Federal health care reform bill meets many of nonprofits' concerns

On March 21, the U.S. House passed the Senate health care reform bill by a vote of 219-212 and then passed a reconciliation package of changes to the Senate bill by a vote of 220-211. Minnesota Reps. Ellison, McCollum, Oberstar and Walz voted for both bills. Reps. Bachmann, Kline, Paulsen and Peterson voted against both bills.

We will be studying the details more closely, but here is our initial scan of how the bill meets the Minnesota Council of Nonprofits’ principles for federal health care reform legislation:

1.  Support for small employers, including nonprofits. The bill provides a payroll tax credit for small nonprofit employers (those with no more than 25 full-time employees and average wages below $50,000) to help offset the cost of providing health care coverage for their employees. For tax years 2010 through 2013, qualified nonprofits will be eligible for up to 25 percent of the costs of providing health care coverage if they pay at least 50 percent of the premiums. “Starting in tax year 2014, they will be eligible for up to 35 percent of such costs if they buy insurance from new exchanges, or insurance marketplaces, that states must set up for small businesses,” the Chronicle of Philanthropy reports.

2. Make health care affordable for low-income Minnesotans. The bill simplifies and expands eligibility for Medicaid for households with income up to 133 percent of the federal poverty level, or about $29,327 for a family of four. For the first time ever, childless adults under age 65 would be eligible for Medicaid beginning in 2014.

The bill provides an option for states to implement the Medicaid expansion sooner. Minnesota House Representative Tom Huntley has expressed interest in taking this path, which he says would bring over $300 million in federal health care dollars to the state, and provides a potential alternative to the GAMC compromise worked out earlier this month. We are watching this issue closely and expect to learn more about this at a legislative hearing later today.

3. Provide adequate federal funding. MCN argued that federal health care reform should not shift too much of the cost of reform on to states. Under the bill, the federal government will pay 100 percent of the cost for the Medicaid expansion from 2014 through 2017 and most of the cost in the following years. (If a state decides to implement the expansion sooner, the states would bear a portion of the cost of expansion.)

It is also important that health care reform not add to the federal budget deficit. In fact, the Congressional Budget Office (CBO) analysis indicates that federal health care reform would reduce the federal budget deficit by $138 billion in the first ten years and $1.2 trillion in the second ten years.

The bill is funded with new excise taxes and fees on medical device manufacturers, pharmaceutical companies and insurance companies. Additionally, the bill increases the Medicare payroll tax rate by 0.9 percentage points (to 2.35 percent) on wages over $200,000 for individuals and $250,000 for married couples filing jointly. Beginning in 2013, a new 3.8 percent tax will be imposed on interest, dividends, capital gains and other investment income for individuals making more than $200,000 and couples making more than $250,000.

4. Contain unsustainable cost increases. While the bill does not include the public insurance option that was in the original House bill, it does include new state insurance exchanges or marketplaces where consumers would be able to shop and compare insurance policies. The proponents of the bill hope that over time the state exchanges will bring costs down because the exchange brings more people together in a larger pool.

Finally, the bill includes significant insurance reforms. Starting this year, insurers will be prohibited from denying coverage to children for pre-existing conditions and eventually from denying coverage to anyone for pre-existing medical conditions. Insurers will also be barred from imposing lifetime dollar caps on the amount of coverage available to policyholders.

For seniors participating in the Medicare prescription drug program, the bill will eliminate the gap in coverage, or “donut hole,” by 2020. Beginning immediately, seniors who hit the “donut hole” would receive a $250 rebate. In 2011, they would also receive a 50 percent discount on brand-name drugs.

President Obama signed the new bill into law on March 23. Meanwhile, the Senate is expected to pass the reconciliation bill later this week and send that bill to the President as well.

There will be continuing efforts in Congress to improve upon the bill, as well as efforts to scale back or even repeal it. Several state attorneys general have announced that they will challenge the constitutionality of the bill. Governor Pawlenty has asked Minnesota Attorney General Lori Swanson to review the legality of the bill as well. In short, we will likely be hearing much more about health care reform in the months and years ahead.

The Coalition on Human Needs is providing an opportunity for you to contact your member of Congress to either thank them or express your disappointment with their vote on the health care reform bill. All you have to do is put in your zip code and you’ll see an email based on how your representative voted for you to edit if you wish and to send.

-Steve Francisco