What The Health Care Bill Means For Employers Business owners are sorting out what the new health care legislation means for how they provide health benefits to their workers. Companies such as AT&T and Verizon have indicated that they may consider reevaluating the health care benefits they currently offer.

What The Health Care Bill Means For Employers

What The Health Care Bill Means For Employers

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Business owners are sorting out what the new health care legislation means for how they provide health benefits to their workers.

Companies such as AT&T and Verizon have indicated that they may consider reevaluating the health care benefits they currently offer.


Janet Adamy, health policy reporter for the Wall Street Journal

John Sutherland, co-owner, Sutherland Framing and Fine Art

James Gelfand, senior manager for health policy, U.S. Chamber of Commerce


This is TALK OF THE NATION. Im Neal Conan in Washington.

With President Obama's sweeping health care bill now law, employers big and small are trying to figure out what it means for them and their workers. Two of the nation's largest phone companies, AT&T and Verizon, already say the law may force them to re-evaluate some health care benefits they currently offer. Two big manufacturers, John Deere and Caterpillar, say it will cost them a lot of money. Another, GE, says it doesn't think so.

Some benefits are added, some taken away. So if you're an employer, an employee, an entrepreneur, self-employed, how do you see the new law affecting you? 800-989-8255. Email us, talk@npr.org. You can also join the conversation on our Web site. Thats at npr.org. Click on TALK OF THE NATION.

Later in the program, John Allen joins us on the Opinion Page on what Pope Benedict knew and when he knew it. But first, health care and business, and we begin with Janet Adamy, health policy reporter for the Wall Street Journal. She joins us here in Studio 3A, and Janet, nice to have you with us today.

Ms. JANET ADAMY (Health Policy Reporter, Wall Street Journal): Nice to be here.

CONAN: And as I understand it, there's an important distinction in the law between companies with fewer than 50 employees and those with more than that.

Ms. ADAMY: Yeah, the way that it breaks down is small businesses with fewer than, specifically fewer than 25 workers, will get some immediate benefits this year. There'll be tax credits starting in 2010 that offset the costs of their premiums. So they'll see a subsidy of as much as 35 percent of their premiums.

For larger employers, that is businesses with 25 - rather 50 or more workers, they're not going to see the biggest changes until 2014. That's when they'll get a new set of requirements that they provide coverage and also provide a certain affordability of the coverage to their workers.

CONAN: So these changes do kick in over time, yet some businesses, as we just heard, are already calculating this is going to cost them a bundle.

Ms. ADAMY: Exactly. What we've heard over the past couple of days is there are a number of large employers, AT&T, Caterpillar and John Deere, who are taking a one-time charge for a tax change in the bill that relates to prescription drugs benefits.

CONAN: And these are for retired employees.

Ms. ADAMY: Exactly. The way that it works is that companies have been receiving a subsidy of up to about $1,300 per worker since 2006. The idea was that the government wanted to encourage them to continue to offer retirees prescription drug benefits instead of putting them on the Medicare Prescription Part D Plan.

What the change is, under the new law, is they'll still receive the subsidy, but they won't be able to deduct the subsidy from their taxes anymore. So basically, they get one benefit, but they don't get the second benefit, and that's what the companies are taking the charge for.

CONAN: And the White House press secretary, Robert Gibbs, said this is just eliminating a tax loophole that let them effectively get a double dip on this.

Ms. ADAMY: Exactly. The White House is making the case that overall, the bill is good for large businesses, and they said they listened to the concerns of business. Valerie Jarrett, at the White House, said yesterday, that they even delayed this change by a year, so it takes effect not until 2013, instead of 2012, because businesses were so concerned about it.

CONAN: And yet other as we heard, General Electric saying well, we don't think it's going to cost us any more.

Ms. ADAMY: Well, there's an important distinction here. There are some companies who are locked into providing this prescription drug benefit because they have union contracts where they'll have to continue to offer the coverage to workers.

But companies that don't have a lot of unionized workers or no unionized workers, if they're providing the benefit right now, they may have some flexibility to no longer offer it.

CONAN: All right, so we're going to have to see how that plays out, and indeed, this is a huge law, as we kept being reminded during the debate on it. It's going to take everybody a while to figure out exactly what it means and exactly how it's going to play out in practice.

Ms. ADAMY: It is, and a lot of the changes don't take effect until 2014. That's when we'll see the most stringent new requirements on businesses. It's mostly for small businesses that we'll see the most immediate effects. That starts this year.

CONAN: And what are, broadly, the effects on them?

Ms. ADAMY: The main thing is the tax credits. It's for small businesses that have fewer than 25 employees and average annual wages of $50,000. So it's basically smaller employees that don't have as highly paid of a workforce.

The idea is that those people are the ones who are really struggling to provide coverage. They've seen some of the sharpest increases in insurance premiums. And politicians, the Democrats specifically, know that that's a group that they really want to reach out to to try to have some popular, early benefits from the bill.

CONAN: Well, we happen to have one of those individuals on the line with us now. Joining us is John Sutherland, co-owner of Sutherland Framing and Fine Art in Voorhees, New Jersey. His op-ed about the challenges of providing health care as a small-business owner appeared earlier this month in the Philadelphia Inquirer, and he joins us by phone from his office. Nice to have you with us today.

Mr. JOHN SUTHERLAND (Co-owner, Sutherland Framing and Fine Art): Thanks for having me.

CONAN: And I understand, as this law effects you, is it a benefit or a detraction?

Mr. SUTHERLAND: Well, I see a lot of benefits in it, and as your other guest mentioned, the tax credit that will go into effect will be a big help to us. We're one of those small businesses with fewer than 25 employees, and the credit will be substantially more than the tax deduction that we can take right now, based on the plan that we have.

And the other aspect of the bill, which we like very much, which won't go into effect for a few years, are the exchanges or pools into which small businesses may purchase coverage.

CONAN: Because up till now, you were not allowed to join a larger pool.

Mr. SUTHERLAND: No, and that's actually something I had written to my congressman about many times over the years, and I know that a number of small businesses that I know have been all for it, as well. It would give us some purchasing power and also dilute our risk.

Right now, if you have a small group, maybe five employees or less, and one of them gets seriously ill or has substantial medical bills, you can be priced right out of the market when your next premium increase comes through.

CONAN: There is also, as I understand it, no provision that forces you to offer health insurance coverage to your employees if you're a small business, but a lot of people would like to.

Mr. SUTHERLAND: Yes, that's true, and under the bill, we wouldn't be forced to, but with the tax credit, which is on a sliding scale, those small businesses, particularly those with 10 or fewer employees, will get a pretty substantial tax credit. And that can be an incentive to hiring additional people or providing a plan for your employees if you don't already do so.

CONAN: So under this, there can actually be an incentive to actually hire more people if you're a small business like you have how many employees, John?

Mr. SUTHERLAND: Just two.

CONAN: Just two. So you're well under that limit.

Mr. SUTHERLAND: Yes, yes, and I do think it would be an incentive to bring more people in and also maybe to create a plan if you don't already have one.

CONAN: Let me ask Janet Adamy on this point. If you had 48 workers in your company, might you pause for a moment to be careful you don't go over that 50 limit?

Ms. ADAMY: That's a great question, Neal, and I think that's going to be one of the things that we see. Companies will start thinking about the insurance and how they provide insurance in terms of some of these new regulations.

What John mentioned, this exchange, that is going to be a very powerful thing for businesses. It doesn't start until 2014. It's designed for small businesses and individuals who want to buy coverage in that larger pool but can't do so because they have too few workers.

CONAN: So John, what's the most immediate change that you will see, you think?

Mr. SUTHERLAND: Well, I would say the tax credit, which goes into effect pretty soon. That would be the most immediate effect. I wish the exchanges went into effect sooner. My understanding is 2014 is the date for that. But the credit will be the most immediate effect.

CONAN: Let's see if we can get a caller in on the conversation, 800-989-8255. We want to hear from employers and employees, large companies and small, even self-employed - 800-989-8255. Email us - talk@npr.org. And we'll begin with Mary(ph). Mary is calling us from Miami.

MARY (Caller): Yes, I am, and I am absolutely thrilled. I am also a small-business owner, and we have three full-time employees in our company, but I get my insurance through my husband's employer.

What I'm really thrilled about is the fact that my husband is several years older than I am, and prior to this legislation, we were really looking at him working six more years just to keep me insured. With the pools and everything else, I think he's going to be able to retire when he wants to, and we're not going to have to worry about whether I can get health care coverage.

CONAN: So some of those workarounds, like being on your husband's health coverage, that will go away - it would be a lot easier for you?

MARY: Yeah, more importantly, he won't have to work just to keep I'll be able to get insurance through an exchange. And again, as the previous caller said, we'll have a spread the risk around because right now, I'm uninsurable, and that won't be a concern after 2014 because I'll be able to go to one of these exchanges. I won't have to have my husband work for a large corporation just to insure me.

CONAN: So you have one of those dreaded pre-existing conditions, Mary?

MARY: Yes, unfortunately, I do. I do.

CONAN: Well, Mary, thanks very much for the call, appreciate it.

MARY: Thank you.

CONAN: And Janet Adamy, there's going to be a lot of people in her situation.

Ms. ADAMY: Yeah, exactly, Neal. What Mary's talking about is something the Democrats have really pushed in this legislation, is getting rid of the phenomenon of job lock, people who stay in jobs just to get health insurance. They point out it's bad for the economy, and it prevents people from doing things like starting your own businesses, or in Mary's case, retiring.

Right away, there would be two options for those people. For Mary, there will be a high-risk pool that takes effect, starting this year, where she can get an insurance plan a little bit easier than if she was buying on the individual market.

And then, of course, in 2014, along with small businesses, individuals -people like Mary and her husband - will be able to go into the exchange and get access to a bigger pool, where they'll be able to get a more affordable plans. So she's exactly the kind of person that this is designed to help.

CONAN: And let's hear from Catherine(ph), Catherine calling us from Greensboro, North Carolina.

CATHERINE (Caller): Hi there. I'm calling because I'm a self-employed or I'm employed by a small business, and I buy my own health insurance. My small business has more than 25 employees. So they're not going to be affected by the immediate tax credits, and it's very frustrating to me because my as far I understand, I won't be affected by anything until 2014.

CONAN: Is she right about that, Janet?

Ms. ADAMY: Based on the way it's structured right now, yes, but keep in mind, you know, we're going to see this evolve. I think for people who are in your situation, you should keep an eye on the way that this develops, and there may be other provisions that surface that could help you.

CONAN: Would 2014 be too late?

CATHERINE: It would be very difficult. My insurance premiums keep increasing. They went up 25 percent at the beginning of this year, and right now, pretty much a quarter of my paycheck goes to health insurance.

CONAN: And Janet Adamy, there's fears that indeed, a lot of health premiums are going to be going up in anticipation of this law.

Ms. ADAMY: Yeah, one thing that I could say that could help her situation is that there are new regulations that take effect right away that place a little bit stricter limits on just how much insurers can raise their premiums.

So if they want to participate in the exchange starting in 2014, private insurers have to make sure that they don't run afoul of certain new rules. So it's possible that the rate increases that we've seen over the last couple of years may not be quite as sharp because of these new regulations.

CONAN: All right Catherine, stay appreciate the phone call.

CATHERINE: Thank you very...

CONAN: Janet Adamy is going to stay with us. John Sutherland, thank you for your time today. We wish you the best of luck.

Mr. SUTHERLAND: Okay, thanks for having me.

Ms. ADAMY: John Sutherland, co-owner of Sutherland Framing and Fine Art in Voorhees, New Jersey, and called us from his office today. We're going to be talking more about larger businesses, as well. So stay tuned. I'm Neal Conan. It's the TALK OF THE NATION from NPR News.

(Soundbite of music)

CONAN: This is TALK OF THE NATION. Im Neal Conan in Washington.

For the past week, employers large and small have been trying to sort out what the landmark health care law means for them. AT&T claims it will cost their bottom line a billion dollars. Other companies, like GE, aren't sure that it's going to cost them anything.

It's a mixed bag for small businesses, too. That's because they stand to benefit from tax credits to help pay employee benefits. Others complain it may translate into fewer hires in the future.

With us to talk about it, is Janet Adamy, health policy reporter at the Wall Street Journal, and if you'd like to join the conversation, if you're an employer, an employee, an entrepreneur, self-employed, give us a call, 800-989-8255. Email us, talk@npr.org. You can also join the conversation on our Web site. Thats at npr.org. Click on TALK OF THE NATION.

Joining the conversation is James Gelfand. He's senior manager for health policy at the U.S. Chamber of Commerce. He's been kind enough to joins us here today in Studio 3A. Thanks very much for coming in.

Mr. JAMES GELFAND (Senior Manager for Health Policy, U.S. Chamber of Commerce): Thank you, Neal.

CONAN: And we've noted a lot of large companies say the new law will be very expensive for them to implement. Explain.

Mr. GELFAND: Well, the issue that we're dealing with right now is a tax change that was contained in the bill could end up having some serious adverse consequences. And the problem for companies that are large is that they have to admit the costs that they're going to have later, right now.

Unlike many governments and state and local affiliates there, they don't have to do that, but when you're talking about large companies, they have to say well, if down the road, we're going to have a billion dollars that we didn't know about that are going to cost us because we have a retiree drug plan, they have to report it. And so, because the law was just passed on Tuesday, well, now they've got to report it.

CONAN: And they're sure about this calculation?

Mr. GELFAND: Well, I think they're moderately sure. The issue here is, as you talked with Janet about earlier, prescription drug plans, which companies voluntarily offer to their retirees, are going to become more expensive.

Now, the ironic part is that if AT&T, or Verizon or any of these other companies, decide not to continue offering these plans, the cost to the government will be far larger than the billion or so that are being reported by some companies.

CONAN: The White House has said that they think that some of these calculations are exaggerated.

Mr. GELFAND: I'm not sure why the White House already seems to know about these calculations, seeing as they were just made and probably haven't been presented to them yet, but I understand they're motivated, right now, to try and defend this plan.

They're on a mission right now, to try and sell this plan. They know that an election is coming up in November, and they have to do everything they can to try and spin a positive light on it.

CONAN: And to put not too fine a point on it, the U.S. Chamber of Commerce was in opposition to this plan all along.

Mr. GELFAND: That's right. We have a couple reasons for that. We think that it's going to be problematic for small businesses. We think most small businesses are completely disqualified from the credits. We think that large businesses are going to have higher taxes, and they're going to have more increased cost, that this plan is not going to put a cap on premiums, and at the end of the day, we're going to end up spending a trillion dollars and maybe not accomplishing what we set out to accomplish.

CONAN: And what is the chamber going to be doing in the month ahead to, well, act on its beliefs?

Mr. GELFAND: Well, we're going to be educating the public as best we can. We're going to be working inside the halls of Congress to try and get some targeted changes. As you talked about earlier, many of the worst changes that are included in this law do not come into play until 2014, and some of the even worse ones don't come in until 2018.

CONAN: These are your characterizations, obviously.

Mr. GELFAND: Of course they are. We're talking about new taxes here, for the most part. But we are also going to working with the regulatory agencies. You've got to keep in mind that President Obama's departments are going to be having to come out with thousands and thousands of pages of regulations to explain how exactly this works, and businesses need to be heard in that process.

CONAN: And so that involves, well, it's an ugly word lately, but lobbyists going up to make their case on Capitol Hill.

Mr. GELFAND: Well, not just lobbyists. Also the people who are going to be directly affected by this, need to have a voice and to speak directly to the people who are going to be writing these regulations.

CONAN: So, and obviously you may be deciding which candidates might help you in the fall and which might not.

Mr. GELFAND: Well, there's no question about it. The chamber has a robust political program, and we're going to be using that to hold accountable, those who voted a certain way. When we get down to it, we're going to be coming out with a book called "How They Voted," and that book is going to score people, based on did they vote for policies throughout the entire Congress that would be helpful to business or that would be hurtful.

CONAN: And obviously, some people will disagree with your evaluations, and others will look with interest on your recommendations.

Mr. GELFAND: Well, the book is only a suggestion, Neal.

CONAN: Only a suggestion, only a suggestion. Janet Adamy is also with us, 800-989-8255. Email us, talk@npr.org. And let me see if we can get another caller on the line. Charles(ph) is with us, calling from Troy in Michigan.

CHARLES (Caller): Hello, Neal.


CHARLES: I want to thank you for your program. It's very informative, and...

CONAN: Thank you for that.

CHARLES: And I just wanted to say I'm a small group. It's just two of us, but it's my wife and me, and my wife has had a pre-existing. We've been a business 25 years, and well, we've seen our rates go up about 300 percent in the last seven years.

CONAN: A lot of people have, yeah.

CHARLES: Yeah, and we can't afford it anymore. And I'm glad for health care reform because now we can shop around and get a better insurance rate.

CONAN: And so you have what kind of business are you in, Charles?

CHARLES: Printing - anything form digital to wide-format printing.

CONAN: So that is a business that has undergone a whole lot of technological change, as well.

CHARLES: Oh, it sure has.

CONAN: I bet it has. All right, Charles, good luck to you.

CHARLES: Thank you very much.

CONAN: Thanks very much for the call, and Janet, is this someone who fits into some of those categories we were talking about before?

Ms. ADAMY: He is, and Charles mentioned that he's had a hard time shopping. One of the things that this exchange, that starts in 2014, would do is it's designed to be the Expedia or Travelocity of health insurance.

So instead of necessarily needing an insurance broker, an average person, a small-business owner, can go into the exchange and do a side-by-side comparison of the plans in there. So at a minimum, it will at least be easier for people to tell what plans are available to them and see how they stack up against each other.

CONAN: And James Gelfand, does the Chamber of Commerce represent people like James, the two-person company, the three-person company like we had on the air before?

Mr. GELFAND: Absolutely. More than 96 percent of our members are small businesses. And one of the things that we have always supported is creating an exchange, this shopping center where I like to compare it to Orbitz, which is my favorite Web site to buy plane tickets. But it's supposed to really help, and we think that that's one of the most positive aspects of this bill.

CONAN: Let's get another caller on the line. This is Sassy(ph), Sassy with us from St. Thomas in Pennsylvania.

SASSY (Caller): Hi there.

CONAN: Go ahead, please.

SASSY: How are you?

CONAN: I'm well, thanks.

SASSY: Did you want me to repeat my comments?

CONAN: Yes, that would be good.

SASSY: Okay. I represent a small business that happens to be a medical office, primary care, and we were tickled to death. I cried when I found out we would actually get a credit on our 2010 taxes, which will be wonderful because our premiums are currently $800 per month per person.

CONAN: $800 per month per person?

SASSY: That is correct.

CONAN: How many people in your office?

SASSY: And yup, there's about that was for eight people, and that was for each of us. We had to increase the employees' contribution this year because it went up to this amount. It went up about 15 to 20 percent, to $40 per paycheck, and one of them actually dropped her plan because she felt she couldn't afford her $40 contribution. But you can imagine how much it's hurting us because we're paying the rest.

CONAN: Yes, absolutely.

SASSY: We're paying approximately $80. We're paying $800 minus $80.

CONAN: And so with the credit, how much is that going to come down?

SASSY: I do not know, because I don't know how much the credit will be, but it's got to be an improvement.

CONAN: Janet Adamy, any offering advice for Sassy?

Ms. ADAMY: What we know right now, is the credit will be up to 35 percent of the premium. So the question is, is that going to be enough to discourage people who were on the bubble about dropping the coverage because it was getting so expensive, whether that's going to keep them from dropping that coverage.

I think the real question, Neal, is that we've seen so many firms drop coverage over the last couple years, will firms actually decide to pick it back up? Is 35 percent enough to encourage them to do that?

SASSY: Some of us happen to feel it's a moral obligation to provide that. It's coming straight out of our pockets because we're self-employed. Our employees would have to contribute less, and so they would come back on to the policy.

CONAN: Come back onto the policy. All right, Sassy, thanks very much. We wish you the best of luck.

SASSY: Thanks very much, bye-bye.

CONAN: The increases, James Gelfand, that some people are talking about, these are the price of health insurance, and of course, the health insurance companies say this is not our obscene profits, this is the cost of health care going up all over the place. This is a lot of people's contribution to this.

But nevertheless, does this plan, to your mind, restrain the growth in those costs, which have been explosive?

Mr. GELFAND: Unfortunately not. As we've seen over the past 10 years, the cost of the average premium go up about 130 percent, according to the Kaiser Family Foundation. And the only want to really get those under control is to: A, change the way we pay doctors and hospitals, which means focusing on prevention, focusing on care coordination and focusing on quality over quality, as well as to get people into the game and make them understand how much health care actually costs in order to get a cap on utilization, as well. We don't see those changes, for a large part, existing in this bill.

Now, large employers have been in favor of some of the pilots that are going to be added into the Medicare program, where you have limited programs that are meant to help reform payments in Medicare. However, it's just too little too late. And when we're talking about creating a new $500 billion entitlement, it's not going to get the job done.

CONAN: Janet Adamy, any idea, yet, as to if this is going to restrain the growth in costs?

Ms. ADAMY: Well, one thing that's important to keep in mind is how much the rest of the large employers and private insurance companies subsidize the cost of covering - caring for people who are uninsured. Uninsured people, they get treatment, and they get treatment often in a more expensive way.

They go to emergency rooms, and they aren't able to pay their bills, and the system essentially has to absorb that, and that gets passed on to all consumers.

There have been a couple of estimates. One that I've seen is that that costs every person $1,000 extra in terms of higher premiums.

CONAN: One thousand dollars a year?

Ms. ADAMY: Correct, $1,000 a year in higher premiums. So by the end of this first phase of the bill, by 2019, there will be an additional 32 million who are uninsured, and the idea is that that will that extra amount of money that everyone else has been subsidizing to cover the uninsured will go away. So from a cost-lowering standpoint, I don't think anything is going to happen overnight, but over time, the idea is that the bill will get rid of a lot of those costs in the system.

CONAN: Here's an email from Chris in Atchison, Kansas: What will does it mean for nonprofit tax-exempt 501(c)(3) organizations? Is there any difference between those? And he says, especially those with fewer than 10 employees? Any difference between those and other small businesses?

Ms. ADAMY: I think there are some different tax treatments, depending on the structure of the business. I can't say for sure exactly what that would do to his business. I think that we need to know a little bit more about it.

CONAN: All right. Let's go to Jesse, Jesse calling from Hartford.

JESSE (Caller): Neal, how are you?

CONAN: I'm well, thanks.

JESSE: Good. I was actually calling - I work for a very large corporation. It's a national company. We only have two plans: One has a very, very high deductible, one with the relatively low deductible. But I'm curious to know if that's going to be a trend, where the deductibles on your plans are going to be increasing as a result of the legislation. And I'll take my answer off the air.

CONAN: All right, and the high deductible is obviously a less expensive offering than the low deductible. But, Janet?

Ms. ADAMY: Yeah. There are high-deductible plans that would be allowed under this - under the bill, especially in the exchange starting in 2014. I think one thing that's important is he - this gentleman mentioned that he works for a large employer to - for the most part, large employer plans that took effect before the bill was signed into law last Tuesday will be grandfathered in. So if you're on a plan that you like, you can stay in that plan.

Now, there will be a couple of changes to that plan. For instance, people on those plans will have to add, if they have a child, the -they'll be obligated if they - the plan would be obligated to add a child up to the age of 26 onto the plan. But for the most part, people who are in employer plans now will be grandfather into those plans.

CONAN: And if they don't like that plan, James Gelfand, presumably after 2014, they would be able to go out and shop on one of these exchanges.

Mr. GELFAND: Well, yeah. Depending on your income as an employee, you may or may not be eligible to just get out of the employer plan, go and get a subsidy from the federal government in the exchange. Now if your income is greater than 400 percent of the federal poverty level - which means, today, that would be a family of four making $88,000 - you would not get a subsidy. But you still could theoretically go into the exchange.

Now we don't really agree that grandfathering is going to save a lot of plans, but we do think that when you get to 2018, when the new so-called Cadillac tax comes into play, you're going to have a lot of plans going to hire deductibles.

CONAN: The tax on so-called, Cadillac plans - has it been set, Janet, as to what that level is? What the description of the - which model Cadillac we're talking about?

Ms. ADAMY: Well, I think people are saying that it's - yeah. It - they increase that threshold quite a bit over a time. It's around $10,000 a year for individual plans and around $27,000 a year for a family plan started in 2017 - 2018, rather. Keep in mind, that's about 1/5 - that's going to raise about 1/5 of the money that it was in the original Senate bill. So that got peeled back quite a bit overtime.

CONAN: We're talking about health care law and employers. You're listening to TALK OF THE NATION from NPR News.

Just let me reintroduce our guests. Janet Adamy, health policy reporter for the Wall Street Journal, and also with us, James Gelfand, senior manager for health policy at the U.S. Chamber of Commerce.

Let's get another caller in. This is Brett, Brett with us from Charlotte, North Carolina.

BRETT (Caller): Yes. Thank you for taking my call. NPR ran a story several years ago, pointing out a researcher had looked at all of the factors affecting that actual cost to consumers for health insurance, their premium costs. And the only item that he could find that had a direct causal effect was interest rates.

Years ago, when interests rates were high, all of the insurance companies would invest all of their premiums and interest - or in interest-bearing accounts - make all of their profit on the back-end, and so they cut premiums on the front-end, obviously, to get more premiums. And everybody seems to think that the extremely high cost right now is due to lawyers and doctors and inefficiencies. But this research...

CONAN: But it's also the interest rates are almost nothing.

BRETT: Exactly. So they, heaven forbid, actually it has to make money running the business, and nobody's talking about that.

CONAN: Is this part of the calculation, Janet?

Ms. ADAMY: You know, that wasn't a theory that I heard in this debate over the last year. I think what you heard more of was that the underlying costs of care were going up, that hospitals were charging more, that insurers were charging more. We didn't hear much about interest rates.

CONAN: And James Gelfand, does this sounds familiar to you?

Mr. GELFAND: I don't think that interest rates are probably the guiding factor, here. I think there's two other factors we should probably look at, too. One is a cost shift from the government. Right now, we believe that the cost of a private insurance premium is 20 to 30 percent more than it otherwise would be because of underpayments made by Medicare and Medicaid. Now, as you know, the bill is going to expand the Medicaid program to another 16 million or so people...

CONAN: Mm-hmm.

Mr. GELFAND: ...which we think could, in fact, lead to an even greater cost shift. And then, we're also wondering if there's going to be any sort of tort reform at some point going on.

CONAN: They've authorized some experiments in that regard, but they have yet to be enacted, as they're certainly not part of this bill.

Mr. GELFAND: Correct.

CONAN: So - this law, excuse me. Thank you very much for the call, Brett.

BRETT: Thank you.

CONAN: Bye-bye. And let's see if we can get one more caller in. Bryce(ph) is with us from Casper, Wyoming.

BRYCE (Caller): Yeah. Hi.

CONAN: Go ahead, please.

BRYCE: Thanks for taking my call. So - yeah, I'm a union sheet metal worker here in Wyoming and, you know, we've got one of this Cadillac plans. It's really good. I'm just curious why we're going to have to foot part of that, you know, with this tax they're going to put on this. It's part of our negotiated wage, and I just don't understand why the unions and stuff like that have become kind of the evil people all of a sudden.

CONAN: Well, I think your point was made directly to the White House and to the members of Congress, as well, which is why the change was made. But as you mentioned, its income and the - I guess the idea, Janet, is that it should - if it's income, it should be taxed like income.

Ms. ADAMY: That's exactly right. I mean, what the unions were saying throughout is that they should be protected from this tax, that people gave up wages in exchange for medical benefits, and so they pushed very hard to get the tax restructured so people like Bryce wouldn't feel a hit from something that they agreed to, instead of a wage. As we mentioned before, the tax doesn't take effect until 2014. The thresholds have been raised. I think what's more likely is...

CONAN: But if they had taken it as wages instead of health benefits, they would be taxed on them.

Ms. ADAMY: They would once the - yes, once the - on the portion that exceeds the threshold. That would be a 40 percent tax. But Neal, it's interesting, what's more likely to happen is that the unions - rather, the employers would offer a less generous plan, so they would get around the tax. So it's not likely that people will actually end up paying a lot of out-of-pocket for this.

CONAN: Bryce, this doesn't take effect for a few years yet.

BRYCE: Sure. I understand that. I just - you know, we're already footing a great part of it with our better plan. I just - I understand the income part of it, I just doesn't - it doesn't seem fair. I'm sorry.

CONAN: That's okay. Bryce, you're not the only person who feels aggrieved with this. Hardly alone. Thanks very much for the call. Good luck.

BRYCE: Thanks. You, too.

CONAN: And our thanks to our guest, James Gelfand, senior management for health - senior manager for health policy at the U.S. Chamber of Commerce. Thanks very much for coming in today.

Mr. GELFAND: Thanks, Neal.

CONAN: And Janet Adamy, health policy reporter for The Wall Street Journal. She also was kind enough to join us today in Studio 3A.

Ms. ADAMY: My pleasure.

CONAN: Coming up: We'll be on the Opinion Page with John Allen of the National Catholic Reporter. Stay with us. It's NPR News.

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