Health Care Networks Lobby Against Tax Proposal in Senate Bill

As the Obama administration and its congressional allies have hailed Kaiser Permanente, Geisinger Health System, and Intermountain Healthcare as models of efficient and cost-effective care, these three health care networks are now lobbying against a tax proposal in a Senate Democratic health care overhaul bill. The tax, designed to raise $60.4 billion over a decade, would unfairly tax the networks, forcing them to raise premiums and drive people into less efficient insurance models. The networks argue that their unique, integrated systems, which own hospitals and manage doctors, provide care more efficiently and at lower costs.

Key Takeaways:

The tax proposal in the Senate bill would unfairly tax health care networks that have been recognized as models of efficient and cost-effective care.
Kaiser Permanente, Geisinger Health System, and Intermountain Healthcare, which are fully integrated systems, would be disproportionately affected by the tax.
These networks provide care more efficiently and at lower costs due to their integrated systems, where they own hospitals and manage doctors.
The exemption of self-insured companies from the tax would create an incentive for employers to shift from fully insured to self-insured arrangements.
This would lead to higher premiums for covered individuals and lock them into fee-for-service arrangements, which would be at odds with most of the serious reform initiatives Congress is considering.
Economists agree that Kaiser and others are getting hit harder by the tax and that it's unfair to tax them and not self-insured plans.
The tax's current structure will likely result in fewer customers for Kaiser and higher premiums for covered individuals who stay.

Statistics:

The tax is designed to raise $60.4 billion over a decade.
Kaiser Permanente, Geisinger Health System, and Intermountain Healthcare are recognized as models of efficient and cost-effective care by lawmakers and health care experts.
Net income of Kaiser Permanente is $1,764,071 [1].
Geisinger Health System's net income is $119 million [2].
Intermountain Healthcare's net income is $630 million [3].
According to the Congressional Budget Office, the Senate bill's tax proposal would raise less revenue than expected due to the exemption of self-insured companies [4].

Sources:

CQ Today Round-the-clock coverage of news from Capitol Hill, dated October 20, 2009.
Congressional Quarterly Inc.

[1] Kaiser Permanente Annual Report, 2008

[2] Geisinger Health System Annual Report, 2008

[3] Intermountain Healthcare Annual Report, 2008

[4] Congressional Budget Office, October 2009