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September 5, 2008
Honorable Lamar Alexander
Honorable Mike Crapo
Honorable Robert Bennett
Honorable Charles Grassley
Honorable Norm Coleman
Honorable Judd Gregg
Honorable Bob Corker
Honorable Gordon Smith
We are disturbed that you are cosponsoring S. 334. This legislation reduces health care choices,increases prices, and will make our health care system worse for the following reasons:
S. 334 would require every American to buy a Healthy Americans Private Insurance (HAPI) health insurance plan OR pay a penalty. Mandatory insurance hasn’t worked in car insurance, and the two states – Maine and Massachusetts — that have passed “universal health insurance coverage” are far from covering everyone.
$1.4 Trillion in NEW Federal Spending
By 2014, the federal government will spend between $1.3 trillion and $1.4 trillion on this new federal program, according to the CBO-JCT analysis of S. 334. Where is the government going to find $1.4 trillion each year?
Under current law, employer-provided health insurance is a tax-free benefit – tax deductible for employers and excludable from an employee’s taxable income. In addition, the self-employed enjoy an income tax deduction. S. 334 would eliminate the current tax exclusion and other health care tax breaks and proposes to tax employers anywhere from 3 to 26 percent per employee. In the May 1, 2008, analysis of S. 334, CBO-JCT suggested these changes in the tax code will amount
to a $400 to $500 billion tax increase per year.
More Mandated Benefits – Abortion and Full Mental Health Coverage
Since 1980, state and federal lawmakers have imposed more than 1,900 mandated benefits on health insurance consumers. Mandated benefits increase the cost of health insurance and cost is the major
reason why people are uninsured.
In your states, health care consumers are forced to buy health insurance with the following number
State Number of Mandates
New Hampshire 39
S. 334 would require every American to buy a HAPI insurance policy that is actuarially equivalent to
BC/BS FEHBP. The HAPI plans must include abortions as a supplemental health insurance benefit
unless the HAPI plan is affiliated with a religious organization. In addition, the HAPI plans have to
include first-dollar coverage for certain health care services, full mental health coverage, and coverage
for other services not mandated in any state or included in the FEHBP plan. Aren’t 1,900 mandates
enough? What about allowing people to choose the benefits they want in an insurance policy rather than
having politicians impose health benefits on them?
No More HSAs
HSAs, as they are currently designed and structured, will no longer exist. S. 334 would require HAPI
plans to have first-dollar coverage for certain health care services and must be actuarially equivalent to
the federal employee plan. No HSA plan meets that requirement, so HSAs are history.
Higher Insurance Rates
According to ehealthinsurance.com, these are the monthly health insurance plan costs for a family of
four in your state in August 2008:
Location Type of Plan Cost
Nashville, Tennessee BC/BS $340.47
Salt Lake City, Utah American Medical Security $308.00
Des Moines, Iowa United $332.87
St. Paul. Minnesota Health Partners $427.65
Boise, Idaho BC/BS $283.00
Portland, Oregon BC/BS $369.00
Manchester, New Hampshire Celtic $370.10
S. 334 would require guaranteed issue and community rating – the evil twins of health care reform.
Maine, Massachusetts, New Jersey, New York, and Vermont are health insurance disaster areas because
of these reforms, which force consumers to pay some of the highest prices in the nation.
According to these state insurance department websites, these are the monthly rates for a family of four
in the health insurance disaster areas in August 2008:
Location Type of Plan Cost
Portland, Maine BC/BS $2,404.87
Boston, Massachusetts Tufts $1,300.38
Asbury Park, New Jersey Horizon BC/BS $7,529.33
Chappaqua, New York HIP $3,641.33
Montpelier, Vermont BC/BS $1,613.98
Are your constituents prepared to pay these kinds of prices?
In fact, New Hampshire passed guaranteed issue and community rating in the early ‘90s and later
repealed those reforms after health insurance became unaffordable.
S. 334 would require every American to buy a HAPI insurance policy, which is designed by the federal
government. This means that everyone would have to drop their current plan – especially their HSA
plan. Even presidential candidate Hillary Clinton would have allowed people to keep their own plan.
According to ehealthinsurance.com, a family of four shopping for health insurance in August 2008 in the
individual market has a choice of at least:
Location Number of Plans Available
Nashville, Tennessee 89
Salt Lake City, Utah 76
Des Moines, Iowa 80
St. Paul, Minnesota 48
Boise, Idaho 32
Portland, Oregon 101
Manchester, New Hampshire 30
The range of plans available in these states is impressive. Consumers can choose HMOs, low
deductibles, high deductibles, HSAs, or PPOs. S. 334 will eliminate many of the choices because these
plans will not meet the federal standards of HAPI plans.
…A Flickering Light in the Darkness
There is a flickering light in the darkness of the entire legislation. Giving everyone a tax break on their
health insurance corrects the current unfairness in our health care tax system. However, attaching all
these strings — mandatory coverage, tax increases, government-designed insurance plans, price controls,
guaranteed issue, and increasing the number benefit mandates — will reduce choices and increase costs
for all Americans.
We encourage you to reevaluate your support of S. 334 and think about its impact on your constituents.
[signatures in attached .pdf]