Mr. President, last month, the Government Accountability Office, GAO, released yet another report about the Trade Adjustment Assistance, TAA, health coverage tax credit, HCTC. The report confirms what many in Congress have been saying…
Mr. President, last month, the Government Accountability Office, GAO, released yet another report about the Trade Adjustment Assistance, TAA, health coverage tax credit, HCTC. The report confirms what many in Congress have been saying since the HCTC program began, the credit is not enough, the program has several barriers to enrollment, the premiums are prohibitively high for some workers because of medical underwriting, and the program is very confusing and expensive to administer. Although the GAO reported a $19 million decrease in costs of administration between 2003 and the end of fiscal year 2006, administrative costs still make up approximately 34 percent of the total spending for the HCTC.
The Trade Adjustment Assistance Act is up for reauthorization this year. It is long past time for Congress to focus on the problems with the TAA health coverage tax credit and reauthorization presents us with that opportunity. That is why I am introducing legislation today that will make much-needed improvements to the HCTC program. And, I am proud that the distinguished Senator from Ohio, Mr. Brown, is joining me in introducing this important bill. The TAA Health Coverage Improvement Act of 2007 offers solutions to many of the problems with the HCTC identified by the GAO. This legislation will go a long way to make the TAA health care tax credit a realistic option for displaced workers and their families.
When Congress passed the Trade Act of 2002, we made a promise to American workers that the potential loss of jobs will not equal the loss of health care coverage. Unfortunately, Congress has failed to make good on that promise. Since we passed this bill, I have heard from steel retirees and widows in my State about how unaffordable the TAA health care tax credit is. And I have been very frustrated, just as I was when this bill passed, that we were not able to make the credit more affordable and accessible for people who need it the most--laid- off workers and retirees with very limited income. We can fix these problems by including provisions from the TAA Health Coverage Improvement Act in the TAA reauthorization bill.
For a good number of supporters of the Trade Act of 2002, the health insurance tax credit was the single most important factor in overcoming their concerns about giving the President fast-track authority to move trade agreements through Congress. In my own judgment, the fast-track would not have passed Congress without the health care tax credit. The TAA health credit was the trade-off to balance the President's authority.
Yet, the success many of us envisioned for the health care tax credit has not been realized through implementation. The number of people who have been able to access the health care tax credit over the last 2 years is extremely disappointing. As of January 31, 2007, only 15,506 out of 252,280 who are eligible for the credit are enrolled
in the program. That is just over 6 percent, which means that almost 94 percent of those eligible are not participating.
In my home State of West Virginia, we have worked hard to promote the HCTC for trade-displaced workers. When Weirton Steel instituted significant layoffs, thousands of employees lost their jobs. In the aftermath, State and national officials, health plan staff, and representatives of the Independent Steelworkers Union and United Steel Workers worked collaboratively to provide continuous health care coverage for HCTC-eligible workers and retirees. The community really came together and worked around the clock to educate workers and retirees about their coverage options and to ensure they were enrolled in the HCTC.
Loss of employment is absolutely devastating to workers and their families. While health care coverage alone cannot replace job loss, it does help to ease the burden on displaced workers and their dependents. West Virginia is a model example of how HCTC can work. However, with only 6 percent of those eligible for HCTC enrolled across the country, there is still much more that needs to be done.
I must say to my colleagues that Congress has had a hand in these disappointing enrollment figures. We have ignored every opportunity to improve the health coverage tax credit and enhance the lives of workers displaced by trade. Members of this body have previously voted against TAA bills that would have extended Trade Adjustment Assistance to service workers and also addressed some of the problems the GAO has identified with the health coverage credit.
The TAA Health Coverage Improvement Act makes long overdue improvements to the TAA health care tax credit. First, this legislation addresses the issue of affordability. In addition to the GAO, several consumer advocacy groups and research organizations, including the Commonwealth Fund, the Center on Budget and Policy Priorities, and Families USA, have cited affordability of the credit as the primary reason for low participation in the HCTC program. The bottom line is that a 65 percent subsidy is not enough. With a 65 percent credit, an eligible individual still has to pay an average of $2,104 in annual premium costs for single coverage plus additional amounts for deductibles and co-payments. This figure is particularly astounding given the fact that the average worker, while actively employed and earning a paycheck, paid just $627 annually in 2006 for single employer-sponsored health insurance coverage. In other words, if you lose your job, you have to pay more than three times as much for health insurance, even if you get the HCTC. The TAA Health Coverage Improvement Act makes the credit more affordable by increasing the subsidy amount to 95 percent.
This legislation also addresses the issue of affordability by placing limits on the use of the individual market, as Congress intended under the original law. The Trade Act of 2002 specified that the health insurance credit could not be used for the purchase of health insurance coverage in the individual market except for HCTC-eligible workers who previously had a private, non-group coverage policy 30 days prior to separation from employment. However, States have been allowed by this Administration to create State-based coverage options in the individual market for any HCTC beneficiaries, including those who did not have individual market coverage one month prior to separation from employment.
Because of the Administration's interpretation of the law, there are people who had employer-based coverage prior to separation from employment who are now being covered in the individual market. This was not the intent of the law. To make matters worse, this interpretation undermines the consumer protections set forth in the law because individual market plans are allowed to vary premiums based on age and medical status. In one state that GAG reviewed for a previous report, because of medical underwriting, HCTC recipients in less-than-perfect health were charged almost 6 times the premiums charged to recipients rated in the healthiest category. The legislation I am introducing today addresses this problem by clarifying that States can only designate individual market coverage within guidelines of 30-day restriction and by requiring individual market plans to be community- rated.
Second, this legislation guarantees that eligible workers will have access to comprehensive group health coverage. Group coverage is what people know. The vast majority of laid-off workers and PBGC retirees had employer-sponsored group coverage prior to losing their jobs or pension benefits. The TAA Health Coverage Improvement Act designates the Federal Employees Health Benefit Plan, FEHBP, as a qualified group option in every State, so that displaced workers Nationwide will have access to the same type of affordable, comprehensive coverage they were used to when they were employed.
Third, the TAA Health Coverage Act clarifies the 3 month continuous coverage requirement. Under the original TAA statute, displaced workers are required to maintain 3 months of continuous health insurance coverage in order to qualify for certain consumer protections. Those protections are guaranteed issue, no preexisting condition exclusion, comparable premiums, and comparable benefits. Congress intended this 3 month period to be counted as the 3 months prior to separation from employment. However, the administration has interpreted the 3 month requirement as 3 months of health insurance coverage prior to enrollment in the new health plan, which usually is after separation from employment and after certification of TAA eligibility. Many laid- off workers and PBGC recipients cannot afford to maintain health coverage in the months between losing their jobs and TAA certification and, therefore, lose eligibility for the statutorily-provided consumer protections. This legislation corrects this problem by clarifying that three months of continuous coverage means 3 months prior to separation from employment.
Fourth, this bill allows spouses and dependents to receive the health coverage tax credit. Over the last 2 years, younger spouses and dependents of Medicare-eligible individuals have not been able to receive the subsidy because eligibility runs through the worker or retiree. This technicality is unfair to individuals who rely on health coverage through their spouses or parents. The TAA Health Coverage Improvement Act allows younger spouses and dependent children to retain eligibility for the health coverage tax credit in the event the qualified beneficiary becomes eligible for Medicare.
Finally, this legislation streamlines the HCTC enrollment process and makes it easier for trade-displaced workers to access health insurance coverage. According to GAO, two of the factors contributing to low participation include the complex nature of the HCTC program and the inability of workers to pay 100 percent of the premium during the up to 3 months before they begin to receive advance payments. The TAA Health Coverage Improvement Act improves consumer information about the HCTC by requiring that the Treasury Secretary's eligibility notice include a description of the HCTC program; specific contact information for state offices responsible for determining eligibility and providing enrollment assistance; a list of the HCTC coverage options in the sate; and a statement informing eligible individuals of the deadline to enroll in HCTC in order to avoid lapses in coverage. Additionally, our legislation includes a presumptive eligibility provision that allows displaced workers to enroll in a qualified health plan and receive the HCTC immediately upon application to the Department of Labor for certification. There is also a provision which directs the Treasury Secretary to pay 100 percent of the cost of premiums directly to the health plans during the months TAA-eligible workers are waiting for advance payment to begin.
As a former Governor, I know how important Trade Adjustment Assistance is to individuals who have lost their jobs due to trade. In West Virginia, thousands of workers have lost their jobs as a result of trade policy. While adjusting to the loss of employment, these individuals still have to pay mortgages, put food on the table, and care for their families. Finding affordable health care adds a significant burden to their worries. The TAA health coverage tax credit is designed
to help American workers retain health insurance coverage during this very difficult transition.
Unfortunately, the HCTC program is not living up to its potential. The Government Accountability Office has given us a very specific diagnosis of the problems. Now, it is up to us to fix them. I look forward to working with my colleagues to pass this important legislation in conjunction with reauthorization of the Trade Adjustment Assistance program.
I ask unanimous consent that the text of the bill be printed in the Record.