This New Year will bring a new "ball game" for health care in our nation's capital.

During their majority run, congressional Republicans successfully pushed for market-based, consumer-directed health reform measures. Even during their last hours in the majority, they successfully advanced legislation to help expand and improve Health Savings Accounts (HSAs). The incoming majority will no doubt forge ahead on health reform, but a different direction is anticipated.

High costs and "the uninsured" are key factors that will keep health care as a top domestic priority. By and large, Americans believe Congress should continue to find solutions to providing people with "access" to health care. A review of various proposals favored by Democrats look to place greater responsibility on government and employers for increasing access to insurance coverage, and they won’t be coy about pushing these in the new Congress.

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A mid-November survey conducted for America’s Health Insurance Plans (AHIP) found broad support for government help and action in addressing health care issues — but that support has limitations.

According to the survey, 63 percent support modifying the current system rather than replacing it with government-run health care. Very large majorities, for example, favor increased government funding for programs aimed at children and low-income Americans (77 percent) and giving tax credits to low and moderate-income families to help purchase insurance coverage (85 percent).

Click here to review the full survey and a summary of findings.

During the lame duck session, Congress passed HSA expansion legislation as part of the larger tax-extensions and trade package. The legislation increases yearly contribution limits, allows individuals to make a one-time transfer from health reimbursement arrangements (HRAs) and flexible spending accounts (FSAs) into the HSA (up to the amount that was in the account as of September 21, 2006), eliminates contribution penalties for mid-year enrollees, and allows employees (on a one-time basis) to make a tax-free transfer of money in their individual retirement accounts to their HSAs. The bill also changes the "comparable contribution" requirements, allowing employers to make higher contributions to employees making less than "highly-compensated individuals."

"These changes will make HSA administration and participation easier," says Consumers for Health Care Choices Founder Greg Scandlen, an early supporter and advocate of the medical savings accounts model.

Click here to visit Consumers for Health Care Choices.

For small firms, such changes will help accelerate adoption by enabling a smooth transition to HSA plans. Yet, even under the original rules and legislation, small businesses were benefiting from HSAs. In an earlier report this year, AHIP found that 33 percent of small firms offering a HSA-eligible plan did not previously offer health insurance, while 37 percent in the individual market were previously uninsured.

However, even with an overwhelming vote for the final tax and trade package that included the boost to HSAs (it passed in the Senate 77-9), most Democrats do not favor the consumerism concept behind HSAs.

Representative Pete Stark, D-Calif., incoming chairman of the Ways and Means Health Subcommittee in the 110th Congress, recently said "the health savings accounts and high-deductible health plans Republicans promote only make a bad problem worse by shifting additional costs to employees."

Stark supports extending Medicare to all Americans, and has even introduced a Constitutional Amendment to "establish a right to health care of equal high quality for every American."

Senator Ted Kennedy, D-Maine, incoming chairman of the Senate Health, Education, Labor and Pensions Committee and a long-time advocate of the "single-payer" system, also supports Medicare expansion. He characterizes his bill, the "Medicare for All Act" as "a starting point for discussions on achieving universal coverage." A companion bill has been introduced in the House by Rep. John Dingell, D-Mich., incoming Chairman of the Energy and Commerce Committee. A per-employee excise tax would be imposed on employers (equal to 7 percent of wages) to fund the program.

Kennedy cites the effort of Massachusetts Gov. Mitt Romney as one that Washington should model with respect to the bipartisan spirit of compromise in which his measure advanced. The plan’s centerpiece is an individual mandate. In addition, Bay State businesses with 11 employees or more will be required to pay a $295 per-worker tax if they do not provide insurance.

Click here to read a previous Small Business Beltway Report for background on the Romney package.

In fact, health policy observers believe that Washington will aggressively work with the states to grant the necessary waivers needed to experiment with universal coverage. As such, these efforts could be a positive or negative for small business costs depending upon what the states want to do.

Scandlen says that his biggest worry on state experimentation is that many will want to enact an employer mandate.

"Even some employers would likely support this — especially those with unions and heavy benefits expenses," says Scandlen.

He says businesses supporting an employer mandate use the "competitive playing field" argument as rationale for government intrusion – that is, they think smaller competitors get a "free ride" if they don’t offer benefits like health care.

Just this week Sen. Ron Wyden, D-Ore., introduced "The Healthy Americans Act," a plan that would essentially abolish the employer-based system but would still require all employers to finance health care. The bill proposes incentives for individuals and insurers for prevention, wellness and disease management, but also promises benefits equal to members of Congress.

All individuals would be required to purchase insurance, and Medicaid would end.

An outline of the Act provided by Wyden summarizes the employer responsibilities: "During a two-year transition phase, employers who have been providing health insurance will ‘cash out’ the value of that health insurance and provide that amount in wages to their employees. After the two years, all employers will make a shared responsibility payment, meaning they pay up to 25 percent of the average premium for essential care in the area."

According to Wyden, this would relieve employers of the "burden of finding affordable health care for their employees" as the employer-based system would essentially end. Working with Health Help Agencies (HHAs) in the states, individuals and families would get enrollment help and guidance. The Lewin Group estimated the program would not cost the government anything.

Click here to read more about Wyden’s "Healthy Americans Act."

With respect to pooling proposals for small businesses that aim to leverage their collective buying capacity through associations, legislation with that end in mind will certainly be reintroduced in the new Congress. However, the preference of most Democrats is to use the government as the pool organizer rather than the association. There are also mandates and quid pro quo arrangements associated with these government-centered pooling schemes.

While political and policy observers do not expect anything "dramatic" in terms of overhauling the health care system (most agree that Democrats will set the issue stage for the 2008 presidential campaign), they also believe the expansion of federal programs and the enabling of state experimentation will continue to set a course for some type of national program in the future.

However, consumer-directed health plans are not at all dead. In fact, the adoption rate of HSAs will only accelerate with the improvements made only a week ago. Scandlen sees a window of opportunity over the next two years that could give government-run health care supporters a run for their money.

"If these plans reach 20 percent of the market in two years, a tipping point is reached where they never go away," Wyden predicts.

The race is on. Certainly, it will be a new ball game for health care when the 110th Congress convenes next year.

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Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council, a research and advocacy group based in Washington, D.C. that works to protect small business and promote entrepreneurship. She is also founder of Women Entrepreneurs, Inc., an association helping women business owners succeed through education, networking and advocacy. Kerrigan can be reached at kkerrigan@sbecouncil.org.