House-Senate Differences Present Challenges for Health Care Reform
McCarran-Ferguson Act Repeal Still in Play
As of this writing, the U.S. House of Representatives and Senate have both passed their versions of health care reform, H.R. 3962 and H.R. 3590, respectively. Differences would typically be addressed by House- and Senate-appointed conferees in a formal conference committee. So far, this has not been the process for health care reform. Democratic House and Senate leaders as well as the Obama Administration are working together to develop a package that will pass both the House and Senate.
Most House and Senate Republicans are expected to oppose the final Democratic leadership package.
There are many issues addressed in the health reform legislation that are important to the small business community, including automotive repairers. In addition to general small business items, the House bill includes a repeal of the McCarran-Ferguson Act for health insurers. Key House members and Sen. Patrick Leahy, D-Vt., chairman of the U.S. Senate Judiciary Committee, continue to push for the repeal language to remain in the final bill.
ASA has been a longtime supporter of legislation that repeals the McCarran-Ferguson Act; H.R. 1583 in the House for the 111th Congress. The last serious attempt to repeal McCarran was during the House health care reform effort in the mid-1990s. Jack Brooks, D-Texas, then chairman of the House Judiciary Committee, attempted to move the McCarran repeal through President Bill Clinton's health reform package.
There are important differences in the House and Senate health reform bills. The following is a review of some of the contrasts in the House and Senate discussions.
The House bill provides for a federal exchange offering individuals and small businesses a place to purchase insurance from providers that choose to participate. States may still structure their own exchange under the House language. The Senate bill requires states to establish exchanges. If a state chooses not to establish an exchange, the Department of Health and Human Services will establish an exchange in that state.
Both the House and Senate bills require that most individuals purchase health insurance. A hardship exemption is included in these provisions. There are penalties for the uninsured; 2.5 percent of adjusted gross income up to the average cost of the exchange policy in the House and a sliding penalty scale in the Senate bill.
Are there subsidies involved? Yes, the House and Senate bills provide tax credits for certain income levels.
What are the benefits? The House bill has a four-tier plan program: basic, enhanced, premium and premium plus. House plans coverage scale from 70 percent for the basic plan to 95 percent for the premium plan. The Senate bill offers a five-tier program: bronze, silver, gold, platinum and catastrophic. The coverage of these plans ranges from 60 percent for the bronze to 90 percent for the platinum.
Employer mandates have been of significant concern for ASA members. The House bill requires that employers offer health insurance or contribute to employee health insurance. This applies to businesses with payrolls above $500,000. The Senate language requires an automatic enrolling of employees in businesses with 200 or more employees. Businesses with 50 employees or fewer are exempt.
Both bills contain significant penalties for failure to adhere to these mandates; 8 percent of payroll in the House and a $750 fee per employee, who receives a tax credit through a state exchange in the Senate.
The debate over abortion coverage language may determine the fate of the final bill in either the House or Senate.
The public option is another high profile issue that held up the Senate bill for weeks. The House bill contains a public option. The Senate bill does not contain a public option.
Pre-existing condition language, prohibitions for insurers rescinding their customers' policies, requirements of coverage for dependent coverage and medical loss ratio stipulations for insurers are similar in both the House and Senate.
There is little tort reform in either bill. The House bill provides incentive payments to states that enact laws curtailing medical malpractice litigation, and the Senate has a grant program for establishing alternatives to litigation.
Medicaid is expanded in both the House and Senate bills. There are differences in prescription drug coverage.
How does the federal government pay for health reform? This will be another contentious issue as negotiators head toward the final package. The House bill includes a 5.4 percent tax on income over $500,000 for an individual and $1 million for joint returns. There is no income tax provision in the Senate bill. The Senate bill looks to an excise tax on some high-end insurance plans, a Medicare hospital insurance payroll tax increase, a tanning service tax and a tax on manufacturers of medical devices. The House also has a 2.5 percent excise tax on medical devices.
As we go to press, the Massachusetts Senate seat is still in play so the outcome of the final bill is a long way from a sure thing in the Senate. Senate Democrats need the Massachusetts seat to ensure a 60-vote majority in the Senate. Conservative and liberal Democrats in the House have issues with much of what is being considered in the House-Senate negotiations. Predicting the final package details or whether health reform becomes law is very complicated and certainly cannot be done with confidence.
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