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Senate Appears to Support Employer-Friendly Health Bill

July 29, 2009

An employer-friendly health care reform bill may be forthcoming from the Senate Finance Committee, according to a person familiar with the draft legislation, which would eliminate an employer mandate and a public health plan option.

On Wednesday, July 29, Max Baucus, D-Montana and chairman of the Senate Finance Committee, told reporters that the cost of his committee’s health care legislation would total $900 billion over 10 years.

To help pay for the bill, committee members have tentatively agreed to tax employers on health plans valued at $25,000 or more, according to the source. Such a proposal, which has been a stumbling block, could raise $90 billion to $190 billion in tax revenue over 10 years.

The developments among Senate Finance Committee members stood in contrast to an impasse in the House Energy and Commerce Committee, where conservative Blue Dog Democrats have pressed for concessions on a public plan and employer mandate, among other issues, from their liberal party members.

After a false start Wednesday, the energy committee said it would resume talks Thursday to produce a health care reform bill.

Regardless, Democrats have agreed to delay a full House vote until September to make sure the bill they vote on has support from Blue Dogs.

If the Blue Dog Democrats prevail in the House, a bill from the energy committee could look similar to the tentative draft coming out of the Senate Finance Committee.

Under that plan, a public health care option would be replaced by health cooperatives set up on the state level, funded initially with government money but then sustained through premiums from members.

In the Senate Finance Committee plan, according to the source, employers would be required to offer coverage but not pay for it. The health plans offered to employees would have to be valued at 60 percent of the value of the health plans enjoyed by federal employees.

That would mean high-deductible health plans with health savings accounts would qualify. A House bill would require plans to provide more benefits.

Employees would be allowed to drop employer coverage but employors would have to repay any government subsidy used by employees to purchase health care. Employees, meanwhile, could opt out of an employer health plan, but doing so would make them ineligible for government health care subsidies.

Unlike earlier proposals that would have taxed the health care benefits of employees, employers would be required to pay a 35 percent tax on the value of any health plan above the $25,000 threshold, according to the source.

The tax proposal drew sharp opposition Wednesday from labor leaders who have strongly opposed a tax on benefits, saying it would hit hard their members, who tend to have generous health care benefits.

“The Goldman-Sachs Cadillac plan for executives may be the target of this proposal, but it could well end up hitting benefits for working families and retirees already reeling from health care costs if lawmakers rely on this as a way to curb federal spending rather than enact real cost containment,” said AFL-CIO President John Sweeney in a statement.

Health care economists have said taxing so-called gold-plated health plans would be a powerful incentive for employers and employees alike to purchase more cost-efficient health plans or plans that offer fewer benefits to patients.

Though the Senate Finance Committee bill remains in its early draft stages, the House labor and tax committees as well as the Senate health committee have all approved health care reform bills. All were largely party-line votes and included both an employer mandate and a public plan option.

The Finance Committee is expected to approve its version of health care reform by August 7. The various proposals will be melded into one bill in each chamber before floor votes now scheduled for September.

Members of Congress will now spend most of August getting an earful from constituents about health care reform, which has bogged down in part because of fears over how changes contained in the bills—most of which cost upward of $1 trillion—will affect current coverage.

House Speaker Nancy Pelosi, D-California, and Majority Leader Steny Hoyer, D-Maryland, said she was pleased that discussions in the House energy committee were moving forward.

“Congress is closer than ever before in history to passing comprehensive health insurance reform,” Pelosi and Hoyer said in a joint statement. “In September, Congress will pass legislation that puts Americans and their doctors back in charge, holds insurance companies accountable, guarantees stability and peace of mind, lowers costs, and provides more choices for higher quality care.”

Jeremy Smerd and Mark Schoeff Jr.

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