PREPARING FOR SENATE ACTION

November 16,2009 -- Jeri G. Kubicki -- NAM

Last week, 220 House members celebrated their slim victory – passage of H.R. 3962 – by a margin of 220–215. In response, many disappointed groups were quick to notify the Senate that the House bill, with its onerous mandates, public plan, billions in new taxes and lack of provisions that reduce long-term costs by improving delivery and performance, is not the right approach to health care reform.

H.R. 3962 is clearly the worst of the health care reform bills in play for manufacturers. It fails to adequately address the high cost of care and insurance coverage, limits our options and flexibility, and adds onerous tax burdens. In addition to employer mandates, including minimum contribution and design requirements, and a public plan that will ultimately shift more costs to employers, the bill limits the flexibility for employers to make changes to retiree benefits and includes a “voluntary” long-term care program that mandates employers to automatically enroll employees in the plan (unless employees opt out) and collect premiums through payroll deduction. Other employer requirements are ambiguous at best.

The Administration congratulated the House on passage of the measure, indicating President Obama’s desire to sign a bill before Christmas. This instigated action from Senate Majority Leader Reid (D-NV), who announced Tuesday that Senate action will occur next week. Many believe this means Leader Reid will try to get the necessary 60 votes required to start debate, but actually wait to debate the Senate bill (as legislative language still has not been released) until the week after Thanksgiving. The Senate has been back and forth with the Congressional Budget Office (CBO) for weeks tweaking bill language in an effort to meet affordability expectations and ensure the package is fully paid for.

The NAM and members of the National Coalition of Benefits will be swarming Senate offices to be sure we explain the problems in the House bill and discuss what real reform looks like. All rumors indicate that the House bill is a non-starter in the Senate. That being said, we are not taking any chances. Two social issues are likely to consume much debate: abortion and immigration.

Abortion is likely to be a heated issue as the Stupak amendment that was passed in the House prevents insurance plans and the public plan from receiving federal monies to cover elective abortions, with the exception of certain cases such as rape or incest. On the Senate side, there is a general agreement that the Stupak amendment goes too far, and many believe that if a bill prevents federal funds for abortions, private plans should be permitted to offer those services.

On the immigration front, neither the House nor Senate bills in play allow illegal immigrants to obtain direct subsidies or benefits, which means no Medicare/Medicaid, government subsidies, or affordability credits for those making up to 400 percent of the federal poverty level ($88,000 for a family of four). The House-passed bill allows illegal immigrants to purchase insurance in the health insurance exchange, including through the government-sponsored public option. There is growing concern that a public option could make premiums affordable for purchase by illegal immigrants by further shifting costs to employers and other taxpayers. The Senate HELP bill also allows illegal immigrants the ability to purchase from the exchange, but the Finance bill bars illegal immigrants from doing so. We are hearing that the merged Senate language will also prohibit illegal immigrants from the exchange, which will have the President's backing.

On the Financing side, Senate Majority Leader Reid is floating the idea of increasing the Medicare payroll tax on incomes over $250,000 as a way to pay for health care reform. The current Medicare tax is 2.9 percent, split between employer and employee (unlike Social Security, there is no income cap). The Senate Finance bill is currently paid for with an excise tax on high-cost insurance plans – but that proposal is unpopular with unions and would put the President in a position of breaking his pledge not to increase taxes on individuals making less than $250,000. Currently there are no details on what a new rate might look like or whether it would apply to both employer and employee.