House Panel, HHS Look at Health Reform and Small Businesses

Democrats in Washington, D.C., were speaking with the same voice on at least one issue in the health care reform debate in recent days, as a House committee and HHS both narrowed in on health insurance and small businesses.

On Oct. 20, California Democrat Henry Waxman held a hearing of the House Energy and Commerce Committee to examine the challenges small businesses encounter in providing health insurance benefits to their workers.

In his opening statement, Waxman discussed findings from previous committee investigations, showing that a number of insurers have more than doubled premiums for small-business customers in a single year.  Pointing out that small businesses lack the market power to negotiate lower premiums for their workers, Waxman argued in favor of a provision of health care reform legislation that would create an insurance exchange to help small businesses win better deals on health insurance.

In testimony prepared for the hearing, Linda Blumberg, a senior fellow at the Urban Institute, cited statistics indicating that firms with fewer than 10 employees were 10.1% less likely to offer health insurance benefits in 2008 than 2000, while ventures with 10 to 99 workers were 4% less likely to offer health insurance to workers in 2008 than they were in 2000.

Like Waxman, Blumberg said an insurance exchange would help small businesses get lower rates for health care benefits.  She also said that changes to health insurance underwriting regulations and subsidies for insurance coverage included in the House reform bill would help boost coverage among small-business workers.

Blumberg said her remarks reflected her own views, not the positions of the Urban Institute.

Off the Hill, HHS Secretary Kathleen Sebelius released a report underscoring what the administration sees as threats to the employer-sponsored coverage system, especially for small businesses. 

The report states that workers at small firms account for 25% of uninsured Americans and cites survey results indicating that three-quarters of small businesses that didn’t offer health care benefits to workers attributed the decision to high insurance premiums.

Also, the report states that health care reform proposals would tackle the problem by strengthening the employer-sponsored coverage system and making coverage more affordable, accessible and portable.

For the past several months, the Obama administration has used similar reports to explain what health care reform proposals would do for targeted groups — small businesses are the latest addition to the list. Previous reports laid out the implications of health care reform for seniors, people with cancer and young Americans. 

Meanwhile, the UCLA Center for Health Policy Research took a look at the common elements of the three major reform plans under consideration in Congress and concluded that the proposals would expand coverage to about four million Californians.  The proposed changes would result in about 93% of nonelderly Californians having access to health insurance, according to UCLA’s fact sheet.

For more on the push for health care reform, keep reading.

Administration’s Message

• In an effort to garner support for health care reform efforts, President Obama on Oct. 20 was scheduled to speak from New York City via video to hundreds of small gatherings managed by Organizing for America, an offshoot of his 2008 presidential campaign, USA Today reports. In addition, top White House aides on Tuesday will attend the regular strategy session of the Common Purpose Project, a coalition directed by former Obama campaign officials that aims to advance his agenda (Wolf, USA Today, 10/20).
• In his weekly radio and Internet address on Oct. 17, Obama said that the U.S. is now closer to overhauling the health care industry than at any other point in history, but he warned that the health insurance industry is determined “to kill reform at any cost,” the Washington Post‘s “44” reports (Fletcher, “44,” Washington Post, 10/17).

Timeline

• On Oct. 14, House Majority Leader Steny Hoyer (D-Md.) said that Congress could be in session until mid-December and that the House’s initial health reform vote likely will occur in November, CQ Today reports. Democratic leaders in the House and Senate say they hope to send President Obama health care legislation this year, but that goal is becoming increasingly distant (Epstein, CQ Today, 10/14).
• On Oct. 14, Senate Minority Leader Mitch McConnell (R-Ky.) said that the Republican caucus will need a “couple of months” to review and debate the chamber’s final reform bill, adding that the bill must be analyzed by the Congressional Budget Office and be available online, The Hill reports (Rushing, The Hill, 10/14). Senate Majority Leader Harry Reid (D-Nev.) dismissed the lawmakers’ requests (Drucker, Roll Call, 10/14).

Senate

• On Oct. 19, Senate Finance Committee Chair Max Baucus (D-Mont.) released his committee’s bill in full legislative language, CQ Today reports. The 1,502-page bill (S 1796), which originally was written in conceptual language, would cost about $829 billion over 10 years and provide insurance coverage to as many as 94% of nonelderly U.S. residents, according to the Congressional Budget Office‘s initial cost analysis (Wayne, CQ Today, 10/19).
• On Oct. 15, the Senate Democratic Caucus convened for the first time since the Senate Finance Committee approved its version of health reform legislation and top party leaders began talks to combine the two reform bills in the chamber, the New York Times reports. According to the Times, deep fissures became apparent as the senators discussed whether the final bill should include a government-administered public health insurance plan option and whether Congress could offset the bill’s costs to raise Medicare payouts to doctors (Herszenhorn/Pear, New York Times, 10/16).
• Speaking to reporters after the meeting, Senate Majority Leader Harry Reid (D-Nev.) said he believes that Senate Democrats would be able to reach a consensus on reform proposals and vote together on the final bill on the Senate floor, Roll Call reports. Reid noted that there are significant divisions among his Democratic colleagues on several key issues but expressed optimism that the team developing the final bill would deliver a package that satisfies all members (Drucker/Pierce, Roll Call, 10/15). Baucus also struck a similar tone of confidence. He said, “Every Democrat will vote for national health care reform.” He also said that “there will be at least one Republican and maybe a couple more who also will vote for” the final Senate bill (Werner, AP/Boston Globe, 10/16).
• In an interview with the Associated Press on Oct. 14, Sen. Susan Collins (R-Maine) said she is open to working with Democrats on crafting the Senate’s reform bill, but said the Senate Finance Committee’s bill needs significant improvements to make coverage more affordable, reduce costs and protect Medicare, the AP/Washington Times reports.  Collins said that she still is opposed to a public option within reform legislation (Alonso-Zaldivar, AP/Washington Times, 10/14).
• Earlier this month, Sen. Joseph Lieberman (I-Conn.) indicated that he would not support the Senate Finance Committee’s health reform bill, the Wall Street Journal reports. Lieberman criticized the size and scope of the legislation, saying Democrats are trying to accomplish “too much” with the overhaul bill during an economic downturn (Strassel, Wall Street Journal, 10/14).

Dollars and Cents

• On Oct. 15, the Government Accountability Office released a report finding that the national debt is expected to exceed 109% of gross domestic product by 2019, in part because of rising health care costs, CongressDaily reports. The report says, “Absent reform, Social Security, Medicare and Medicaid will account for a growing share of the economy in coming years. The longer action to deal with the nation’s long-term fiscal outlook is delayed, the larger the changes will need to be, increasing the likelihood that they will be disruptive and destabilizing” (Sanchez, CongressDaily, 10/16).
• Congressional policymakers are using the federal income tax code to help determine which U.S. residents would receive federal subsidies to purchase health insurance under reform legislation, CQ Weekly reports. The “consequence” could be that efforts to provide universal health insurance would “depend heavily on the country’s already overburdened tax collection agency,” according to CQ Weekly (Rubin, CQ Weekly, 10/19).
• Executives reviewing the Senate Finance Committee’s reform legislation expect drug companies to gain tens of millions of new customers, while insurance companies — particularly those that offer plans in the individual market — might be hurt by the legislation, the Wall Street Journal reports (Adamy/Hitt, Wall Street Journal, 10/19).

Targeting Insurers

• On Oct. 14, Senate Majority Leader Harry Reid (D-Nev.) said that a 60-year-old antitrust exemption for health and medical malpractice insurance companies is “anticompetitive and damaging to the American economy” and that the exemption should be abolished, the New York Times‘ “Prescriptions” reports. Reid spoke at a Senate Judiciary Committee hearing in support of legislation that would repeal the exemption, which results from the 1945 McCarran-Ferguson Act (Herszenhorn, “Prescriptions,” New York Times, 10/14).  The exemption gives regulatory control of the industry’s business practices to individual states.
• Also on Oct. 14, Sen. Charles Schumer (D-N.Y.) called for an amendment to the chamber’s health reform bill — which is being merged out of portions of the Finance Committee bill and the Senate Health, Education, Labor and Pensions Committee bill — that would remove the antitrust exemption (O’Connor/Budoff Brown, Politico, 10/14).
• Assistant Attorney General Christine Varney also provided testimony at the hearing. She said that the Justice Department is “generally opposed” to antitrust exemptions. She added that health reform efforts should include measures that encourage strong competition (Noyes, CongressDaily, 10/14).
• Sen. Orrin Hatch (R-Utah), ranking Republican on the Judiciary Committee, said he has seen little evidence to abolish the exemption. He said it has allowed insurance providers to collaborate in certain areas, such as sharing information, which can sometimes assist smaller firms (Norman, CQ HealthBeat, 10/14).
• On Oct. 15, House Speaker Nancy Pelosi (D-Calif.) warned the health insurance industry that reform legislation could mean more fees, regulation and competition for insurers, the Washington Post reports (Murray, Washington Post, 10/16). Pelosi suggested that the House could adopt a Senate proposal to place a flat $40 billion fee on insurance companies over 10 years and adopt a windfall profits tax on the industry (Reuters, 10/15). She also promoted rules in the House bill that would require health insurance companies to spend 85 cents of every dollar collected in premiums on benefits. Furthermore, Pelosi pointed to an effort by lawmakers to eliminate the industry’s antitrust exemption, which insurers have had since 1945 (Washington Post, 10/16).

Shaping the Debate

• In a recent letter to key Democratic senators, America’s Health Insurance Plans President and CEO Karen Ignagni proposed specific policy changes for health care legislation that would be more palatable to the insurance industry, CQ HealthBeat reports. The letter was sent to Democratic Sens. Harry Reid (Nev.), Max Baucus (Mont.) and Tom Harkin (Iowa). Ignagni’s letter addresses the penalties for people who do not maintain health insurance coverage, and it calls for broader cost-cutting efforts, such as ending reimbursements for each test, procedure and appointment and adopting a single payment method to cover multiple services in an effort to promote teamwork (Reichard, CQ HealthBeat, 10/15).
• On Oct. 19, a coalition of 11 patient, consumer and labor groups announced that it is developing a proposal to urge key senators to make health coverage more affordable than coverage under the Senate Finance Committee’s bill, CongressDaily reports. The 11 groups include AARP, the American Cancer Society Cancer Action Network, the Service Employees International Union, the American Heart Association and Consumers Union (Edney, CongressDaily, 10/20).
• On Oct. 19, the Progressive Change Campaign Committee released a television ad in Nevada — where Reid is facing a re-election challenge — to generate pressure on Reid to include a public plan in final reform legislation, the Boston Globe‘s “Political Intelligence” reports. The committee also sent an e-mail to 225,000 activists nationwide to raise about $100,000 to fund the cost of airing the ad 200 times (Rhee, “Political Intelligence,” Boston Globe, 10/19).
• During testimony before the Senate Health, Education, Labor and Pensions Committee on Oct. 15, Ignagni reiterated the need for a strong insurance mandate and said that insurers are committed to ending cost disparities between women and men. The panel also included women who described difficulties receiving insurance coverage, as well as representatives from both conservative and liberal interest groups (Norman, CQ HealthBeat, 10/15).
• Earlier this month, the BlueCross BlueShield Association released a report predicting that the Senate Finance Committee health care reform bill would raise insurance premiums, CQ HealthBeat reports (Reichard, CQ HealthBeat, 10/14). Both the report from BCBS and an AHIP report released on Oct. 11 state that weakened individual health insurance mandates would cause fewer healthy, young people to buy plans, in turn raising premiums for all.  In a letter to Congress that accompanied the study, Scott Serota, president and CEO of BCBS, wrote, “I want to underscore our strong commitment to working with Congress and the administration to enact bipartisan legislation this year” (Zimmerman/Young, “Blog Briefing Room,” The Hill, 10/14).
• On Oct. 14, Rep. Alan Grayson (D-Fla.) delivered 90,000 petitions to Reid urging him to take a strong stance on health reform legislation, Roll Call reports. Grayson delivered the petitions on behalf of the Progressive Change Campaign Committee, of which he is a member. The petitions request that Reid strip the leadership titles of any Democratic senators who offer their support to a Republican filibuster (Dennis, Roll Call, 10/14).

What’s in the Bills

• A change to the Finance Committee bill made prior to markup would reduce the number of middle-income families that would be eligible for tax credits to obtain health coverage, CongressDaily reports. Under the original language, families with annual incomes between 100% and 400% of the federal poverty level would qualify to receive the tax credits. However, committee Chair Max Baucus (D-Mont.) changed the definition of income from “modified adjusted gross income,” or AGI plus investment interest, to “modified gross income” (Cohn, CongressDaily, 10/20).
• Although Senate Budget Committee Chair Kent Conrad (D-N.D.) and Sens. Sam Brownback (R-Kan.), Mark Pryor (D-Ark.) and Ron Wyden (D-Ore.) are seeking to control health care costs as part of U.S. health reform efforts, all four also are attempting to help hospitals in their states receive a funding boost that accompanies a “critical access” classification, Kaiser Health News reports.  Congress established the critical access category in 1997 to guarantee access to care in isolated parts of the country (Pianin/Carey, Kaiser Health News, 10/19).
• The Senate Finance Committee‘s health reform bill would allow Medicaid to cover smoking-cessation medicines that are now on an “excludable” list, the Wall Street Journal reports. States are permitted to decide whether to cover the treatments, and more than three-quarters of states do so. However, the coverage varies by state (Mundy, Wall Street Journal, 10/16).
• Wellness incentives in the Senate Finance Committee’s bill could create a loophole that would allow health insurers and employers to charge more to people who have risk factors for chronic health conditions, the Washington Post reports. The bill would permit employers to provide incentives to employees to make healthier choices as long as the incentives’ value is no larger than 30% of the premium employers and employees pay for coverage, with an option for the federal government to raise the threshold to 50%. Currently, incentives may be no more than 20% of the premium. The bill would allow exceptions for people who have medical reasons for not meeting certain targets (Hilzenrath, Washington Post, 10/16).
• Provisions in reform legislation that reduce price disparities based on age for insurance plans might “dramatically raise prices for young adults,” the Washington Times reports. The Senate Finance Committee’s legislation states that insurance companies would not be able to charge seniors more than four times what they charge for young adults, while the Senate Health, Education, Labor and Pensions bill (S 1679) and the House bill (HR 3200) prevent insurers from charging more than twice as much (Haberkorn, Washington Times, 10/18).

Poll

• A Galen Institute poll found that 54% of survey respondents were strongly opposed to an individual mandate to obtain insurance and that 17% said they were somewhat opposed to it, according to CQ HealthBeat (Norman, CQ HealthBeat, 10/19).

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.