After much fanfare, Senator Max Baucus (D-Mont.), Chairman of the Senate Finance Committee, yesterday officially released the America’s Healthy Future Act (pdf) for his committee’s consideration. Although designed to appeal to conservatives in comparison to the House’s Affordable Health Choices Act (H.R. 3200) and a similar measure approved by the Senate Health, Education, Labor and Pensions (HELP) committee, it is uncertain whether Baucus’s bill will draw any Republican support, and enough to reach the 60 votes needed to avoid a filibuster.
The American’s Healthy Future Act does not contain the more stringent employer mandates provided for in other prominent healthcare bills under consideration, but does impose certain requirements on large businesses. According to a summary of the bill (pdf):
Effective January 1, 2013, all employers with more than 50 employees who do not offer coverage will have to reimburse the government for each full-time employee (defined as those working 30 or more hours a week) receiving a health care affordability tax credit in the exchange equal to 100 percent of the average exchange subsidy up to a cap of $400 per total number of employees whether they are receiving a tax credit or not.
As a general matter, if an employee is offered employer-provided health insurance coverage, the individual would be ineligible for a health care affordability tax credit for health insurance purchased through a state exchange. An employee who is offered coverage that does not have an actuarial value of at least 65 percent or who is offered unaffordable coverage by their employer, however, can be eligible for the tax credit. Unaffordable is defined as 13 percent of the employee’s income. A Medicaid-eligible individual can always choose to leave the employer’s coverage and enroll in Medicaid. In this circumstance, the employer is not required to pay a fee.
Other key provisions of this bill affecting employers and the insurance industry would do the following:
- Provide tax credits for small businesses to help them offer insurance to their employees;
- Require insurance companies to offer coverage to all individuals regardless of health status or pre-existing conditions. The bill would allow limited variation in premium rates for tobacco use, age, and family composition. Variation in rating would also be allowed between – but not within – a geographic area;
- Eliminate yearly and lifetime limits on the amount of coverage plans provide;
- Create a Simple Cafeteria Plan through which small businesses could provide tax-free benefits to employees. Eligible employers that make contributions for employees under a simple cafeteria plan would be exempt from pension plan nondiscrimination requirements applicable to highly compensated and key employees;
- Create web-based insurance exchanges that would standardize health plan premiums and coverage information to make purchasing insurance easier;
- Give consumers the choice of non-profit, consumer owned and oriented plans (CO-OP);
- Require insurers by 2014 to comply with new transparency and accountability standards or pay a penalty fee. Such standards include the requirement that each individual receives an outline of coverage presented in a uniform format not to exceed 4 pages nor include print smaller than 12-point font. Other standards would mandate that insurers publish the share of their premium revenue that is used for administrative expenses and not medical benefits. In addition, the bill would impose new requirements for the electronic exchange of payment and other health care information with hospitals, doctors and other providers;
- Require employers to disclose the value of the benefit provided by the employer for each employee’s health insurance coverage on the employee’s annual Form W-2;
- Eliminate the deduction for the subsidy for employers that maintain prescription drug plans for their Medicare Part D eligible retirees;
- Levy a non-deductible excise tax of 35% on insurance companies and plan administrators for any health insurance plan that is above the threshold of $8,000 for singles and $21,000 for family plans. This tax would not apply to plans sold in the individual market;
- Impose annual flat fees across the industry and according to market share on the pharmaceutical manufacturing, medical device manufacturing, and health insurance sectors, as well as on clinical laboratories. These fees would not apply to laboratories and manufacturers with earnings below certain thresholds.
Notably, Baucus’s bill does not provide for a public insurance option, but rather calls for the creation of health insurance cooperatives. Some Democratic lawmakers have said they would not support a healthcare bill in the absence of a public option. The bill would require all individuals – with certain exceptions – to obtain healthcare coverage or pay a fee.
Markup of this bill is scheduled to begin next week. If approved by the Senate Finance Committee, this healthcare reform bill will be merged with the more liberal bill that has already cleared the Senate Health, Education, Labor and Pensions Committee for full Senate consideration.