Focus shifts back to Senate after House passes reforms

Senate Majority Leader Harry Reid, D-Nev., soon is expected to unveil a reform bill assembled from measures already approved by the Finance and Health, Education, Labor and Pension committees for full Senate consideration. PHOTO: AP PHOTO

WASHINGTON—As the crucial stage in the drive to pass sweeping health care reform legislation is about to begin, employer groups are focusing on the U.S. Senate in efforts to shape the direction of the reform legislation.

Senate Majority Leader Harry Reid, D-Nev., is soon expected to unveil a reform bill he is assembling from measures already approved by the Finance and Health, Education, Labor and Pension committees for full consideration by the full Senate.

Senate debate on the measure, which is expected to last a couple of weeks, comes after House approval—on a narrow 220-215 margin with only one affirmative Republican vote—of reform legislation earlier this month.

The House bill has unnerved the employer community.

“Employer reaction has been very negative. There is deep business opposition to it,” said Frank McArdle, a consultant with Hewitt Associates Inc. in Washington.

“We are extremely anxious about it,” said Gretchen Young, vp-health policy with the ERISA Industry Committee in Washington.

That anxiety is driven by several provisions in the House legislation. Those provisions would:

c Remove employers' ability to design health care plans with the government telling them what benefits they must offer and the cost-sharing limitations they can impose.

That loss of control could occur through a House bill provision that would establish a new commission charged with developing recommendations on benefits to be covered and health plan enrollee cost-sharing that could be required. The Department of Health and Human Services secretary would have the authority to adopt and impose commission recommendations.

“This would be extremely disconcerting to employers, who provide generous benefits and could lose control,” Mr. McArdle said.

c Barring employers offering health care plans to retirees from reducing benefits unless they make comparable reductions for active employees. Such a requirement could force employers to maintain retiree health care plan designs that they need to change or lead them to eliminate retiree health benefits before such a requirement would kick in.

c Impose fines on employers offering generous health care plans for failing to extend coverage immediately to new employees, an approach used by many organizations in high-turnover industries.

c Establish a public option, or government-run health insurance plan, that would be available to those purchasing coverage through state insurance exchanges, which the legislation would set up.

Employers fear the government-run plan would enjoy competitive advantages, drive out commercial insurers and lead to a single-payer system.

Whether these and other House provisions that employers find objectionable are incorporated into the Senate bill—either because Sen. Reid includes them or through amendments on the Senate floor—isn't yet known.

Noting the intense employer opposition, some observers say it is likely that most of these provisions will not make it into a final Senate bill.

“In the end, health care reform cannot pass without at least the tacit support of the business community. If employers are united against it, it will fail,” Mr. McArdle said.

“We are hoping that the Senate will hear the voice of reason,” said Chantel Sheaks, a principal with Buck Consultants L.L.C. in Washington.

If those provisions don't make it into the Senate bill, their fate then would have to be decided by a Senate-House conference committee which would work out differences between the House- and Senate-passed measures.

Some say it is likely the House would bend for a very practical reason: Something similar to the House bill would not be able to win the 60 votes needed to pass the Senate.

“The House knows if they don't bend, (final passage) won't happen,” Ms. Sheaks said.

Others see compromises by the House and Senate.

“There will be bending on both sides, but we are confident that the final bill” will be a lot closer to what the Senate passes compared to the House bill, said Paul Dennett, senior vp-health care reform with the American Benefits Council in Washington.

While much wheeling and dealing remains ahead, Washington observers say final passage of reform legislation is likely.

“This is the signature domestic issue of President Obama. There is a growing realization that legislation will pass, perhaps in early 2010, and employers need to start considering what will be the implications for their health care programs,” Mr. Dennett said.

Perhaps the biggest issue needing resolution will be how the core of the reform legislation—providing federal health insurance premium subsidies to the lower-income uninsured—will be funded. House-passed legislation relies heavily on boosting taxes on higher-income individuals, while the bill passed by the Senate Finance Committee includes a 40% excise tax on expensive health insurance plans.

However, observers say it appears likely the House and Senate will reach an agreement to cap the maximum pretax annual contribution that employees can make to health care flexible spending accounts. Bills passed by the Senate Finance Committee and the House would impose a $2,500 limit. Currently, there is no limit on FSA contributions.

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