Congress to Tackle Wide Range of Health Policy Issues

Published January 1, 2005

President George W. Bush’s reelection means the direction of Executive Branch policies on health care is unlikely to change significantly in the next four years, although some personnel turnover is expected over the next few months. Health and Human Services Secretary Tommy Thompson announced on December 3 he will be resigning effective February 4 or when a successor is confirmed.

In Congress, the biggest change will be the ascension of Sen. Mike Enzi (R-WY) as chairman of the Senate Health, Labor, Education, and Pensions Committee. Like his predecessor, Sen. Judd Gregg (R-NH), Enzi is seen as a mainline conservative.

As a result of their strengthened majorities, Republicans will probably benefit from increased committee ratios, particularly in the Senate, which could allow some measures to pass through committee without the support of all committee Republicans. Specific arrangements regarding members’ assignments will be determined through discussions among party leaders and at meetings of each party’s Steering Committees and will be negotiated once Congress reconvenes in January.

Tax Credits, State Regulations

The major health issues likely to receive consideration in the 109th Congress include tax credits or deductions for health insurance and measures addressing state mandates and regulation.

Bush consistently has advocated tax credits as a means of making health insurance affordable for the low-income uninsured. Nine different legislative proposals for tax credits were introduced in the past Congress, including two bills, authored by Senate Majority Leader Bill Frist (R-TN) and House Ways and Means Committee member J.D. Hayworth (R-AZ), which closely mirror the President’s proposal.

Some members of Congress favor a tax deduction for purchases of health insurance. Proposals along those lines have been introduced by members of both parties on both sides of Capitol Hill, including House Republican Policy Committee Chairman Christopher Cox (R-CA) and Sen. Barbara Boxer (D-CA).

The latest increases in the federal government’s revenue projections may make passage of tax credits or deductions more achievable. The first step in achieving that goal would be for Congressional leaders–including new Senate Budget Committee Chairman Gregg and House Budget Committee Chairman Jim Nussle (R-IA)–to set aside money for health care tax measures in the Fiscal Year 2006 budget.

State mandates and regulations are another area to receive congressional attention. The administration-supported bill allowing small businesses to pool together and form association health plans (AHPs) stalled in the Senate in 2004. Despite the increased Republican majority in that body, it is at best questionable whether AHPs are in any better shape for action in the new session.

Proponents, even with four new Republican votes in the chamber, are still well short of the 60 they need to move the bill in the Senate and avoid a potential filibuster. Only one or two Democrat senators (there might be only one–Robert Byrd–now that Zell Miller is gone) have publicly stated they would support AHPs, and there is at least one Republican senator (and perhaps more) who has openly voiced his opposition to them. So at best, the proponents only have 55 votes in favor, and the actual number may be less than that.

Other legislative proposals recently under consideration would directly tackle the state mandates the AHP bill was intended to avoid. Rep. John Shadegg (R-AZ) has introduced a bill allowing individuals to purchase insurance across state lines, and Sen. Judd Gregg (R-NH) supports requiring states to allow insurers to offer certain types of policies free of state-imposed benefit mandates.

Interstate Insurance Purchases

In a new poll by Zogby International, 72 percent of respondents expressed support for allowing an individual in one state to buy health insurance from a firm in another state if the insurance being purchased is state-regulated and approved, as it would be under Shadegg’s bill.

Under current law, except for certain multi-state trusts, it is illegal to buy a health insurance policy that has not been approved and regulated by the insurance department in the purchaser’s state.

“This poll proves that when people understand they have choices, the market works and consumers win,” Shadegg said.

Polled Democrats and Republicans alike supported the concept of cross-state insurance purchases. Only 12 percent of Democrats opposed it.

“These numbers indicate that a true, bipartisan solution exists to reducing the cost of health insurance and the number of uninsured in America,” Shadegg said.

Small Business Relief, HSAs

In addition to his longstanding support for association health plans, Bush also has supported tax relief for small businesses’ health costs and direct funding for employers who contribute to health savings accounts (HSAs) for their workers–that is, a tax credit that is actually a direct deposit into an HSA as opposed to a credit used to defray the cost of insurance.

Reinsurance proposals designed to help small businesses control costs may also be on the horizon, with Frist echoing Sen. John Kerry (D-MA) in his call for further study of this concept. Kerry proposed a new federal subsidy to defray the cost of insuring high-risk individuals, to have the federal government pick up the cost of all health care for every individual whose costs exceed $50,000 in a year.

Something that extensive, however, is tantamount to making the federal government the reinsurer for the whole country. Hence, more narrowly tailored approaches are being discussed on Capitol Hill to help cover the costs of high-risk individuals while still requiring insurance companies to assess and underwrite risk. Those options, however, are in the very early stages.

With a tax reform package potentially on the horizon, some HSA supporters will look to expand federal tax deductibility to include the high-deductible plan premiums that accompany HSAs. Other key leaders, however–including House Ways and Means Committee Chairman Bill Thomas (R-CA)–have expressed reservations about using the tax code to steer the market to a particular product.

Thomas said last year, “The President, in the State of the Union address, said it doesn’t make any sense to have HSA deposits deductible, but not the premiums for the high-deductible insurance that goes with the HSA. I think that’s right, but we should not recreate the problem of government driving the marketplace.”

Other Issues

There is also some discussion on the Hill and among those who question their utility in a post-HSA world about addressing the issue of health insurers’ network discounts (the deep discounts that an insurer who has a large share of a particular market extracts from providers with the threat of closing them out of their business “network” unless they offer the insurer these deep discounts), both to provide greater transparency for HSA users and to increase competition in the insurance market.

Finally, a bill making technical corrections to the Medicare Modernization Act of 2003, which provided for the deductibility of HSA contributions under a set of conditions, would provide an opportunity for supporters to strengthen or modify HSA provisions–such as language clarifying the interoperability of HSAs, Health Reimbursement Accounts (HRAs), and Flexible Spending Accounts (FSAs) or a chance for opponents to attempt to weaken HSAs’ advantages of flexibility and deductibility.

House Energy and Commerce Committee Chairman Joe Barton (R-TX) has indicated an interest in Medicaid reform, and Bush has outlined a plan to give states more discretion in the way they spend their funds. Such efforts could pave the way for state Medicaid programs to introduce consumer choice opportunities.

The next few months seem likely to bring to the forefront of the congressional agenda several ideas that long have been popular among advocates of market-based, consumer-driven health care. Strengthened by a popular majority and several new Republican senators with strong track records on health care issues, Bush will be presented with an opportunity to cement his legacy through additional reforms in federal oversight of health care.

Many details remain to be hashed out, however, and the federal budget deficit still looms large on the horizon. Nonetheless, the outlook for further reforms of America’s health care system appears promising.

John D. Desser ([email protected]) is founder of the Coalition for Affordable Health Coverage ( and a vice president of Jefferson Government Relations, LLC, in Washington, DC.