WASHINGTON — Businesses wouldn't be required to provide health insurance under legislation being readied for Senate debate, but large firms would owe significant penalties if any worker needed government subsidies to buy coverage on their own, say Democratic officials familiar with talks on the bill.
For firms with more than 50 employees, the fee could be as high as $750 multiplied by the total size of the work force if only a few workers needed federal aid, the officials said. That is a more stringent penalty than in a bill that recently cleared the Senate Finance Committee, which said companies should face penalties on a per-employee basis.
The officials also said individuals would generally be required to purchase affordable insurance if it were available and would face penalties if they defied the requirement.
They spoke on condition of anonymity, saying they were not authorized to discuss the private negotiations involving key Senate Democrats and the White House. They also stressed that no final decisions have been made on the details of the measure, expected to reach the Senate floor in about two weeks.
In general, the bill taking shape in private talks led by Senate Majority Leader Harry Reid of Nevada is designed to answer President Obama's call to remake the nation's health care system. It would expand coverage to millions who lack it, ban insurance industry practices such as denial of coverage for pre-existing medical conditions, and slow the growth in medical spending nationally.
Like a companion measure in the House, it would create a new federally regulated marketplace, termed an exchange, where individuals and families could purchase insurance sold by private industry. Federal subsidies would be available to help those at lower incomes afford the cost.
Subsidies would also be available to smaller businesses as an incentive for them to provide insurance.
Nominally, Reid's task is to meld bills already approved by the Senate Finance Committee and the Senate Health, Education, Labor and Pensions Committee. In reality, however, he has a virtual free hand in coming up with a measure, with a goal of amassing a 60-vote majority to overcome a threatened Republican filibuster.
Reid has told fellow senators he is strongly considering including a provision for a government-run insurance plan in the bill as a way to ensure that consumers have a choice and to create competition for private companies. States would be permitted to drop out under the plan.
That is a somewhat weaker version than the HELP Committee voted for, but the Finance Committee omitted any federal role in the sale of coverage in favor of nonprofit co-ops competing with private industry.
The issue is the most contentious in the effort to overhaul the nation's health care system, and it is not known whether Reid has the 60 votes for his plan.
Sen. Chuck Schumer, D-N.Y., a leading advocate for a government-run insurance provision, said on NBC's "Meet the Press" that he thought the drive for 60 votes was close to success.
One critic, Sen. Ben Nelson, D-Neb., said on CNN that he was not enthusiastic about the proposal, but he did not rule out giving Reid his vote on a key procedural vote.
"Well, I certainly am not excited about a public option where states would opt out.... I'll take a look at the one where states could opt in if they make the decision themselves," he said.
Numerous other issues are involved in the bill.
The requirement for individuals to purchase insurance would include provisions to exempt individuals or families unable to find affordable coverage. Those who are obligated to buy coverage and refuse would face a fine of perhaps $100 in the first year of the program.
There is no penalty for individuals in the first year of the program in the Senate Finance Committee bill, a provision inserted at the request of Sen. Olympia Snowe. The Maine Republican is the only member of her party in either house of Congress to vote for a Democratic-backed health care bill in committee this year.
The switch Reid is considering is an attempt to increase the number of people with insurance, a key goal of the legislation.
Officials familiar with the Senate negotiations said the bill is likely to maintain a federal health care program for lower-income children as a stand-alone program, rather than folding it into the broad national insurance exchange. Sen. Jay Rockefeller, D-W.Va., is an ardent proponent of the arrangement and did not announce publicly he would vote for the Senate Finance Committee bill until after his proposal was approved.
The legislation is also expected to include an option for states to negotiate with private industry to provide group coverage for lower income residents. The proposal is backed by Sen. Maria Cantwell, D-Wash., and patterned after a program in her home state.
Reid is also searching for ways to scale back a tax on high-cost insurance policies approved by the Senate Finance Committee. Organized labor strongly opposes the proposal, and the House bill is not expected to include it.