Legislation & Politics

Week Ending September 25, 2009

Senate Finance Committee Begins Debate on Health Reform Bill

On Tuesday, the Senate Finance Committee began to debate its deeply flawed version of health reform legislation. While our allies on the Committee filed a number of amendments aimed at improving the bill, we are unlikely to win any significant improvements in the bill. Instead, key amendments will be debated but withdrawn, laying the groundwork for the next step in the legislative process. Several problems with the bill are highlighted below:

Taxes High-Cost Health Plans. The bill would impose a tax on so-called “high-cost” health plans – plans that exceed a cost of $21,000 for family coverage and $8,000 for individual coverage in the year 2013. The tax would be 40% of every dollar in excess of these threshold amounts. The tax would be imposed on health plans, including self-insured plans. The cost would then be passed on to employers. This will drive employers to demand cuts in benefits or more cost sharing in order to keep below the threshold. The threshold amount is indexed to the Consumer Price Index-U (CPI-U) plus one percent, so it would increase over time. However, the increase in the cost of coverage far exceeds CPI-U plus 1%. So while a plan initially may not meet the threshold amount in the year 2013, most of the plans covering union members will eventually be taxed.

Almost No Employer Responsibility. There is no requirement that employers provide coverage or pay into a fund to help subsidize coverage for low and moderate income families who must purchase their own. The only requirement on employers is that they pay up to $400 a year for any worker who gets a subsidy. This provision weakens the employer-based system of coverage and shifts the cost of reform onto families and the government.

Medicaid Costs Shifted to the States. The bill expands the Medicaid program to cover all individuals up to 133% of the federal poverty level. The Congressional Budget Office estimates that in the long run, states will pick up 10% of the cost of expansion. While AFSCME supports expanding Medicaid coverage to more low-income people, it is imperative that the cost be borne by the federal government. State budgets are already stretched to the limit by current Medicaid costs and other budget demands.

Co-ops Rather than a Public Health Insurance Option. The bill fails to include a public health insurance option as is included in the House bills and in the Senate Health, Education, Labor and Pensions (HELP) Committee bill. The purpose of the public option is to introduce competition into the insurance market in order to lower costs and give families another choice of coverage. Instead, the bill would establish state and regionally based co-ops – essentially small, nonprofit insurance plans. The Congressional Budget Office concluded that co-ops would have no impact on the market.

Cuts to Disproportionate Share Hospitals (DSH). The Senate Finance bill would cut DSH payments to safety net hospitals by $48 billion over 10 years. DSH payments through the Medicaid and Medicare programs provide additional resources to states and providers to offset the cost of providing services to the uninsured. While the number of uninsured and the amount of uncompensated care will be reduced under health reform, these cuts are too drastic and threaten the financial stability of safety net hospitals.

We expect the Finance Committee to finish its debate of the bill next week. At that point, its bill will be merged with a much better bill approved earlier by the HELP Committee. We will be fighting to have the merged bill include many of the stronger HELP bill provisions. AFSCME will be working with the HELP Committee, Senate leadership and the White House to make improvements, especially in the tax on health plans. But it is clear that we are at a critical moment and that it will take a strong grassroots effort to shape the bill to our liking.

House Moves Quickly to Pass Unemployment Benefits Extension

This week, the House overwhelmingly passed legislation to provide an additional 13 weeks of unemployment benefits in high unemployment states (those with unemployment rates of 8.5% or more). The vote on the Unemployment Compensation Extension Act of 2009 (H.R. 3548) was 331 to 83.

The House-passed bill would help workers in 27 states, and efforts are underway to persuade the Senate to provide additional weeks of benefits for workers exhausting their benefits in all states. Nationally, more than 400,000 workers are scheduled to run out of all of their state and federal benefits by the end of September, and that number is projected to rise to 1.4 million by the end of the year. We expect Senate action very soon.

House Passes Bill to Block Medicare Premiums Hike

On Thursday, by a vote of 406 to 18, the House passed the Medicare Premium Fairness Act (H.R. 3631), which will help protect 11 million seniors and cash-strapped states from increases in the 2010 Medicare Part B premiums. (Medicare Part B pays for health care expenses other than hospital care). Automatic provisions in current Medicare law would require roughly 27% of the 42 million people enrolled in Medicare Part B to see their premiums rise to $110 to $120 a month, an increase of up to 20 percent. The increase would hit new enrollees and retirees especially hard. It would also hit vulnerable state budgets, which are obligated to pay premiums for many low-income seniors. To alleviate this unfair financial burden, the bill will keep Part B premiums at the current rate, $96.40 per month.

HHS Issues Report on Health Insurance Reform and Medicare

The Department of Health and Human Services issued a report on Health Insurance Reform and Medicare. The report highlights several problems in the current health care system, including how overpayments to private Medicare Advantage plans burden all of America’s seniors. The typical couple in traditional Medicare will pay on average $90 more next year to subsidize private insurance companies that do not provide their Medicare benefits. The report can be found at http://www.healthreform.gov/reports/medicare/index.html.

House Approves Two Transportation Law Extensions

The House passed a three-month extension of surface transportation law on September 24 by a vote of 335-85. The bill (H.R. 3617) would extend current highway, transit and highway safety programs through the end of the year. Although Republican leadership urged its members to vote against the bill, 86 Republicans voted with the Democrats to pass the bill. The Administration has requested an 18-month extension, and the Senate appears ready to support the Administration’s position.

The House also approved legislation extending the Federal Aviation Administration (FAA) through the end of the year. Although the House has already approved a multiyear reauthorization (H.R. 915), the Senate has yet to do so. The Senate now has three months to complete work on its bill (S. 1451).

Co-sponsors Needed for the Cooperation Act

The Public Safety Employer-Employee Cooperation Act (H.R. 413, S. 1611) is a legislative priority for AFSCME. If passed, it will give public safety officers collective bargaining rights in states that do not have them. The bill establishes minimum standards including: the right of public safety officers to bargain over wages, hours and working conditions; a dispute resolution mechanism, such as fact finding, mediation or arbitration; and enforcement of contracts through state courts.

Please call your members of Congress and ask them to co-sponsor the bill, if they have not already done so. A list of current co-sponsors is available at http://www.thomas.loc.gov (search for H.R. 413 by bill number, then click on co-sponsors when bill information is displayed).

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