How Boehner, Pelosi surprised everyone with a $200 billion deal

A few days after the chaos of a failed vote to fund the Department of Homeland Security, Speaker John Boehner asked for a meeting, alone, with House Democratic Leader Nancy Pelosi.

Compromise was on his mind.

With automatic cuts to doctors under Medicare set to take effect at the end of March, Boehner (R-Ohio) wanted to explore the possibility of a deal that would end the Sustainable Growth Rate (SGR), and with it a problem that has dogged Congress for nearly two decades.

The March 4 meeting in Pelosi’s (Calif.) office on the second floor of the Capitol was brief, lasting only 11 minutes.

{mosads}But on the central question that has for years thwarted deal-making between the parties — whether to raise taxes — Boehner got the answer he was looking for.

Democrats would not insist on tax hikes in legislation ending the Medicare formula, Pelosi told Boehner.

“That was, from our point of view, the breakthrough,” said Michael Steel, a Boehner spokesman. 

Democrats say the Medicare package is on an entirely different scale than the $4 trillion deficit-reduction package that President Obama and Democrats sought to negotiate with Republicans in 2011. Those talks broke down over the question of raising taxes, with both sides leveling bitter accusations over who was unwilling to bend.

A Democratic aide familiar with the Medicare talks called the comparison to the 2011 negotiations “not apples and oranges, but apples and baseball bats.”

Democrats view it is a victory that two-thirds of the deal is not paid for, that it includes priorities like funding for the Children’s Health Insurance Program, and that Boehner did not insist on cuts to health programs that they thought would be harmful.  

On Thursday, three weeks after the Boehner-Pelosi meeting, the Medicare deal passed the House in an overwhelming, bipartisan vote of 392-37.

The roughly $200 billion package, now awaiting action from the Senate, would be partially paid for, with a mix of cuts to healthcare providers and measures requiring wealthier Medicare beneficiaries to pay a higher share of premiums. 

President Obama has said he is ready to sign the bill, which would lift the threat of payment cuts to doctors who treat Medicare patients.

Senate Majority Leader Mitch McConnell (R-Ky.) expressed confidence Friday that it would clear his chamber. “We’ll move to it very quickly when we get back,” he said. 

That’s news to the ears of Boehner and Pelosi, who were already in a jovial mood when their bill passed the House.

“This is what we can accomplish when we focus on finding common ground,” Boehner said.

Pelosi said it was a “privilege” to work with Boehner and added, “I hope it will be a model of things to come.”

The foundation of the agreement, aides say, was laid long before the crucial meeting of the leaders this month.

Early last year, leaders of both parties on three key committees — Senate Finance, House Ways and Means and House Energy and Commerce — came together to propose a bill to repeal the SGR.  

Their plan replaced the cuts with modest pay increases and benchmarks to shift the payment system so that it incentivizes quality of care instead of quantity. While the framework became the core of this year’s package, it stalled in 2014 over the question of how to pay for the changes. 

Early this year, committee leaders asked House leadership for parameters they could look at on how to pay for SGR repeal. Boehner and Pelosi’s healthcare staffs began meeting in early February, laying the groundwork for the two leaders’ meeting in March. 

The Boehner-Pelosi talk ushered in the final stretch of negotiations, with members of the Energy and Commerce and Ways and Means committees brought back into the picture. Pelosi met with the ranking members of those panels, Reps. Frank Pallone Jr. (D-N.J.) and Sandy Levin (D-Mich.), the same day she met with Boehner. 

Up until that point, the talks had been kept secret. Healthcare lobbyists and groups who have fought for years to end the SGR were completely in the dark.

But then came rumors, and then more credible information during the week of March 9. 

“Everybody was blindsided by it,” said Clif Porter, senior vice president of government affairs at the American Health Care Association, the skilled nursing trade group. 

That there would be a long-term fix, and that the cost would be only partially offset, “caught every credible lobbyist in DC by surprise,” he added.

The news, which also broke that week, set off a push by AHCA, and other industry groups that had long been pushing for a solution, to limit the cuts they would face under the agreement.

Rep. John Fleming (R-La.), co-chairman of the GOP Doctors Caucus, said he, too, was surprised by the news of the potential agreement. He and others met with Boehner shortly after the midterm elections and left “pessimistic” about the chances for a long-term fix because of the uncertainty about offsets. 

“We left pretty much thinking this was going to be the same old situation when we pass another six-month patch, so lo and behold I was surprised,” Fleming said.

On March 12, committee leaders briefed their members and prepared a statement that came out the next day, on a Friday afternoon, for the first time publicly confirming that there were “active discussions on a bipartisan basis.”

Some proposals proved too difficult to get into the final deal. Negotiators tried to combine Medicare Part A, which covers hospital care, with Part B, which covers doctors’ visits, to create a single deductible and a cap on out-of-pocket costs. 

That idea has drawn support in the past from some members of both parties as a way to streamline the system, improve care and save the government money. But when negotiators tried to help ease the changes for lower-income seniors with a lower deductible and lower out of pocket cap, it was too expensive, and the offsets would not have passed muster with either caucus, according to a Democratic aide familiar with the talks.  

Lawmakers were still making substantial progress, though threats to the deal lurked ahead. 

The Senate was not on board. On March 19, Sen. Ron Wyden (D-Ore.) released a statement warning of an “abortion policy rider” in the package that could be objectionable.

Pelosi’s office sprung into action. The language in question, which relates to the Hyde Amendment, already bars federal funding for abortions at community health centers under an executive order, aides argued.

With those objections threatening the deal, Pelosi, working with the House Pro-Choice Caucus, by Monday night had secured additional language making clear that the Hyde language would expire when the funding did. 

Republicans checked to make sure that the language was just continuing the status quo in their eyes, and agreed. 

Attempting to assure her caucus, Pelosi told Democrats Tuesday morning that she would leave Congress before ever voting to codify the Hyde Amendment, and that the bill did no such thing. 

Reps. Diana DeGette (D-Colo.) and Louise Slaughter (D-N.Y.), who co-chair the Pro-Choice Caucus, released a statement backing the bill that same day.

Asked why he chose to negotiate with Democrats, rather than moving through a bill with only Republican votes, Boehner said he seized on an opportunity to negotiate in a bipartisan way on the spending offsets.

“The door opened, and I decided to walk in it,” he said. “As simple as that.”