Washington D.C. Employment Law Update : Washington D.C. Employment Lawyer & Attorney : Littler Mendelson Law Firm : Virginia, Tyson's Corner

 . . . the question that I'm going to ask myself and I ask of all of you is, is there enough serious effort that in a month's time or a few weeks' time or six weeks' time we could actually resolve something? And if we can't, then I think we've got to go ahead and make some decisions, and then that's what elections are for.

Obama concluded the summit by acknowledging that it may be impossible to resolve the differences between the parties, and alluded to the fact that Democrats could proceed with reconciliation: “I don't know, frankly, whether we can close that gap. And if we can't close that gap, then I suspect Mitch McConnell and Harry Reid, Nancy Pelosi and John Boehner are going to have a lot of arguments about procedures in Congress about moving forward.”

Meanwhile, according to a Wall Street Journal article, President Obama might be amenable to advancing a scaled-back version of health care legislation should a more comprehensive overhaul bill fail to garner requisite support. According to the article, this more modest approach would provide coverage to an additional 15 million Americans, which is half the amount a larger bill would have covered. More details about this alternate approach have not been released.

Republicans, by and large, seem to favor a more incremental approach to health care reform. On Wednesday, for example, the House of Representatives overwhelmingly approved by a 406-19 margin legislation that would repeal the anti-trust exemption in place for health insurance companies. The Health Insurance Industry Fair Competition Act (H.R. 4626), would amend the McCarran-Ferguson Act of 1945, which reaffirmed that states are the primary regulators of insurance, and expressly exempted the “business of insurance” from antitrust laws.

At the conclusion of the health summit, however, President Obama indicated that a piecemeal approach to reform was untenable: “. . . a step-by-step approach sounds good in theory, but the problem is, for example, we can't solve the preexisting problem if we don't do something about coverage.”

Transcripts from the summit can be found at The Washington Post’s political blog 44.

Photo credit: Chuck Kennedy

With respect to employer responsibility under the President’s plan, small businesses would receive $40 billion in tax credits to support coverage for their workers beginning in 2010. As under the Senate bill, employers with fewer than 50 workers would be exempt from any employer responsibility policies. In addition, as articulated in the Senate bill, the proposal does not require employers to offer or provide health insurance, but does require them to contribute to the cost if their workers receive government subsidies to purchase their own policies. Under the Senate plan, if any employee of a large firm obtains tax credits to purchase insurance through a health insurance exchange because the employer’s plan is considered unaffordable, the employer would pay $3,000 per full-time worker. If the large employer doesn’t offer insurance in the first place, it would need to pay $750 per full-time worker under the Senate bill if any employee obtains tax credits for the purchase of health care. Under Obama’s plan, the first 30 workers would be subtracted from the employer responsibility payment calculation. For example, a firm with 51 workers that does not offer coverage would pay an amount equal to 51 minus 30, or 21 times the applicable per employee payment amount. Obama’s plan would raise the applicable payment amount for firms with more than 50 employees that do not offer coverage from $750 to $2,000. In addition, the plan would eliminate the assessment for workers in a waiting period for enrollment, while maintaining the 90-day limit on the length of any waiting period beginning in 2014.

With respect to the tax on Cadillac plans, the threshold for the excise tax would be raised from $8,500 for single plans to $10,200 and from $23,000 for family plans to $27,500. These amounts would be indexed for subsequent years at general inflation plus 1 percent. The tax on such high-premium policies would begin in 2018, up from 2013 set forth in the Senate bill.

One feature of Obama’s bill not included in either the House or Senate package is greater regulation of the insurance industry’s ability to increase costs. Sen. Dianne Feinstein (D-CA) last week announced her intent to introduce legislation that would prevent insurance companies from enacting unfair health premium rate increases. Obama’s proposal includes elements of Feinstein’s proposal, and calls for the creation a new Health Insurance Rate Authority “to review and rein in unreasonable rate increases and other unfair practices of insurance plans.” Under the terms of this plan, if a rate increase is deemed unreasonable and unjustified, health insurers would be required to lower premiums, provide rebates, or take other actions to make premiums affordable.

Obama’s proposal is intended to be the focus of Thursday’s health care summit. Meanwhile, according to an article in The Hill’s Blog Briefing Room, Sen. Majority Leader Harry Reid (D-NV) said that Democrats will likely use the budget reconciliation process to pass changes to the already-passed Senate bill to gain House approval. Reid claimed that this procedural maneuver – which requires a simple majority to pass instead of the 60 votes needed to end a filibuster – would take place within the next two months.

Photo credit:  MBPHOTO, INC.