The Power of A

The Senate Finance Committee yesterday released the legislative language for its health care reform proposal.  The massive 1,502 page bill contains few surprises, reflecting the Finance Committee mark-up earlier this month and technical corrections made to the language.

Of note to the nonprofit community is the legislative language on the small employer subsidy the bill would give for providing insurance.  Previously, the draft had indicated that only 501(c)(3) organizations would be eligible to receive a partial withholding tax credit if they offered credible insurance, had 25 or fewer employees, and had an average salary of under $40,000.  The new legislative language expands the number of organizations eligible to receive the credit:

“TAX-EXEMPT ELIGIBLE SMALL EMPLOYER.-For purposes of this section, the term ‘tax-exempt eligible small employer’ means an eligible small employer which is any organization described in section 501(c) which is exempt from taxation under section 501(a).”

While there are few surprises, there is still controversy surrounding the legislation.  The bill contains a 40% tax on so-called high-end insurance plans as the major revenue raiser for the bill.  Such a tax has raised opposition from liberal Senate Democrats and a majority of the House Democratic caucus.  Currently, Majority Leader Reid (D-NV) and other key Senate Democrats are working on merging the Finance and HELP committee bills for floor consideration.

Quick Hits

The Finance Committee changes eligibility for insurance subsidy to being based on “modified gross income” (subscription)… America’s Health Insurance Plans (AHIP) responds to complaints about their study on the impact of the Senate Finance bill… Could the public option make its way into the Senate health care bill?

Today, beginning at 10 AM, the Senate Finance Committee will vote to pass its version of health care reform.  If the bill passes committee (as it is expected to do) it will be merged by the Senate Majority Leader with the Senate HELP bill for Senate floor consideration.  There are some storylines the media are following leading up to the vote, including:

-  Whether Senator Olympia Snowe (R-ME) will vote for the bill: Senator Snowe is the only Republican on the committee who has indicated she could vote for the health care bill.  Finance Chair Baucus has been working with her to ensure some of her provisions have been included in the legislation, but Senator Snowe still has not indicated whether she will vote for it.  Politico breaks down the impact of her vote either way.

-  Will any Democrats vote against the bill: Senator Rockefeller (D-WV) does not like that the bill does not have a public option.  Senator Wyden (D-OR) wanted the insurance exchange open to more individuals, not just small businesses.  Senator Lincoln (D-AR) has expressed concern over the cost of the legislation.  The loss of more than one of these Senators with no Republican votes would defeat the bill.

-  The AHIP report: Yesterday, America’s Health Insurance Plans (AHIP) released a report stating the Finance Committee bill would end up costing families $4,000 more for insurance by 2019.  You can find the report here.  The White House yesterday accused insurance groups of playing politics with the timing and content of their report.  Today’s vote could show if the new information has an impact on anyone’s vote in committee.

Quick Hits

PBS’s The News Hour holds a conversation with the White House Office of Health Reform’s Nancy DeParle and AHIP’s Karen Ignagni… Senators John Kerry (D-MA) and Lindsay Graham (R-SC) write a New York Times editorial on climate change legislation… The Supreme Court is considering major case that could impact campaign financing for all corporations.

The big health care news this morning is the preliminary financial analysis the Congressional Budget Office (CBO) and Joint Taxation Committee (JTC) shared with the Senate Finance Committee.  In a letter to Chairman Baucus (D-MT), CBO Director Doug Elmendorf gave an estimate that the Senate Finance Committee’s health care proposal would cost $829 billion over 10 years, which is less than the House legislation and under the White House’s $900 billion limit.  The CBO and JTC also estimated the bill would cover 94% of citizens (91% of residents) and reduce the federal deficit by $81 billion in the first ten years, with additional savings in the subsequent 10 years.

While the financial estimate may boost passage of a comprehensive health care bill, especially the Finance Committee’s version, questions inside and outside Congress are still being debated on the merits of the Finance legislation.  Senate liberals are still concerned that the Finance bill will not have a robust public option, and they will likely fight for its inclusion on the Senate floor.  Liberals in both the House and Senate will also push for additional coverage in a final bill; the Finance proposal would leave almost 25 million Americans uninsured.

Outside of Congress, two key groups immediately expressed concern with the financial analysis.  Both hospital associations and insurance groups stated that the proposed cost of the bill and coverage would undermine their health reform agreements made with the White House and threatened to oppose the Finance legislation.  The Federation of American Hospitals argues that insuring only 94% of citizens and 91% of residents, and not the 97% and 94% the White House had promised, would leave hospitals with the cost of treating a large number of uninsured patients; this cost to hospitals would endanger the $155 billion the industry had promised to provide in health care savings over 10 years.  Insurance groups have also argued that the Finance bill lacks strong penalties for foregoing insurance, making it more likely individuals will pay a small penalty than buy insurance.  This, according to insurers, will weaken the insurance pools as the healthy will only seek insurance when ill.

Do you think the Finance language will be the Senate’s version of health care reform?

Quick Hits

House Democratic leadership outlines its public plan options, while members suggest additional alternatives… Leadership also looking ahead to a fight (subscription) with moderates over cost of health care bill… The Washington Post chart comparing the three major health care reform bills.

The inclusion of a bipartisan wellness amendment in the Senate Finance health care bill last week has sparked the formation of a coalition of associations and other groups claiming it undermines health care reform.

The Carper/Ensign amendment, adopted by an 18-4 vote, would allow employers whose employees participate in a variety of wellness programs to give a health insurance premium discount of up to 30%; the amendment increases the current federal level of 20%.  Qualified wellness programs would include weight loss programs and smoking cessation classes which employers want their employees to join to decrease their chance of high medical bills from preventable disease.  The amendment would allow the Department of Health and Human Services to even increase the discount up to 50%.

“Weight gain and unhealthy lifestyles that focus on smoking and lack of exercise have sky-rocketed our healthcare costs.  These costs could be lowered by focusing on what makes us healthy - through weight loss programs, smoking cessation and preventive care.  Voluntary employee participation in these areas should naturally be reflected in lower healthcare costs,” Ensign said in a statement.

Inclusion of the amendment in the Finance bill has created opposition from a wide range of associations, unions, and issue advocacy groups across the political spectrum.  Organizations such as the American Heart Association, American Diabetes Association, and the American Cancer Society-Cancer Action Network argue that the amendment’s inclusion creates a health coverage disparity between the healthy and those with chronic illness.  The coalition of organizations are conducting Hill visits advocating to members of Congress that legislating wellness programs into employer insurance will raise premiums for sicker employees, forcing those employees to drop coverage or move into a higher-cost plan.

“Charging people more for their insurance because they have a health condition is simply going to push people out of the system,” said American Heart Association CEO Nancy Brown to the National Journal (subscription).

The language also raises employee privacy concerns, the American Cancer Society’s Dick Woodruff told National Public Radio.  “I think it’s incredibly intrusive for a person to go to work and have to undergo, for instance, a cheek swab. And the results of that information get filed away somewhere. You don’t know what happens to that information.”

Do you think that health care reform legislation should have wellness provisions that allow for adjustable premiums?

Quick Hits

The nonpartisan Congressional Research Service released an analysis of the impact of health reform on small businesses… 154 House Democrats sign a letter opposing taxing “Cadillac” insurance plans… A bipartisan group is pushing the Senate Majority Leader to post the merged Senate health care bill on the internet for 72 hours… Moderate Senate Democrats are cautiously supporting the Carper public option alternative.

The Senate Finance Committee yesterday continued to debate the list of amendments to its comprehensive health care reform legislation, but conspicuously absent from the discussion were any amendments tied to the major issues being discussed by members of Congress and the media, according to Politico.  At the beginning of yesterday’s hearing, the first amendment discussed was Senator John Kerry’s (D-MA) changes to the tax on “Cadillac” insurance plans.  However, the discussion was quickly ended when Kerry stated his intention to withdraw his amendment, stopping the debate over a major proposal to pay for health care reform.  Instead, it looks like he will reintroduce the amendment on the Senate floor.  Public option alternative amendments by Senators Carper and Snowe, which have been discussed by Senate leadership in recent days as major proposals, are also not scheduled to be debated by the committee.

The result is that the Finance Committee markup will be completed by the end of the week, allowing for the merging of the Finance and HELP Committee legislation.  Senate Majority Leader Reid yesterday told reporters he was cancelling the Columbus Day recess, setting aside that time for a floor debate on health care.  It seems likely that it is during that debate that we will see (depending on the content of the merged bill) debates on a version of the public option (or a trigger for the public option) as well as ways to pay for the Senate legislation.

Debate yesterday instead focused mostly on social issues, including abortion and immigration.  A list of all amendments and the votes can be found at the America’s Health Insurance Plans website, but some amendments of note include:

-          The Ensign/Carper amendment that would allow employers to adjust health care premiums based on the workers’ healthy or unhealthy behavior (Passed 19-3).

-          A Grassley amendment to remove the $6 billion fee on insurance companies (Failed 10-13).

-          A Nelson amendment to allow seniors to claim a tax deduction if their catastrophic insurance costs exceeds 7.5% of their income (Passed 14-9).

Quick Hits

The U.S. Chamber of Commerce urges its members to oppose Wyden amendment C-1 that requires large employers to offer at least two health care plans to employees…  CBO failed to include an exemption for hospitals in the Finance bill’s Medicare cost-cutting commission, skewing the score (subscription)… The White House tax reform panel holds its first public hearing yesterday and hears from some associations… Senators Kerry and Boxer introduce the Senate climate change legislation… The Washington Post tries to define a “Cadillac” plan.

In a move the national media is decrying as the death of the public option, the Senate Finance Committee voted down two amendments yesterday that would have inserted language into the Chairman’s Mark creating and funding a public insurance plan run by the federal government.

The Chairman’s Mark currently has language funding the creation of nonprofit cooperative health care plans, an idea meant to entice Republican and moderate Democratic votes for the Finance Committee legislation.  Both amendments sought to replace the cooperative language with public option language.  The first amendment, offered by Senator Rockefeller (D-WV), would have created a public option with a reimbursement structure for the first two years that mirrored Medicare, after which the government would have negotiated reimbursement rates with providers.  The proposal, seen as the most liberal public option plan, was defeated 15-8 with opponents claiming the Medicare rates were too low for doctors and hospitals.

The second amendment was offered by Senator Charles Schumer (D-NY).  Like the Rockefeller amendment, the Schumer amendment would have created a public plan but have negotiated reimbursement rates with providers from its creation.  That amendment was defeated by a 13-10 vote, with all 10 Republican committee members voting against it with Senators Lincoln (D-AR), Conrad (D-ND), and Baucus (D-MT).  After considering those two amendments, the committee moved through a few more amendments (including approving a Republican amendment requiring members and staff to participate in a state-based exchange for insurance) before adjourning around 10 PM.  The markup will continue at 10 AM today, and is being broadcast over the internet at the committee website.

The 10^th Annual Summit Awards Dinner

A special thanks to those who attended and supported the 10^th Annual Summit Awards Dinner last night at the National Building Museum.  The dinner honors six incredible association programs (which you can see here) that exemplify the Power of A message of associations as pioneers of collaborative problem solving.  Please visit our site www.asaecenter.org/summitdinner in the upcoming weeks to view pictures of the event and find out more information about next year’s dinner.

Quick Hits

Roll Call (subscription) is reporting this morning that the White House is preparing a draft (or possibly multiple drafts) of health care legislation that can be introduced or use to influence the debate if Congress stalls on consideration of comprehensive legislation… America’s Health Insurance Plans, the trade association for the insurance industry, released an outline of how the Finance language would affect the insurance industry… Senator Carper (D-DE) is discussing with Democratic senators a state-based alternative to co-ops and the public plan… House leadership tries to trim the cost (subscription) of the Tri-Committee bill back to $900 billion.

Members of Congress and staffers have the day off in recognition of Yom Kippur, but even with the break they are preparing for a contentious week of health care debating.

Most of the attention this week will be on the Senate Finance Committee, which resumes its markup of the Chairman’s Mark health care language tomorrow.  Last week, the committee took an immense amount of time debating a few amendments, and moved many of the major debates (including financing) to this week.  Among the major amendments debated last week was the Nelson amendment that would require drug makers to provide rebates on drugs they sell to Medicare and Medicaid participants.  The amendment had aimed to close the Medicare “donut hole” but was opposed by the White House and Chairman Baucus as potentially undermining the deal the White House had with the Pharmaceutical Research and Manufacturers of America (PhRMA) to help pay for health care reform.  The amendment was defeated 10-13.

The following are the major issues that the committee will likely discuss over the next week, and may help pass or sink the legislation:

- The Rockefeller-Schumer Public Option Amendment: This is likely to be one of the most controversial amendments debated in the committee. The two Senators have pushed for an amendment that would replace the privately-owned cooperatives concept with a public option contained in the Senate HELP and House bills. It is likely the amendment will be defeated in committee but could be reoffered on the Senate floor.

- The “trigger” amendment: While an immediate implementation of a public option in a health care bill may be a non-starter, the idea of a public option “trigger” or delayed implementation may gather enough votes to pass. The trigger has the tentative support of Senator Olympia Snowe (R-ME) and would create a public insurance option if specified insurance reforms were not in place within a certain timeframe.

- Subsidies for middle class Americans: A major concern with some Senate Democrats is the perilous balance between an individual mandate and the cost of insurance. At issue is the concern that by mandating a certain level of insurance, some middle class families would face an increased insurance bill and instead opt to pay a financial penalty. Insurers are concerned this would weaken the pool of insured, especially since many of the opt-outs would be younger, generally healthier Americans. Others call it a tax on middle class Americans, something the bill seeks to avoid.

- Charitable deductions: Chairman Baucus has said any amendment that would add cost to his bill must be offset, and this is the most popular offset offered in members’ amendments. The provision would cap the value of itemized deductions at 33% or 35% for taxpayers whose brackets would be set to rise to 36% or 39.6% in 2011. ASAE and a host of other nonprofits oppose this provision as detrimental to charitable giving in a poor economy.

- Grassley amendments #489 and 490: While not tracked by most media, these two amendments by Senator Grassley would be onerous to many nonprofits. The amendments would they would (1) give the IRS statutory authority to require tax-exempt organizations to report governance and management information and (2) give the IRS expanded authority to challenge executive compensation. Both are being offered as “pay-fors” for health care reform, but it is unknown if the amendments will be debated this week or simply dropped.

Quick Hits:

The U.S. Chamber of Commerce emails the Finance Committee its objections to three major amendments to be considered… The White House shows how a health insurance exchange would work with a working example… Insurers advocate for an individual mandate without an easy opt-out… How the National Association of Insurance Commissioners would play a large role in reformed health care… USA Today offers pros and cons of taxing high-cost insurance plans.

As the Senate Finance Committee today continues to wade through hundreds of amendments to the health care reform bill drafted by committee Chairman Max Baucus (D-MT), ASAE has taken issue with two specific proposals that have generated concern in the nonprofit community.

The two amendments in question, filed by Senate Finance Ranking Member Charles Grassley (R-IA) in advance of the committee’s markup this week, would give the IRS statutory authority to require governance reporting from tax-exempt organizations, and expand the Service’s authority to challenge nonprofit executive compensation practices.

In a letter delivered to Senate Finance Committee offices yesterday, ASAE asks that both amendments not be accepted as part of the health care reform package currently in committee markup.

The IRS recently revised the Form 990 return filed by most tax-exempt organizations and added a new section on governance. The Grassley amendment, however, would protect the IRS from “wasteful legal challenges” by specifically mandating that the Service require governance information be reported in nonprofit filings. ASAE has voiced concern about the IRS creating uniform, narrow standards for good governance in light of the extraordinary diversity of the nonprofit sector. ASAE also believes the proposal could be interpreted to remove any legal recourse for exempt organizations whose governance practices are questioned by the IRS.

The second amendment would grant the IRS authority to subjectively determine whether an organization relied on appropriate comparable data in setting compensation for top executives. This extension of IRS authority seems “excessive and dangerous, and unfairly shifts the burden of proof to filing organizations to prove that the compensation is reasonable instead of the government,” ASAE stated.

What are your thoughts on these amendments?