talk at the time.
Banks are still cleaning up their balance sheets from the recent credit boom that fueled banks' appetite to extend loans, many with poor underwriting and triggers that caused borrowers' payments to spike to unaffordable levels.
More lenders are expected to go under this year as the industry tries to get a handle on commercial real estate loans that will continue to worsen, as more strip malls go vacant and residential developments stall.
Banks held about $1.7 trillion in commercial real estate loans at the end of September, according to Federal Reserve data, or about 15 percent of their total assets. But to the extent these loans weaken, small banks are likely to be hit the hardest because larger banks were better diversified.
Banks that analysts say could risk big losses include Salt Lake City's Zions Bancorp, Columbus, Georgia's Synovus Financial Corp and Dallas-based Comerica Inc.
Before FBOP, U.S. Bancorp bought Downey Savings of Newport Beach and PFF Bank & Trust of Pomona when those thrifts failed last November, the newspaper said. Just this month, U.S. Bancorp bought 20 Nevada branches from BB&T Corp, which had acquired them as part of its deal to buy Colonial BancGroup Inc, it added.
(Additional reporting by Mary Milliken; Editing by Bernard Orr and Dean Yates)
Sat Oct 31, 2009 5:44am EDT
By Sam Mircovich and Edwin Chan
LOS ANGELES (Reuters) - U.S. authorities seized nine failed banks on Friday, the most in a single day since the financial crisis began and the latest stark sign that substantial parts of the nation's banking industry are being crippled by bad loans.
The move brought the total number of failed banks in 2009 to 115 -- their highest annual level since 1992 -- with analysts expecting more to come. Among the lenders seized Friday was Los Angeles-based California National Bank, in what was the fourth-largest U.S. bank failure this year.
The largest institution to fail in the current financial crisis was Washington Mutual, which boasted $307 billion in assets when it was shuttered in September 2008.
U.S. Bancorp on Friday acquired the nine banks that had been held by FBOP Corp, picking up $18.4 billion in assets and $15.4 billion of deposits.
Visibly worried employees lined up to file into Cal National's head offices in the heart of a deserted downtown Los Angeles on a chilly Friday evening, where they had their employers' fate explained to them, regulators said.
"We're getting ready to turn everything over to U.S. Bank," said Roberta Valdez, a spokeswoman for the Federal Deposit Insurance Corp, which helped supervise the transfer of FBOP's assets. "They will continue to operate as normal in the interim," she added, referring to lenders acquired from FBOP.
U.S. Bancorp -- which has been buying up distressed assets this year -- is picking up the lenders once owned by FBOP, a private Illinois group with over $18 billion in assets that owned banks in Texas, Illinois, Arizona and California.
Cal National is FBOP's largest bank by branches. Others that will now go under the U.S. Bancorp umbrella included BankUSA, Citizens National Bank, Madisonville State Bank, North Houston Bank, Pacific National Bank, Park National Bank, San Diego National Bank, and the Community Bank of Lemont.
"This transaction is consistent with the growth strategy that we have outlined many times in the past, which includes enhancing our existing franchise through low-risk, in-market acquisitions," said Rick Hartnack, vice chairman of consumer banking for U.S. Bancorp.
"This transaction adds scale to our current California, Illinois and Arizona footprints."
NEXT BIG HEADACHE
In the "near future," all nine lenders' branches will be re-branded U.S. Bank, which is the California-focused unit of U.S. Bancorp's that operates a network of more than 770 branches across Illinois, Arizona and California.
U.S. Bancorp did not specify what would happen to the new employees it inherits.
Cal National operates 68 branches across Southern California with more than $7 billion in assets. As of June 30, the lender maintained five times as much foreclosed property on its books and twice as many non-current loans as it had a year earlier, according to the Los Angeles Times, which first reported news of its evening takeover on Friday.
Cal National lost about $500 million on heavy investments in Fannie Mae and Freddie Mac preferred shares, the newspaper added, referring to securities rendered nearly worthless by the government takeover of the mortgage firms last year.
According to FDIC data, Cal National was the fourth biggest bank failure this year in terms of assets, just edging out Corus Bank, seized Sept 11 with a flat $7 billion of assets.
A bank official who answered the main number at Cal National's headquarters said they could not talk at the time.
Banks are still cleaning up their balance sheets from the recent credit boom that fueled banks' appetite to extend loans, many with poor underwriting and triggers that caused borrowers' payments to spike to unaffordable levels.
More lenders are expected to go under this year as the industry tries to get a handle on commercial real estate loans that will continue to worsen, as more strip malls go vacant and residential developments stall.
Banks held about $1.7 trillion in commercial real estate loans at the end of September, according to Federal Reserve data, or about 15 percent of their total assets. But to the extent these loans weaken, small banks are likely to be hit the hardest because larger banks were better diversified.
Banks that analysts say could risk big losses include Salt Lake City's Zions Bancorp, Columbus, Georgia's Synovus Financial Corp and Dallas-based Comerica Inc.
Before FBOP, U.S. Bancorp bought Downey Savings of Newport Beach and PFF Bank & Trust of Pomona when those thrifts failed last November, the newspaper said. Just this month, U.S. Bancorp bought 20 Nevada branches from BB&T Corp, which had acquired them as part of its deal to buy Colonial BancGroup Inc, it added.
(Additional reporting by Mary Milliken; Editing by Bernard Orr and Dean Yates)
Tuesday, October 27, 2009
Dem moderates challenge Reid on health care plan
http://news.yahoo.com/s/ap/20091027/ap_on_bi_ge/us_health_care_overhaul
By DAVID ESPO, AP Special Correspondent David Espo, Ap Special Correspondent – 1 hr 3 mins ago
WASHINGTON – Democratic moderates who control the balance of power on health care legislation balked Tuesday at a government-run insurance option for millions of Americans, underscoring the enormity of the challenge confronting Senate Majority Leader Harry Reid one day after he unveiled the plan as a consensus product.
Republican opposition stiffened, and party leaders announced they would attempt to strangle the bill before formal debate begins.
Despite the obvious obstacles, senior Democrats cast Reid's draft legislation as a turning point in the yearlong campaign to enact President Barack Obama's top domestic priority. Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, said there is now a "sense of inevitability, the sense that, yes, we're going to pass health care reform, and it's going to lower costs, provide better health insurance coverage ... and reform the health insurance market."
The proposed government insurance option long ago emerged as the biggest flashpoint in both the House and Senate as Democrats struggle to pass legislation that extends coverage to millions who lack it, bans insurance industry practices such as denying coverage on the basis of pre-existing medical conditions and slows the growth of health care spending nationally.
But before that issue can be joined on the Senate floor, Reid's first challenge is to gain 60 votes — the number needed to overcome a filibuster by Republicans — just to bring the bill up, a parliamentary maneuver so routine that a vote is rarely required.
Sen. Mitch McConnell of Kentucky, the Republican leader, announced that in this case, members of his party will treat it as though it were "a vote on the merits" of a bill he said would "cut Medicare, raise taxes and increase health insurance premiums." He suggested Democrats could expect campaign commercials next year on the basis of the vote, and recalled that Sen. John Kerry, D-Mass., was ridiculed in his 2004 presidential campaign for having once said he voted for a bill before he voted against it.
Tuesday's developments illustrated the difficulties facing the 69-year-old Reid, juggling at least three separate concerns: his role as head of the Democratic caucus, the desire to deliver on Obama's agenda and a 2010 re-election campaign in Nevada, where his approval ratings are low.
"This isn't over until I'm standing with President Obama and he's signing a bill into law that delivers what Nevadans are demanding — real health insurance reform," Reid wrote in an e-mail message to political supporters in his home state Monday night.
The decision to include a government insurance option in his legislation had obvious appeal for liberals who account for a strong majority inside the Senate Democratic caucus, and it is likely to please labor unions and party activists in Nevada.
But it has gained less-than-effusive support from Obama, who is eager to have at least a dollop of bipartisanship for his signature domestic issue. Sen. Olympia Snowe of Maine, the only Republican who has sided with Democrats in committee this year, has announced she will not support the bill Reid drafted.
Still, if Reid is pressed in coming weeks by moderates to fall back, he can explain to liberals that he was forced to do so because his preference — a government insurance option — proved to be unobtainable in the Senate.
Already, that pressure is evident.
Sen. Tom Carper, D-Del., one of several Democrats unhappy with Reid's proposal, said he may seek changes on the Senate floor, a move likely to be welcomed by moderates. He backs a government role in states where one or two insurers control the market and premiums are high.
While Reid is expected eventually to secure all 60 Democratic votes on the critical first test to bring the bill to the Senate floor, Sens. Ben Nelson of Nebraska, Mary Landrieu of Louisiana and Evan Bayh of Indiana all declined to say on Tuesday how they would vote.
In an indication of the pressure Reid faces, Bayh said the majority leader had agreed to cut an earlier proposal for a $40 billion tax on medical device makers.
"He significantly modified that proposal in a way that I understand will not impact thousands of good-paying jobs," said Bayh, whose state is home to Guidant Corp., a maker of cardiovascular devices, among other major industry players. No details were available on the precise changes Reid agreed to.
Speaker Nancy Pelosi is in a similar position in the House. Efforts to draft a consensus health care bill for a vote have been stalled for more than two weeks. The principal stumbling block is an internal disagreement over terms for setting fees for doctors, hospitals and other health care providers treating patients with government-sold coverage.
Liberals want the government to set the rate unilaterally, pegged to the charges the government pays Medicare beneficiaries. Moderates want the government to negotiate with the providers in setting fees.
Pelosi favors the approach liberals want, but officials say she has all but concluded she cannot gain the necessary majority of 218 votes for it.
House Democrats also must resolve internal disagreements relating to abortion services and health care for immigrants before they can send the bill to the House floor for a vote.
___
Associated Press writers Julie Hirschfeld Davis, Ben Evans, Andrew Miga, Ken Thomas, Erica Werner and Ricardo Alonso-Zaldivar contributed to this report.
By DAVID ESPO, AP Special Correspondent David Espo, Ap Special Correspondent – 1 hr 3 mins ago
WASHINGTON – Democratic moderates who control the balance of power on health care legislation balked Tuesday at a government-run insurance option for millions of Americans, underscoring the enormity of the challenge confronting Senate Majority Leader Harry Reid one day after he unveiled the plan as a consensus product.
Republican opposition stiffened, and party leaders announced they would attempt to strangle the bill before formal debate begins.
Despite the obvious obstacles, senior Democrats cast Reid's draft legislation as a turning point in the yearlong campaign to enact President Barack Obama's top domestic priority. Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, said there is now a "sense of inevitability, the sense that, yes, we're going to pass health care reform, and it's going to lower costs, provide better health insurance coverage ... and reform the health insurance market."
The proposed government insurance option long ago emerged as the biggest flashpoint in both the House and Senate as Democrats struggle to pass legislation that extends coverage to millions who lack it, bans insurance industry practices such as denying coverage on the basis of pre-existing medical conditions and slows the growth of health care spending nationally.
But before that issue can be joined on the Senate floor, Reid's first challenge is to gain 60 votes — the number needed to overcome a filibuster by Republicans — just to bring the bill up, a parliamentary maneuver so routine that a vote is rarely required.
Sen. Mitch McConnell of Kentucky, the Republican leader, announced that in this case, members of his party will treat it as though it were "a vote on the merits" of a bill he said would "cut Medicare, raise taxes and increase health insurance premiums." He suggested Democrats could expect campaign commercials next year on the basis of the vote, and recalled that Sen. John Kerry, D-Mass., was ridiculed in his 2004 presidential campaign for having once said he voted for a bill before he voted against it.
Tuesday's developments illustrated the difficulties facing the 69-year-old Reid, juggling at least three separate concerns: his role as head of the Democratic caucus, the desire to deliver on Obama's agenda and a 2010 re-election campaign in Nevada, where his approval ratings are low.
"This isn't over until I'm standing with President Obama and he's signing a bill into law that delivers what Nevadans are demanding — real health insurance reform," Reid wrote in an e-mail message to political supporters in his home state Monday night.
The decision to include a government insurance option in his legislation had obvious appeal for liberals who account for a strong majority inside the Senate Democratic caucus, and it is likely to please labor unions and party activists in Nevada.
But it has gained less-than-effusive support from Obama, who is eager to have at least a dollop of bipartisanship for his signature domestic issue. Sen. Olympia Snowe of Maine, the only Republican who has sided with Democrats in committee this year, has announced she will not support the bill Reid drafted.
Still, if Reid is pressed in coming weeks by moderates to fall back, he can explain to liberals that he was forced to do so because his preference — a government insurance option — proved to be unobtainable in the Senate.
Already, that pressure is evident.
Sen. Tom Carper, D-Del., one of several Democrats unhappy with Reid's proposal, said he may seek changes on the Senate floor, a move likely to be welcomed by moderates. He backs a government role in states where one or two insurers control the market and premiums are high.
While Reid is expected eventually to secure all 60 Democratic votes on the critical first test to bring the bill to the Senate floor, Sens. Ben Nelson of Nebraska, Mary Landrieu of Louisiana and Evan Bayh of Indiana all declined to say on Tuesday how they would vote.
In an indication of the pressure Reid faces, Bayh said the majority leader had agreed to cut an earlier proposal for a $40 billion tax on medical device makers.
"He significantly modified that proposal in a way that I understand will not impact thousands of good-paying jobs," said Bayh, whose state is home to Guidant Corp., a maker of cardiovascular devices, among other major industry players. No details were available on the precise changes Reid agreed to.
Speaker Nancy Pelosi is in a similar position in the House. Efforts to draft a consensus health care bill for a vote have been stalled for more than two weeks. The principal stumbling block is an internal disagreement over terms for setting fees for doctors, hospitals and other health care providers treating patients with government-sold coverage.
Liberals want the government to set the rate unilaterally, pegged to the charges the government pays Medicare beneficiaries. Moderates want the government to negotiate with the providers in setting fees.
Pelosi favors the approach liberals want, but officials say she has all but concluded she cannot gain the necessary majority of 218 votes for it.
House Democrats also must resolve internal disagreements relating to abortion services and health care for immigrants before they can send the bill to the House floor for a vote.
___
Associated Press writers Julie Hirschfeld Davis, Ben Evans, Andrew Miga, Ken Thomas, Erica Werner and Ricardo Alonso-Zaldivar contributed to this report.
Public Option Push in Senate Comes With Escape Hatch
Sen. Reid's plan is to pay physicians under the public option at Medicare rate. Some doctors have already shunned Medicare patients as they claim Medicare reimbursements do not cover cost, see http://money.cnn.com/2009/10/27/news/economy/healthcare_medicare_doctors/index.htm
http://www.nytimes.com/2009/10/27/health/policy/27health.html
By ROBERT PEAR and DAVID M. HERSZENHORN
Published: October 26, 2009
WASHINGTON — The Senate majority leader, Harry Reid, sided with his party’s liberals on Monday and announced that he would include a government-run insurance plan in health care legislation that he plans to take to the Senate floor within a few weeks.
His proposal came with an escape hatch: A state could refuse to participate in the public insurance plan by adopting a law to opt out. Even so, the announcement was a turning point in the debate over how much of a role government should play in an overhauled health care system, and it set the stage for a test of Democratic party unity.
With Republicans united for now in opposition to any bill including a public option, Mr. Reid needs support from all members of his caucus — 58 Democrats and two independents — to take up the legislation. Aides said Monday that he appeared to be short of that goal, lacking firm commitments from several members of the caucus.
Should Mr. Reid prevail, both houses of Congress would be poised to act on bills including a government-run plan to compete with private insurers in selling health coverage to consumers. The House is still weighing the details of its approach, but Democratic leaders have made clear they will include a government plan in their version of the bill.
Just weeks ago, the prospects for such an approach seemed remote, reflecting all-out opposition from conservatives to what they considered an excessive government role in the economy and a lack of enthusiasm from many moderate Democrats. But the idea has consistently drawn strong support in national polls, and it has backing from President Obama, though he has not insisted on it.
“The best way to move forward is to include a public option with the opt-out provision for states,” said Mr. Reid, Democrat of Nevada. “I believe that a public option can achieve the goal of bringing meaningful reform to our broken system.”
Mr. Reid’s decision was acclaimed by liberal organizations like MoveOn, Families USA and Health Care for America Now, a coalition that includes labor unions and civil rights groups.
But Mr. Reid lost the one Republican who had given Democratic efforts a tinge of bipartisanship, Senator Olympia J. Snowe of Maine. She has proposed a different approach, in which a government plan would become available only if states did not make progress in reducing insurance premiums and covering more of their residents.
“I am deeply disappointed with the majority leader’s decision to include a public option as the focus of the legislation,” Ms. Snowe said. “I still believe that a fallback, safety-net plan, to be triggered and available immediately in states where insurance companies fail to offer plans that meet the standards of affordability, could have been the road toward achieving a broader bipartisan consensus in the Senate.”
Mr. Reid and his aides provided few details of his proposal. They said the public plan would be national in scope and would be available on the first day that major provisions of the health care legislation take effect, in 2013.
The government plan would negotiate payment rates with doctors, hospitals and other health care providers. Some liberal Democrats, including the House speaker, Nancy Pelosi, have said payments should be pegged to Medicare rates, which could save money for the government and for consumers.
The debate over the public option has highlighted a divide among Democrats. The Senate health committee included a public plan in the bill it approved in July. The Senate Finance Committee rejected two versions of the public plan before approving its bill this month.
Those who voted against the public plan on the finance panel included three Democratic senators: Max Baucus of Montana, the committee chairman, and two centrists, Kent Conrad of North Dakota and Blanche Lincoln of Arkansas. Mr. Baucus had said he was open to a public option but did not think it could get 60 votes in the Senate.
As an alternative to a government-run plan, Mr. Conrad has proposed insurance cooperatives: essentially nonprofit, member-run groups, offering coverage to individuals and small groups. Proponents say they could save money by negotiating discounts with health care providers; the Congressional Budget Office sees no significant savings.
Mr. Reid said his plan would include co-ops, as well as the government plan. States that opt out of the public plan could not offer co-ops, an aide to Mr. Reid said.
Liberals see the public option as essential to the success of the legislation, saying it would foster competition and thus help drive down premium costs. With his action on Monday, Mr. Reid showed liberals he was doing all he could to achieve their goal. If his effort falters, he could propose other variations of a public plan, like one with the trigger mechanism Ms. Snowe proposed.
Mr. Reid, who faces a stiff challenge in his re-election bid, said he knew Ms. Snowe “does not like a public option of any kind,” and he held out hope that she would ultimately support the bill.
Pressed on whether he had the needed votes, Mr. Reid said, “I believe we clearly will have the support of my caucus to move to this bill and start legislating.”
A Democrat on Capitol Hill who backs the public option said “there is a lot of concern” that Mr. Reid had made his decision without nailing down the votes to prevail on the Senate floor.
The White House press secretary, Robert Gibbs, said President Obama was pleased with Mr. Reid’s decision. “He supports the public option because it has the potential to play an essential role in holding insurance companies accountable through choice and competition,” Mr. Gibbs said.
Republicans and insurance companies assailed the decision. “No matter what you call it or how you dress it up, the Democrats’ proposal is government-run insurance,” said Senator Jon Kyl of Arizona, the No. 2 Republican in the Senate.
Liberal senators have urged Mr. Reid to include the public option in the bill he is putting together, working with versions approved by two Senate panels.
At a town-hall-style meeting in Colorado in August, Mr. Obama complained that people on the left and the right had become “fixated” on the public plan, which he described as “just one sliver” of efforts to overhaul the health care system.
For the moment, Senate Democratic leaders are taking an aggressive approach, defying Republicans and brushing aside the objections of moderate Democrats who are apprehensive about a public plan. “All the national polls show a wide majority of Americans support the public option,” Mr. Reid said.
But Mr. Reid’s decision will not be the last word. The Senate will probably spend weeks on the health care bill and could vote on dozens of amendments, including several to alter or eliminate his version of a public plan. At any stage, 60 votes could be required.
http://www.nytimes.com/2009/10/27/health/policy/27health.html
By ROBERT PEAR and DAVID M. HERSZENHORN
Published: October 26, 2009
WASHINGTON — The Senate majority leader, Harry Reid, sided with his party’s liberals on Monday and announced that he would include a government-run insurance plan in health care legislation that he plans to take to the Senate floor within a few weeks.
His proposal came with an escape hatch: A state could refuse to participate in the public insurance plan by adopting a law to opt out. Even so, the announcement was a turning point in the debate over how much of a role government should play in an overhauled health care system, and it set the stage for a test of Democratic party unity.
With Republicans united for now in opposition to any bill including a public option, Mr. Reid needs support from all members of his caucus — 58 Democrats and two independents — to take up the legislation. Aides said Monday that he appeared to be short of that goal, lacking firm commitments from several members of the caucus.
Should Mr. Reid prevail, both houses of Congress would be poised to act on bills including a government-run plan to compete with private insurers in selling health coverage to consumers. The House is still weighing the details of its approach, but Democratic leaders have made clear they will include a government plan in their version of the bill.
Just weeks ago, the prospects for such an approach seemed remote, reflecting all-out opposition from conservatives to what they considered an excessive government role in the economy and a lack of enthusiasm from many moderate Democrats. But the idea has consistently drawn strong support in national polls, and it has backing from President Obama, though he has not insisted on it.
“The best way to move forward is to include a public option with the opt-out provision for states,” said Mr. Reid, Democrat of Nevada. “I believe that a public option can achieve the goal of bringing meaningful reform to our broken system.”
Mr. Reid’s decision was acclaimed by liberal organizations like MoveOn, Families USA and Health Care for America Now, a coalition that includes labor unions and civil rights groups.
But Mr. Reid lost the one Republican who had given Democratic efforts a tinge of bipartisanship, Senator Olympia J. Snowe of Maine. She has proposed a different approach, in which a government plan would become available only if states did not make progress in reducing insurance premiums and covering more of their residents.
“I am deeply disappointed with the majority leader’s decision to include a public option as the focus of the legislation,” Ms. Snowe said. “I still believe that a fallback, safety-net plan, to be triggered and available immediately in states where insurance companies fail to offer plans that meet the standards of affordability, could have been the road toward achieving a broader bipartisan consensus in the Senate.”
Mr. Reid and his aides provided few details of his proposal. They said the public plan would be national in scope and would be available on the first day that major provisions of the health care legislation take effect, in 2013.
The government plan would negotiate payment rates with doctors, hospitals and other health care providers. Some liberal Democrats, including the House speaker, Nancy Pelosi, have said payments should be pegged to Medicare rates, which could save money for the government and for consumers.
The debate over the public option has highlighted a divide among Democrats. The Senate health committee included a public plan in the bill it approved in July. The Senate Finance Committee rejected two versions of the public plan before approving its bill this month.
Those who voted against the public plan on the finance panel included three Democratic senators: Max Baucus of Montana, the committee chairman, and two centrists, Kent Conrad of North Dakota and Blanche Lincoln of Arkansas. Mr. Baucus had said he was open to a public option but did not think it could get 60 votes in the Senate.
As an alternative to a government-run plan, Mr. Conrad has proposed insurance cooperatives: essentially nonprofit, member-run groups, offering coverage to individuals and small groups. Proponents say they could save money by negotiating discounts with health care providers; the Congressional Budget Office sees no significant savings.
Mr. Reid said his plan would include co-ops, as well as the government plan. States that opt out of the public plan could not offer co-ops, an aide to Mr. Reid said.
Liberals see the public option as essential to the success of the legislation, saying it would foster competition and thus help drive down premium costs. With his action on Monday, Mr. Reid showed liberals he was doing all he could to achieve their goal. If his effort falters, he could propose other variations of a public plan, like one with the trigger mechanism Ms. Snowe proposed.
Mr. Reid, who faces a stiff challenge in his re-election bid, said he knew Ms. Snowe “does not like a public option of any kind,” and he held out hope that she would ultimately support the bill.
Pressed on whether he had the needed votes, Mr. Reid said, “I believe we clearly will have the support of my caucus to move to this bill and start legislating.”
A Democrat on Capitol Hill who backs the public option said “there is a lot of concern” that Mr. Reid had made his decision without nailing down the votes to prevail on the Senate floor.
The White House press secretary, Robert Gibbs, said President Obama was pleased with Mr. Reid’s decision. “He supports the public option because it has the potential to play an essential role in holding insurance companies accountable through choice and competition,” Mr. Gibbs said.
Republicans and insurance companies assailed the decision. “No matter what you call it or how you dress it up, the Democrats’ proposal is government-run insurance,” said Senator Jon Kyl of Arizona, the No. 2 Republican in the Senate.
Liberal senators have urged Mr. Reid to include the public option in the bill he is putting together, working with versions approved by two Senate panels.
At a town-hall-style meeting in Colorado in August, Mr. Obama complained that people on the left and the right had become “fixated” on the public plan, which he described as “just one sliver” of efforts to overhaul the health care system.
For the moment, Senate Democratic leaders are taking an aggressive approach, defying Republicans and brushing aside the objections of moderate Democrats who are apprehensive about a public plan. “All the national polls show a wide majority of Americans support the public option,” Mr. Reid said.
But Mr. Reid’s decision will not be the last word. The Senate will probably spend weeks on the health care bill and could vote on dozens of amendments, including several to alter or eliminate his version of a public plan. At any stage, 60 votes could be required.
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