New Fee Proposed On Health Insurance Companies

One of the most recent proposals was issued by the chairman of the Senate Finance Committee in an effort to bolster a bipartisan health care bill. The comprehensive plan would include provisions for reforming the health care system as well as a new fee aimed at insurance companies that would help with covering the currently uninsured.

Spearheaded by Senator Max Baucus of Montana, the proposal is the fruit of more than a year’s work. The fee on insurers was suggested by a number of liberal Democrats back in July. By adding it to the current bill, Baucus potentially has a way to cover some of the outlined costs.

Yet, at the same time, such an addition could turn away many of the Republican legislators Baucus has been courting for support. Baucus, and others, are attempting to create a bipartisan consensus among 6 of the 23 senators on the Finance Committee.

Baucus’ proposal lacks the government run plan or public option that many Democrats are anxious to see as a part of any new legislation. As such, there are questions about whether Baucus’ plan will be flexible enough to accommodate the president’s proposals.

Currently, there are doubts about whether Baucus’ proposal will actually make it to the final table in its current form or garner enough support from Republican members on the committee.

The new fee on insurance companies would be one of several means of funding the implementation of the plans. Starting in 2010, the fee would raise $6 billion annually. It would be allocated among the various insurers based on their market shares.

“The health insurance industry should pay its fair share of the cost because it stands to gain over 40 million new consumers under health care reform legislation,” said Senator Schumer, one of the architects of the proposed fee.

Both insurance companies and various Republicans in Congress have voiced their opposition to the fees, going as far as saying that the costs would be passed on families and employers who purchase insurance plans. In essence, the fee would lead to higher coverage costs.