HEALTH CARE REFORM INITIATIVE - CONTACT YOUR CONGRESSIONAL LEADERS TODAY
6/12/2009
Health care reform is inevitable and it will happen this year. This is what we are hearing from key Senators and Representatives. Based on conversations we have had with Congressional top aides, we agree that there will be a health care reform bill this year. How health care reform is financed is a key part of the equation and we are asking for your help to contact your Senators and Representatives with your input. We will be sending this same request to employers asking for their help next week.
Discovery has been actively involved these last few months contacting key Senators and Representatives, meeting with their offices in both Washington DC and locally, sharing our input on the financing proposals outlined in the Senate Finance Committee's report published May 20, 2009. We are fortunate to have Senator Conrad (D-ND) on both the Senate Finance Committee and Senate Budget Committee and Representative Pomeroy (D-ND) on the House Ways and Means Committee. These committees are actively involved in health care reform.
Of great concern are a couple of the options included in the Senate Finance Committee report. Financing options include the elimination or capping of the employer health care exclusion, elimination or capping of flexible spending accounts and health reimbursement arrangements, and eliminating over-the-counter medications as eligible expenses.
Please contact your state's Senators and Representatives to let your voice be heard on health care reform and financing proposals. Your state's Senators and Representatives place a high regard on your opinion as their constituent. Contact information can be found at www.house.gov for the House of Representatives and www.senate.gov for the Senate. Links to the individual web sites, phone numbers and email addresses are located on the site for your Senators and Representatives. Phone calls are very effective. We do not recommend sending a letter via the USPS due to the delays caused by increased security measures put in place after 9/11.
The timetable for producing legislation is accelerating. Senator Baucus (D-MT), Chairman of the Senate Finance Committee, stated the Committee would publish its recommendations for financing health care reform on June 17, 2009. The current timetable is that the Senate and House health care reform bills are expected to pass by the end of July with reconciliation of the two bills completed in September with a final bill ready for President Obama's signature in October 2009.
Two proposals were released June 9, 2009. One by the House Committee on Ways and Means, Energy and Commerce and Education and Labor included key features for health care reform legislation. Also on June 9, the Senate HELP (Health, Education, Labor and Pensions) lead by Senator Kennedy (D-MA) released its health care reform proposal.
Some key points to consider when responding to the Senate Finance Committee financing proposals:
Options to Modify the Exclusion for Employer-Provided Health Coverage
Modifying or eliminating the exclusion for employer-provided health coverage seems counter intuitive to increasing access to health care, as it will only serve to eliminate health care coverage for many employees where the employer is no longer able to cover the cost of health care without the benefits of the exclusion. Employees would be forced to find coverage elsewhere or go without coverage all together. The cost of health care is increased because employees are now paying for the access to care with after-tax dollars. Take-home pay that might otherwise be used to pay for preventive measures to increase overall health and well-being is now taken away through taxation, thereby reducing preventive care in general and increasing the likelihood of ongoing health problems down the road as employees and their families grow older.
Changing the excludability of health care would increase employer FICA taxes by up to 7.65 percent of the cost of employer paid health care. For employers that decide to continue to sponsor health plans this would result in an even greater cost shift of health care costs to employees.
A cap on the employer exclusion is a tax increase that can only have a negative impact on the economic recovery that has been taking place recently. Reducing employee discretionary income and reducing the capital available for employers to reinvest and grow their business (hire more employees) will result in fewer jobs and higher unemployment.
Modify or Repeal the Exclusion for Employer-Provided Reimbursement of Medical Expenses under Flexible Spending Arrangements and Health Reimbursement Arrangements.
Flexible spending arrangements are at the heart and core of employer provided benefit plans today. Eliminating flexible spending arrangements as an option for employees to pay for health care would put a tremendous tax burden on employees, as they would now be required to pay for out of pocket expenses on an after-tax basis.
Employees are already struggling with rising medical costs and new plan designs that require they pay more out-of-pocket expenses. Eliminating or modifying the employer exclusion will create an incentive and further exacerbate the shifting of costs to employees. Eliminating FSAs would severely limit employees' ability to pay for health care. Preventive health care would be impacted because the funds are not there for employees to pay for proactive health care maintenance, such as is provided through the availability of medications that were once prescription drugs and are now available over-the-counter.
Flexible spending arrangements are a tool used to educate employees on the cost of health care because every year an election must be made. If a cap on the medical FSA election is necessary to save the FSA for employees, then we agree it must be done. However, we ask that the cap be indexed such as the one currently in place for HSAs. The majority of employers place a cap within their own plan design. Our experience is the cap placed on the maximum annual election is generally between $3,500 and $5,000 per plan year.
We ask that if there is a limit placed on the employer exclusion, that you exclude FSAs, HRAs and HSA from being placed under this limit. The cost of premiums alone will use up the limit and will no longer allow FSAs, HSAs or HRAs be viable options.
Limit the Qualified Medical Expense Definition
Many years ago, over-the-counter medications were not an eligible expense under Section 213(d) and were not eligible for reimbursement from an FSA, HSA or HRA. The change was made when more and more prescription drugs were being reclassified to over-the-counter drugs. Common prescription medications such as allergy medications, cholesterol lowering drugs, etc. were no longer available by prescription and were not covered by insurance or eligible for reimbursement from an FSA, HSA or HRA. By allowing certain over-the-counter medications as eligible for reimbursement from an FSA, HSA or HRA, the incentive toward preventive care is increased. Individuals no longer need to seek medical care for a prescription drug that is now over-the-counter. They can take care of themselves seeing a doctor only when it is necessary, which in turn helps to lower overall health care costs.
We ask that you continue to allow over-the-counter medications and drugs be eligible for reimbursement from an FSA, HSA and HRA as it provides in inexpensive way for individuals to take care of their health care needs and reduce their doctor and other health care related visits.
Categories: General, HSA, HRA, FSA