Health Care Reform Plan Likely Moving Into Full Senate

The Senate Finance Committee is expected to pass sweeping health care reform legislation this week as the focus shifts to the Senate floor, the next battleground for the bill.

The Finance Committee completed action Friday, October 2, on the bill assembled by panel Chairman Max Baucus, D-Montana, having worked through 564 amendments.

This week, the committee will vote on the bill. Then, Senate Majority Leader Harry Reid, D-Nevada, will meld the Finance Committee measure with a very different one approved in July by the Health, Education, Labor and Pensions Committee for the full Senate to consider, probably beginning the week of October 12.

Many of the issues that dominated the Finance Committee deliberations during the past two weeks are certain to come up on the Senate floor. These include whether a government-run plan should be established to compete with private insurers and whether employers should be mandated to offer coverage.

“It is a milestone, but a long road remains,” said Paul Dennett, senior vice president of health care reform at the American Benefits Council in Washington.

“A big step has been completed, but an even bigger one lies ahead,” said Frank McArdle, a consultant in the Washington office of Hewitt Associates Inc.

In the House of Representatives, Democratic Party leaders have to put one bill together for floor debate from the measures passed in July by three House panels: the Education and Labor, Energy and Commerce, and Ways and Means committees. That also could happen as soon as mid-October.

“Certainly, a lot of spirited debate” is in the offing, said Neil Trautwein, vice president and employee benefits counsel with the National Retail Federation in Washington.

While there is a lot of work to be done, observers say enactment of reform legislation now appears more likely than ever.

“With an issue that is the top domestic priority for the president and significant Democratic majorities in the House and Senate, it would be difficult to see how that a reform bill won’t be enacted by the end of the year,” Dennett said.

Some last-minute actions by the Senate Finance Committee will be beneficial to employers, the most significant involving an excise tax that would be imposed on the costliest health plans.

Baucus had proposed a 40 percent excise tax on employer-provided coverage in which premiums exceed $8,000 a year for individual coverage and $21,000 for family coverage.

This would include premiums for medical, dental and vision care; employer contributions to health reimbursement arrangements and health savings accounts; and employee contributions to flexible spending accounts.

The threshold amounts would increase to match rises in the Consumer Price Index for urban areas, plus one percentage point.

Those $8,000 and $21,000 thresholds, which would begin in 2013, would be higher in certain cases.

For retirees age 55 and older in employer plans and employees in certain high-risk professions, the thresholds under an earlier proposal would have been $8,750 for individual coverage and $23,000 for family coverage.

However, the Finance Committee last week approved an amendment by Sen. John D. Rockefeller IV, D-West Virginia, to bump up the thresholds to $9,850 for single coverage and $26,000 for family coverage for early retirees and employees in high-risk professions, which include law enforcement, firefighting, rescue squads, ambulance crews, construction and mining.

The Finance Committee also accepted a change involving contributions to health care flexible spending accounts. Baucus initially proposed a $2,000 annual cap, but later bumped it up to $2,500, which the committee accepted. There is no cap under current law.

Benefit experts expect the FSA cap could be revised, either in the compromise bill Reid develops or perhaps on the Senate floor.

Baucus said he would accept indexing the $2,500 cap to the CPI. “That indicates some opportunities on the FSA cap issue,” Dennett said.

But the foundation of the bill remains intact. The legislation would create federal premium subsidies for the lower-income uninsured, a provision intended to make a big dent in the 46 million uninsured in the United States.

It also would impose penalties on individuals who do not enroll in a health insurance plan.

In addition, employers with more than 50 employees that provide plans in which premiums paid by employees are at least 10 percent of their adjusted gross incomes would be hit with financial penalties, generally no greater than $400 per employee. The same penalties would apply to employers with more than 50 employees that do not offer any coverage.

In addition, the legislation would reform the personal lines markets, including eliminating exclusions for pre-existing medical conditions.

Some proposed reforms could aid employers. For example, with an expansion of coverage, health care providers would have less uncompensated care, a cost now shifted to insured patients, McArdle said.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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