Industry Critical Of Proposed Tax On Health Insurers

NU Online News Service, July 17, 2:50 p.m. EDT

WASHINGTON–The health insurance industry is voicing strong criticism over a proposal by a group of Democratic senators to impose $100 billion in taxes or fees on insurers to help defray the cost of health care reform.

The proposal was made by Sen. Charles Schumer, D-N.Y.; Robert Menendez, D-N.J.; and Debbie Stabenow, D-Mich.–all members of the Senate Finance Committee.

Sens. Kurt Conrad, D-N.D., and Olympia Snowe, R-Maine, also members of the committee, said they would also support such a levy, although it remains unclear what form it would take.

It comes as the Finance panel continues its work to craft a compromise health care reform proposal that would win bipartisan support.

Three House committees–the Ways and Means, Education and Labor, and Energy and Commerce committees–are also working to craft a House version of similar legislation.

The Senate Health, Education, Labor and Pension Committee Wednesday completed work on its version of the legislation. The plan is to mesh the HELP and Finance Committee bills, in hopes of having the full Senate vote on its version of legislation by early August.

Speaking on behalf of the health care insurance industry, however, Robert Zirkelbach, director, strategic communications, for America's Health Insurance Plans, and an official at CIGNA both said the proposal is a bad idea.

Mr. Zirkelbach argued that the health insurance industry has already made significant concessions in an effort to support health care reform initiatives, and a new tax would be inappropriate.

Mr. Zirkelbach cited reforms the industry has embraced and said it has "worked very hard to embrace the concerns of the American people."

He pointed out that the industry has proposed new market rules and consumer protections "that would fundamentally reshape health plan business practices."

Specifically, he said these proposals include guaranteed coverage for pre-existing conditions, discontinuing rating based on a person's health status or gender, and a personal coverage requirement to include everyone in the system.

Chris Curran, a spokesman for CIGNA, argued, "Isn't one of the major points of this reform effort to make things less costly for consumers? If you put a $100 billion tax on insurance companies, it will ultimately get passed on to the consumer in the form of higher premiums," he explained.

"Health plans are currently taxed at both the federal and state levels including assessments that help fund high-risk pools in 30 states," he added.

Mr. Curran observed that because families and small businesses are struggling during the economic downturn, "now is not the time to impose new fees on health care coverage that will make that coverage less affordable."

Regarding the Schumer, Menendez, Stabenow proposal, he said Congress "must rein in" insurers by tightening regulation and increasing market competition. He said they justified a new tax by contending that the health insurance industry has been "a big part of the problem" of high uninsured and high costs, and "now must be part of the solution."

The senators also cited statistics which they argued showed that since 2001, health insurance profits have soared 418 percent and premiums have doubled.

While the senators said they were not "drawing lines in the sand" over the design of the fee, they suggested that, depending on how it was designed, the proposal could potentially raise $100 billion.