Podcast: Understanding the Senate Finance Committee's Health Reform Bill

October 27, 2009

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In this podcast, we will discuss the Senate Finance Committee’s Health Reform Plan. I’m Shannon Spillane and the Center’s Senior Health Fellow, Judy Solomon, is joining us today.

1. Judy, the Senate Finance Committee recently approved an ambitious health reform plan. Is this bill a good step toward health reform?

Yes, it is, it’s a major step forward. The bill would extend health care to millions of uninsured people and protect millions more who are underinsured or face financial distress because of the high cost of health coverage.

The bill is also fiscally responsible. It won’t add to the deficit – in fact it actually reduces the deficit. And, it begins to rein in health costs – a key first step in addressing our long-term fiscal problems. That said, there are some serious shortcomings that would limit its effectiveness.

2. Are there particular shortcomings that jump out?

There are. First, of particular concern is the structure of the bill’s tax credits that are put in place to help low- and moderate-income families buy insurance.

3. Why do the credits need improvement?

Very simply they’re just not generous enough. They wouldn’t put enough money in the pockets of low- and moderate-income families to make insurance affordable for them. Many people, particularly those with lowest incomes who already struggle to buy food and pay the rent and utilities would face health insurance costs under the bill that would be difficult, if not impossible, to meet. And, even those who could afford to buy the insurance would still face substantial out-of-pocket costs, such as high co-pays and deductibles.

In contrast, the other bills that Congress is considering – one in the House and another in the Senate HELP Committee – they do a better job of making insurance affordable and ensuring that coverage doesn’t require people to pay out-of-pocket costs that they cannot afford.

4. Judy, I understand there’s also concern about something called the “free rider” provision in the plan. What would it do?

 Free rider would make it more expensive for an employer to hire someone from a modest-income family than someone from a well-off family. That of course would give employers a disincentive to hire low-or moderate income workers. Many of these workers are likely to be people of color.

5. Why is that and how does free rider work?

 The “free rider” provision would require employers who do NOT offer health coverage to their employees to pay penalties for any employees who receive tax credits to buy health coverage in the new health insurance exchanges.

But the provision would NOT require these employers to offer coverage. Nor would these employers pay any penalty for employees who do not get the tax credits.

So, for instance, an employer could be charged $4,000 or more for each full-time employee who receives a tax credit to purchase coverage. That’s a lot of money, and employers would have an incentive to avoid the charge by hiring people with higher family incomes who are not eligible for the tax credits.

6. So what should be done to continue moving health reform legislation through the process?

 At this point in the process, policymakers should work on blending the best provisions from the various bills in a fiscally responsible way. They should address the shortcomings of the Finance Committee package and produce a bill that can pass the Congress.

Thanks for joining us, Judy.

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