Health Affairs

Yesterday, the Senate Finance Committee voted 14-9 in favor of legislation overhauling the nation’s health care system. Much attention was focused on the “yes” vote supplied by Sen. Olympia Snowe (R-ME), the one Republican who joined all 13 Committee Democrats in support of the bill. 

Garnering less attention was the yes vote cast by Ron Wyden (D-OR). Together with Sen. Bob Bennett (R-UT), Wyden had earlier introduced legislation that would have ended the tax exclusion currently enjoyed by employer-sponsored health benefits. In place of this tax exclusion, Wyden-Bennett would have provided refundable tax credits to consumers for the purchase of health insurance, thus severing the link between employment and health coverage. Wyden-Bennett failed to gain traction in the Senate, and all the health reform bills being considered in Congress would retain the tax exclusion for employer benefits, although the Finance Committee bill would impose an excise tax on insurers providing expensive “Cadillac” plans.

During the Finance Committee’s mark-up of its legislation, Wyden offered a “free choice” amendment. In cases where an employer failed to offer its employees a meaningful choice of health plans, Wyden’s amendment would have allowed the firm’s workers to turn the amount the employer spends on coverage into a voucher. If they wished, the workers could then have used the voucher to purchase coverage through the newly created “insurance exchanges” that all of the Congressional health reform bills create. Wyden withdrew his amendment, but in a colloquy Senate Finance Committee chair Max Baucus (D-MT) pledged to work with Wyden toward incorporating a compromise version of the free choice amendment in the final Senate health reform legislation.

Wyden’s amendment has attracted both enthusiastic support and fervent opposition. Elliot Wicks a senior economist at Health Management Associates, warns that Wyden’s proposal could saddle the insurance exchanges with the sicker, more expensive members of an employer’s workforce. “If individual employees had a choice of staying with their employer’s plan or going to the exchange, employers would find ways to make their plans more attractive to healthier workers and less attractive to sicker individuals,” Wicks tells the Health Affairs Blog. In a separate post, Wicks lays out in detail how he believes the insurance exchanges should be structured, and he examines how each of the health reform measures being considered by Congress measures up to the criteria he sets forth.

This entry was posted on Wednesday, October 14th, 2009 at 10:52 am and is filed under All Categories, Consumers, Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.