Health Insurance Reforms: First Dominos are Set to Fall

BusinessWeek reports that the California State Assembly passed a major health care reform plan that would expand coverage to almost 70% of the state’s uninsured at a cost of $14.4 billion. Under the Governor’s proposal, everyone would be require to buy minimum health insurance coverage. Insurers could not deny coverage based on age or medical condition and would be required to spend 85% of premium dollars on actual patient care. Revenue to fund the reform would come from taxes on hospitals, cigarettes and employers who do not provide a minimum level of health insurance.

Pennsylvania’s Governor has a similar Health Care Reform Act, the highlights of which are as follows:

• Establishes a basic health insurance program for employees of small low-wage employers and uninsured adult individuals, without waiting periods and pre-existing condition exclusions
• Creates a “Fair Share Tax” on all employers equal to 3% of payroll through 2010 and increasing to 3.5% thereafter.
• Provides for a small employer tax credit for first 5 years
• Provides a tax credit for all employers that offer a minimum level of coverage to all employees who work 30 or more hours per week based on the out of pocket cost to the employee and level of employee participation
• Requires insurers offering small group plans to:

• use modified community rating in setting rates taking into account only age, geographic region, and family composition
• vary rates by a factor no greater than 33%
• maintain a medical loss ratio of no less than 85%

These reforms are coming and they will impact employers by mandating a level of minimum coverage for employees and by taxes those employers who don’t offer coverage. Keep tabs on Pennsylvania’s Health Care Reform at the Governor’s website dedicated to this project.