Ilovebenefits’s Blog

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Health Care Reform Update

Here is a well written synopsis of where the health care reform efforts stand as of September 28th.



Last week, the Senate Finance Committee began considering over 500 amendments to Senator Max Baucus’ (D-MT) long-awaited health care reform bill.  The Committee will continue its work on the last of the three Congressional health reform bills this week.  After a few days of amendments, the price tag has now increased to $900 billion from when Senator Baucus introduced it at $774 billion over 10 years.  The bill would reform the individual and small group markets and pay for an expansion of health coverage to the uninsured by taxing “high cost” insurance and employer plans, cutting private Medicare Advantage plan payments, and assessing fees on all insurers, pharmaceutical companies, medical device manufacturers and clinical laboratories.

Senator Baucus compromised on several provisions to appease liberal Democrats on the committee such as providing additional Medicaid assistance to states with seasonally adjusted unemployment rates of 12% or higher for August 2009 and accepted part or all of 10 amendments filed by Senator Olympia Snowe (R-ME), who is the Republican most likely to vote for the bill.  However, Senator Snowe voiced concern about the overall cost of the bill and the need to have more specific language and cost information before the final vote.

The Committee defeated a number of amendments to remove Medicare payment cuts to hospitals, nursing homes and other health care providers; cut $113 billion in payments to Medicare Advantage plans; and eliminate an independent commission with increased powers to reduce Medicare payments.

The Committee defeated attempts by Senators John Kerry (D-MA) and Jeff Bingaman (D-NM) to add an employer mandate and attempts by Senator Charles Grassley (R-IA) to remove the individual mandate.  Senators John Rockefeller (D-WV) and Charles Schumer (D-NY) plan to offer amendments for a government-run plan. Other amendments would increase the subsidies for low-income people to afford coverage.

Once the Committee completes consideration of all amendments and votes to approve the bill, Senate Majority Leader Harry Reid (D-NV) will combine it with the rival version passed by the Senate Health, Education, Labor and Pensions (HELP) Committee, which includes an employer mandate and a government-run plan.

Meanwhile in the House, Majority Leader Steny Hoyer (D-MD) reached out to Minority Whip Eric Cantor (R-VA) and Representative Charles Boustany (R-LA) this week to discuss areas of agreement between Republicans and centrist and fiscally conservative “Blue Dog” Democrats. Many “Blue Dog” Democrats currently oppose the House bill because Speaker Nancy Pelosi, (D-CA) continues to support a government-run plan modeled after Medicare, breaking a previous agreement with Representative Mike Ross (D-AR), a “Blue Dog” leader.

Notable provisions of the Senate Finance Committee bill include:

  • Excise Tax on Health Plans (Including Employer Plans): Would impose an excise tax of 40% on the aggregate value of employer-sponsored health coverage above threshold amounts, beginning in 2013.  Plans would calculate COBRA amounts for medical coverage, Flexible Spending Account (FSA) amounts, Health Reimbursement Arrangement (HRA) amounts, employer Health Savings Account (HSA) contributions, and dental, vision, and other supplemental insurance. The threshold amounts would rise for those over 55 or in high risk professions to $8,750 for single coverage and $23,000 for family coverage, but would be $8,000 for single coverage and $21,000 for family coverage for everyone else, beginning in 2013.
  • Free Rider Assessment:  Employers would not be required to offer coverage. However, if employers with 50 or more full-time employees (30 hours and above) do not offer health coverage with an actuarial value of at least 65% (Bronze Exchange plan) or employers’ coverage exceeds 12% of specific employees’ modified adjusted gross incomes, then employees may apply for a tax credit for exchange coverage. Employers would pay the lesser of the “flat dollar amount” set by the Health and Human Services (HHS) Secretary multiplied by the number of employees receiving the tax credit or a fee of $400 per employee multiplied by its total number of employees (regardless of the number of employees receiving the credit).
  • Health Account Changes: Would set the FSA contribution limit at $2,500, to take effect in 2011.
  • Eligibility for Tax Credits: Would provide refundable tax credits (based on the Silver Exchange Plan—70% actuarial value) to individuals (single or joint filers) with modified adjusted gross incomes at or below 300% of federal poverty ($66,150/family of 4) from 3% for those at 100% of federal poverty up to 13% for those at 300% of federal poverty. Individuals with modified adjusted gross incomes between 300%-400% of federal poverty could receive tax credits based on their share of premiums, capped at 13% of income. Employees could only receive tax credits if they receive waivers from state exchanges that their employers’ plans are either greater than 12% of their modified gross incomes or have actuarial values of less than 65% (Bronze Exchange plan).
  • Medicare Advantage Plan Payment Cuts: Would reduce Medicare Advantage (MA) payments by 3% in 2011, base MA payments on a blend of current benchmarks and plans’ bids in 2012 (33% based on competitive bids) and 2013 (67% based on competitive bids) and move to a full competitive bidding process to base payments on the average of plan bids, beginning in 2014. Would shift the annual enrollment dates for MA plans to October 15-December 7 and allow MA enrollees to disenroll and return to traditional Medicare from January 1-February 15.  Would provide bonus payments to MA plans with care coordination/quality improvements, beginning in 2014. Would allow HHS to grant employer-based Private-Fee-For-Service MA plans a waiver from the network requirements (2 or more plans, contracted provider networks). MA plans could grandfather their extra benefits in areas where average plan bids are greater than 85% of local fee-for-service costs, in 2012—these plans would not receive quality bonus payments.
  • Taxing of Employers’ Retiree Drug Subsidy (RDS): Employers that provide prescription drug plans for their Medicare Part D eligible retirees could no longer exclude the Part D subsidy from gross incomes for corporate income tax purposes.
  • Medicare Physician Payments: Would implement value-based, budget neutral, Medicare physician payment adjustments based on the quality of care relative to cost, beginning in 2015.
  • Individual Coverage Requirement Maximum Penalty:  By 2013, would require all citizens to have health coverage when affordable options are available including employer coverage, the new cooperative health plan, private plans in national/state insurance exchanges, Medicare, Medicaid and SCHIP or pay an annual penalty between $750 and $1,900, depending on their modified adjusted gross incomes, (maximum of $1,500 for people between 100% and 300% of federal poverty). Citizens are exempt the individual coverage requirement if the lowest cost premium (the net of subsidies and any employer contribution) available exceeds 10% of their modified adjusted gross incomes (indexed for premium growth).
  • Wellness Premium Discounts: Would permit employer-sponsored plans to offer employees up to a 30% discount for participation in wellness programs if approved by the Departments of HHS, Labor and Treasury.
  • Comparative Effectiveness Research Center: Would create a nonprofit institute to set a research agenda, conduct and publicly disclose comparative effectiveness research with $150 million over 5 years raised through a per Medicare beneficiary contribution and a per covered life assessment on private and self-insured health plans.  The HHS Secretary could not use the comparative effectiveness research findings to limit access to care. 

September 29, 2009 - Posted by | Federal Government, healthcare | ,

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