The Power of A

Yesterday, the House Democratic leadership unveiled their comprehensive healthcare legislation.  The legislation has a few changes from the discussion draft circulated last month (you can see the changes here) but the major ones include a new surtax on high-income families and a sliding scale penalty for small businesses that do not offer health insurance coverage.  To help associations make sense of the provisions, ASAE below has outlined below what the bill could mean for associations and their employees:

Businesses (Including Associations)

1. Businesses would be required to provide a minimal level of coverage for employees or pay a penalty of 8% of their payroll. The minimum level of coverage is specified in the bill and can be further specified by the Health Benefits Advisory Committee.

2. Employers would be required to contribute 72.5% of the cost of premiums for FTEs’ coverage and 65% of family plans.

3. Five years after the bill is passed, all businesses would be required to meet the minimum coverage standards required of those in the Exchange. Also, employers could no longer place annual or lifetime caps on plans.

4. Employers that offer health insurance must provide a process to automatically enroll employees into their health plan with the lowest premium. Those same employees are eligible to opt-out of the plan.

Small Business

1. Small businesses, based on size, are eligible to participate in the Health Insurance Exchange to find insurance for employees. Companies with ten or fewer employees can participate in the first year, and it expands to 20 or fewer employees in the second year. After the second year, participation can be extended to additional businesses. Businesses that participate in the Exchange have their plans for employees managed by the Exchange.

2. All businesses with payroll under $250,000 are exempt from the employer mandate. Businesses with payroll between $250,000 and $400,000 that do not provide insurance would pay a modified fee based on their payroll size (2% for $250k-$300k; 4% for $300k-$350k; and 6% for $350k-$400k).

3. A tax credit is provided to small businesses that offer health insurance.

Individuals

1. Individuals not covered by their employers may participate in the Health Insurance Exchange to find coverage fitting themselves or their family, either through private insurance or a public insurance plan.

2. “Affordability credits” would be available for individuals and families up to 400% of the federal poverty level ($43,000 for individuals and $88,000 for families) on a sliding scale. The credits would be administered through the Exchange. Families and individuals at or below 133% of the federal poverty level are eligible to be covered by Medicaid.

3. The bill imposes an individual mandate; the penalty for failure to have coverage would be 2.5% of the person’s modified AGI but would not exceed the average cost of a health care policy in the Exchange.

4. If an employee’s insurance costs their employer more than 11% of that employee’s AGI, that employee can leave the employer plan and enter the Exchange.

5. Families whose income exceeds $350,000 (or individuals whose income exceeds $280,000 annually) would pay a surtax to finance the reform. Families earning between $350,000 and $500,000 would pay a 1% surtax; those earning between $500,000 and $1,000,000 would pay a 1.5% surtax. Those families earning above $1,000,000 annually would pay a 5.4% surtax. The surtax numbers could increase if the anticipated healthcare revenue does not meet the expected level.

Does the House proposal positively or negatively affect associations?

Quick Hits

HELP Committee passes its version of the healthcare bill… The Blue Dog coalition is not entirely pleased with the House bill, but the Progressive Caucus is… The Wall Street Journal analyzes on how the bill would affect small businesses… House Republicans prepare to release their own healthcare overhaul language… Is the Senate Finance Committee considering stricter reporting on corporations’ 1099 forms to pay for their legislation? (subscription)… Or are they considering a windfall profit tax on private insurers?… President Obama will speak on healthcare in the Rose Garden today with the American Nurses Association.

In an interview with the Associated Press, Maine Senator Olympia Snowe (R-ME) outlined her support for a public plan with a trigger option as a possible compromise to the stalemate over inclusion of a public plan in comprehensive health care reform.

The trigger option would mean a government-run insurance company would only come into existence if private insurance companies failed to enact specified reforms. Senator Snowe stated her opposition to a public plan that is immediately created, saying: “If you establish a public option at the forefront that goes head-to-head and competes with the private health insurance market … the public option will have significant price advantages”

However, in the interview she expressed a desire to reform the insurance market. “I don’t think we can entirely depend on the private insurance market to deliver. They haven’t delivered thus far, and that’s why we’re in the predicament we’re in today,” she said.

Also this morning, Politico obtained a Senate Health Education Labor and Pension (HELP) Committee document outlining its proposal for a public plan in its legislation. The proposal would be a weaker version of the House version of the public plan, but more government-oriented than the co-op proposal. Details of the “Community Health Insurance Option” can be found here, but highlights include:

- The public plan would be an offering to the bill’s insurance exchange, and would follow the same rules as private insurers except the federal government would set reserve requirements.

- For the first three months, the government (specifically HHS) would pay the plan’s claims. This would be considered a loan to be repaid by the plan.

- The payment rates paid by the public plan would be no more than the local average of private rates, but could be less.

- There is no requirement that a health care provider participate in the plan.

Quick Hits

White House Press Secretary Robert Gibbs gives a non-committal answer (subscription) to whether the president is open to taxing employer-provided health care… the Small Business Coalition for Affordable Healthcare releases its first YouTube video… a list of other groups advertising (subscription) over the Congressional recess.