NU Online News Service, July 29, 3:45 p.m. EDT

WASHINGTON–Leadership of the Senate Finance Committee said members are making "progress" drafting bipartisan health care reform legislation that the insurance industry can support, but it won't be anytime soon.

In a statement, committee chairman Sen. Max Baucus, D-Mont., and Sen. Charles Grassley, R-Iowa, the panel's ranking minority, said, "While progress has been made in recent days, neither an accord nor an announcement is imminent."

In fact, the statement said, "significant policy issues remain to be discussed among the members, and any one of these issues could preclude bipartisan agreement. Members are continuing their methodical work this morning."

But, the panel does appear to be working toward sending a bill to the Senate floor before the Senate leaves for a month-long recess Aug. 7. Congress will resume work Sept. 8.

The bipartisan legislation would include incentives for employers to provide health insurance coverage for their workers rather than impose a more drastic mandate.

The Senate Finance bill would also mandate creation of health insurance "cooperatives" modeled after rural electricity providers rather than the so-called "public option" strongly opposed by both health underwriters and agents.

Sen. Baucus emerged from a meeting with the six members of his committee working on the bipartisan bill and told reporters that he had received a preliminary report from the Congressional Budget Office.

He said "based on a draft of the health care reform bill that we are currently negotiating, that [report] estimates the cost of the bill below $900 billion over 10 years, covers 95 percent of all Americans by 2015 and is fully offset."

"In fact, according to the preliminary CBO report, the bill would actually reduce the federal deficit in the 10th year by several billion dollars," he said. "In addition, employer-sponsored coverage increases throughout the life of the program. That is, there is no net crowd out."

In his comments, Sen. Baucus cautioned that the current draft does not include resolutions of several key issues. "Nevertheless, the report is encouraging," he said.

But one provision contained in the proposed legislation is prompting criticism from America's Health Insurance Plans (AHIP).

This would be a proposed tax on insurance companies offering individual plans valued at more than a certain limit, estimated by AHIP to vary between $21,000 and $25,000, according to various reports.

Insurers would have to pay an excise tax on such policies, and the cost would likely be passed on to employers. While the structure isn't clear, the tax would likely fall on the portion of any policy exceeding the mandated limit.

Robert Zirkelbach, a spokesman for AHIP, responded by saying that taxing insurers "is the wrong approach at the wrong time. New taxes on health care coverage will make coverage less affordable."

He added that the new tax would disproportionately impact employees in high-cost states, specifically New York, California and Texas, as well as older workers "who have more comprehensive benefits packages."

Joel Kopperud, director of government affairs for the Council of Insurance Agents and Brokers, said the concern about the employer mandate within the industry is that a mandate would have acted as an incentive for companies to pay the penalty imposed by the House bill, as much as $800 per employee, rather than buy group insurance policies for the entire company.

"I think the most important news is the employer mandate piece as it relates to the public option," he said. "If the package includes a cooperative instead of the government-run plan that is in the versions of the legislation drafted by the Senate Health, Education, Labor and Pension Committee and is also in the House bill, it's more likely that the private sector will be able to fairly compete."

He explained that a "public" health plan would pay no state premium taxes, would not have to generate a profit to keep operating, and would have lower costs for administration, such as offices and employees.

"A public plan will undermine the private marketplace, whereas a cooperative is more likely to compete on a level playing field than a government insurance plan," Kopperud said.

"The devil is in the details, but this is significant progress," he said.

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