On February 25th Democrat and Republican leaders joined President Obama at Blair House for a meeting on health care reform.  The President released a new blueprint for health care reform that seeks to offer a compromise between the House and Senate passed bills.   If enacted, the President’s plan would extend coverage to 31 million Americans.  Of particular importance is the proposed excise tax provision on high cost health care plans that was contained in the Senate passed bill.  The House passed bill did not contain such a provision.  The President’s new proposal maintains the excise tax provisions with modifications.  Plans for state and local government workers and provided through collective bargaining agreements would be exempt for five years.  The plan would also raise thresholds higher for “high risk” professions.  We will work to ensure that law enforcement is clearly defined in bill language considered in the House and Senate.

The President indicated that he would give Republicans up to six weeks to make new proposals.  Leaders of the House and Senate will develop a compromise version of the two bills into law. Discussions are centering around having the House pass the Senate bill, accompanied by a "sidecar'' bill that could fall within the "budget reconciliation'' process (which cannot be filibustered) This means that only a majority vote is required.

Excise Tax Provisions

• An Increase in the Threshold for Both Family and Individual Coverage.
  The threshold that the tax would impact for all employer based health plans was increased from $23,000 to $24,000 for families and $8,900 for individuals. The threshold will increase annually based on the inflation rate plus 1% starting in 2013 (excluding high cost states). If health premiums increase more than is currently expected between 2010 and 2013, the initial thresholds will be raised even more.
• Thresholds will be Higher if Health Costs Rise More than Expected.
  If health premiums rise more than is currently expected, the initial thresholds will be raised so that plans would not be unfairly affected.
• Safeguards for High-Cost States.
  The thresholds will be increased for the 17 states with the highest health care costs. Starting in 2013, the threshold for these states will be 120 percent of the regular thresholds, 110 percent for 2014, and 105 percent for 2015.
• Permanent Adjustments.
  The thresholds will be increased to $9,850 for individual plans and $26,000 for family plans for retirees and workers in high-risk professions. They would also be adjusted to reflect unfair cost differences based on age and gender. 
• Protections for Women and Older Workers.
  Thresholds will be increased permanently for workforces that are older or predominantly female.
• Transitional Adjustments.
  The thresholds for the 17 states with the highest health care costs would be 120 percent of the regular thresholds for 2013, 110 percent for 2014, and 105 percent for 2015. Plans for state and local government workers and provided through collective bargaining agreements would be exempt for five years to allow time for transitioning and to renegotiate.
• Excludes the Cost of Dental and Vision Plans.
  Dental and vision are exempted from the threshold.
• Tax Only Affects Portion of Premium over Threshold.
  The tax would only touch the portion of the premium that exceeded the cap.