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Health insurance reforms finally hit the fast track

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in Employee Benefits Program,Human Resources

You’ve heard a lot of talk about reforming the country’s health insurance system … and now it appears you may see some action.

Health care costs are reaching a boiling point — financially and politically. A new Wall Street Journal poll says rising health care expenses are now the number one economic concern among Americans.

For years, Congress has been stalled on passing comprehensive health care reforms. As a result, some states have stepped into the void, adding new mandates for employers that could affect the way your organization does business.

So far, Maine, Massachusetts, and Vermont have passed universal-type coverage laws. In some cases, they require all residents to obtain health insurance, with financial help from the state if necessary.

Several other states are also exploring ways to increase coverage for their residents. The proposals vary, but they often include mandates for employers to offer insurance and/or mandates for individuals to purchase it.

Last month, California Gov. Arnold Schwarzenegger (R) proposed creating a universal system that would require all state residents—even illegal immigrants—to carry health insurance. Any business with 10 or more employees would have to either offer health insurance to its employees or pay a 4-percent-of-payroll fee into a fund to help the uninsured buy coverage.

Response from Washington

All of this state action isn’t lost on Washington, where special interest groups have fought for years over their piece of the health-insurance turf. Now those groups seem resigned to the fact that something needs to be done and, for the first time, they seem willing to work together to achieve it.

The state actions and special interest heat will put big pressure on Congress this year to pass some reforms. The problem: While many in Congress agree on the diagnosis, few can agree on the right cure.

White House response: President Bush last month proposed counting employer-provided health insurance benefits as income for the first time, thus making them taxable.

However, under the Bush plan, Americans would be able to take a health insurance deduction (whether they obtain benefits through their employers or not) of $15,000 for families and $7,500 for singles. The net effect: Employees with especially generous benefit plans would face a new tax.

Outlook: With elections looming, it will be difficult to push through such a major piece of legislation relating to health care. But the chances are better in 2007 than in any year during the past decade.  

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