Obama FY 2015 Budget Analysis: Summary of Health Plan Proposals

NBCH thanks the American Benefits Council for the information provided in this post.

The latest version of President Obama’s federal budget proposal includes a number of provisions that would substantially affect employer-sponsored benefit plans.

Obama’s Fiscal Year 2015 budget proposal, released on March 4, requests $3.9 trillion for the government operation; the White House Office of Management and Budget (OMB) released the detailed budget estimates by agency in conjunction with the proposal. The bipartisan budget deal reached in December 2013 essentially set the budgets and appropriations levels for 2014 and 2015, rendering the president’s budget largely inconsequential from a practical perspective. However, the president’s proposal does illustrate his administration’s policy priorities and approach for the coming year. Furthermore, several of these provisions could ultimately be taken from the budget and considered separately as federal revenue offsets for larger legislation or as stand-alone measures.

Most notably, as in the prior year’s budget proposal, the FY 2015 budget proposes reductions in the value of itemized deductions and other tax preferences (including employer-sponsored health insurance and employee retirement contributions) to 28 percent for high-income earners. 

The budget also specifically addresses a number of other health benefit initiatives.

Health Care

• The 2015 budget proposal provides resources to continue to support implementation of the Patient Protection and Affordable Care Act (PPACA), including the Health Insurance Marketplace, premium tax credit and cost sharing assistance, and increasing federal support to states expanding Medicaid coverage for newly eligible low-income adults. 
• As in prior years, the proposal “implements payment innovations and other reforms in Medicare and Medicaid and other Federal health programs that encourage high-quality and efficient delivery of health care, improve program integrity, and preserve the fundamental compact with seniors, individuals with disabilities, and low-income Americans.” This is accompanied by $25 million over two years to monitor and prevent fraud, waste and abuse in the Health Insurance Marketplace. 
• The budget retains a modified version of last year’s proposal for income-related premiums. Specifically, the proposal would impose premium increases for beneficiaries in Medicare Parts B and D and impose a surcharge on Medicare Part B premiums for new beneficiaries and those that purchase near or full first-dollar Medigap coverage. 
• The budget proposes a program to align employer group waiver plan payments with average Medicare Advantage plan bids. 
• The budget proposes to expand mental health treatment and prevention services across the Substance Abuse and Mental Health Services Administration and the Centers for Disease Control and Prevention and make changes to the Medicaid program to increase access to mental health services, particularly for youth. 

Other Issues

• As in the previous year’s budget proposal, the president recommends a program to penalize and eliminate misclassification of employees as “independent contractors.” The budget proposal specifically includes $14 million to combat misclassification (identical to the prior year’s budget), including $10 million for grants to states to identify misclassification and recover unpaid taxes and $4 million for the U.S. Department of Labor (DOL) Wage and Hour Division (WHD) to investigate misclassification. 
• With regard to family leave issues, the budget also again proposes a $5 million “State Paid Leave Fund” within DOL to provide competitive grants that would help states cover the start-up costs of launching paid-leave programs. The budget proposal also provides an increase of more than $41 million for the DOL WHD for increased enforcement of laws addressing wages, overtime and family and medical leave.