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CCH® BENEFITS — 11/17/08

Senate Finance Chairman Fires First Congressional Salvo On Health Care Reform

From Spencer's Benefits Reports: Only one week after Barack Obama was elected President, Sen. Max Baucus (Mont.), chairman of the Senate Finance Committee, released an 89-page Call To Action for health care reform. In an earlier letter to Mr. Obama, Mr. Baucus announced his intent to use the proposal “to move forward on health care reform in the early days of the 111th Congress and of your Administration.”

In addition to the proposal of Mr. Baucus, some existing legislative proposals also are likely to be used in the next Congress, including those from Sen. Ted Kennedy (Mass.) and Rep. John Dingell (Mich.); and Sen Ron Wyden (Ore.).

The Baucus proposal bears some similarity to Mr. Obama’s own reform proposals during the presidential campaign, and has three major elements: increased access, healthy system reform, and financing. This proposal is the first installment of the Baucus plan, and concentrates on the increased access elements.

Increasing Access To Affordable Health Care Coverage

The Baucus proposal to increase access includes the following:

Individual responsibility. This is an individual mandate for all Americans to obtain health care coverage, which might be enforced through the tax system. It would have premium subsidies funneled through the Tax Code for those who do not pay income taxes. This individual mandate is a primary difference between the Baucus and Obama plans.

Strengthening the employer-based system. Large employers would have the choice of providing health care coverage or contributing, on a percentage-of-payroll basis, to a fund for the uninsured. Midsize employers would have the same options but with a smaller required contribution. Businesses with the fewest workers and the lowest wages would be offered a new tax credit to purchase health insurance for their employees, and would be exempt from contributions to the general coverage fund if they still were unable to offer insurance to employees. All except the smallest employers would be required to offer an IRC Sec. 125 premium-only plan.

Guaranteed access for individuals and small businesses. Guaranteeing access includes these elements:

• Health Insurance Exchange. A Health Insurance Exchange would be established (similar to the Massachusetts Connector) through which individuals and small businesses in the market for insurance could obtain affordable health care coverage. The Exchange would be an independent entity, the primary purpose of which would be to organize affordable health insurance options, create understandable, comparable information about those options, and develop a standard application form for enrollment in a chosen plan. Participating employers would have to enroll all employees in the Exchange.
• Independent Health Coverage Council. A board of directors—called the Independent Health Coverage Council—would make decisions that would help to guarantee that affordable health insurance options were available. The President would appoint members of the Council with the advice and consent of the Senate for set, staggered terms. Among other duties, the Council would define such terms as coverage and affordability.
• Insurance market reforms. Guaranteed issue without preexisting conditions exclusions would be required. Rules for insurance policy rates would be specified in statute, after consultation with the National Association of Insurance Commissioners, consumer advocates, and others.
• Small business tax credit. A targeted tax credit, which small firms could use toward the cost of purchasing health care coverage, would be based on a firm’s size and earnings per employee.
• Premium subsidies. Refundable tax credits would be available to individuals and families with incomes at or below four times the federal poverty level who purchased coverage through the Health Insurance Exchange.

Strengthening public programs. Health care coverage would be made immediately available to Americans aged 55 to 64 through a Medicare buy-in; with a phase-out of the disability waiting period; the establishment of a national Medicaid eligibility level at 100% of the poverty level; and a requirement that states to use the State Children’s Health Insurance Program (SCHIP) to cover all children at or below 250% of the poverty level and who are not Medicaid eligible.

Prevention and wellness. The proposal would establish “RightChoices,” a temporary program to provide the uninsured with immediate access to a set of proven-effective preventive services such as a health risk assessment, physical exam, immunizations, and age and gender appropriate cancer screenings recommended by the U.S. Preventive Services Task Force; reduce or eliminate co-payments for recommended preventive services under Medicare; and require plans participating in the Health Insurance Exchange to include certain preventive services.

Reaction To Proposal, Other Proposals

Many national groups had immediate and tempered praise for Mr. Baucus’s initiative. Karen Ignagni, president and chief executive officer of America’s Health Insurance Plans (AHIP) wrote in a statement, “Now is the time for health care reform. We commend Senator Baucus for putting forth a comprehensive reform proposal that addresses the key health care challenges facing the nation. We look forward to reading the plan and participating in the discussion to ensure all Americans have access to high-quality, affordable health care coverage.”

The Service Employees International Union (SEIU), said in a statement that “Senator Max Baucus’ thoughtful and comprehensive approach to address the nation’s broken health care system is a significant contribution to the growing discussion around solutions to the crisis.”

The American Public Health Association (APHA) commended Mr. Baucus for “adding his voice to the growing chorus of individuals and organizations asking that the new President and Congress make health reform a priority for 2009. APHA encourages Baucus and others interested in health system reform to establish the importance of prevention and public health as the foundation for reform.”

Meanwhile, the Divided We Fail Coalition urged Mr. Obama in a letter that “a health care overhaul be a priority in the Administration’s first 100 days.” The letter, sent by Divided We Fail members the Business Roundtable, the National Federation of Independent Businesses, AARP, and the SEIU, noted that “Addressing skyrocketing healthcare costs is a critical component of stabilizing household, national and global economies. Inaction undermines the economic security of our families; limits the productivity of our workforce; stagnates job creation and wage growth; and threatens to crowd out investments in energy, education and infrastructure.”

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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