Both the House and Senate worked overtime in the final months of 2009 to pass their individual versions of health care reform legislation. But there are still hurdles to clear before President Obama has a final bill to sign. The Senate’s version, which was passed on Dec. 24, 2009, must be reconciled with the bill that passed the House of Representatives in November.
The staff of the three House committees most involved with the bill (House Ways and Means, Education and Labor, Energy and Commerce) have released an 11-page summary of similarities and differences in the House and Senate versions.
To narrow the view down to what will impact employers and HR professionals, the government affairs staff at the Society for Human Resource Management compiled a side-by-side analysis of the employment provisions, along with its take on the relative merits of each provision.
SHRM’s positions tend to play it down the middle, leaning neither too far right nor left on the partisanship scale. The overriding concern: That employers continue to have flexibility in the kind of benefits they offer employees.
Provision-by-provision analysis
The Senate version of health care reform is called the “Patient Protection and Affordable Care Act.” The House version goes by “H.R. 3962, Affordable Health Care for Americans Act.” Here’s SHRM’s take on each:
Individual mandate requiring all individuals to have health coverage
- Senate: Yes, requires individuals to maintain minimum essential coverage beginning in 2014. Failure to maintain coverage will result in a penalty of $95 in 2014, $350 in 2015, $750 in 2016 and indexed thereafter. For those under the age of 18, the applicable penalty will be one-half of the amounts listed above.
- House: Yes, requires individuals to have coverage or pay a penalty of 2.5% of their adjusted gross income above the filing threshold or the average premium on the Exchange.
SHRM’s position: All stakeholders, including purchasers, consumers, payers, providers, and policymakers have a shared interest in improving access to health care.
Employer mandate requiring employers to offer insurance, with penalties for those who don’t.
- Senate: No requirement to offer coverage, but all employers with more than 50 full-time employees that do not offer coverage (and have at least one full-time employee, or FTE, receiving the premium assistance tax credit) would be required to make a payment of $750 per FTE to the government. If an employee opts out of an employer plan because the premium would exceed 9.8% of the employee’s income and receives a tax credit, the employer assessment would equal $3,000 multiplied by the total number of FTEs who obtain an income-based tax credit.
- House: Yes. Small employers with an annual payroll that does not exceed $500k are exempt from this requirement. Requires employers to pay 72.5% of the premium for individuals and 65% of the premium for families. Employers offering coverage would be subject to an 8% payroll tax for employees who decline qualified employer coverage that would cost more than 12% of the employee’s income.
SHRM’s position: “Pay or play” proposals would limit employers’ flexibility and innovation. Under this approach, some employers may simply choose to “pay” rather than offer coverage, leaving employees without the coverage they have grown accustomed to.
Employer penalty for employers not offering coverage.
- Senate: Penalty of $750 per FTE. In addition, an employer with more than 50 FTEs that requires a waiting period before an employee can enroll in health care coverage will pay $400 for any full-time employee in a 30-60 day waiting period and $600 for any full-time employee in a 60-90 day waiting period. An employer with more than 50 employees that does offer coverage but has at least one fulltime employee receiving the premium assistance tax credit will pay the lesser of $3,000 for each of those employees receiving a tax credit or $750 for each of their fulltime employees total.
- House: Employers not offering coverage would be subject to a penalty equal to 8% of average total wages paid annually.
SHRM’s position: See above.
Requirement that health plans offer specific benefits
- Senate: Requires health plans to be sold in the insurance exchanges to cover an essential benefits package.
- House: Requires essential benefits package covering broad range of medical, mental health, prescription drug, and rehabilitative services.
SHRM’s position: SHRM supports employer flexibility in plan design.
Public plan – government-run health insurance plan designed to compete with private plans
- Senate: Yes. Establishes a Community Health Insurance Option as a qualified health plan through exchanges. Allows States to enact a law to opt out of offering the option.
- House: Yes. Creates a new public health insurance option as part of the health insurance exchange and allows for negotiated rates.
SHRM’s position: SHRM is concerned with a public plan option because inadequate public plan reimbursement under current law has resulted in significant cost-shifting to private plans, increasing costs for both employers and employees.
Wellness provisions
- Senate: Allows employers to offer premium discounts and other awards for up to 30% of the total premium to individuals who satisfy a health standard and includes provisions to ensure that discriminatory practices do not occur. The Secretary of HHS would have the authority to issue regulations to allow financial incentives up to 50%. Requires the CDC to study and evaluate best employer-based wellness practices and provide an educational campaign and technical assistance to promote the benefits of worksite health promotion to employers.
- House: Creates a grant program to help small and mid-sized employers establish or strengthen workplace wellness programs. Participating employers must offer the programs to all employees and cannot mandate participation nor use participation as a condition to receive any financial incentive. Requires the HHS Secretary to develop and periodically update a national strategy designed to improve the nation’s health through evidence-based clinical and community-based prevention and wellness activities.
SHRM’s position: SHRM strongly supports health promotion, prevention and wellness programs and believes that health reform must include provisions that will enable greater availability of these critical programs among employers and employees.
