The outline of America’s future health care delivery system started to emerge last week as members of the Senate Finance Committee began drafting what is hoped will be compromise legislation able to pass Congress and also win the signature of President Barack Obama.

If the base document that will serve as the starting point for the committee’s work is any guide, the final bill will embrace the three components President Obama said in a recent address to Congress that any health care reform legislation must have.

Specifically, the president said, such legislation must provide consumer protections for those with insurance, an exchange that allows individuals and small businesses to purchase affordable coverage, and a requirement that people who can afford insurance get insurance.

The base document was unveiled Sept. 16 by Sen. Max Baucus, D-Mont., chairman of the Finance Committee.

The compromise legislation omits the so-called “public plan” of such concern to the insurance industry, as well as the controversial proposal for a so-called “Navigators” system that would bar insurance agents from providing advice and soliciting.

In unveiling the base document that will be used to craft a bill, Baucus said, “This is a unique moment in history where we can finally reach an objective so many of us have sought for so long.

“The Finance Committee has carefully worked through the details of health care reform to ensure this package works for patients, for health care providers and for our economy,” he added.

Under the legislation he is proposing, insurance companies would be required to issue coverage to all individuals regardless of health status.

Moreover, insurers would no longer be allowed to limit coverage based on pre-existing conditions. But, limited variation in premium rates would be permitted for tobacco use, age, and family composition.

Rating rules for the individual market would also apply to the small group market, as defined by states. This would include groups of one to 50 employees, but could include companies with up to 100 employees, depending on current state law.

The Baucus legislation would seek to make purchasing health insurance coverage easier and more understandable by using the Internet to present consumers with available plans.

His bill would create state-based web portals, or “exchanges” that would direct consumers purchasing plans on the individual market to every health coverage option available in their zip code.

His bill would also give small businesses access to state-based “Small Business Health Options Program” or SHOP exchanges.

These exchanges-like the individual market exchanges-would be web portals that make comparing and purchasing health care coverage easier for small businesses, Baucus said.

The Baucus bill also contains authority to create “Consumer Owned and Oriented Plans (Co-ops).

These plans would be able to operate at the state, regional or national level to serve as non-profit, member-run health plans to compete in the reformed non-group and small group markets, Baucus said. These plans will offer consumer-focused alternatives to existing insurance plans. Six billion dollars of federal seed money would be provided for start-up costs and to meet solvency requirements, he said.

In dealing with the transition to a reformed insurance market, Baucus proposes that once the insurance market reforms take effect, people who want to keep the insurance they have today can do so.

Plans would be allowed to continue to offer the coverage they offer today and this coverage would be grandfathered, he said. “These grandfathered plans would only be available to those people who are enrolled today or, in the case of a small employer, to new employees and their dependents,” he explained.

People who qualify for the health care affordability tax credits in the reformed market would not be able to use the credits to purchase grandfathered plans, he said in addressing another issue of concern to agents.

Tax credits would be offered only to purchase plans created in the reformed market that meet the new benefit standards, he said.

The base document’s language on medical malpractice appears to be a placeholder subject to stronger action through the amendment process when the Finance Committee deals with the bill.

The document contains language that would “express the Sense of the Senate” that health care reform presents an opportunity to address issues related to medical malpractice and medical liability insurance.

The language would further express the Sense of the Senate that states should be encouraged to develop and test alternatives to the current civil litigation system as a way of improving patient safety, reducing medical errors, encouraging the efficient resolution of disputes, increasing the availability of prompt and fair resolution of disputes, and improving access to liability insurance, while preserving an individual’s right to seek redress in court. The provision would also express the Sense of the Senate that Congress should consider establishing a state demonstration program to evaluate alternatives to the current civil litigation system.

John Greene, vice president of congressional affairs for the National Association of Health Underwriters, said the committee hopes to complete its work soon.

Moreover, he and others hope that release of the compromise document will set the stage for the drafting of a more acceptable proposal in the House.

One of the issues Greene believes critical to health insurance agents is who will have access to the co-ops the Baucus proposal would create as an alternative to the public option.

Under the Baucus proposal, people would be allowed to get insurance through a co-op even though their employer offers insurance, if the cost of the coverage exceeds 13% of their income.

“We feel that if someone is offered private insurance, they should not be given access to a co-op or even an exchange that will also offer lower-cost coverage,” Greene said.

“The reason is that if too many people aren’t included in a group, it will raise the cost of coverage to all others to an unacceptable level,” he said. “Moreover, it will also raise the cost of insurance to the government.”

He said the agents’ industry will also be seeking to ensure that there is an appropriate transition to the individual mandate that will require everyone to get insurance, and will provide marketing opportunities for agents.

“There needs to be an enforcement mechanism to ensure compliance with the individual mandate,” Greene said.

Joel Kopperud, a director of government relations for the Council of Insurance Agents and Brokers, said that as his group prepared to advocate for issues acceptable to agents, “we’re encouraged that the government option is not included.”

But, he added, “We are concerned that Americans accessing their insurance through any exchange have access to the same insurance professionals as those accessing coverage outside the exchange.”

Backing up Greene, he cautioned, “We’ll be working closely with the committee to preserve consumer access to licensed insurance professionals.”

Baucus said the Congressional Budget Office estimates his draft bill would cost $856 billion over 10 years.

He contended that this amount would be fully paid for, “mostly through increased focus on quality, efficiency, prevention and adjustments in federal health program payments, without adding to the federal deficit.”

Key obstacles that will be facing Baucus include the fact that no Republican has so far signed on, although Sen. Olympia Snowe, R-Maine, has been courted by Democrats and the White House.

Other members of the so-called “gang of six” within the Finance Committee that have been working on a compromise bill but haven’t yet signed on include Sen. Charles Grassley, R-Iowa, and Sen. Mike Enzi, R-Wyo.

Grassley, a critical vote, said before the release of the base document that he will continue to work toward a compromise agreement, but didn’t totally commit himself.

Among his concerns were that the document he would support in the Senate would be undone through negotiations with the more liberal House.

He also sought a commitment on several other issues, including language barring payment by the federal government for abortion and language that would ensure that illegal aliens not get subsidized for health care through a final bill.

But, he said, “We’ve been clear from the start that we’re willing to stay at the table. There’s no reason not to keep working until we get it right. In the end, legislation that impacts every American should have strong bipartisan support.”

Earlier in the week, a former Grassley staffer told a Medicare conference that there is a “very strong possibility” a health care reform bill will pass Congress this year, and that she believes that Grassley “will work” to get such legislation through the Senate Finance Committee.

Colette Desmarais, a principal at Mehlman Vogel Castagnetti, a Washington, D.C. lobbying group, also said that the final health care reform legislation will look more like the one developed by the “Senate side,” i.e., without a public option, than the more liberal version in the House.

At the same conference, Duane Wright, a vice president at the Glover Park Group, another Washington advocacy group, predicted that politics will force passage of such legislation by December, before the 2010 congressional election cycle begins in earnest.

He also said that such legislation will not include a public option, and that the White House will put pressure on liberal members of the House to pass “not a perfect bill, but a momentous step forward.”

Wright also said that besides the start of the 2010 congressional election season, Congress will be forced to act this year “because the bill is out there, the more difficult it will become to pass it.”