[Congressional Record Volume 148, Number 145 (Tuesday, November 12, 2002)]
[Senate]
[Pages S10837-S10839]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          INTENT OF TAA HEALTH INSURANCE TAX CREDIT PROVISIONS

  Mr. BAUCUS. Madam President, as I have said on numerous occasions, I 
am extremely pleased with the health care provisions in the Trade Act 
of 2002. The advanceable, refundable 65 percent tax credit toward the 
purchase of health insurance premiums for TAA workers and PBGC retirees 
represents a monumental precedent. It is an important precedent for 
Democrats because, for the first time, the federal government will 
extend assistance for health coverage to laid-off workers. And the 
provisions are also important for Republicans and others who believe 
that the best way to help the uninsured is through tax credits for the 
purchase of health insurance. This program is an important test case, 
if you will, to determine whether this approach is viable and workable.
  It is the viability and workability of the tax credit that I wish to 
address today.
  Our negotiations on the Trade Act health credits were really a 
continuation of discussions that started around this time last year--
during the debate over economic stimulus. Democrats had proposed 
including a 75 percent subsidy for COBRA premiums coupled with Medicaid 
expansions as part of our economic stimulus package. Republicans 
initially proposed a limited block grant for health care assistance and 
later altered their package to include individual tax credits for 
health insurance.
  It goes without saying that Republicans preferred a tax credit 
approach rather than a subsidy approach, and the Democrats expressed a 
strong preference for group-based insurance over individual insurance.
  The resulting compromise that was reached as part of the trade deal 
truly was a delicately-crafted bipartisan effort. Democrats moved from 
a premium subsidy to a tax credit, dropped the Medicaid expansion, and 
yielded on the issue of requiring those eligible for COBRA to purchase 
only COBRA coverage. Republicans got their tax credit, but it does not 
allow new individual market policies to be purchased with the tax 
credit except for those who had such coverage while they were working.
  The health insurance options available to TAA workers and PBGC 
retirees include COBRA and state-based COBRA, as well as:
  state high risk pools;
  state employee benefit plans--or comparable programs established by a 
state;
  direct purchasing arrangements between states and insurers;
  a state-operated health plan;
  coverage purchased through a private purchasing pool; and
  coverage under a spouse's employer group plan.
  In other words, eligible workers and retirees will be given a wide 
range of health insurance choices--depending on which options their 
state has adopted. Having a number of choices is important to 
Republicans and will be appreciated by TAA workers and PBGC retirees as 
well.
  I understand that some might try to read the legislative language 
regarding these options in a way that would allow broader access to 
insurance purchased in the individual market. That was not our 
intention. As I mentioned above, the Senate bill and conference report 
explicitly agreed to include individual health insurance as qualified 
health insurance, but only for individuals who had such coverage for 
one month prior to separation from employment. We did not intend to 
allow states to enter into arrangements with individual insurers 
through the state-based coverage options.
  The second point I would like to make addresses the insurance 
protection provisions--guaranteed issue, a bar against pre-existing 
condition limitations, and premium and benefit protections. This 
language was part of the Senate bill, only we applied the protections 
to all of the state pooling options.
  The conference report required workers to have had three months of 
previous health care coverage in order for these important protections 
to apply. The language is vague, however, and does not specify when the 
three months of aggregate coverage had to occur. I'd like to clarify 
here that this coverage should occur for three months prior to 
employment separation necessary to attain eligibility for assistance 
under this law.
  A more narrow reading of the three-month coverage requirement would 
disqualify those who have had lapses of coverage between the loss of 
job-based or retiree coverage and application or eligibility 
determination for assistance under this program. After all, the goal of 
the health provisions was to ensure access to coverage and to prevent 
the loss of health coverage.
  On that same point, the language on premium protections could be read 
to allow insurers to charge different rates to individuals 
participating in the TAA program. That was not our intention. The 
Senate language was intended to mean that TAA workers, as a group, 
should be charged the same premiums when states choose to enroll these 
individuals in existing insurance arrangements--for example in state 
employee health plans. Individual workers should not be charged higher 
premiums based on their health status in these plans.
  And, if a State elects to create a new insurance pooling 
arrangement--in which case it is not possible to compare premiums for 
TAA workers to anyone else--we had intended that States would not allow 
premium rating on an individual basis but rather as a group.
  To make my views known to the agencies that will administer the new 
tax credit, last week I sent letters to the Treasury Department, the 
Department of Labor, and the Department of Health and Human services 
regarding congressional intent in the TAA health insurance tax credit.
  It is my sincere hope that we can bring the same willingness to work 
together and compromise to other important health care issues.
  I ask unanimous consent that letters I previously referred to be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                 October 17, 2002.
     Paul H. O'Neill,
     Secretary, U.S. Department of Treasury, 1500 Pennsylvania 
         Avenue, NW, Washington, DC.
       Dear Secretary O'Neill: In a few short weeks, the health 
     insurance assistance provisions of the Trade Act of 2002 will 
     take effect. The passage and enactment of the historical Act 
     was the result of a delicately-crafted bipartisan effort. I 
     was proud to play a role in this significant achievement, and 
     I will continue to work with you to ensure its successful 
     implementation and operation. To that end, I am writing to 
     ensure that the Act's critically-important health insurance 
     protections are implemented consistent with the intent and 
     the letter of the law.

[[Page S10838]]

       As you know, for many of the supporters of the Trade Act, 
     the health assistance was the single most important factor in 
     overcoming concerns about the effects of enhanced trade 
     negotiating authority on American jobs. These provisions were 
     designed to assure American workers that the potential loss 
     of work does not equal the loss of health coverage. 
     Protecting health coverage is especially important now. We 
     recently learned that an additional 1.4 million Americans 
     became uninsured in 2001. Successful implementation of this 
     new law can make a difference in preventing additional 
     workers and their families from losing health coverage.
       As you implement this law, there are three issues that I 
     particularly want to emphasize. First, members of the 
     Conference Committee explicitly agreed to include individual 
     health insurance as qualified health insurance, but only for 
     those qualifying individuals who had such coverage for one 
     month prior to separation from employment (see section 
     (35)(e)(1)(J)). We did not intend to allow states to enter 
     into arrangements with individual insurers through the state-
     based coverage options, and I believe that this objective is 
     clear in the conference report. Any other interpretation of 
     the law would be a violation of the intent of its authors.
       Second, for those without access to employer-based 
     coverage, we included strong consumer protections. To prevent 
     discriminatory premiums and substandard benefits, we linked 
     the premiums and benefits offered to qualifying individuals 
     to those of ``similarly situated individuals'' (see sections 
     (35)(e)(2)(A)(iii and iv)). In plain English, this means that 
     individuals eligible for this tax credit should neither be 
     charged premiums or offered benefits that apply only to this 
     group nor pay higher premiums based on their own health 
     status or history.
       In addition, the law provides guaranteed issue to 
     qualifying individuals (see section (35)(e)(2)(A)(i)). 
     ``Guaranteed issue'' has the same meaning in this law that it 
     has in state regulation of insurance. Specifically, to be 
     qualified health insurance, each plan must ensure access to 
     each qualified individual who meets the other criteria for 
     this coverage. It does not mean that an issuer of health 
     insurance can accept some but not all qualifying individuals 
     so long as there is an alternative that accepts the denied 
     individuals (e.g., a high-risk pool).
       Third, since the goal of this provision is preventing loss 
     of health coverage, the Conference Committee agreed that 
     eligible individuals must also have been previously insured 
     for three months (see section (35)(e)(3)(B)). The law does 
     not specify when this aggregate of three months of creditable 
     coverage had to occur. To clarify, we intended that this 
     coverage should occur for three months prior to employment 
     separation necessary to attain eligibility for assistance 
     under this law (e.g., termination due to trade in the case of 
     displaced workers eligible for trade adjustment assistance 
     and retirement in the case of Pension Benefit Guaranty 
     Corporation (PBGC) eligible individuals). The three-month 
     coverage requirement should not disqualify those who had or 
     have lapses of coverage between the loss of job-based or 
     retiree coverage and application or eligibility determination 
     for assistance to this program. Indeed, these individuals 
     have a special need for access to affordable health insurance 
     and should not be penalized due to delays in passing, 
     implementing, and operating this law.
       I make these clarifications to underscore their importance 
     in successfully implementing the health provisions of the 
     Trade Act. I know that the President shares our mutual 
     commitment to make this an effective program that preserves 
     health insurance for this set of American workers and 
     retirees. I look forward toward a continued collaboration in 
     implementing, monitoring, and, if successful, expanding these 
     important health policies.
           Sincerely,
     Max Baucus.
                                  ____

                                                 October 17, 2002.
     Elaine L. Chao,
     Secretary, U.S. Department of Labor, Frances Perkins 
         Building, 200 Constitution Avenue, NW, Washington, DC.
       Dear Secretary Chao: In a few short weeks, the health 
     insurance assistance provisions of the Trade Act of 2002 will 
     take effect. The passage and enactment of the historical Act 
     was the result of a delicately-crafted bipartisan effort. I 
     was proud to play a role in this significant achievement, and 
     I will continue to work with you to ensure its successful 
     implementation and operation. To that end, I am writing to 
     ensure that the Act's critically-important health insurance 
     protections are implemented consistent with the intent and 
     the letter of the law.
       As you know, for many of the supporters of the Trade Act, 
     the health assistance was the single most important factor in 
     overcoming concerns about the effects of enhanced trade 
     negotiating authority on American jobs. These provisions were 
     designed to assure American workers that the potential loss 
     of work does not equal the loss of health coverage. 
     Protecting health coverage is especially important now. We 
     recently learned that an additional 1.4 million Americans 
     became uninsured in 2001. Successful implementation of this 
     new law can make a difference in preventing additional 
     workers and their families from losing health coverage.
       As you implement this law, there are three issues that I 
     particularly want to emphasize. First, members of the 
     Conference Committee explicitly agreed to include individual 
     health insurance as qualified health insurance, but only for 
     those qualifying individuals who had such coverage for one 
     month prior to separation from employment (see section 
     (35)(e)(1)(J)). We did not intend to allow states to enter 
     into arrangements with individual insurers through the state-
     based coverage options, and I believe that this objective is 
     clear in the conference report. Any other interpretation of 
     the law would be a violation of the intent of its authors.
       Second, for those without access to employer-based 
     coverage, we included strong consumer protections. To prevent 
     discriminatory premiums and substandard benefits, we linked 
     the premiums and benefits offered to qualifying individuals 
     to those of ``similarly situated individuals'' (see sections 
     (35)(e)(2)(A)(iii and iv)). In plain English, this means that 
     individuals eligible for this tax credit should neither be 
     charged premiums or offered benefits that apply only to this 
     group nor pay higher premiums based on their own health 
     status or history.
       In addition, the law provides guaranteed issue to 
     qualifying individuals (see section (35)(e)(2)(A)(i)). 
     ``Guaranteed issue'' has the same meaning in this law that it 
     has in state regulation of insurance. Specifically, to be 
     qualified health insurance, each plan must ensure access to 
     each qualified individual who meets the other criteria for 
     this coverage. It does not mean that an issuer of health 
     insurance can accept some but not all qualifying individuals 
     so long as there is an alternative that accepts the denied 
     individuals (e.g., a high-risk pool).
       Third, since the goal of this provision is preventing loss 
     of health coverage, the Conference Committee agreed that 
     eligible individuals must also have been previously insured 
     for three months (see section (35)(e)(3)(B)). The law does 
     not specify when this aggregate of three months of creditable 
     coverage had to occur. To clarify, we intended that this 
     coverage should occur for three months prior to employment 
     separation necessary to attain eligibility for assistance 
     under this law (e.g., termination due to trade in the case of 
     displaced workers eligible for trade adjustment assistance 
     and retirement in the case of Pension Benefit Guaranty 
     Corporation (PBGC) eligible individuals). The three-month 
     coverage requirement should not disqualify those who had or 
     have lapses of coverage between the loss of job-based or 
     retiree coverage and application or eligibility determination 
     for assistance to this program. Indeed, these individuals 
     have a special need for access to affordable health insurance 
     and should not be penalized due to delays in passing, 
     implementing, and operating this law.
       I make these clarifications to underscore their importance 
     in successfully implementing the health provisions of the 
     Trade Act. I know that the President shares our mutual 
     commitment to make this an effective program that preserves 
     health insurance for this set of American workers and 
     retirees. I look forward toward a continued collaboration in 
     implementing, monitoring, and, if successful, expanding these 
     important health policies.
           Sincerely,
     Max Baucus.
                                  ____

                                                 October 17, 2002.
     Tommy G. Thompson,
     Secretary, U.S. Department of Health and Human Services, 
         Washington, DC.
       Dear Secretary Thompson: In a few short weeks, the health 
     insurance assistance provisions of the Trade Act of 2002 will 
     take effect. The passage and enactment of the historical Act 
     was the result of a delicately-crafted bipartisan effort. I 
     was proud to play a role in this significant achievement, and 
     I will continue to work with you to ensure its successful 
     implementation and operation. To that end, I am writing to 
     ensure that the Act's critically-important health insurance 
     protections are implemented consistent with the intent and 
     the letter of the law.
       As you know, for many of the supporters of the Trade Act, 
     the health assistance was the single most important factor in 
     overcoming concerns about the effects of enhanced trade 
     negotiating authority on American jobs. These provisions were 
     designed to assure American workers that the potential loss 
     of work does not equal the loss of health coverage. 
     Protecting health coverage is especially important now. We 
     recently learned that an additional 1.4 million Americans 
     became uninsured in 2001. Successful implementation of this 
     new law can make a difference in preventing additional 
     workers and their families from losing health coverage.
       As you implement this law, there are three issues that I 
     particularly want to emphasize. First, members of the 
     Conference Committee explicitly agreed to include individual 
     health insurance as qualified health insurance, but only for 
     those qualifying individuals who had such coverage for one 
     month prior to separation from employment (see section 
     (35)(e)(1)(J)). We did not intend to allow states to enter 
     into arrangements with individual insurers through the state-
     based coverage options, and I believe that this objective is 
     clear in the conference report. Any other interpretation of 
     the law would be a violation of the intent of its authors.
       Second, for those without access to employer-based 
     coverage, we included strong consumer protections. To prevent 
     discriminatory premiums and substandard benefits, we linked 
     the premiums and benefits offered to qualifying individuals 
     to those of ``similarly situated individuals'' (see sections 
     (35)(e)(2)(A)(iii and iv)). In plain English, this means that 
     individuals eligible

[[Page S10839]]

     for this tax credit should neither be charged premiums or 
     offered benefits that apply only to this group nor pay higher 
     premiums based on their own health status or history.
       In addition, the law provides guaranteed issue to 
     qualifying individuals (see section (35)(e)(2)(A)(i)). 
     ``Guaranteed issue'' has the same meaning in this law that is 
     has in state regulation of insurance. Specifically, to be 
     qualified health insurance, each plan must ensure access to 
     each qualified individual who meets the other criteria for 
     this coverage. It does not mean that an issuer of health 
     insurance can accept some but not all qualifying individuals 
     so long as there is an alternative that accepts the denied 
     individuals (e.g., a high-risk pool).
       Third, since the goal of this provision is preventing loss 
     of health coverage, the Conference Committee agreed that 
     eligible individuals must also have been previously insured 
     for three months (see section (35)(e)(3)(B)). The law does 
     not specify when this aggregate of three months of creditable 
     coverage had to occur. To clarify, we intended that this 
     coverage should occur for three months prior to employment 
     separation necessary to attain eligibility for assistance 
     under this law (e.g., termination due to trade in the case of 
     displaced workers eligible for trade adjustment assistance 
     and retirement in the case of Pension Benefit Guaranty 
     Corporation (PBGC) eligible individuals). The three-month 
     coverage requirement should not disqualify those who had or 
     have lapses of coverage between the loss of job-based or 
     retiree coverage and application or eligibility determination 
     for assistance to this program. Indeed, these individuals 
     have a special need for access to affordable health insurance 
     and should not be penalized due to delays in passing, 
     implementing, and operating this law.
       I make these clarifications to underscore their importance 
     in successfully implementing the health provisions of the 
     Trade Act. I know that the President shares our mutual 
     commitment to make this an effective program that preserves 
     health insurance for this set of American workers and 
     retirees. I look forward toward a continued collaboration in 
     implementing, monitoring, and, if successful, expanding these 
     important health policies.
           Sincerely,
     Max Baucus.

                          ____________________