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Life Health > Health Insurance > Your Practice

Congress Pursuing Health Care Reform On Many Fronts

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Congress appeared to be moving late last week toward healthcare reform legislation that addresses the concerns of the health insurance industry, but industry officials say enactment of final legislation is unlikely to occur before late fall at the earliest.

At the same time, however, support appears to be growing in Congress for including in the bill a provision creating a long term care entitlement program, the so-called CLASS Act or Community Living Assistance Services and Support Act.

Industry officials voiced dismay at this development.

On the total package, a bipartisan group of members of the Senate Finance Committee, whose chairman is Sen. Max Baucus, D-Mont., were moving at press time toward drafting legislation that would include incentives for employers to provide health insurance coverage for their workers rather than impose a more drastic mandate.

The Senate Finance bill would also mandate creation of health insurance “cooperatives” modeled after rural electricity providers rather than the so-called “public option” strongly opposed by both health insurers and agents.

And sources close to the panel say the committee’s final product is likely to propose narrowly targeted tax increases, unlike the controversial tax surcharge on the wealthy adopted by the House, and limits on deductions for high-income taxpayers supported by the Obama administration.

Industry officials and congressional staffers said the Senate panel could vote on the measure before the Senate leaves for its summer recess Aug. 7.

In the House, opposition by conservative Democrats to provisions also opposed by the insurance industry as well as Republicans, have delayed action by three committees dealing with healthcare reform until fall.

Diane Boyle, executive vice president of the Association of Health Insurance Advisors, said her members are “encouraged” by the latest events.

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

She specifically cited the provisions dealing with the employer mandate and the public options.

Boyle said she was also encouraged by the decision of the House to delay action until after the recess. “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 said

Joel Kopperud, director of government affairs for the Council of Insurance Agents and Brokers, said the concern about the employer mandate within the industry is that a mandate would have acted as an incentive for companies to pay the penalty imposed by the House bill, as much as $800 per employee, rather than buy group insurance policies for the entire company.

“I think the most important news is the employer mandate piece as it relates to the public option,” he said. “If the package includes a cooperative instead of the government-run plan that is in the versions of the legislation drafted by the Senate Health, Education, Labor and Pension Committee and is also in the House bill, it’s more likely that the private sector will be able to fairly compete.”

He explained that a “public” health plan would pay no state premium taxes, would not have to generate a profit to keep operating, and would have lower costs for administration, such as offices and employees.

“A public plan will undermine the private marketplace, whereas a cooperative is more likely to compete on a level playing field than a government insurance plan,” Kopperud said.

“The devil is in the details, but, this is significant progress,” he said.

Regarding the CLASS Act, on July 20, during a markup that extended until midnight, the House Energy and Commerce Committee added the provision to the House bill. It is now only included in the version of the legislation adopted in mid-July in the Senate HELP Committee.

The amendment to the House bill was offered by Rep. Frank Pallone, D-N.J., chairman of the panel’s Health Subcommittee.

It contains the same language added by Republicans in the HELP bill which directs the Health and Human Services Secretary to develop the program in an “actuarially sound manner” and to take actions necessary, including adjusting benefits or premiums, to maintain program solvency and ensure that the program remains deficit neutral.

In comments on the Senate floor on July 28, Sen. Herbert Kohl, D-Wis., chairman of the Senate Aging Committee, voiced strong support for the provision as one of his priorities for healthcare reform.

“This bill would provide new funding for long term care through a voluntary social insurance program,” he said.

But Frank Keating, president and CEO of the American Council of Life Insurance, and Jessie Slome, executive director of the American Association for LTC Insurance, reiterated the industry’s concern with the provision.

In a letter to HHS Secretary Kathleen Sebelius, Keating said the provision would provide “an inadequate benefit and likely create confusion over the costs of long-term care services.”

Keating said in the letter that “the benefit would pay, at most, 12% of their potential round-the-clock home care costs.

“Yet, far too many enrollees are likely to believe that participation in the program is all they need to protect themselves and their families from the financial burdens of long-term care,” Keating said.

Slome added that, “I anticipate well-meaning politicians will ultimately pass legislation creating a new voluntary entitlement program that provides long-term care benefits to Americans.”

But, he said, “when provisions designed to maintain the program’s solvency prove to be unpalatable to the very people the program is intended to benefit, the only recourse will be a mandatory tax on employers and employees.”

That, Slome said, “is good news for insurance producers who will be able to market LTC-supplement plans to those who fear dependence on inadequately funded government programs.”

He also called it “good news” for millions of baby boomers. “By the time the new mandatory tax is required, most will have ceased working (and contributing to Medicare).

“But, Senator Kennedy’s legacy for millions of younger working (and tax-paying) Americans will be a plan for funding our (baby boomers’) failure to plan,” Slome added.


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