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Life Health > Health Insurance > Health Insurance

Baucus Changes Bill

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WASHINGTON BUREAU — Senate Finance Committee Chairman Max Baucus today brought a heavily revised version of his health reform proposal to a bill drafting session.

Baucus, D-Mont., said the changes would make the health care more affordable for low- and middle-income Americans.

Baucus unveiled new draft today as the Senate Finance Committee began a “markup” of the bill and the 564 amendments submitted by committee members. Baucus is hoping a completed bill can be reported out of the committee this week.

A description of the changes made to the original “chairman’s mark” version of Baucus’s America’s Healthy Future Act bill are available here.

That document and other documents related to the AHFA bill are available here.

Some of the changes Baucus made would increase the pressure on insurance companies. One would increase the excise tax the proposed plan would impose on insurers that sell high-cost health insurance policies.

Many of Baucus’s amendments incorporate changes sought by other committee members.

One revision would narrow the gap between the rates health insurers charge the oldest and youngest insureds to 4 to 1.

The revised bill would increase the proposed tax rate on so-called “Cadillac plans” to 40% percent, from 35%, and it would increase the health insurance provider fee to $6.7 billion per year, from $6 billion per year. This would be paid based on the market share of the insurer.

The new bill also would raise the threshold above which insurance companies would be subject to the “Cadillac tax” by $750 for individual plans and $2,000 for family plans for workers with high-risk jobs and for non-Medicare retirees ages 55 and up. The thresholds Baucus originally proposed were $8,000 for an individual and $21,000 for a family.

Baucus also is trying to keep insurers from discriminating against employees of midsize and large companies, by eliminating annual and lifetime limits for all plans participating in state exchanges and keeping midsize and large employers with group health plans from imposing unreasonable annual or lifetime limits on coverage.

Baucus is seeking to move the effective date of two proposed budget items that could squeeze revenue from flexible spending account and health savings account holders to Dec. 31, 2010, from Dec. 31, 2009.

One of the items would be a new limit on the amounts workers can contribute tax-free contributions to flexible spending accounts. The other would be an increase in the tax imposed on HSA withdrawals made before age 65 that are not used for qualified medical expenses to 20%.

Another Baucus bill HSA provision would impose a $2,500 cap on HSA contributions. The cap would not increase with inflation.

A Baucus bill FSA provision would combine FSAs with major medical plans in the calculations made to determine whether a health plan ought to be subject to the Cadillac plan tax.

Sen. Charles Grassley, R-Iowa, the highest-ranking Republican on the Senate Finance Committee, started the bill markup by praising Baucus but expressing concern about the health bill drafting process that the Obama administration set up.

“Few people have worked as hard as you have on this issue,” Grassley said to Baucus, according to a written version of his remarks. “Your tireless dedication to moving ahead can be seen in everything you have done to get to this day. And you created an environment in this committee for bipartisanship and collegial work on this very important issue. The roundtables and walkthroughs held this year were perhaps the most open and inclusive process this committee has undertaken in its history, I believe since I’ve been on the committee.”

But “I have a feeling the White House and the leadership on your side grew impatient and through artificial deadlines, forced us to where we are today,” Grassley said. “It seems to me that some people in the Senate would rather have it done right now instead of done right. That artificial deadline pushed us aside and put an end to that bipartisan work before it could produce a bipartisan bill.”

Republicans have been reluctant to try to support a bipartisan bill because of concerns about what the White House and congressional Democratic leaders would do to a bipartisan bill once it left the Finance Committee, Grassley said.

“No one wanted to be used in a process that was going to have the rug pulled out from under it at some point down the road,” Grassley said.

In related health news:

- The Congressional Budget Office released a study indicating that the cost of health coverage available through the proposed insurance exchanges would tend to be higher than the average premiums available through the individual market today.

Costs would be higher because the new policies would have to cover preexisting medical conditions, and issuers could not deny coverage to people with expensive health problems, CBO Director Douglas Elmendorf writes in a letter to Baucus that summarizes the CBO’s conclusions.

But, especially for people with health problems, paying more for coverage and knowing that coverage would be available would be better than having no access to coverage, Elmendorf writes.

Today, “some people with high expected costs for health care do not purchase insurance today because of the high premiums they would be charged; those premium amounts do not enter the average for the current market because the policies are not purchased, but those people would face lower premiums in the exchanges than in the current individual market,” Elmendorf writes.

The Baucus bill would impose new annual fees on manufacturers and importers of brand-name drugs and medical devices, on health insurance providers, and on clinical laboratories.

The premiums for the exchange plans would include the effects of those fees, which would increase premiums by about 1%, Elmendorf estimates.

- The Council of Insurance Agents and Brokers, Washington, is wondering whether a provision in Baucus bill that bars “insurance industry involvement and interference” in the operation of health care cooperatives could be interpreted as barring agents from working with coops and selling coop coverage.

CIAB President Ken Crerar expresses that concern in a letter to Baucus.

The language should be changed “to make clear that agents, brokers, third-party administrators and other service providers” can work with the new cooperatives, Crerar writes.

Agents, brokers, TPAs, and other service providers, have long played a significant role in the provision and service of health care insurance, delivering valuable services to individuals and employers in the design and ongoing operation of their health plans, Crerar writes.

As benefits specialists, “agents and brokers are subject to rigorous state licensing and continuing education requirements, and serve a proud and important role as advocates for their clients,” Crerar writes.


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