Senate Health Bill Tax Change A Nod To Kaiser Permanente
By Martin Vaughan, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- A late change in Senate health legislation would
shift more of the burden of a $6.7 billion annual tax on health insurers toward
large, for-profit insurers and away from integrated health systems such as
Oakland, Calif.-based Kaiser Permanente.
Despite the change, Kaiser says it would still shoulder an unfair amount, and
will continue to fight to strip out or alter the tax in the health bill the
Senate is taking up next week.
"The language in the Senate bill is an improvement, but it remains inequitable
and would have unintended consequences," said Chris Stenrud, spokesman for
Kaiser Permanente.
A provision added to the bill before its unveiling last week would ensure that
the tax applies not only to plans insured by companies like Cigna Corp. (CI),
Aetna Inc. (AET) and UnitedHealth Group Inc., (UNH), but also to the fees the
insurers earn when they act as third-party administrators for companies that
fund their own health benefit plans.
About 57% of workers who have health insurance are in plans funded by their
employer, according to the Kaiser Family Foundation's 2009 survey of employers.
In many cases, the employer contracts with a benefits administrator, often an
insurance company, which processes claims.
"What you get when you contract with a third-party administrator is their
expertise, and access to an already established, broad network of providers,"
said Paul Dennett, senior vice president at the American Benefits Council, a
trade group representing large employers.
The health-insurance industry tax in the Senate bill would be divided among
insurers, based on their market share. In an earlier version passed by the
Senate Finance Committee, each company's fee would have been determined based on
its share of premiums written. Self-insured plans would have been disregarded
when calculating the tax.
Kaiser Permanente, Intermountain Healthcare, and Geisinger Health System
complained to senators, saying the tax was unfair. As integrated providers, all
of their business would be subject to the tax; but self-insured plans would
escape it, they argued.
According to a letter those three organizations wrote to senators, Kaiser
would have paid 8% of the $6.7 billion tax, even though it insures only 3% of
Americans with health coverage.
The revised Senate bill unveiled by Senate Majority Leader Harry Reid (D.,
Nev.) last week would also include fees paid to third-party benefits
administrators in the calculation of the tax. It would not apply to benefits
administrators who are not health insurance companies.
Stenrud, the Kaiser spokesman, says the tax remains unfair because fees paid
to administrators only account for a small percentage of the cost of care. That
means that for self-insured plans, as little as 6% of plan costs would be taxed,
while 100% of plan costs would be taxed for fully insured coverage.
Whatever the structure of the tax, the health-insurance industry is gearing up
to fight it on the Senate floor and in possible conference negotiations between
the House and Senate.
"New health-care taxes will only make health-care coverage less affordable for
families and small businesses across the country. That is the opposite of what
health-care reform is supposed to accomplish," said Robert Zirkelbach, spokesman
for America's Health Insurance Plans, a trade group.
The Senate bill is expected to result in coverage for about 31 million
Americans who are now uninsured, many of whom would receive government
subsidies. That is new business for private insurers, and Senate Democrats argue
that the taxes makes sure the industry chips in on costs.
Industry lobbyists are seeking to reduce the dollar amount of the tax, and
delay its effective date. The tax would kick in in 2010, even though the bill's
health insurance mandate and coverage subsidies wouldn't kick in until 2014.
- By Martin Vaughan, Dow Jones Newswires; 202-862-9244; martin.vaughan@
dowjones.com
(END) Dow Jones Newswires
11-24-091600ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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