Hot News for January 2010

Health Care Bill Update
Legislative Conference call 1/21/2010

I participate in a weekly TWU system-wide legislative conference call, the subject of that call this week (as it been for the lat several months) is health care reform legislation. The following constitutes my report on this weeks call.

As most of you are aware, with the loss of Ted Kennedy's seat, the Democrats have lost their 60 vote majority in the Senate. This has greatly complicated the health care reform. Currently several options are possible:

• Pass the current bills before Senator Brown is seated; not going to happen. the stated position is that Congress will wait until he is seated.
• Continue down current path; the reconciled bill that comes out of the conference committee only requires a 51% majority. This option is deemed not likely since the loss in Massachusetts is being regarded as referendum on the inadequacies of the current bills.
• The House can pass the Senate version of the bill thus avoiding the conference committee and the reconciliation process and then pass companion add-on bills to address side issue. This is also deemed not likely since it is believed, based on the results in Massachusetts, that supporting the current Senate bill will cost seats in November.
• Start from scratch and pass groups of smaller bills; this probably is the most likely scenario.

At this point nobody knows what will happen....

Another issue that has arisen is the excise tax on Cadillac insurance plans. At this particular moment in time the proposed excise tax does not affect us. The valuation of our health care plans for either a single individual or family falls below the threshold level of the taxable plans. Bear in mind that as long as the tax exists the possibility exists that the threshold can be adjusted up or down and that we could be taxed. Currently we are so far below the proposed threshold that outcome is unlikely. The threshold is currently indexed to a cost of living adjustment and will increase over time. Furthermore the TWU regards the excise tax as a breach of promise. During the campaign Obama stated there would be no tax on health care benefits. For those reasons the TWU continues to oppose the excise tax and stands against the current Senate version of the bill and therefore stands against the AFL-CIO brokered compromise. (See letter from Jim Little to Congressional members below). The IAM and Nurses Association stand with the TWU against the AFL-CIO brokered compromise.

Gary Moffitt
Local 567 legislative Director

Dear Congressional Member: On behalf of the Transport Workers Union of America, AFL-CIO, and our over 250,000 active and retired members I am writing to you to express our strong opposition to the excise tax provision in the Patient Protection and Affordability Act of 2009. This tax amounts to a betrayal of the campaign promise made by President Barack Obama that alluded to our hard earned, collectively bargained, healthcare benefits would not be taxed under his healthcare reform plan. We now express our intention to oppose this bill if the excise tax is not eliminated from it. Supporters of this tax claim that it is a tax on "Cadillac" healthcare plans held by wealthy bankers and business executives, but it's not. The reality is that the vast majority of plans considered "Cadillac" are comprehensive health plans held by middle class working Americans which includes union members who have foregone increases in their pay to have access to fuller healthcare benefits. A tax on these plans amounts directly to a tax on our members and sends the signal that this Congress and this President think it is acceptable to pay for healthcare reform on the backs of working Americans. As it is currently written, an excise tax of 40% would be levied on insurance companies for health plans with annual premiums above $8,500 for individuals and $23,000 for families. This description is misleading because we all know that the costs of these taxes will be passed down to workers one way or another. Employers will probably cut the benefits that they offer to get their plans under the threshold. In any scenario, such a tax hurts workers, especially those with collectively bargained benefits or in high risk professions where more comprehensive benefits can mean the difference between a lifetime of health or a lifetime or suffering due to ailments caused by high risk jobs. Furthermore, we strongly believe that the threshold cannot be raised high enough to protect all workers from having their benefits taxed. There is only one option: eliminate the excise tax from the bill. If the tax is not eliminated, we will be forced to oppose this bill. Sincerely, James C. Little, President TWU of America, AFL-CIO

The Mechanic and Related Negotiating Committee represents Aviation Maintenance Technicians, Overhaul Support Mechanics, Aircraft Cleaners, Parts Washers in Title I, also Plant Maintenance Mechanics, Plant Maintenance Man, Utility Man, Building Cleaners, Cabin Cleaners in Title II

1-888-4TWUUpdate 1-888-489-8873

The M&R Negotiations sub-committee met in Dallas the week of Jan 11th -14th. On Tuesday January 12th AA Management gave the Mediator and the M&R Committee a presentation on their current TWU retirement Proposal.

On Wednesday January 13th AA Management gave the Mediator and the M&R Committee a presentation on Healthcare Market Trends. That evening AA Management presented a comprehensive proposal to the M&R Committee that is posted on the negotiations website at

http://negotiaate.twu.org

In the afternoon of Thursday January 14th the full M&R committee met at the ATD to review the company’s proposal and voted unanimously for the M&R subcommittee to reject the proposal at the next session. We are currently waiting for the Mediator to set the date for the next session and we will update you as soon as it is scheduled.

The TWU M&R Negotiating Committee recognizes these are difficult times and appreciate your and support as we work towards an
agreement.

>>> Company Proposal <<<
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Comparison of House & Senate Health Reform Bills

Senate passage of a badly flawed version of health reform legislation on Christmas Eve completed an historic year in Congress – where more progress was made towards comprehensive health reform than anytime in 60 years.

The House & Senate will have to resolve hugely important differences in their bills this month before they can send a final bill to President Obama – whether to tax health benefits to fund coverage for the uninsured, create a public insurance health plan option to hold down health costs and keep insurers honest, and require all employers to pay their fair share are the top three. The outcome of negotiations on those key issues will determine how well, or poorly, the legislation will work for working families.

Neither bill is the one that we would have written. But the House bill is, in most respects, very good. The Senate bill has many good provisions in it, but is badly flawed in key areas.

By way of background, below is a simplified list of common reform elements in both the House and Senate bills, followed by a more detailed comparison of differences on five key issues.  For more detail see comparison prepared by House Tri-Committee Staff (Ways & Means, Energy & Commerce, Ed & Labor) at www.speaker.gov/pdf/ HScomparison.pdf.

Overall Design in Both House & Senate Bills– keeps the structure of the current system – employment-based insurance with public programs for the elderly and poor – but makes major changes to address serious shortcomings in coverage, quality and cost of care.  The changes will result in significant systemic change that, within ten years,  will make health care in America very different.

But health care will not see a radical make over. For instance, even as the legislation outlaws the worst insurance abuses and puts in place strong consumer protections, it won’t eliminate the role of private insurance, and it won’t immediately reduce the cost of health services that drive the ongoing outrageous growth in US health spending.  The legislation aims at comprehensive reform of health care as it now exists, not elimination of the failed private insurance system or overhaul of the medical industry.

Consumer Protections in Insurance

• Prohibits denial of coverage or higher rates due to pre-existing conditions.
• No longer permits insurers to cancel coverage when someone files a claim.
• Bans annual or lifetime limits on claims payments by insurers.
• Sets up procedures for disclosure, review & justification of insurance rate increases
• Requires health plans to have appeals process that meet certain standards and states to have an external appeal process for people dissatisfied with the result of the internal one.
• Ends gender discrimination whereby insurers charge higher rates for women
• Reduces age-based variation in rates – instead of charging older people five or more times what younger people pay, insurers will not be able to charge any more than twice (House) or three times more (Senate).
• Either eliminates rate variation for tobacco use (House) or limits it at 1.5:1 (Senate)
• Sets minimum benefits standards for insurance plans in exchange, for new plans outside exchange and for existing plans after five year “grace period” (House only).
• Covers out of school children – children up to age 27 will be covered under family plans

More Affordable Coverage for Active Workers

• Caps out-of-pocket costs – $10,000 (House) & $11,000 (Senate) maximum annual limits, largely eliminating the cause of medical bankruptcies that now total 700,000 a year, 2/3rds of which involve fully-insured people who still can’t afford their  medical bills.
• A range of cost-containment provisions that are estimated by independent experts to result in savings to families of between $2,000 and 3,000 per year in premiums by 2019.
• Prohibits co-pays for check-ups & preventative tests – insurers must provide, free of charge, mammograms, cancer screening, tests for diabetes and other chronic conditions, and regular check-ups.
• Requires that insurance companies rebate to policy-holders any spending in excess of 15% of total expenditures spent on things other than medical claims, e.g., administrative expenses, marketing, executive salaries, and profit.
• New insurance exchanges with standardized rules and simplified procedures that prevent insurers from choosing policy-holders based on lowest risk, reduce administrative cost, and provide a “level playing field” insurance market to promote competition and consumer choice.
• The exchanges will be open to small/ medium employers or plans in 2013 (House) and 2014 (Senate). In 2015 (House) and 2017 (Senate), exchanges open to large employers/plans.
• Lowers small & medium size group insurance rates – the new “insurance exchange” with standardized benefit packages and uniform application process is estimated to cut administrative costs to the level of the most efficient large groups now enjoy, 5% (compared to 15-40% now).

Coverage Expansion

• Between $436 billion (Senate) and $602 billion (House) budgeted to subsidize coverage (through public programs, mostly Medicaid, and private insurance) for people with incomes up to 400% of the federal poverty level, or approximately $89,000, to pay for health coverage.
• Tax credits of up to 50% of the cost of coverage for employers with 50 workers or less and annual wages up to $50,000,  for up to five years (House) and six years (Senate)  Amounts vary by tax year, workforce size and income level.
• Medicaid coverage extended to $150 of federal poverty level (FPL) (House) and 133% FPL (Senate).
• Federal gov’t pays 100% of costs of Medicaid expansion for two years  & 91% thereafter (House) or 100% for two years and then 32.3 percentage points above current federal payments in each state, i.e., 82.3% to 95% (Senate). [Exception: Nebraska will continue to be paid 100%.]
• Funding for 10,000 new Community Health Centers ($14b in Senate, $10b in House)

More Affordable Coverage for Retirees & Seniors

• Cost relief for early retiree coverage – a new re-insurance program will pick up 85% of the cost of treatments between $15,000 and 90,000 for retirees ages 55-64.
• $500 immediate increase in Medicare drug allowance.
• Phased closing of Medicare drug program “donut hole” where seniors have to pay 100% of drug costs.
• 50% cut in price of brand name drugs for seniors in donut hole until it is eliminated.

Cost Containment

• National strategy for controlling costs, starting in Medicare and extending to private health insurance, that reforms the payment method for doctors, hospitals, and other care providers by basing payment on the quality, effectiveness, and efficiency of services, instead of just the number of procedures performed.
• Automate processes to lower costs of record keeping & processing reduce unnecessary duplication of tests and avoid costly errors in treatment, e.g., new drugs that cause adverse interactions with other drugs
• Pay for services on value, not just volume  -- rapid testing and expansion of programs with redesigned payment systems to encourage higher quality care while lowering costs
• Increase primary care physician payments, while not raising overall physician spending in Medicare, as an incentive for more primary care docs
• Federal innovation center charged with developing new models of organizing and paying for care, such as “Accountable Care Organizations”, and expanding them through-out Medicare once tested and proven.
• Reducing hospital-acquired infections by the widespread adoption of proven protection protocols.
• Hold hospitals accountable for costs of preventable hospital re-admissions
• Aggressive anti-fraud and abuse procedures.
• Comparative effectiveness research to improve care and inform clinical and patient decisions
• Prevention and wellness
• Establish a regular priority-setting process for federal health policy with substantial multi-stakeholder input
• Require reporting from all health providers on national, stanradized measures of quality.
• Widespread reporting on the results of quality measurement that permit easy and accurate comparisons of performance by physicians and patients.
• This cost containment strategy is projected to save the federal government $450-500 billion by 2019 (Congressional Budget Office). Specifics include:
• Reducing payments to “private plan” Medicare, i.e., Medicare Advantage  by $135-170 billion over ten years.
• Lowering the annual Medicare rate adjustments for hospitals is projected to save  $150 billion/ten years.
• A new Independent Payment Advisory Committee that will take over much of Congress’ authority to set payment rates and, therefore, greatly reduce the ability of insurance and medical industry lobbyists to push rates higher and higher rates. Projected to save $28 billion over ten years.
• Many outside experts predict that actual savings will exceed CBO estimates, which historically have been very low.  Actual savings from the 1983 and 1997 Medicare payment reform bills was double what CBO projected. Costs of Medicare prescription drug benefit enacted in 2003 were 40% less than CBO predicted.
• The private sector is expected to adopt much of the above cost containment measures developed for Medicare with a projected savings of $150-200 billion over the first ten years, and substantially more in the second decade (Commonwealth Fund/Center for American Progress)

Federal Spending and Deficit

• Fully paid for by new revenue and cost savings in Federal programs
• Both bills would reduce the federal deficit by approximately $130 billion/ten years  and considerably more over twenty years

Major Differences

1. Financing Coverage Expansion

The AFL-CIO will continue to fight against an excise tax on health benefits, for the House surcharge on income for families with income over $1 million, for the Senate increase in the Medicare tax for families earning over $250,000, and for other progressive revenue sources, such as limiting itemized deductions for wealthy Americans ($318 billion) or applying the Medicare tax to unearned income for families making $250,000 + per year ($110 billion).

2. Public Health Insurance Plan Option

The AFL-CIO will continue to fight for a strong public option as the only credible proposal before Congress for near term cost containment and to create real competition among insurers.

3. Employer Responsibility to Provide Coverage

The AFL-CIO will continue to fight for genuine employer mandate (House), which covers 11 million more workers and raises $135 billion to pay for subsidies – compared to $28billion from Senate penalty -- but also the lower threshold for construction in the Senate bill and  House early retiree reinsurance funding .

4. Purchasing Exchange & Standards for Insurance Plans

The AFL-CIO will fight for efficiency, competition, and choice in exchanges:

• Retain the House provisions for Federal exchange.
• Adopt Senate provision making employers with 100 or fewer workers eligible for the exchange as soon as it is operational and eliminate state option to limit to firms with 50 workers. Retain House provision authorizing expansion of exchange to all employers as early as 2015
• Retain the House provisions extending insurance market reforms to all markets, including benefit standards and rating rules
• Retain the House provisions requiring federal standards for plan transparency and data disclosure, and combine the best of House and Senate provisions on consumer assistance, medical loss ratios, quality reporting and rate reform. 

5. Subsidies to Purchase Coverage and Affordability

The AFL-CIO will fight for affordability protections:

• For persons at or below 250% Poverty Line in the exchange, from the House bill, retain premium protections and actuarial value standards
• For persons above 250% of the Poverty Line in the exchange, from the Senate bill, retain premium protections

For Immediate Release
Contact: Amaya Tune 202/550-8731
Eddie Vale 631/334-8191

Statement by AFL-CIO President Richard Trumka
on Final Senate Passage of Health Care Bill

December 24, 2009

In the face of inexcusable partisanship, obstruction and gamesmanship, it is remarkable that Majority Leader Reid was able to move a health care bill through the United States Senate. Not since the passage of Medicare 44 years ago have we seen Republican scare tactics so blatantly contrary to the interests of the American people.

At this historic moment, it is so important to the future of working Americans—and to our country—to get health care reform right. Despite doing some good things, the Senate bill remains inadequate. Substantial changes must be made in the final bill.

Genuine reform must bring down health costs, hold insurance companies accountable, assure that all Americans can get the health care they need and be financed fairly.

• That’s why we have been steadfast in support of a public health insurance option. It is the way to break the stranglehold of the insurance industry that has led to skyrocketing health care costs that have especially penalized small business.
• Employers must pay their fair share.
• It makes no sense to tax the benefits of hard-working Americans to pay for health reform. The House bill curbs insurance companies and taxes the wealthy who benefited so richly from the Bush tax cuts. The Senate bill instead includes exorbitant new taxes on middle class health benefits that would affect one in five workers with employer-provided health coverage—or about 31 million people—in 2016. That’s the wrong way to pay for health care reform and it’s political suicide.

The House bill is the right model for reform. It covers more people, takes effect more quickly and is financed more fairly. The AFL-CIO is ready to fight on behalf of all working families to produce a final bill that can be called genuine reform. Working people cannot accept anything less.

AFL-CIO Health Care Reform Update – December 24, 2009

Senate Overcomes Republican Opposition and Delay Tactics
And Passes Health Reform Legislation

As a result, January 2010 will be the most critical month in our movement’s decades-long struggle for comprehensive health care reform. To win our support, the final bill must bring down health costs, assure that Americans can get the care they need and be financed fairly.

Though the Senate bill fails the test of reform in several key areas – most notably it fails to include a public insurance option or an employer mandate; and it includes a tax on insurance premiums above $23,000 (family) and $8,500 (individual) – the House has no intention of rolling over and playing dead.

On January 4, a week before the official opening of the Second Session of the 111th Congress, Speaker Nancy Pelosi will call her leadership team back to Washington to begin formulating the House strategy for getting a final health care bill to the President.

Rather than convening a formal conference committee, the House intends to modify the Senate bill, pass it again before the end of the month and send it back to the Senate for a final vote. If the Senate accepts the House changes, a vote that will require the approval of 60 Senators, the bill will go to the White House for the President’s signature.

Getting rid of the benefits tax is a top priority for House Democrats --190 Reps have signed the Courtney letter in opposition to the tax -- evidence that our campaign to build a “firewall” in the House against benefit taxation is getting traction.

The House will also fight for provisions in its bill that mandate employers to “pay or play”, cover more people, implement the reforms in the bill more quickly and make insurance more affordable.

In his final “manager’s amendment,” Senator Reid made some significant changes: most important was in the threshold for applying the so-called free rider penalty in construction was reduced to five workers and payrolls of more than $250,000. Under the original bill, all firms with fewer than 50 employees and payrolls of $500,000 would be exempt from paying the $750 per-employee penalty if they do not provide health insurance. (See attached for where the final Senate bill wound up in comparison to the House on certain key issues.)

Labor has fought for universal health care for nearly 100 years, but we are going to have to fight like hell for the next 4 weeks to make sure we get a bill worthy of working people’s support.

Joe Arabie
Director Field Education & Research
Texas AFL-CIO
1106 Lavaca
Austin, Texas 78701
512 477 6195 (ofc.)
joe@texasaflcio.org

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