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Insurers Say Taxes in Baucus' Plan Make Health Care Less Affordable

Source: IFA

Posted on 17 Sep 2009

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The nation's two largest groups representing health insurance companies say that while they support some measures in Senator Max Baucus' health reform plan, new taxes he proposes levying against insurers will hinder the goal of making care more affordable.

Baucus (D-Mont.) unveiled his America’s Health Future Act Sept. 16, which the Senate Finance Committee will begin debating Sept. 22. The proposed legislation will cost $856 billion over the next decade and enact measures including individual mandates for insurance and establish health cooperatives rather then a government-run insurance program.

The proposed bill also levies a 35% excise tax on insurers for individual health plans worth more than $8,000 and family plans worth at least $21,000 annually. The bill also includes an aggregate annual fee of $6 billion for all U.S. health insurance providers.

Scott P. Serota, president and CEO of the Blue Cross Blue Shield Association, said while the group’s 39 affiliated companies nationwide support the goal of making coverage affordable, they are not in favor of taxes on the industry.

“We are greatly concerned that burdensome new taxes and fees aimed at insurers and other healthcare industry stakeholders would severely undermine the reforms that the chairman’s mark aims to achieve,” Serota said in a statement. “These unprecedented new taxes would make coverage much less affordable for individuals, their families, and employers.”

The proposed taxes also met with opposition from America’s Health Insurance Plans, which represents nearly 1,3000 insurers nationwide.

“New taxes on health care coverage will have the opposite effect by making coverage less affordable for families and employers across the country,” AHIP president and CEO Karen Ignagni said.

Concern by both groups regarding the excise tax was also mirrored by the International Brotherhood of Teamsters, who said in a statement that middle-class wage earners “cannot afford to pay more for health insurance than they already do.”

“We much prefer the House plan, which would pay for expanded coverage by imposing a surcharge on those who can afford it – the wealthiest Americans,” said Teamsters General President Jim Hoffa. Co-op concerns

AHIP also voiced its concern over another part of Baucus’ plan, the co-ops in which consumers run their health care as opposed to private insurers. Ignagni said that the various reform efforts laid out though the Senate Finance Committee bill are enough to aid consumers.

“New health insurance reforms and consumer protections will guarantee access for all Americans without the need for a new untested government-created co-op that could disrupt the quality coverage on which millions of Americans rely today,” she said. “We believe there is an opportunity for additional system-wide cost containment to ensure coverage is more affordable and to put our health care system on a sustainable and fiscally responsible path. “

Serota said the BCBSA supports guaranteed coverage for everyone, regardless of pre-existing conditions and the individual mandate, calling the latter “the linchpin to making insurance reforms work.”

The group also voiced its support for an age rating provision, providing discounts to young people to encourage them to purchase health coverage.

“Age rating provisions in other bills would preclude these discounts and would result in major premium increases to young people causing many to forgo coverage,” Serota said. “Making insurance affordable for young people, who account for as much as 40% of those without insurance, is critical to reducing the number of uninsured and will help to lower the cost of health insurance for everyone, including older Americans.”