Kennedy Tactic Calls For Government Health Program, Employer Fees
July 3rd, 2009
Health and Human Services | 
The plan includes a government-run insurance program as an alternative to private coverage, and would cost about $400 billion less than an earlier proposal.
Kennedy, a Massachusetts Democrat, and Senator Chris Dodd, a Connecticut Democrat, said in a letter to members of the Senate Health, Education, Labor and Pensions Committee that the plan would cost $611.4 billion over 10 years, citing an analysis by the non-partisan Congressional Budget Office.
The CBO later released a preliminary analysis of the legislation pegging its net cost at about $600 billion. Thats down from an estimate of $1 trillion for a previous draft of the legislation.
The new plan, when combined with another proposal in the Senate Finance Committee, would help lead to health-insurance coverage of 97 percent of Americans, Dodd said. The CBO said Kennedys portion of the plan would extend coverage to about 20 million Americans, a little less than half of the estimated 44 million uninsured Americans.
President Barack Obama praised the plan. And Dodd, on a conference call with reporters yesterday, said it meets Obamas goal of affordable and accessible health care.
“We are on the cusp, on the brink, of doing something here that is absolutely critical,” said Dodd, who is leading the committees work while Kennedy receives treatment for brain cancer.
Added Penalties
Lawmakers cut the plans cost by $400 billion in part by adding the penalties for employers who dont offer insurance coverage, CBO said. The agency said lawmakers also trimmed costs by eliminating insurance subsidies for those with incomes above 400 percent of the federal poverty level, while reducing the subsidies for those earning less than that.
The revised plan also decreased subsidies for those with access to health-care coverage through their employer, even if employees consider that insurance to be unaffordable.
The plan would require all legal U.S. residents to have health insurance, CBO said. The Internal Revenue Service would impose penalties on those who dont have health insurance, though individuals with incomes below 150 percent of the federal poverty level would be exempt, the analysis said.
Insurers would be required to cover all applicants, and couldnt limit coverage for those with pre-existing conditions.
The proposal would prevent insurers from varying premiums for a given plan according to an individuals health and would only allow them to peg premiums to age “to a limited degree,” CBO said. The restrictions would only apply to new insurance policies, the agency said, allowing already existing ones to be exempt from the rules.
Obama said in a statement the overhaul reflects his principles of lowering costs and covering more Americans.
The government-run option “would make health care affordable by increasing competition, providing more choices and keeping the insurance companies honest,” Obama said.
Health insurers have opposed a government-run plan, saying it would have the purchasing power and regulatory authority to run private competitors out of business.
Industry Reaction
Insurers say changes theyve promised, such as covering people with preexisting conditions and not basing premiums on a persons health, will achieve Democrats goals, said Robert Zirkelbach, a spokesman for Americas Health Insurance Plans, the insurers Washington, D.C. trade group.
“If we do the types of reform that everybodys talking about, then a government-run plan in any form is not necessary,” he said in a telephone interview yesterday.