Winners, Losers Examined In Senate Health Bill Tax Treatment, Insurer Regulations

The Associated Press reports on some winners and losers in the Senate health reform bill including cosmetic surgeons who helped defeat a proposed 5 percent tax on their services and a handful of states getting more federal aid to help them afford a proposed Medicaid expansion. Among the winners: "Nebraska, Louisiana, Vermont and Massachusetts. These states are getting more federal help with Medicaid than other states. In the case of Nebraska — represented by Sen. Ben Nelson, who's providing the critical 60th vote for the legislation to pass — the federal government is picking up 100 percent of the tab of a planned expansion of the program, in perpetuity."

The AP also names Medicare Advantage beneficiaries in Florida among winners as they will have their benefits grandfathered in, a handful of "high-risk" workers who won't have to pay all of a proposed tax on high-cost insurance plans and Community Health Centers, which got $10 billion more dollars to provide care. Losers, according to the AP, include tanning salons who would have to pay a 10 percent tax on their services if it survives the Senate conference with the House and people who make more than $200,000 a year who would have to pay a Medicare tax increase (Werner, 12/21).

The New York Times reports that Sen. Max Baucus, D-Mont., was successful in getting a provision in the Senate bill that expands Medicare to cover people in Libby, Mont., who were exposed to asbestos in a mine. "Items were inserted into the bill by the Senate majority leader, Harry Reid, Democrat of Nevada, to get or keep the support of various lawmakers. … (a)nother item in the package would increase Medicare payments to hospitals and doctors in any state where at least 50 percent of the counties are 'frontier counties,' defined as those having a population density less than six people per square mile." According to the Times, the Congressional Budget Office has identified those states as Montana, North Dakota, South Dakota, Utah and Wyoming (Pear, 12/20).

Nonprofit insurers are also being given a proposed tax exemption in legislation, The Wall Street Journal reports. "Part of the deal was an exemption for nonprofit insurance companies that met several requirements. One way to qualify is to spend an average of 92% of premiums on health-care expenses. That spending measure, called a company's medical-loss ratio, is closely watched to determine how much insurers take in profits."

Few would qualify for that, however, but other provisions that would allow them to avoid the tax include providing guaranteed-issue coverage to people who couldn't get coverage elsewhere (Johnson, 12/21).

Kaiser Health News also offers a story explaining some of the issues surrounding the medical-loss ratio. "The Senate bill would require insurers to spend at least 80 percent on medical care and quality improvements, while the House bill specifies 85 percent. Insurers that don't comply would owe rebates to customers." Spending limits may not stop insurers from raising rates, however. "But even some advocates say companies could game the system by broadly defining medical costs, for example" (Appleby, 12/20).

Kaiser Health News/USA Today, in a separate story, reports that one of the central tenets of the overhaul is the requirement for nearly all Americans to carry health insurance. "Under the Senate bill, people who don’t buy coverage would face a maximum penalty of $95 beginning in 2014. That would jump in 2016 to $750 or two percent of their annual income up to the cost of the cheapest health plan, whichever is greater. In the House bill, violators would pay as much as 2.5 percent of their annual income up to the cost of the cheapest plan beginning in 2013." Some people are saying they will simply pay the penalty (Galewitz, 12/21).

Finally, The Wall Street Journal in a separate story reports that there are differing factions on abortion as well, even after Sen. Ben Nelson, D-Neb., compromised to allow states to opt-out of allowing insurers in state exchanges from offering coverage for abortion. Under that deal with Nelson, "women who receive a new tax credit to buy insurance would write a separate check with their own money for abortion coverage, and states would explicitly have the option of barring such coverage from plans sold on new insurance exchanges." Abortion-rights advocates say they oppose the Senate compromise because it restricts how women can use their own money to pay for abortion. "Laurie Rubiner, vice president for public policy at the Planned Parenthood Federation of America, said having to make a separate payment will prompt many women to switch to a plan that doesn't cover abortion. 'There's a stigmatizing effect to it,' she said" (Adamy, 12/21).

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