Health Care Reform

November 16, 2009 - The House of Representatives approved health care reform legislation on November 7. The Senate begins debate on its version of the bill this week. ALPA is playing a leading role in opposing any taxation of employer-provided health care benefits to pay for this overhaul.

As many of you saw or read, the United States House of Representatives passed its version of health care reform, H.R. 3962, on November 7. It is possible that the Senate will begin debate on its version of a bill this week. Not since 1965 has such a major initiative dealing with changes to our healthcare system progressed to this stage of the legislative process.

Over the past year, well over 600 amendments have been filed in response to the five bills written by the five committees of jurisdiction. Those Committees are: in the House, the Ways and Means, the Energy and Commerce, and the Education and Labor Committees; in the Senate, the Finance, and the Health, Education, Labor and Pensions (HELP) Committees. These committees of jurisdiction held hundreds of hours of hearings and mark-ups.

The goal of this report is to update you on the provisions contained within the House-passed bill and the process ahead. ALPA has been playing a leading role in opposing any taxation of employer-provided health care benefits to pay for this overhaul. There is no such provision in the House-passed bill. The Senate bill, as reported by the Finance Committee, does contain an excise tax on insurance companies and self-funded plans of 40% on the value of plans for singles in excess of $8,500 per year and family plans over $23,000 per year, beginning in 2013 and indexed for inflation at CPI plus 1%. We, and the rest of labor, are adamantly opposed to this or any other tax on our benefits. Please see the attached documents.

While we have taken a strong position on the taxation question, we have not on the overall legislation. As any negotiator will tell you, health care is the fastest rising cost that employers are seeking to curb at the bargaining table. This has a direct impact on our ability to negotiate wage increases and other benefits. The sole criteria we are using to determine if the legislation is worthy of support or opposition is how it will affect our ability to negotiate good benefits and compensation increases, as well as the subsequent economic impact on ALPA members.

The following are some of the major provisions of H.R. 3962:

• The main funding mechanism is a surtax on earned income for individuals earning over $500,000 per year or couples earning over $1 million per year.

• The legislation contains an individual mandate. The mandate will require all people who have no form of health care to purchase health insurance. Subsidies are available on a sliding scale. An employee is eligible to receive a subsidy if his/her contribution to the premium cost exceeds 12% of modified adjusted gross income.

• The House bill would insure about 96% of Americans. Many would receive coverage through an expansion of Medicaid and the creation of an employer mandate.

• The employer mandate is considered to be a revenue offset as it would mandate that employers provide insurance or pay into a fund to help insure their employees. The theory is that if other larger businesses are mandated to participate, it relieves the burden on employers, like ours, who are already providing health care insurance.

• Creation of a public option to foster competition in all insurance markets. In too many cases, only one or two insurance companies service a particular market. This leads to monopoly situations which result in higher prices. At present, 32 states exceed the definition of “highly concentrated” established by the U.S. Justice Department. In all but four states, the top two insurers, measured by market share, control over 50% of the market.

• Limiting contributions to FSAs is being used as a revenue raiser to help pay for health care overhaul. We have concerns with this revenue raiser as some of our employers offer higher contribution limits. ALPA is working with a coalition of like-minded unions and organizations who share our concern. We hope to address our concerns with this revenue provision in the Senate version.

• Insurance market reforms include bans on the current insurance industry practices of establishing lifetime limits on total payment of benefits, pricing based on gender or health status, and denial of coverage based on preexisting condition.

• Prohibits co-pays on preventative care and places a limit on out-of-pocket expenses.

• Mandates a maximum of 2-1 age rating for people between ages 50-60. Currently, insurance companies can charge whatever rate they want for this age group. As a result, this group is charged much higher premiums because of unrestrained age rating. This provision seeks to decrease health care costs for one of the most expensive groups to insure -- pre-Medicare-eligible retirees.

• Eliminates overpayments by Medicare by closing the “donut hole,” which resulted from the Medicare Prescription Drug Improvement and Modernization Act (Medicare part D) passed in 2003. The donut hole resulted in seniors paying thousands of dollars in out-of-pocket costs. This Act also mandated that Medicare pay subsidies to insurance companies who administer Medicare Advantage plans in excess of what Medicare pays for the exact same services it offers.

• According to the non-partisan Congressional Budget Office (CBO), the cost of the bill is $894 billion over ten years after the savings from other aspects of the legislation are realized.

As mentioned above, the Senate is expected to begin consideration of its bill this week. It will be a merged version of the two measures reported out by the Finance and HELP committees. It is unnumbered at this time since it has yet to be introduced. While the House was able to consider and complete action on its bill within days, the same is not expected in the Senate. We fully expect the Senate to spend weeks on this bill, and possibly longer, if they don’t have 60 votes to break a potential filibuster. While the stated goal and the President’s desire is to have a bill enacted by year’s end, it is highly unlikely that will occur. Congressional leaders have said they will remain in session until Christmas if necessary to complete action but this long, drawn out process could very well spill over into next year. We will keep you posted as events unfold.

Attachments:

Letter to U.S. Congress from unions
Congressional letter
AFL-CIO advertisement