These days, massive and often confusing legislative proposals seem to be the norm on Capitol Hill. One bill that has generated significant debate — and controversy — is the House’s current version of the health care bill, H.R. 3200. Although it is vague in many respects, employers trying to predict the future can draw some conclusions now about what life under a government-run healthcare system might be like.
The centerpiece of H.R. 3200 is its creation of a “health insurance exchange,” which would be administered by a new federal agency called the “Health Choices Administration.” The exchange would offer private plans alongside a public option (which would be established by the Secretary of Health and Human Services) and essentially would be the only place an individual could go to purchase insurance not through an employer or a grandfathered non-group plan. In this way, H.R. 3200 will diminish the ability of private insurers to sell non-group health coverage, as they will be forced to compete with the government option on the exchange.
The bill does not forbid employers from continuing to offer self-funded health coverage or plans purchased on the group market through private insurers. However, it creates substantial penalties for employers whose existing plans are not "qualified health benefits plans," meaning they will have to meet a host of new regulatory requirements…some of which do not yet exist. At a minimum, these rules will address service and premium ratings areas, insurance ratings rules, age variation categories, standards for nondiscrimination in benefits, standards for network adequacy, marketing standards, claims and appeals procedures, and standards for transparency and disclosure.
The penalty for failing to meet all of these rules will be an 8% payroll tax on employers with annual payrolls over $400,000. The new rules likely will require a new round of negotiations with providers for those employers who continue to offer coverage outside the new exchange. Further, employers will no longer realize cost savings by offering programs like flexible spending accounts, health spending accounts, and health reimbursement arrangements.
Perhaps the most striking aspect of H.R. 3200 is what is not in it. Although the Obama Administration has promised that Americans will be able to keep their old health plans if they like them, Section 102 of the bill, which read: "Nothing in this division shall prevent or limit individuals from keeping their current health benefit plan," was dropped in committee.
It is difficult, if not impossible, to accurately predict the impact of health care reform on employers. Who knows whether H.R. 3200 will ultimately become the law? And even if it does, the bill contains countless regulatory and rulemaking loose ends and vagaries that only time will iron out. Perhaps only one thing can be said with certainty right now: life for employers who choose to offer health insurance will get less predictable. We will continue to track the progress of H.R. 3200 and its counterparts in the Senate and will report frequently as health care reform gets closer to being reality.