The government could rein in aggressive marketing practices of health insurance companies, regulate their premiums and allow workers to drop out of group health plans to seek a better deal on their own under legislation being developed by leading Democratic senators.The Senate proposals, which emerged this week, are broadly similar to ones being drafted by the chairmen of three House committees. Democrats in both houses would vastly expand federal regulation of insurance to guarantee that all Americans have access to affordable coverage, a top priority of President Obama.Lawmakers have not figured out how to pay for their proposals, which could easily cost more than $1 trillion over a decade. And they have not resolved the politically explosive question of whether to create a public insurance program, to compete with private insurers.But after a week of intense discussions, in which members of the House and the Senate immersed themselves in the details of health care, Democrats began to line up in favor of several basic ideas.Under the Senate proposals, everyone would be required to carry insurance. The requirement would take effect in 2013, but exemptions would be allowed for illegal immigrants and people with religious objections.In addition, most employers would be required to offer insurance to their full-time workers, or else pay a special tax. The government would set minimum standards for benefits, including doctors’ services, hospital care and prescription drugs. All insurers would have to offer four levels of coverage: lowest, low, medium and high.Insurers “could not include lifetime limits on coverage or annual limits on any benefits,†a detailed options paper from the Finance Committee says.Under the Senate plans, the federal government would regulate the marketing of commercial insurance to families and employers, just as it regulates sales of managed care plans to Medicare beneficiaries by companies like Aetna Health Insurance, Humana Health Insurance, and UnitedHealth.While the House has not made as much progress as the Senate, House Democrats agree with their Senate colleagues that the government should establish a national health insurance exchange, or marketplace, where people could buy coverage, using standard application forms. All insurers would have to participate in the exchange, and the government would post “quality ratings†on a Web site.Consumers could sign up for insurance at hospitals, schools, Social Security offices and state departments of motor vehicles.Senator Max Baucus, the Montana Democrat who is chairman of the Finance Committee, said the exchange would “make purchasing health insurance easier and more understandable.â€Under the Democratic proposals, the government would offer tax credits to help people buy insurance. The credit would be available to people with incomes up to four times the poverty level ($88,200 for a family of four).The government would also provide tax credits to help small businesses buy insurance for employees. The credit would be available to businesses with up to 25 employees, and businesses with the lowest-wage workers would get more aid.Under the Senate proposals, the government would regulate not only insurance products, but also the marketing of insurance and sales commissions paid to insurance agents and brokers.The Democrats would “ensure compliance†with the new requirements in several ways.Taxpayers would have to report their health insurance coverage on their federal income tax returns. Under the main Senate proposal, the penalty for not being insured would be an excise tax, which could be as high as 75 percent of the premium for the lowest-cost health plan available in the area where a person lives.Under the proposal, all employers with more than $500,000 in total payroll would have to offer insurance to full-time workers or “pay an assessment,†in the form of a new excise tax.An employer offering insurance would have to pay at least 50 percent of the premium. An employer not offering insurance would have to pay the excise tax, which would increase with a company’s payroll, so the largest employers might pay $500 per employee per month.More than 160 million Americans receive health insurance through employers, the principal source of coverage for people under 65.One of the most notable features of the Senate proposals is that workers could drop out of an employer’s group health plan and buy private insurance on their own, outside the workplace. The employer’s normal contribution for a worker would be paid to the insurance exchange.Democrats said that people dropping out of employer plans would, in many cases, be eligible for tax credits to defray their premiums.Employers worry that this feature would destabilize the health plans they provide to employees.“If people can opt out of employer-sponsored insurance and get a tax credit, that will lead to a death spiral for employer-sponsored plans,†said James P. Gelfand, senior manager of health policy at the United States Chamber of Commerce.“People who are sick will stay in employer plans, and many young, healthy people will opt out,†Mr. Gelfand said.The Democratic proposals would expand Medicaid to cover additional low-income families with children. And the federal government would require states to increase Medicaid payment rates for doctors and hospitals, which are often much lower than rates paid by Medicare and commercial insurers.Democrats said they had not decided on the precise income limits, and they are still trying to figure out whether Medicaid recipients could buy coverage through the insurance exchange.
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