Conservative House Democrats seemingly have a new ally in the Congressional Budget Office as they attempt to make health care legislation less costly for the federal government.

Douglas Elmendorf, director of the CBO, said yesterday the House bill now going through committee action and a Senate bill do not include “the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount.” As head of the nonpartisan office that calculates the budgetary impact of legislation, his remarks sparked fresh criticism of the bills.

Early this morning, the House Ways and Means Committee, one of three House panels weighing amendments to the bill, approved the far-reaching legislation over the dissenting votes of three Democrats. It would guarantee insurance to the vast majority of Americans at a cost of about $1 trillion over 10 years. A combination of taxes on the wealthy and reductions in spending for Medicare and Medicaid, the state-federal program for the poor, would largely pay for an expansion of insurance coverage.

Yesterday, a leader of the Blue Dog Coalition of conservative House Democrats said he and six others in the group would vote together to block the bill in the Energy and Commerce Committee unless changes were made to slow the rate of growth of federal health care spending and to ensure that rural hospitals are adequately reimbursed for treating new patients under the legislation.

“We simply are demanding a bill that contains costs so that health care can grow at the normal rate of inflation and that addresses many of the rural health care concerns that [hospitals be adequately reimbursed] and that we don’t put small businesses out of business through an employer mandate,” Rep. Mike Ross, D-Ark., said in an interview.

In response to the Blue Dogs’ demands, House Speaker Nancy Pelosi, D-Calif., said yesterday that there would be opportunity for members to make additional “structural changes” in the bill to address cost concerns.

“Can there be more (savings)? I think so,” she told reporters. “And that is what the legislative process is about. You don’t write the whole bill, introduce it, and then go to the floor. This is the time now for an open process of bipartisan review of the bill in the committees. So, I am hopeful and optimistic that there will be more savings.”

Ross, chairman of the Blue Dogs’ health care task force, said the six others who would vote to block the bill are Reps. Zack Space, Ohio, Baron Hill, Indiana, Charlie Melancon, Louisiana, John Barrow, Georgia, Jim Matheson, Utah, and Bart Gordon, Tennessee. Ross said they would offer a series of amendments in committee to fix the problems they see.

The seven lawmakers outlined their goals in identical opening statements yesterday before the committee:
• Find every penny of savings within our current public programs and ensure we get more value for every health care dollar we spend;
• Be more aggressive in implementing innovative delivery reforms to bend the cost curve; and,
• Provide assistance for individuals, families and small businesses to help them purchase health care without bankrupting the federal government.

“If it’s not amended, we cannot support the current bill, and it would only take seven Democrats to stop the bill in committee,” Ross warned.

The Blue Dogs also are concerned about requiring employers, especially small businesses in rural areas, to offer insurance or pay a penalty, he said. And Ross said they oppose a government-run insurance option to help extend coverage to more Americans if hospitals aren’t paid far more than the rates allowed under the Medicare program, the federal program for the elderly and disabled.

The House bill would reimburse hospitals at Medicare rates and doctors at a slightly higher rate. Under the bill, businesses that do not offer health insurance would pay an 8 percent payroll tax to help subsidize coverage in a new insurance exchange. The bill was changed slightly to exempt the smallest employers from the requirement, but Ross said that is not sufficient.

The House Democratic leadership has instructed the committees to complete work on the bill by next week.

Ross stressed that “we’re not trying to stop health care reform.” He said, “We just want to slow down and do it right. This is the biggest domestic reform that we’ll undertake in my lifetime. Why do they want to rush it in a markup that’s going to last two days this week and three days next week?”