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Employers should note White House attempt to revive health care reforms

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Katten Muchin Rosenman LLP
USA
February 26 2010

The White House has released a health care reform plan similar to legislation passed by the Senate in December, and the plan might be headed to the budget reconciliation process for approval. Several provisions in the White House plan are of particular interest to employers.    

Under the White House proposal, no mandate would be imposed on employers to provide health care coverage, but most employers would be required to defray the cost if employees enroll in the health exchange established by the proposal. Small businesses would receive $40 billion in tax credits to support coverage for their employees beginning in 2010, and employers with fewer than 50 employees would be exempt from any employer responsibility requirements. The individual mandate for coverage is retained, but the assessments are lowered for those who choose not to become insured.

The tax on so-called “Cadillac plans” is based on the proposal in the Senate bill, which was negotiated with key unions. However, the threshold premium for tax would be raised from $8,500 for singles to $10,200 and from $23,000 for families to $27,500, and would index these amounts for subsequent years at general inflation plus 1%. The provisions would become effective in 2018. Premiums for dental and vision benefits are excluded.

The proposal also provides for a federal authority called the Health Insurance Rate Authority to regulate health insurance premiums. The proposal retains the state-based health insurance exchange and does not contain a public health insurance option.

It is possible for the Senate to use the budget reconciliation process to enact health care reforms, which would allow changes in the Senate bill with a simple majority instead of the 60 votes needed to stop filibusters. However, provisions not directly related to the budget (e.g., creation of the Health Insurance Rate Authority) could not be included in a reconciliation package.

The saga continues with no clear vision of what the final result might be.

More information about the White House proposal can be found here.

Gregory K. Brown

Gregory K. Brown

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