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Obama’s last-ditch health care reform proposal would affect HR

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in Employee Benefits Program,HR Management,Human Resources

Ahead of an upcoming summit between the White House and Congressional Republicans and Democrats, President Obama has released his last-gasp proposal for reforming the nation’s health care system. Several elements of the new plan could affect HR—if the proposal ever becomes law.

The White House plan would require most employers to offer health insurance benefits to their employees, or else face monetary penalties. It would require most people to have health insurance, or else face tax penalties.

But it would create state-based insurance exchanges designed to make coverage more affordable for small employers and individuals who can’t buy health insurance elsewhere, such as through their jobs.

Last, best hope?

The Obama administration’s proposal hews closely to the health care reform legislation that the Senate passed last Christmas Eve. That bill never made it to a House-Senate conference committee that—under normal circumstances—would have reconciled it with a House bill that passed in November.

When Republican Scott Brown of Massachusetts won a January special election to fill the seat of the late Sen. Ted Kennedy, Democrats lost their filibuster-proof majority in the Senate, and Senate Majority Leader Harry Reid called a time-out on efforts to move the legislation forward.

The White House proposal represents Obama’s last, best hope of achieving health care reform, according to many Washington observers. It was the signature issue of his first year in office, but political infighting stalled it

Release of the White House plan coincides with a health care summit planned for Thursday in Washington. Obama has invited House and Senate Republicans to present their own proposals for health care reform, and Democrats from both houses of Congress are expected to attend as well.

Employer mandate

Of the proposal elements most likely to affect HR professionals, the employer mandate looms largest.

Under the Obama plan, organizations with 50 or more employees would have to offer health insurance benefits. If they didn’t, they would have to pay $2,000 annually per employee. Obama’s proposal would go easier on mid-sized employers, exempting the first 30 uncovered employees from the penalty calculations.

Small businesses—those with fewer than 50 employees—would generally be exempt from the employer mandate.

Individual mandate


Individuals would be required to have at least basic health insurance. Those who don’t would face annual tax penalties—the greater of either $695 or 2.5% of income. The idea: To encourage more young, healthy people to buy insurance, increasing the size of the risk pool and thus helping to control the high cost of covering only older and sicker individuals.

Insurance exchanges

The Obama plan, like the Senate bill, would create 50 state-based insurance “marketplaces” where small businesses and people without employer-sponsored insurance could buy affordable, basic coverage.

Other features of the Obama proposal would expand Medicare coverage for older people.

Many of the plan’s provisions would not take effect for several years, with others going live in 2013.

The prospects for enactment: It’s too soon to tell. Much hinges on the outcome of this Thursday’s health care summit, which will be broadcast live on C-SPAN.

To read more about the Obama administration proposal, visit www.whitehouse.gov/health-care-meeting.

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