Health care reform received a major boost on Tuesday when the Senate Finance Committee voted 14-9 in favor of the “America's Healthy Future Act of 2009.” Yet industry watchers of employee benefits still remain concerned over the measure, citing its costs and workability.

Setting priorities

“As the Senate — and the full Congress — continue the legislative process, we believe the Senate Finance Committee bill provides the most promising framework for achieving much-need health reform while preserving high-quality employer-sponsored coverage on which more than 160 million Americans depend,” says James Klein, president of the American Benefits Council.

Still, “[m]ore work is needed to ensure the highest possible number of individuals obtain health coverage so that sustainable health insurance reform can be achieved. In particular, weak enforcement of the individual mandate will likely cause many healthy people to refrain from buying coverage until they are sick," adds Klein, whose organization represents private-sector employers.

The group hopes that Congress will reconsider provisions in the bill that will result in a complicated and costly excise tax on high cost plans, extensive new fees on health insurers and new taxes on prescription drug coverage for retirees. “These costs are all likely to eventually be passed along to employers and employees and would certainly make health care more costly,” explains Klein, adding that ABC has created a list of priority employer issues for lawmakers to consider during the health care debate.

Another employer group that is not too ecstatic about the 10-year, $829 billion health care proposal approved by the Senate Finance Committee is the U.S. Chamber of Commerce. “One of the primary goals of health care reform is the overriding need to reduce ever-escalating costs for both consumers and employers. The Senate Finance bill increases premiums, raises taxes, and creates a new entitlement that will add to the nation's growing debt," says Bruce Josten, executive vice president of government affairs at the U.S. Chamber of Commerce, a trade association that represents the interests of American businesses. 

Debating premiums

To complicate matters, PricewaterhouseCoopers recently issued a report stating that health insurance premiums will rise even more rapidly if “America’s Healthy Future Act of 2009” becomes law.

PwC accountants calculate that the legislation would add $600 to a single person’s premiums and $1,700 a year to the cost of family coverage by the time most provisions are in effect in 2013.  While Chairman Max Baucus (D-Mont.) questioned the credibility of a report commissioned by America’s Health Insurance Plans — “It’s a heath insurance company hatchet job,” Committee spokesman Scott Mulhauser told the news organization AP.

“I don’t think it does much for health care reform other than extend health insurance coverage to most of the uninsured with no reform for the drivers of cost, namely us,” says Tom Schuetz, co-president of Iowa’s Group Services.

Coupled with restrictions in the Genetic Information Nondiscrimination Act of 2008 that prohibit adverse use of genetic information in determining health care coverage, “it’s no wonder we aren’t able to address the root causes of our out of control health care costs,” adds Schuetz. He also pointed to the difference between the original projected costs for Medicare and its actual costs today as a warning.

For reform efforts to succeed, premiums must be affordable and people must be able to keep their existing private coverage, but changes made to the Finance Committee bill during markup would interfere with these goals, says Peter Stein, vice president of congressional affairs with the National Association of Health Underwriters.

“The weakening of the individual mandate, tens of billions of dollars in new insurer fees and taxes, tight limits on age rating, and high minimum benefit levels will make private health insurance unaffordable for many Americans. By some estimates, these provisions combined could double premiums for the youngest third of our population coming into a reformed insurance marketplace,” he says.

“Without an effective and enforceable insurance mandate and an influx of younger, healthier people, the bill would essentially create a marketplace where people can wait to buy coverage until they get sick. And this will cause premiums to increase significantly for everyone.”

The National Association of Insurance and Financial Advisors also takes issue with a number of provisions in the bill, including the individual mandate. The Baucus bill originally called for non-participation penalties between $750 and $3,800, depending on income level. That was reduced to $750 per adult in a household during committee markup. Such weak mandates “could devastate affordable insurance,” says Diane Boyle, executive vice president, AHIA-NAIFA Health & Employee Benefits. “If people can carry insurance only when they’re sick or injured, the price of insurance will skyrocket for everyone. This is a very difficult problem that Congress must resolve,” she adds.