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Obama Now Pushing Required Health Care Coverage

June 4, 2009
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Related Topics: Medical Benefits Law, Benefit Design and Communication, Policies and Procedures, Latest News
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President Barack Obama has signaled a willingness to require individuals to purchase health care coverage, an element thought to be essential to keep the cost of health care reform down.

“I share the goal of ending lapses and gaps in coverage that make us less healthy and drive up everyone’s costs, and I am open to your ideas on shared responsibility,” Obama wrote in a letter to two senators whose committees are drafting health reform legislation, adding that those who cannot afford to purchase insurance should get a hardship waiver.

Obama reiterated his belief that small businesses should be exempt from a requirement that employers provide health insurance to employees.

“While I believe that employers have a responsibility to support health insurance for their employees, small businesses face a number of special challenges in affording health benefits and should be exempted,” he wrote.

The letter was sent Tuesday, June 2, to Sens. Edward Kennedy, D-Massachusetts and chairman of the chairman of the Health, Education, Labor and Pensions Committee, and Max Baucus, D-Montana and chairman of the Finance Committee. The senators are taking the lead in crafting health reform legislation that observers expect to take shape by midsummer, with versions in the Senate and House voted on by the time Congress recesses in August.

The letter represents a shift for the president on his stance toward individual mandates. During the campaign, Obama opposed then-candidate Hillary Clinton’s support of an individual mandate, preferring instead to require only children to carry health insurance.

The letter also voiced support for a public health insurance option to compete against private health plans in the marketplace, a concept that Republicans say will lead to government-run health insurance.

In a letter Monday, June 1, Rep. John Boehner, R-Ohio, said a government insurance option, while limited at first, would grow in scope and cost. Employers have worried that a cheaper government plan would present a cheaper alternative for employees.

Though Obama did not mention it in his letter, one key issue that appears to be gaining wider acceptance among policymakers is a proposal to end the tax-exempt status of employee health benefits, an issue that employer groups are marshalling their lobbying resources to oppose.

“We believe it would be a mistake to limit the tax exclusion,” said James Klein, president of the Washington-based American Benefits Council, whose members include large employers. “Contrary to popular belief, the exclusion is actually extremely important to low- and moderate-income Americans. The exclusion represents a much bigger percentage of their overall compensation than high-income individuals.”

The requirement that individuals purchase health insurance helped gain critical support from health insurers and employers for the passage of a health reform law in Massachusetts in 2006.

Obama said in his letter that he hopes to “complete health care reform by October.”

—Jeremy Smerd

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