- The Washington Times - Saturday, December 19, 2009

UPDATED:

Senate Democratic leaders say last-minute changes to the health care bill include giving nonprofit health insurance companies an exemption from the excise tax on insurers, a revision pushed by Sen. Carl Levin, who is a major recipient of campaign contributions form mega nonprofit Blue Cross Blue Shield.

The excise tax or fee on health insurance companies was expected to bring in $6.7 billion to help pay for the nearly $1 trillion bill, but the complete exemption for nonprofits sought by Mr. Levin, Michigan Democrat, would cut the revenue in half.

“The health insurance fee proposal in the pending Senate bill does not distinguish between the true nonprofit insurance companies and most profitable insurance companies in the country, and I’ve been working to fix that because I think that distinction is important,” Mr. Levin said in written statement to The Washington Times.

Nonprofit health insurers — which insure about 45 percent of Americans and include multistate companies such as CareFirst Inc. and Health Care Service Corp.— are virtually indistinguishable from their for-profit competitors.

The insurance premiums paid to nonprofits are often as high as those paid to for-profit insurance companies.

The top executives at nonprofits also take home pay checks just as huge as that of their for-profit counterparts.

For example, nonprofit Blue Cross Blue Shield of Massachusetts CEO Cleve Killingsworth’s total compensation in 2008 was just over $1 million compared to for-profit WellPoint Inc. CEO Angela Braly’s $1.13 pay package that year, according to health industry data service Atlantic Information Services, Inc.

Blue Cross Blue Shield of Michigan CEO Daniel Loepp made $910,269 in 2008.

Federal Elections Commission data shows he also gave Mr. Levin’s campaign committee $3,000 in the course of the 2007 and 2008 election cycles.

Mr. Levin’s top campaign contributor from the 2005 into the 2010 election cycles was Blue Cross Blue Shield, with total contributions of $48,000, according to campaign finance data OpenSecrets.org.

Mr. Levin originally drafted the exemption language as an amendment to the bill. But the language was added as Senate leaders wrote the final package behind closed doors.

Levin spokesman Bryan Thomas said the exemption language inserted into the bill is “significantly different” than what his boss proposed.

Still, Senate Majority Whip Richard J. Durbin, Illinois Democrat, said “some version” of the exemption will be in the final package unveiled Saturday morning. It was unclear early Saturday if nonprofits would get a pass on all or just some of the fee, or how the exemption would impact the bill’s price tag.

The bill is intended to expand coverage to millions of uninsured Americans, guarantee coverage by prohibiting denial of insurance forpre-existing medical conditions and hold down skyrocketing health care costs.

Mr. Durbin said the nonprofits deserve the tax break.

“They are nonprofits for a reason. They are trying to keep the cost of health care down,” he said.

Critics of the exemption say the nonprofits would be granted an unfair advantage in the insurance marketplace, as the excise tax pushes up the cost of doing business and premiums at for-profit insurance companies.

The Congressional Budget Office concluded that the cost of the excise tax likely will be passed on to business and individual consumers in the form of higher premiums.

Consumers in states where the health insurance market is dominated by for-profit companies would pay higher premiums than people in other states where most get coverage from nonprofits.

In Georgia, 91 percent of residents get health insurance from for-profit companies. In Nevada and Maine it is 87 percent and in Ohio 85 percent, according to health industry analyst HealthLeaders-Interstudy.

Those state’s consumers could end up with higher premiums than people in Minnesota, where 91 percent are insured by nonprofits, or Michigan, where 76 percent use nonprofit companies.

A legal analysis of the Levin amendment for Wellpoint Inc. cited a potential violation of the Constitution’s uniformity clause that commands that “Duties, Excises and Imports shall be uniform throughout the United States.”

Rather than applying the tax uniformly across the country, the exemption would result in the excise tax’s application and effect to vary greatly from state to state, said a memo to Wellpoint by the law firm Akin Gump Strauss Hauer & Feld.

The Times obtained a copy of the memo.

Blue Cross Blue Shield Association, the lobbying arm of the health insurance companies, did not respond to a request for comment.

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