Friday, January 15, 2010

The latest on the health care negotiations

There are many sticking points yet to be hashed out, but there does appear to be a plan emerging on how to deal with what has been called the tax on “Cadillac” health plans that the Senate added to its bill. All of us are just now reading the potential compromise, so this is a very early report on what I am hearing.

Essentially insurance plans that are a result of collective bargaining would be exempt through 2018. It is important to note, this is a tax on insurance companies that market and sell high-cost plans. The tax will hit only 3 percent of the premiums of the plans that they sell, and they can avoid it by selling a more affordable health care plans.

The threshold at which the tax on so-called “Cadillac plans” has been adjusted as a result of this deal — increasing from $23,000 a year for a family policy, to $24,000.

The threshold is even higher for certain plans with older workers and women, a move to benefit unions with a high proportion of female membership.

The agreement on the high-premium excise tax would:
  • Include permanent adjustments based on age, gender and high-risk professions – factors that affect the cost of health plans regardless of the generosity of the benefits they provide. This makes good sense, as it focuses the impact on plans that provide the highest-cost benefits – not those that happen to cover the highest-cost workers.

  • Exempts the cost of dental and vision plans from the cost of coverage. These benefits are outside the core health spending which this provision is aimed at slowing.

  • Provide transition relief to help employers, insurers and workers adjust to the permanent provision. This includes a transition period for high-cost states, as well as providing health plans for state and local workers and collectively bargained plans a 5-year transition window before being subject to the tax. This is similar to the approach in other areas of the bill – including insurance market reforms and the insurer fee – where transition periods are built in to give stakeholders time to adjust.
More talks on other elements of the bill are underway, but this was one of the large differences between the House and Senate plans.