Dems Unveil Latest Health Reform Proposal

October 29, 2009 ( - Employers with 100 or fewer employees could buy health insurance coverage from a new Health Insurance Exchange in 2013, as part of proposed health reform legislation unveiled Thursday by U.S House Speaker Nancy Pelosi (D-California) and other Democratic leaders.

According to news reports and a Congressional summary of The Affordable Health Care for America Act (H.R. 3962), small businesses would be eligible for federal subsidies to help pay for workplace policies, while large firms would be required to cover their workers and most individuals would be required to carry insurance.

Employers that choose to offer coverage would contribute at least 72.5% of premiums for workers and 65% for families.   With low-wage workers, the person can opt for subsidized coverage through the exchange partly funded by that person’s employer.   Companies not offering qualified coverage would contribute 8% of their payroll to help cover expenses of workers seeking coverage through the exchange.

The bill indicates that an employee’s share of premiums for employer-provided coverage offered through the exchange may be paid on a pre-tax basis through a cafeteria plan, but exchange coverage that is not employer-offered is not eligible to be offered through a cafeteria plan.

“In addition to the targeted assistance, the exchange and market reforms provide a long-sought opportunity for small businesses to benefit from a more organized, efficient marketplace in which to purchase coverage,” the Congressional summary indicated.

The 8% requirement is phased in for small businesses with an annual payroll between $500,000 and $750,000. There is also a tax credit program to help low-wage small businesses offer coverage to their employees.

The bill summary said small businesses with annual payrolls below $500,000 are exempt from requirements to offer or contribute to coverage, including the 8% payroll payment.

A new independent Advisory Committee with practicing providers and other health care experts, chaired by the U.S. Surgeon General, will recommend a benefit package based on standards set in the law, the bill summary said.

This new essential benefit package will serve as the basic benefit package for coverage in the exchange and over time will become the minimum quality standard for employer plans. The basic package will include preventive services with no cost-sharing, mental health services, oral health and vision for children, and caps on the amount of money a person or family spends on covered services in a year.

The summary said that there will be four plan levels within the exchange - all of which cover the essential benefit package, but have varied levels of cost-sharing.

The bill drops nontaxable reimbursements of over the counter medications from HSAs, HRAs, and health FSAs; limits contributions to health FSAs to $2,500; increases the penalty for non-health related distributions from HSAs (from 10% to 20%) and eliminates the tax deduction for employers who receive a government subsidy for providing retiree prescription drug coverage.

A temporary government program would help people turned down by private insurers because of medical problems, lawmakers said. After that, insurers no longer could refuse to provide coverage to the sick, nor could they charge more because of poor health of the insured.

Republican reaction to the newest bill was swift and critical. U.S. Representative Tom Price (R-Georgia), head of the Republican Study Committee, issued a statement quoted in news reports saying Democrats had produced a "government takeover that will limit choice, competition and innovation in health care while increasing costs and decreasing quality."

He said the measure would kill jobs, raise taxes, and inflict cuts on a program of private Medicare that provides benefits to millions of seniors.

The Congressional bill summary is available here . The bill text is available here .