Big Stakes for Health Reform in Tomorrow’s Senate Vote

September 13, 2010 at 10:29 am

The Senate will vote tomorrow on an amendment to small business legislation that would seriously weaken an essential element of the new health reform law — the requirement that individuals obtain health insurance or pay a penalty  — and eliminate preventive care funding aimed at reducing the onset of chronic diseases and improving overall health.

Sponsored by Senator Mike Johanns (R-NE), the amendment would repeal a provision of the health reform law designed to improve businesses’ compliance with the tax laws.  Repeal would cost $17.1 billion over the next ten years, the amount of additional revenue that would have been collected due to improved tax compliance.

To make up for this loss, the amendment would do two things.  First, it would eliminate all $11 billion in Affordable Care Act funding for the Prevention and Public Health Fund for fiscal years 2010-2017 — taking away critical investments that could help reduce the incidence of chronic illness and infectious disease, improve overall health, and reduce the cost of treating preventable medical problems.

Second, it would weaken health reform’s individual mandate, which is designed to lower the overall cost of coverage by encouraging healthy people (who cost less to insure) to enroll in coverage rather than wait until they get sick.  While the Affordable Health Act would allow some people to remain uninsured without incurring a penalty, the Johanns amendment would allow many more to do so, meaning that fewer people would receive federal subsidies to help them buy coverage.

This would reduce federal costs for these subsidies, but at the price of increasing the number of uninsured people by 2 million (relative to what would occur under the health reform law), driving up premiums by as much as 4 percent for people with coverage through the new health insurance exchanges (because the pool of people in the exchanges would be less healthy, on average), and raising the cost to health care providers and state and local governments of providing health care to the uninsured.

While critics have argued that the tax-compliance provision would create excessive paperwork for businesses, senators who want to modify it can do so without undermining health reform.  An alternative amendment from Senator Bill Nelson (D-FL), which the Senate will also consider on September 14, would scale back rather than eliminate the provision to ease the burden for small businesses and make up for the lost revenue by reducing tax subsidies for the largest oil companies.  That’s a much more sensible approach.

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More About Edwin Park

Edwin Park

Park is Vice President for Health Policy at the Center on Budget and Policy Priorities, where he focuses on Medicaid, the Children’s Health Insurance Program, and issues related to federal health reform.

Full bio | Blog Archive | Research archive at CBPP.org

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