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Life Health > Health Insurance > Health Insurance

Health Reform Creeps Along

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WASHINGTON BUREAU — Senate Finance Committee leaders have confirmed that 6 members are making progress toward drafting bipartisan health reform legislation that the insurance industry could support.

But committee leaders say no deal is about to come out.

“While progress has been made in recent days, neither an accord nor an announcement is imminent,” Sen. Max Baucus, D-Mont., chairman of the Finance Committee, and Sen. Charles Grassley, R-Iowa, the highest-ranking Republican member of the panel, said in a statement.

“Significant policy issues remain to be discussed among the members, and any one of these issues could preclude bipartisan agreement,” Baucus and Grassley said. “Members are continuing their methodical work this morning.”

The bipartisan version of the legislation would include incentives for employers to provide health insurance coverage for their workers rather than impose a more drastic mandate.

The Senate Finance bill also would mandate the creation of health insurance “cooperatives” modeled after rural electricity providers rather than creating the so-called “public option” health plan. Creation of a new public health plan program is strongly opposed by both health underwriters and agents.

Baucus emerged from a meeting with the 6 members of his committee who are working on the bipartisan bill and told reporters that he had received a preliminary report from the Congressional Budget Office.

He said that, based on a draft of the health reform bill that lawmakers are currently negotiating, the CBO estimates the cost of the bill to be less than $900 billion over 10 years.

The bill would provide coverage for 95% of all Americans by 2015 and is fully offset, Baucus said.

“In fact, according to the preliminary CBO report, the bill would actually reduce the federal deficit in the 10th year by several billion dollars,” he said. “In addition, employer-sponsored coverage increases throughout the life of the program. That is, there is no net crowd out.”

In his comments, Baucus warned that the current draft does not include resolution of several key issues. “Nevertheless, the report is encouraging,” he said.

One provision contained in the proposed legislation is prompting criticism from America’s Health Insurance Plans, Washington.

This would be a proposed tax on insurance companies offering individual plans valued at more than a certain limit, estimated by AHIP to vary between $21,000 and $25,000, according to various reports.

Insurers would have to pay an excise tax on such policies, and the cost would likely be passed on to employers. While the structure isn’t clear, the tax would likely fall on the portion of any policy exceeding the mandated limit.

Robert Zirkelbach, an AHIP spokesman, says taxing insurers “is the wrong approach at the wrong time. New taxes on health care coverage will make coverage less affordable.”

The new tax would disproportionately affect employees in high-cost states, such as New York, California and Texas, as well as older workers “who have more comprehensive benefits packages,” Zirkelbach says.

Diane Boyle, executive vice president of the Association of Health Insurance Advisors, an affiliate of the National Association of Insurance and Financial Advisors, Falls Church, Va., says AHIA members are “encouraged” by the latest events.

“The negotiations in the Senate Finance Committee look promising,” Boyle says. “We were always hopeful that what would come out of the Senate Finance Committee would be more to our liking and what we are seeing indicates that will most likely be true.”

She cited the provisions dealing with the employer mandate and the public option. But, she says, final action on the legislation is unlikely until fall.

Boyle says she also is encouraged by the House decision to delay action until after the break. “We are hopeful that the House tri-committees will use the delay until after the recess to come back and amend the current draft to make it more amenable and realistic,” she says.

In related news, support appears to be growing in Congress for adopt a health system bill that includes a provision that would create a long term care entitlement program.

The Senate Health, Education, Labor and Pensions Committee has included a Community Living Assistance Services and Support Act, or CLASS Act, provision in its version of the health system change bill.

The American Council of Life Insurers, Washington, has insisted this week in a video, in a public statement and in a letter to Health and Human Services Secretary Kathleen Sebelius that the CLASS Act is well-intentioned but, as currently written, would expose program participants to big, unexpected bills.

The voluntary program would cost about $60 per month at first, and it would pay a minimum benefit of $50 per day, according to the provision text.

“The benefits received by program participants are a fraction of the real cost of long-term care services,” ACLI President Frank Keating says in a statement. “Nursing home care now averages $203 per day and will rise to $740 per day in 30 years. Round-the-clock home health care services now cost $1,100 per day and will likely rise to $2,000 within five years.”

Offering a $50-per-day benefit would mislead U.S. residents about the true cost of care, adding to the current epidemic of confusion, Keating says.

Many surveys have found that U.S. residents already mistakenly believe that Medicare will pay for long term care services, Keating notes.

If the CLASS Act adds to the confusion, “people will not take the appropriate steps on their own to address this crucial financial planning issue,” Keating says.

In addition, the program would start off on a weak financial footing, and no private program with such a weak design would be allowed on the market, Keating says.


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