As Health Reform Enters Crucial Stage, Businesses Refocus on Key Issues

As the Senate begins to merge two health care reform bills, employers are refocusing their lobbying on three concerns they say are deal-breakers to any legislation.

Employers have stepped up opposition to government-run health insurance, known as the public plan option, as well as a proposal that would allow employees to drop health coverage provided by their employer. Employers also oppose strict requirements that would force a majority of businesses to provide health insurance for their employees.

Employers are particularly concerned about a public plan option, which they think will increase costs for private providers of health coverage.

Though the Senate Finance Committee passed a bill last week that included funding for health insurance cooperatives, a separate plan passed this summer by the Senate Health, Education, Labor and Pensions Committee would establish a publicly run health insurer to compete against private insurers.

Sen. Max Baucus, D-Montana and chairman of the Senate Finance Committee, has not ruled out endorsing the creation of a publicly run health insurance option, which has renewed worries among employers.

“I want any mechanism that keeps the health insurance industry’s feet to the fire,” Baucus said during a conference call with reporters Monday, October 19. “We need to find ways to help reach that goal.”

Employers are also trying to rally opposition to an amendment by Sen. Ron Wyden, D-Oregon, allowing companies to opt out of employer coverage.

Wyden, a longtime proponent of severing ties between employment and health care, says his amendment would allow some employees to receive a voucher equal to the value of the health plan offered by their employer and use it to purchase insurance on a health insurance exchange. Employers fear it would entice healthy employees to drop employer coverage.

Employers have also renewed their opposition to a mandate in the Senate HELP Committee that would require them to provide insurance to their employees or pay a fee.

There’s “no compromise” on those issues, said Martin Reiser, chairman of the national Coalition on Benefits, an organization composed of 200 employers and employer groups—including Xerox, UPS and Target—and such groups as the American Benefits Council and the National Association of Manufacturers.

“My sense is that the three are absolute bottom lines for everyone” in the business community, said Reiser, a manager of government policy for Norwalk, Connecticut-based Xerox.

After watching the relatively business-friendly health care reform bill pass through the Senate Finance Committee last week, the group helped hash out a more unified strategy through daily conference calls among members to beat back support for the public plan option, Wyden’s proposal and an employer mandate.

Employers also join health insurers and hospitals in worrying that any health care reform bill that does not assess heavier penalties on individuals who fail to buy health insurance will lead to higher health care costs overall and possibly more stringent requirements on businesses.

To ensure passage in the Finance Committee, legislators reduced the penalties individuals would have to pay if they did not buy insurance.

As it stands, the penalty would be phased in over five years beginning in 2013. By 2017, the penalty would be $750 per adult.

Most experts say that is not enough to compel young people to buy insurance. Employers say the penalties are not strong enough, and instead should be close to the cost of purchasing coverage.

“If the individual mandate doesn’t work, then this bill doesn’t work,” said James Gelfand, senior manager for health policy at the U.S. Chamber of Commerce. All proposals so far have included an individual mandate but have been vague on how the government would enforce the requirement.

The individual mandate is seen by experts as a twin pillar of health reform—the other being a guarantee that no American is denied coverage.

Baucus on Monday defended the Finance Committee bill but acknowledged that he hadn’t succeeded in crafting a law that would get every American enrolled in health insurance.

“We are wrestling with this concept of how to we get all Americans [into the health insurance system],” he said. “Everybody should participate in the system and have health insurance and we need to figure out ways to do that.”

Under the Baucus plan, an employer or health insurer would have to offer medical coverage that covered 65 percent of health care costs. Such a plan could not cost an employee more than 10 percent of that employee’s salary.

The Finance Committee bill would allow people under 25—the so-called young “invincibles” who tend to believe they do not need health insurance—to purchase cheaper catastrophic plans.

Employers had been pleased with the more business-friendly stance of the Finance Committee, which would impose softer penalties on employers that did not offer insurance.

In the Finance Committee bill, as of July 1, 2013, employers with 50 or more employees would be required to offer health insurance. If not, employers would have to reimburse the government for any subsidy provided to an employee.

The Senate HELP Committee and House bills would require employers to pay for richer coverage and would assess steeper fines.

—Jeremy Smerd

Stay informed and connected. Get human resources news and HR features via Workforce Management’s Twitter feed or RSS feeds for mobile devices and news readers.