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Health Care Reform

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Just as the hazy, hot days of summer roll into the Nation’s capital, debate on overhauling our health care system is heating up.  Earlier this week, Senator Ted Kennedy (D-MA) released the Affordable Health Choices Act, the first comprehensive health reform proposal to be circulated on Capitol Hill.   

The Senate Health, Education, Labor and Pensions Committee held the first of a series of hearings planned on Kennedy’s draft plan on June 10, and the committee is expected to begin finalizing the details of the legislation this month.

In short, the Affordable Health Choices Act includes:

A mandate for individuals to purchase health care coverage, with subsidies provided for low-income individuals;

A mandate on employers to provide health care coverage, with a “small business” exemption;

A public plan option, which Republicans have suggested is the first step toward government-run health care;

The creation of a Health Care Gateway (often referred to as an exchange or connector) to assist individuals and employers in purchasing health care coverage; and

Disease prevention, public health, and wellness program modernizations.

The Senate Finance Committee, which is charged with determining how to pay for health reform, is also moving forward on a comprehensive reform proposal that will likely be introduced next week.  The Finance Committee’s task is perhaps the most daunting because some experts have recently suggested the price tag for health care reform will run $1.3 - 1.5 trillion, with a few saying it could grow to as much as $2 trillion.

One alternative to help pay for reform that is gaining momentum among policymakers is changing the tax exclusion for employer-provided health care benefits.  Interest in this idea has grown as a result of a Joint Committee on Taxation report that suggested taxing a portion of employer-provided benefits would generate $418.5 billion over 10 years, an option that is generally opposed by SHRM, employer and union groups. 

To help garner support for this provision, Finance Committee Chairman Max Baucus (D-MT) has suggested that he would ensure this “cap” on the value of employee health care benefits would not take effect for “a number of years;” would include a “grandfather” provision for collective bargaining agreements; and that the “cap” would be higher than the cost ($13,000) of the average federal employee’s health plan.  It is still unclear how health care accounts such as Health Savings Accounts and Flexible Spending Accounts would be treated under such a cap.

As Congress sorts through these contentious reform options, SHRM will continue to advocate for HR’s reform goals:

1.      Strengthen and improve the employer-based health care system

2.      Encourage greater use of health prevention, promotion, and wellness programs

3.      Strengthen the Employee Retirement Incomes Security Act to ensure a national, uniform framework for health care benefits

4.      Reduce health care costs by improving quality and transparency

5.      Ensure tax policy contributes to lower costs and greater access



 Next Issue


The next issue of HR Issues Update will be published on Friday, June 26, 2009.

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