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NAW News

Health Care Reform

updated July 2009
- July 2009

 [updated July 2009]

After a national election campaign that spent considerable time on health care issues, months of “super-stakeholder” meetings, roundtables and walk-throughs, Congressional hearings and a White House summit, the health care train has left the station -- destination unknown. The process unfolds against the backdrop of a broken health care system that costs too much, absorbs an already too large and growing share of the nation’s total economic output, and leaves too many people without reasonable and economically manageable access to health care. Specifically:

  • Health care costs today are $2.3 trillion per year and rising;

  • Health care costs account for 16% of GDP today and are on a path to 20% in 10 years; and

  • 46 million people (15% of the population) are uninsured, up from 38.4 million in 2000.

Further, the rapid increase in employer health care costs – 119% from 1999 to 2008 – has yielded a decline in employment-sponsored coverage. A September 2008 study by the Employee Benefits Research Institute indicates that the percentage of non-elderly individuals with employment-based coverage decreased from 68.4% in 2000 to 62.2% in 2007, and a 2008 Kaiser Family Foundation survey reveals that the percentage of small to mid-size employers (3 to 199 workers) offering health benefits declined from 68% in 2000 to 62% today.

When Congress adjourned for the 4th of July recess, the Senate Health, Education, Labor, and Pensions (HELP) Committee completed its second week of markup on an incomplete legislative draft unveiled two weeks ago (the “Affordable Health Choices Act”), scored by the Congressional Budget Office (CBO) at $1 trillion in new deficit spending over 10 years. CBO further estimates that the bill, if fully implemented, will reduce the number of uninsured by just 16 million and reduce the number of people with employment-based coverage by 15 million. The details of two key issues to the employer community, the employer mandate and the public plan option – both of which NAW opposes – have yet to be plugged-in to the bill and remain to be scored by CBO. CBO has indicated that the resolution of these issues “could have substantial effects on our analysis.” Consequently, the HELP Committee did not meet its deadline of completing action on the Affordable Health Choices Act prior to Congress’ July 4th recess.

The process in the HELP Committee has been complicated by the extended health-related absence of the Committee’s Chairman, Senator Edward M. Kennedy (D-MA). In his absence, Senator Christopher J. Dodd (D-CT), the HELP Committee’s second-ranking Democrat, has been tapped by Chairman Kennedy to shepherd the bill through the committee process. While the committee’s Democratic majority did reach out to the GOP minority and engage a broad range of stakeholders, including the employer community, in what appeared to be a collaborative effort to achieve a bipartisan consensus, the Affordable Health Choices Act is neither. Senator Dodd has publicly stated that bipartisanship is not a goal of this effort, and the Majority Leader, Sen. Harry Reid (D-NV) recently set a very low bar for achieving bipartisanship when he said “We do want to do a bipartisan bill … We need about three or four (of 40) Republican senators to join with us to have a bipartisan bill.”

The Senate Finance Committee also has jurisdiction over health care issues, significantly including responsibility for paying for reform, which experts believe will cost somewhere in the $1 trillion-to-$2 trillion range. Unlike the normally politically polarized HELP Committee, the Finance Committee, now under the leadership of Chairman Max Baucus (D-MT) and Ranking Minority Member Charles Grassley (R-IA), has a long history of bipartisan cooperation. The bipartisan nature of the panel has been reflected to date in the committee’s work on comprehensive health care reform. Senate Finance, which has yet to unveil a comprehensive legislative draft, submitted language to CBO which scored the proposal at approximately $1.6 trillion. The unexpectedly high price tag slowed the process in Senate Finance, which had hoped to complete markup on its version of health care reform legislation by the June 26th – July 5th recess. The Finance Committee is now not expected to begin markup on its bill until Congress returns from the July 4th break. In the meantime, Chairman Baucus has indicated his intent to trim $600 billion from the bill’s CBO-scored cost with reports just before the break that he has obtained a new, lower, score from CBO with unannounced changes in the legislation.

The Finance Committee is continuing to work through several complex and controversial issues, including the employer mandate, the public plan option, and how to finance reform’s cost. Regarding the latter, a number of tax issues are under consideration, including new limitations on the tax exclusion (the tax preference under which employees receive employer-paid health benefits tax-free). NAW opposes altering the current tax treatment of employer-paid benefits. (More information on tax issues can be found in the separate staff report.)

Once both Senate committees have completed action on their respective bills, the two panels will attempt to merge the bills into a single legislative vehicle for Senate consideration. Given the substantially different approaches to reform that appear likely from the two panels, the task of melding the two bills may prove to be considerably more complicated and time-consuming than once thought possible. This calls into question whether the full Senate will be able to complete action on a bill prior to Congress’ August/Labor Day recess and enable the Congress to meet President Obama’s demand that the legislative branch put a comprehensive health care reform bill on his desk for his signature by October 15th.

The three committees with jurisdiction over health care issues in the House of Representatives; Education & Labor, Energy & Commerce, and Ways & Means, unveiled the so-called “Tri-Com” bill on June 19th, an incomplete and yet-to-be-CBO scored legislative draft that fails to reveal the revenue raisers that must be included to offset the still-to-be-determined cost of the bill. (HSI Network, a non-partisan, independent health research firm estimates the Tri-Com bill will reduce the number of uninsured to 3% of the population at a 10-year cost of $3.5 trillion, with a “crowd-out” effect that causes 64 million people to lose their current private health care coverage.)

Immediately following the July 4th recess, each committee will mark-up provisions of the bill over which they exercise jurisdiction so that at the end of the markup process a single bill is produced for consideration by the Rules Committee and the full House. Unlike the collaborative approach that has characterized the Senate Finance Committee’s process and, to a lesser extent, the HELP Committee’s work, the “Tri-Com” bill is a partisan Democratic initiative. Although Republicans have engaged the issue in the House, the Democratic majority probably has the votes to pass their bill in the House without any Republican input or votes, something that is on track to occur before the Congress’ August/Labor Day recess.

In the aftermath of the unveiling of the Affordable Health Choices Act and later the Tri-Com bill, NAW sent letters to appropriate Members of the Senate and House outlining our support for comprehensive health care reform legislation that

  • Emphasizes cost containment;
  • Preserves the Nation’s private, free-market health care system and voluntary employment-based health insurance system and thus maintains the current ERISA framework, rejects a public plan option, and rejects an employer mandate;
  • Includes market-based pooling arrangements for small business and the self-employed;
  • Retains the current-law tax treatment of employer-paid health benefits for both employees and employers; and
  • Rejects new or increased taxes on business.

Our letters also reveal our recognition that universal coverage is a cost issue as well as an access issue, and indicates our willingness to accept a reasonable, realistic individual mandate.

More recently, NAW launched a grassroots initiative that emphasizes many of these points.

NAW is an active member of both the National Coalition on Benefits (NCB) and the Small Business Coalition for Affordable Health Care, and we will continue to work with our allies in these coalitions and like-minded members of the employer community at-large in support of comprehensive health care reform legislation that controls cost, expands coverage and improves the quality of care within a reformed free-market health care system.