U.S. Sen. Ron Wyden, D-Ore., today pressed an Obama administration official to help find ways to resolve a glitch in the law that would deny federal assistance to the millions of Americans of modest means who could be priced out of family health coverage at work.
During a Senate Finance Committee hearing Wyden asked Gary Cohen, Deputy Administrator and Director of the Center for Consumer Information and Insurance Oversight (CCIIO) at the Centers for Medicare and Medicaid Services (CMS), to work with him to find ways to ensure that millions of Americans squeezed by the so-called "family glitch" will have access to affordable health coverage.
Cohen, who is working to establish the health insurance exchanges that begin in 2014, said he would respond to Wyden in writing within a month with ideas about how states could help employees take their employer health contributions to the exchanges to shop for policies that are a better fit for their families.
"We've got millions of people -- working-class, middle-class people -- who are going to be pushed into a regulatory health coverage no man's land," Wyden said. "They are unable to afford the family coverage through their employer and ineligible for the subsidy that could be used by dependents on the exchange."
Kaiser Family Foundation has estimated that there could be as many as 3.9 million dependents in American families in which the worker has access to affordable employer-sponsored coverage but the family does not.
Last month, the Internal Revenue Service (IRS) ruled that workers cannot get federal tax credits to help them purchase coverage on the health insurance exchanges, which start in 2014, unless the cost of the individual employers-based health coverage premium exceeds 9.5 percent of the worker's household income. This strict ruling ignores the fact that the cost of family coverage is much higher.
Wyden had succeeded in helping address the issue of ensuring affordable family insurance coverage through his Free Choice Vouchers (FCV), but they were eliminated from the law in the continuing budget resolution passed by Congress in April 2011.
With the FCV, if an employer offered family coverage that an employee with a family simply could not afford, they would have the option of taking the employer contribution and shopping for a more affordable family policy in the health exchange.
"And without it, millions of families will simply not be able to find health care coverage that fits their needs at a price they can afford," Wyden said.
Under the current law, many employees of modest means could be forced to choose between their employers' unaffordable insurance or going without.
A Kaiser Family Foundation survey published last year found that employees' annual share of insurance premiums averaged $951 for individual coverage and $4,316 for family coverage. The lowest income workers would generally be eligible for Medicaid, and the higher income workers are unlikely to have to pay more than 9.5 percent of their income for insurance. The ruling would largely hit people with incomes under three times the poverty level - $67,050 for a family of four in 2011.
This is the second time Wyden raised the issue with the Obama administration this week -- Wyden also brought the family glitch problem up during this week's confirmation hearing for Treasury Secretary nominee Jack Lew.
Lew said that while his primary concern was getting the health care exchanges "up and running," he acknowledged there may be gaps in coverage and that he would work with Wyden and the other members of the Senate Finance Committee to address any identified gaps.