Thursday, August 06, 2009

Progress reported at the Senate Finance Committee

The Washington Post reported this morning that the bipartisan Senate Finance Committee negotiators are making progress on their version of the health care reform bill. According to that report,

The group is closer to resolving other major questions and has already
agreed to about $500 billion in changes to existing federal health programs,
including Medicare and Medicaid. For example, negotiators would require
wealthier seniors to pay more for prescription drug coverage under Medicare, and
they would charge co-payments for clinical lab procedures. The lab co-pays are
potentially lucrative, raising about $20 billion over 10 years.

Other new sources of revenue include penalties on individuals who do not obtain health insurance, and a "free-rider" provision that would require employers that
currently offer health insurance to continue to do so, or to reimburse the
federal government for workers who switch to subsidized coverage through an
insurance exchange. Both provisions could yield about $43 billion over 10 years.

The rest of the additional revenue -- about $250 billion -- would come from
new taxes, primarily from an excise tax of up to 35 percent on insurance
companies that sell extremely generous policies worth at least $21,000 a year
for family coverage or $8,000 a year for individuals, according to aides
involved in the discussions. About 7 percent of taxpayers hold such policies.

The Finance Committee proposal is also likely to contain a number of much smaller tax provisions, including a $2,000 cap on flexible savings accounts -- which are currently unlimited -- and a plan to improve tax compliance by requiring businesses to tell the Internal Revenue Service when they pay corporations for services.

I did the math and found that the the annual premium for the FEHBP's most popular option Blue Cross FEP Standard Option is $5872 for self only and $13,447 for self and family. The self only premium is 24% below the proposed taxation threshold of $8,000, and the self and family premium is 35% below the proposed taxation threshold of $21,000.

Kaiser Health News offers an interview with AHIP President Karen Ignani. Apropros to the last point:

Q. The Senate Finance Committee has been having trouble coming up with the money for the health care bill, which is the reason they’re talking now about windfall profits taxes on insurers and taxes on companies that sell high-cost policies. Since you're opposed to both of those, what would you propose as an alternative?

A. I think the country has to get serious about bending the cost curve…We think there needs to be incentives for things to happen over the next few years that can reduce the rate of increase in health care costs, but there should be a commission, a broad commission not simply looking at Medicare, but a broad commission to monitor the progress and to make recommendations if goals are not achieved.

Q. Should there be some kind of mechanism for an across-the-board cut [in health spending]?

A. I think we have to look at those sorts of things. It doesn’t have to happen right away, but having a commission, having a mechanism, would give every stakeholder group an incentive to create more productivity, to reduce unit costs and to create more efficiency. And those are the kinds of incentives that I think the system needs.

The Wall Street Journal posed a series of questions and answers about health care reform. The first Q and partial A was this:

How would the bills impact the health insurance of members of Congress and other federal employees? What is their coverage like?

It’s likely that the bills would affect members of Congress about as much as anyone who currently has a relatively generous plan from an employer – not a great deal, at least in the short term.

The short term would end in 2019 under the House bill.

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