WASHINGTON -- The Senate Finance Committee's health care reform bill is fading into history, but its tax-exempt bond provisions have a decent chance of surviving as part of the new bill being cobbled together by Senate leaders, lobbyists said yesterday.
The finance panel passed a huge reform bill on July 6 that would, among other things, lift the $150 million limit on the amount of bonds that individual 501(c)(3) organizations may have outstanding at one time. The bill would also set up new requirements that health care organizations would have to meet to obtain 501(c)(3) status.
But rather than bring that bill or health bills passed by other Senate committees to the floor, Senate Majority Leader George Mitchell, D-Maine, decided to draft a new bill, in an effort to develop a measure that would have a better chance of garnering the necessary 51 votes for Senate passage. Lobbyists said Mitchell may unveil his bill late this week or early next week.
Another factor driving the development of a new bill is the acknowledgment by President Clinton and congressional leaders last week that the cornerstones of Clinton's original plan, which include universal coverage and a requirement that employers shoulder the cost of such coverage, must be scaled back to win approval by lawmakers.
In the House, Majority Leader Richard Gephardt, D-Mo. is leading the effort to draft a new health care bill, which may be finished this week. Legislation passed by the House Ways and Means Committee on June 30 contained new requirements for 501(c)(3) organizations but would not lift the $150 million limit.
Mitchell's decision to go back to the drawing board does not necessarily doom either of the Finance Committee bond provisions, lobbyists said. They said that those provisions are not part of the negotiations going on now among Senate leaders to come up with a new bill. Instead, the leaders are focusing on a handful of major health care reform issues.
Once the big pieces of the bill are in place, the leaders will add smaller provisions from the committees with a hand in the health care process, the lobbyists said. The provision to lift the $150 million limit has a good chance because it enjoys the strong support of Senate Finance Committee chairman Daniel P. Moynihan, D-N.Y., and Sen. John Danforth, RMo., a member of the panel, several lobbyists said.
"This is something that Moynihan is very firmly committed to doing and there are no other committees with jurisdiction" over the provision, "so it's not something they're fighting over," said a lobbyist who asked not to be identified.
Thus, "unless there's a big reason why Mitchell would disregard a committee with sole jurisdiction and their recommendations, I think you'll see it in the final package," the lobbyist said of the 501(c)(3) bond provision. "I think the process is designed generally to keep us alive."
But some lobbyists said the provision also has a big strike against it -- the federal government would lose money. Senate leaders may not want to add a revenue-losing provision to a health care bill that already is expected to be very expensive, they said.
"I think that provision is fairly vulnerable," said a hospital industry lobbyist. "They're looking for money. They're just so desperate for money to pay for this stuff that any little thing that's a revenue loser is going to be in trouble."
There is no official cost figure for the 501(c)(3) bond provision because the Congressional Budget Office has not completed work on its revenue estimates for the Senate Finance Committee bill.
But one source said that the provision will be "very costly." A similar provision that covered only health care institutions that was proposed for the House tax committee bill was estimated to cost $600 million over 10 years. That high price tag kept the provision out of the Ways and Means bill, lobbyists have said.
The Senate committee's provision on new standards for tax-exempt organizations, on the other hand, is expected to raise revenue for the federal government, and thus is widely expected to be in both Mitchell's and Gephardt's bills.
Under the finance committee's legislation, in order to be deemed tax-exempt, a health care organization would have to do a number of things. These include providing qualified outreach services to its community, annually assessing the community's health care needs, and developing a written plan to meet those needs. The Ways and Means bill is similar, but somewhat more restrictive.
Also in the provision's favor is the fact that the president first proposed new 501(c)(3) standards in his original health care reform bill in April, although those standards are less stringent than in either the House or Senate committee bills.
"They opened the door on it in the president's bill," said the hospital industry lobbyist. "I think since that door was opened there, it's going to end up in the final package."
The provision that would lift the $150 million limit would also remove some of the post-1985 restrictions that were placed on 501(c)(3) bonds, in an effort to put them more on a par with governmental bonds. For example, under the provision 501(c)(3) bonds would not be subject to a 2% limit on issuance costs that now applies to them and to private-activity bonds, but not to governmental bonds.
Micah S. Green, the executive vice president of the Public Securities Association, said the bond provision has a good chance of surviving because it "is an issue that's enjoyed great support [in Congress] over the years."
Green said he thinks "the case has been made that it needs to be done. The question is, can it be done in this package?" PSA officials "are neither worried nor complacent" about the bond provision's chances, but "are at a nervous state of optimism" that it will be included in the final Senate bill, Green said.
A lobbyist for local governments, meanwhile, warned against too much speculation about the chances for either provision, saying it was far too early to know whether such relatively minor items would be included.
"It's such a complicated, huge bill that they're working with that I haven't heard specifics on any provision for quite a while," the lobbyist said.
