Health Reform - U.S. Chamber Perspective

The U.S. Chamber of Commerce supports meaningful, common sense health care reform that will cure the problems in our system – not create new ones. The Chamber agrees with the President’s eight principles for health reform, but the devil is in the details.

The business community shares the goals of Congress and the Administration to reduce costs, improve quality, and expand access. However, businesses voluntary provide health benefits to 160 million Americans, and it is essential that we are not negatively affected by reforms.

Employers provide health care benefits because it makes solid business sense. However, health insurance premiums have doubled in the last decade, and without reform, rising costs will threaten the viability of businesses of all sizes and put job security and benefits at risk for millions of employees. We feel strongly that the individual and small group insurance markets must be fundamentally restructured to “work” for those two groups, and individuals should be able to deduct (tax parity) the cost of insurance. Tax fairness does not mean raising taxes.

Employers have led the way in seeking a higher quality, evidence-based health care system, and remains firmly committed to helping forge solutions that will address delivery system shortcomings, reduce costs and force quality improvement. We are equally committed in our opposition to proposals that will threaten already struggling businesses with increased costs, taxes, fees, mandates, regulatory burdens, and cost-shifts from government programs. In addition, we must protect ERISA; implement health IT; support prevention and wellness programs; and create a vibrant private insurance market for small business and individuals.

Individuals who are opting out of insurance coverage due to escalating costs must act responsibly. This will require comprehensive reform to the individual and small group insurance markets – you cannot mandate coverage for these individuals until they have somewhere to go. The Chamber looks forward to working on this, and we can get something done, but Congress needs to make meaningful compromises – which will mean serious efforts to lower the costs of health care. Final legislation should be pragmatic and bipartisan.

Without serious steps to decrease health care spending any such a plan will accelerate the day of a health care financial meltdown. Health reform is meaningless without Medicare reform. The healthcare delivery system must establish, measure, and report benchmarks of quality in medical practice. To decrease costs, we must improve quality. Expanding coverage is not enough to truly reform the system.

MAJOR AREAS OF CONCERN:

Mandates: Currently, employers offer insurance as a VOLUNTARY benefit to over 177 million Americans. Employers want to keep their ability to offer uniform health benefits to their employees intact through preserving ERISA. All of the innovation you’ve seen in the last 20 years has come from employers. Businesses are concerned about an individual mandate requiring a one-size-fits-all “minimum benefits package”. The solution isn’t to force people to buy into an unaffordable system; the solution is to improve the quality and affordability of health care. Employers are already buckling under health care costs and cannot be expected to pay more. Mandates on business to finance health reform will hurt the economy.

An individual mandate might become a de-facto employer mandate if the requirement on individuals is overly prescriptive and expensive and employers have to redesign their plans. Minimum coverage should be truly minimal – major medical with catastrophic coverage and coverage of preventative services.

New Government-Run Plan: President Obama, Sen. Kennedy, and House leaders all favor a new government-run plan to compete with private plans. A public plan would be an unfair competitor because it would not reimburse doctors and hospitals fairly; much like Medicare does this will increase costs to employers. Consumers would flock to the public plan because its premiums would be cheaper, and ultimately no viable private plans would remain. The Lewin Group estimates 130 million people could move from private to public insurance – this would be a disaster, and would devastate the employer-sponsored system. It's a very short step to a Medicare-like program for all Americans in a single-payer system.

How to pay for reform? The financing of health reform will be the toughest challenge that congressional leaders face. Estimates indicate that the price tag will be somewhere between $1.2 to 1.5 trillion, or higher. The President included in his budget numerous pay-fors that would be highly problematic for employers including LIFO, Deferral, and other industry-specific taxes, as well as repealing tax breaks for higher income individuals (including reducing charitable and mortgage deductions, capital gains, etc). At the center of the financing debate is whether to tax health benefits offered by employers. Currently, if you receive health benefits from your employer, they are a tax-free benefit. Congress may consider either capping or removing the “exclusion” altogether. This will be a significant tax policy change to all employees (and has ramifications to employers through FICA and other taxes).