Following the 2003 enactment of tax-preferred health savings accounts, President George W. Bush recommended in this year’s State of the Union address that Congress make tax-deductible the premiums paid for catastrophic health insurance policies tied to health savings accounts.
Rep. Bill Thomas (R-California), chair of the House Ways & Means Committee, supports the President’s proposal. He said deductibility would lead to a “more level playing field” between the group health insurance market, with its tax breaks for employers, and the individual market, where those tax benefits do not exist.
Democrats oppose the deductibility of catastrophic health insurance premiums, as they opposed HSAs in last year’s Medicare debates. They contend anything that makes HSA policies attractive would hurt the group insurance market and reduce public support for new efforts to nationalize and regulate health care.
House Republicans have the votes to prevail on the deductibility issue, but the matter is far less certain in the Senate, where the Republican leadership would need 60 votes to counter an expected Democratic filibuster.
AHPs Stalled
Prospects for the enactment of association health plan legislation in the Senate remain dim. In June 2003, the House approved HR 660–the Small Business Health Fairness Act of 2003–permitting small businesses to join with one another to purchase health insurance coverage for their employees under uniform federal regulation by the Department of Labor, thus avoiding state oversight.
A companion Senate bill, S 545, cosponsored by Senators Olympia Snowe (R-Maine) and Kit Bond and James Talent (R-Missouri), has attracted little interest from Senator Judd Gregg (R-New Hampshire), chair of the Health, Education, Labor and Pension committee, which has jurisdiction.
Without commenting on the bill, Majority Leader Bill Frist (R-Tennessee) has said on several occasions he would defer to Gregg and his committee for action.
The ranking Democrat on Gregg’s committee, Senator Ted Kennedy (D-Massachusetts), opposes AHPs. “Those plans are nothing more than giveaways to Republican trade associations and will raise the premiums for more than 20 million workers,” he has said. A Kennedy spokesman was more to the point, saying simply, “AHPs will never get through the Senate.”
Kennedy Proposes Play-or-Pay
Kennedy prefers employer mandates. Under his “Health and Insurance Affordability Act,” employers with at least 50 workers would be required to provide health insurance to their employees, with the federal government paying any costs that exceed 12 percent of the employer’s payroll.
Employers with between five and 50 workers would be required either to offer health coverage or contribute to a government program providing coverage, modeled after the Federal Employees Health Benefits Program (FEHBP). Employers with five or fewer workers would be exempt from the mandate but allowed to participate in the federal program if they chose to do so.
Most large employers and profitable smaller businesses would pay about 75 percent of the cost of their employees’ health insurance plans under the Kennedy proposal, while the federal government would pay the remainder, estimated at $100 billion annually.
The bill also contains incentives to boost health care quality, promote information technology advancements, permit drug importation from European Union countries and Canada, limit direct-to-consumer advertising by pharmaceutical manufacturers, and allow the Department of Health and Human Services to negotiate drug prices on behalf of Medicare beneficiaries. The bill’s chances in a Republican-controlled Congress are slim.
Looking Ahead
The outlook for congressional action this session on these and other health issues is murky.
The House is sharply divided along partisan lines on these measures. The environment is often described, by members and staffers alike, as “poisonous.” While some committees function cooperatively, and some member-to-member relations across party lines are strong, party rancor is the rule, not the exception. There is a great deal of resentment among some Republicans over the mounting federal deficit and the recently enacted Medicare reform legislation, whose cost is now at least $145 billion more than Congress was led to believe.
In the Senate, the Republican majority would require 60 votes to silence any Democratic filibuster and bring an issue to a vote. While a simple majority vote then would prevail, even that is problematic due to the shifting nature of alliances among conservative, moderate, and liberal/progressive Democrats and Republicans. For Frist, it can be an unceasing struggle within his own ranks and House colleagues, not to mention Democrats.
Compounding these atmospherics is the limited schedule remaining for this session of Congress. Both parties have Presidential nominating conventions this summer– the Democrats the last week of July, the Republicans a month later–along with an “August recess” that begins the third week of July.
Tom Bruderle is vice president of congressional affairs for the National Association of Health Underwriters (NAHU). His email address is [email protected].
