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Early Draft of Legislation Offers Peek at Sweeping Changes in Health Care

June 5, 2009
Related Topics: Medical Benefits Law, Benefit Design and Communication, Health and Wellness, Latest News
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A partial first draft of health reform legislation emerged Friday, June 5, confirming speculation that most businesses would be required to pay a fine for not offering health coverage to employees.

While many of the details in the draft have not been filled in—for example, how much such a fine would be—the legislation outlines a sweeping health care reform agenda that covers the establishment of a health insurance exchange, the scope of minimum coverage employers must offer, and a requirement that all individuals purchase health coverage.

A public health plan is expected to be included in the bill, but the details of such a plan, as well as the specifics around an employer pay-or-play mandate, remain a sticking point among the various constituents that have worked with legislators to hammer out legislation.

The draft legislation came from Sen. Edward Kennedy, D-Massachusetts and chairman of the Senate Health, Education, Labor and Pensions Committee. That panel has taken the lead in crafting the health reform bill, called the American Health Choices Act. Another bill with more details on how reform is to be financed is expected by June 17 from the Senate Finance Committee, chaired by Sen. Max Baucus, D-Montana.

One major proposal the Finance Committee bill will likely provide details on is whether employees can expect to have their health benefits taxed, a policy that proponents say will help pay for health care reform, which is expected to cost more than $1 trillion.

Employer groups have been lobbying against such a measure.

The draft legislation from Kennedy’s committee is prefaced by a “declaration of rights” that may assuage some conservative groups that feared health reform would empower government bureaucrats to make personal health care decisions for individuals. The bill states that “health professionals should judge what is best for their patients.”

The insurance exchange, known as the American Health Benefit Gateway, would be set up within each state to help individuals and employers purchase health insurance coverage. Employers would have to alert employees that they can purchase coverage in the individual market from the exchange.

The bill says health plans in the Gateway cannot deny people coverage based on pre-existing conditions. The Gateway would guarantee the availability of health insurance coverage in the individual and group markets, removing lifetime or annual limits on the amount of medical care insurance companies will pay for.

The draft bill did not detail what kind of plan would qualify as minimum coverage.

The federal government will offer credits to help small employers, defined as 27 or fewer full-time employees, provide coverage to employees, according to the draft.

Employers that do not contribute to the health coverage of employees will have to make a monthly payment to the federal government for each employee who is not offered health insurance. The payment amount has not been specified.

—Jeremy Smerd

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