Senate Finance Chairman Max Baucus Releases Long-Awaited Health Reform Plan
After months of intense negotiations, Senate Finance Committee Chairman Max Baucus (D-MT) officially released his plan (America's Healthy Future Act of 2009) to overhaul the nation’s health care system.
Stakeholders have long anticipated the introduction of the Chairman’s proposal, culminating nearly a year of intense negotiations between three Democratic and three Republican members of the Finance Committee Democrat nicknamed “The Gang of Six,” as the best chance for gaining bipartisan support for health reform. However, as Baucus previewed the proposal at a post-introduction press conference, he stood alone as no other Republican nor Democrat has lent their name in support of the measure.
In his printed press statement
released upon introduction of the proposal, Baucus said that his legislation “will rein in health care costs and deliver quality, affordable care to the American people.”
The plan is estimated to cost $774 billion over 10 years, financed largely through savings from health care delivery system reforms and additional assessments on health care providers.
Specific provisions of interest to HR professionals include the following:
· Individual Requirement – Beginning in 2013, the plan would require all U.S. citizens and legal residents to purchase coverage through the individual market, a public program, Tricare or through an employer. Failure to comply would result in an excise tax on the individual. Tax credits would be available for low-income individuals who cannot afford coverage.
Employers with 200 or more employees must automatically enroll employees in health insurance plans offered by the employer, although employees could opt out if they demonstrate they have coverage from another source.
· Employer Requirement – Employers would not be required to provide health care coverage. However, all employers with more than 50 employees that do not offer coverage would be required to pay a fee for each employee who receives a tax credit for health insurance through a state exchange. The fee would be equal to the average tax credit in the state exchanges and capped for all employers at an amount equal to $400 multiplied by the total number of employees at the organization, regardless of how many receive the state exchange tax credit.
· Employer Reporting Requirement – The proposal would require employers to disclose the aggregate premiums for health insurance coverage for each employee on his or her annual Form W-2.
· Tax on High Cost Health Plans – Starting in 2013, the bill would impose a 35% non-deductible excise tax on insurance companies that offer health plans that cost more than $8,000 a year for individuals and $21,000 for families. In determining the “value” of the employer-sponsored health insurance coverage, the aggregate value of all employer-sponsored health insurance coverage is taken into account, including coverage in the form of reimbursements under a health Flexible Spending Account (FSA) or a Health Reimbursement Account (HRA), employer contributions to a Health Savings Account (HSA), and coverage for dental, vision, and other supplementary health coverage.
· Health Spending Accounts – The Baucus plan would cap the amount of tax-free contributions to a health FSA at $2,000 (currently $5,000) starting in 2013 and would also exclude over-the-counter medications as an allowable FSA expense. With regard to Health Savings Accounts, the proposal would increase penalties on distributions from an HSA that are not used for qualified medical expenses from 10% to 20% starting in 2010.
· Health Care Cooperatives – Rather than a government-run public plan option, the Baucus plan would authorize the formation of Consumer Owned and Oriented Plans (CO-OP). These plans could operate at the state, regional or national level to serve as non-profit, member-run health plans to compete in the reformed non-group and small group markets.
In general, Chairman Baucus has embraced a much more centrist approach to health reform than the three House proposals approved by their respective committees of jurisdiction, or the version that has been proposed by the Senate Health, Education, Labor and Pensions Committee.
Members of the benefits community have publicly stated that the Baucus proposal is preferable to some of the other reform bills. “It’s significantly better than anything else we’ve seen from Congress,” said Gretchen Young, vice president of health policy at the ERISA Industry Committee. However, she added that she still has concerns about the excise tax on insurance plans, which would translate to a tax on self-funded plans.
In addition, two major anti-deficit groups have expressed guarded optimism said the Baucus plan has the potential to help ease the budget crunch resulting from rising health care.
Although an improvement over other versions of health reform, several provisions in the proposal are of concern to SHRM, namely the tax on high dollar health plans and changes to Flexible Spending Accounts. The Society is crafting a letter expressing those concerns and will communicate these views to key Members of Congress.
The Senate Finance Committee has begun consideration of Chairman Baucus’ “America’s Healthy Future Act” this morning, September 22, 2009. To follow the Committee’s action on the bill, click HERE and scroll down on the page to access a live webcast of the hearing.