WASHINGTON—It appeared that federal health reform had taken one step closer to passage with the Aug. 3 approval of America's Affordable Health Choices Act by a third House committee, but reactions from insurers, the public and employers could slow its momentum.

By a vote of 31-28, the House Energy and Commerce Committee approved the bill, which will be merged with the version earlier passed by the House Ways and Means and Education and Labor committees and face a full House vote after Sept. 8, when Congress returns from summer recess.

But passage of H.R. 3200 drew criticism from America's Health Insurance Plans and conservative voters, who have been protesting at health care town hall meetings organized by members of Congress.

Meanwhile, the unveiling of the Senate Finance Committee's version of reform legislation—which health reform supporters expect to be more conservative that the House approach—was postponed until mid-September, though the six panel members are pledging to work through the recess.

“We're still waiting for the Finance Committee to take action. That really is what folks are waiting for now,” said Kathryn Wilber, senior counsel, health policy, at the American Benefits Council in Washington. Committee Chairman Max Baucus, D-Mont., and Sen. Charles Grassley, R-Iowa, “are working with a small bipartisan group to try to reach a compromise.”

Unlike H.R. 3200, which creates a new public program to compete against private insurers in exchanges where U.S. residents could shop for health plans, the Senate bill is expected to include state-sponsored, nonprofit cooperatives, which would be offered as one option in an insurance exchange.

“Conceptually, we like the idea as long as the co-ops aren't a public plan in drag,” said Joel Wood, senior vp at the Council of Insurance Agents & Brokers in Washington. “The broader concern is the impact on existing group plans if every American is afforded access to some government-run plan.”

Employers also hope the Finance Committee bill, unlike the House bill, will include an individual mandate and not an employer mandate.

H.R. 3200 requires individuals to buy health care coverage or pay a tax to the federal government equal to 2.5% of adjusted gross income. It also mandates that employers provide a certain level of benefits established by a Health Benefits Advisory Committee or be subject to a tax of up to 8% of payroll.

Proposals being considered in the Senate Finance Committee are “not attractive to employers, but it does the least harm,” said Steve Raetzman, a senior consultant at Watson Wyatt Worldwide in Arlington, Va. “I think people are hoping that the Senate comes out with something that becomes the reference point for what can pass on a bipartisan basis.”

Even before H.R. 3200's passage by three House committees, employers raised concerns about the legislation's potential impact on employer-sponsored benefit plans.

The National Coalition on Benefits, made up of more than 185 employers—including Boeing Co., Xerox Corp. and Caterpillar Inc.—as well as business groups—such as the National Business Group on Health and the Business Roundtable—sent a letter to Democratic House Speaker Nancy Pelosi of California and Republican Rep. John Boehner of Ohio, opposing the House version of the legislation because of its potential to erode employer protections under the Employee Retirement Income Security Act.

“We're strongly opposed to anything that would touch ERISA,” said Helen Darling, president of the Washington-based NBGH. “In particular, we're very concerned about so-called "minimum credible coverage,'” that would be required under H.R. 3200 to avoid the 8% payroll tax.

Some have expressed concerns about the uncertainty that aspect of the legislation would create for employers' existing plans (BI, July 27).

Insurers, which also support an individual mandate, voiced their opposition to H.R. 3200 at a teleconference last week, where AHIP President Karen Ignagni announced the industry trade group would step up its media campaign against any legislation that would include a public plan option.

“A government-run plan would inevitably rely on its price-setting ability to offer artificially low premiums, effectively subsidized by the private sector through cost-shifting,” Ms. Ignagni said. “This would force employers to drop their coverage, creating a death spiral for private insurance and financial catastrophe for many hospitals and doctors.”

Supporters of the public plan option, including most Democrats and the Obama administration, dispute that claim and say the public plan would foster greater competition among insurers.

Although the original version of the House bill would have allowed the public option to base provider payments on Medicare rates, the conservative Blue Dog Democrats successfully amended the legislation to require the public option to negotiate reimbursement rates directly with providers that choose to participate, similar to the way insurers negotiate with providers that choose to participate in their preferred provider networks.

As AHIP pleads its case over the airwaves and anti-reform protesters flood town halls across the United States, employers continue to work through traditional channels, sending letters to Congress and talking directly with lawmakers about their concerns.

“We're encouraging our members to meet with their congressional delegations during the summer recess at this critical period,” said Andrew Webber, president of the National Business Coalition on Health, which also has sent a letter on behalf of its coalition network of 7,000 public and private employers to President Obama and congressional leaders recommending that final legislation preserve ERISA.

Employers don't plan to enter the public debate, because “I'm not sure it would work,” said NBGH's Ms. Darling.

“We're not going to be attending any town hall meetings,” said Laurel Pickering, executive director of the New York Business Group on Health. “Instead, we have scheduled two of our own meetings” with lawmakers.

“We think it's better for us to have our own forum with Congress to lay out the issues that are important to us,” Ms. Pickering explained. “We're clearly wanting to communicate our opinions about maintaining the employer-based system and protecting ERISA.”