Issues with the House Passed Health Reform Bill
Key issues of concern with House passed legislation:
1. Employer mandate to “pay” or “play. The House legislation contains a provision that employers must either offer health benefits that meet a specified essential benefit structure and pay 72.5% of the individual premium or 65% of the family premium or pay 8% of total payroll. While employers do not have to comply with the benefit requirements for five years, this level of detail into the plan design and amount of payment undercuts ERISA’s current flexibility that permits employers to design benefit plans that meet employees’ needs. This essentially mandates how much employers must pay irrespective of their profitability and without regard to whether these additional costs will create a bankruptcy.
2. Public plan. The House legislation authorizes a public plan to be offered within the exchange. This plan will be required to “negotiate rates” with providers, but will be a “government-directed” plan. While the exchange is only available to individuals and small employers in the first five years, it is expected that the public plan will result in greater cost shift to private payers and the public plan will not innovate. This cost shift will create a greater cost to employers, again making them less competitive in the global marketplace.
3. Other Requirements on Employer-sponsored coverage. The House legislation has a “maintenance of effort” requirement for all employer-sponsored retiree health plans. There are also additional administrative and regulatory requirements that may be imposed in the future.
4. Revenue offsets that are outside of health care spending. The revenue offsets are primarily from reductions in Medicare and a tax on high-income earners. The tax on high-income earners will only “add” costs to the health care system, rather than finding ways to reduce overall spending or make the health care system more affordable.
The bill is without much of the regulatory detail that will emerge years after passage. This will result in uncertainty and the likelihood that more employers will abandon private insurance.
No comments yet.