Direct from the candidates

Proposals to expand retirement coverage by making payroll-deduction retirement savings available at work are supported by experts across the political spectrum, commonly through payroll deduction “auto-IRA’s”. Should the goal of “auto-IRA” legislation in the next Congress be to establish a new standard structure for workers to save for retirement? Or to encourage more employers to establish meaningful retirement plans with company contributions? What factors would be important to accomplishing your goal?

Obama

More than 75 million working Americans –– roughly half the U.S. workforce –– lack employer-based retirement plans. Even when workers are given the option of joining employer-based plans, many do not take up the option because it requires considerable work to research plans and investment portfolios, and to enroll in the plan. However, extensive experience with automatic enrollment shows that when employees, including low-income employees who are the least likely to save, are given easy options to save, they overwhelmingly choose to do so. Automatic enrollment in 401(k) plans has increased enrollment rates dramatically.

Accordingly, Barack Obama has proposed automatic workplace IRAs to dramatically increase both the number of Americans who save for retirement and the overall amount of personal savings for individuals. Under this plan, employers who do not currently offer a retirement plan will be required to automatically enroll their employees in a direct-deposit IRA account. Employees may opt-out by signing a written waiver. Even after enrollment, employees will retain the right to change their savings levels, reallocate investment portfolios or end contributions to the account. Obama’s plan will also make it easier for the self-employed to access new easy-to-enroll IRAs.

To minimize administrative burdens on employers, Obama will set up a direct-deposit system that is compatible with the existing direct-deposit payroll system that most large employers already utilize. For most firms, offering payroll deduction IRAs will involve little cost since the employer will not be maintaining a plan; rather it would be acting simply as a forwarding agent for employee contributions. In addition, Obama will make temporary tax credits available to firms to defer the cost of establishing these arrangements. Firms with 10 or fewer employees or who have been in business for less than two years will be exempt from this requirement, but may take advantage of this low-cost opportunity to offer a convenient saving arrangement for their employees if they so choose (and will then be eligible for the temporary tax credits).

This program is projected to dramatically increase savings by low- and middle-income workers who do not currently save.

McCain

First, we should not sever the connection between employers and pensions. Matching contributions and vesting can be used by businesses to create incentives for people to remain on the job and save more for their own retirement.

Second, we should make it easier for people who work for small employers, for whom it is too costly to provide a pension plan, to save for their own retirement. Auto-IRAs are a natural way to achieve that. The goal is not to displace more and more company pensions, but rather that all workers have some way to easily save for retirement.

After years of decline, a minority of U.S. businesses are now able to provide health insurance benefits for their workers. In addition to cost containment, insurance market changes and subsidies would appear to be necessary if the U.S. is to meaningfully decrease or eliminate the rolls of the uninsured. Do you believe these subsidies should be directed primarily toward lower-income individuals or toward employers? Why? How could those subsidies best be targeted for a maximum impact on the uninsured and a minimal impact on the federal budget?

McCain

John McCain believes that the way to help employees of small businesses that don’t provide employee health insurance is to help the employee, rather than pursue Barack Obama’s proposal to impose a new tax on small businesses through his “play or pay” proposal. The Obama plan will only hurt small businesses and their employees; they are facing enough challenges. Today, the tax code provides tax benefits only to those who receive health insurance through an employer. We can provide the same tax benefit to all Americans. John McCain’s health-care reform plan would provide everyone a refundable tax credit that individuals could use to purchase health insurance, either through their employers or in the individual market. The credit would equal $5,000 for families and $2,500 for individuals. Because the tax credit would be refundable, it would permit even low-income families to purchase health insurance. Employees of small businesses that cannot afford to provide health insurance would now be empowered to purchase health insurance — even across state lines. And families would be able to keep health insurance even if a parent changes jobs or leaves the workforce.

This tax credit would enable Americans in every tax bracket to purchase – either from their employer or directly from an insurance company of their choice –– a health insurance plan as good as what a Member of Congress receives with no out of pocket cost.

John McCain will also take major steps to lower the cost of health insurance, such as shifting our system’s focus to preventive and coordinated care, updating our information-technology infrastructure, enacting comprehensive medical-liability reform, and bringing greater competition to the prescription drug market through safe reimportation and faster introduction of generics.

Finally, John McCain has proposed a Guaranteed Access Plan, which would join the federal and state governments in a cooperative effort to help those with pre-existing conditions obtain health insurance. This plan would reflect the best experience of the States to ensure these patients have access to health coverage. One approach would establish a nonprofit corporation that would contract with insurers to cover patients who have been denied insurance and that could join with other state plans to enlarge pools and lower overhead costs. There would be reasonable limits on premiums, and assistance would be available for Americans below a certain income level.

Obama

Barack Obama and Joe Biden will ensure affordable, accessible health care coverage for all Americans. Currently, there are over 45 million Americans lacking health insurance, and millions more are at risk of losing their coverage due to rising costs. Rising costs are also a burden on employers, particularly small businesses, which are increasingly unable to provide health insurance coverage for their employees and remain competitive. Nearly two million fewer Americans receive health insurance coverage through their employers now compared to eight years ago, and this trend shows no sign of slowing down. It is simply too expensive for individuals and families to buy insurance directly on the open market and impossible for many with pre-existing conditions.

The Obama-Biden administration will ensure affordable health coverage for all Americans. The Obama-Biden plan maintains patient choice, and establishes a National Health Insurance Exchange with a range of private insurance options as well as a new public health plan to allow individuals and businesses to buy affordable and accessible health coverage similar to that available to federal employees.

Barack Obama and Joe Biden understand that too many families that do not qualify for public health programs like Medicaid and SCHIP have trouble finding affordable health insurance. They know from talking to small business owners across the nation that the skyrocketing cost of healthcare poses a serious competitive threat to America’s small businesses. The Obama-Biden health care plan will provide tax credits to all individuals who need them for their premiums. They will also create a new Small Business Health Tax Credit to provide small businesses with a refundable tax credit of up to 50 percent on premiums paid by small businesses on behalf of their employees. To be eligible for the credit, small businesses will have to offer a quality health plan to all of their employees and cover a meaningful share of the cost of employee health premiums. Obama and Biden will also require insurance companies to cover pre-existing conditions so all Americans, regardless of their health status or history, can get comprehensive benefits at fair and stable premiums.

Health Insurance, outside of government sponsored programs, is by and large provided to American workers and their families by employers throughout the country. Group plans provided by employers are cost effective and efficient when compared to many other programs. How do you propose to support the efforts of employers to increase the quality of health care and to get the cost of health care and health insurance under control?

Obama

Barack Obama believes that employers play a critical role in our health care system. The Obama-Biden health care plan would build upon our current employer-based system and improve it.

The Obama-Biden plan will make health insurance work for people and businesses –– not just insurance and drug companies by:

• Lowering the costs of healthcare by $2,500 per family, a year –– this will make it easier for businesses to cover their employees and for employees to afford care;

• Creating a new Small Business Health Tax Credit to help small businesses provide affordable health insurance to their employees;

• Lowering costs for businesses by covering a portion of the catastrophic

health costs they pay if they guarantee that such savings are used to reduce premiums for employees;

• Preventing insurers from overcharging doctors for their malpractice insurance and invest in proven strategies to reduce preventable medical errors;

• Establishing a National Health Insurance Exchange with a range of private insurance options as well as a new public plan based on benefits available to members of Congress that will allow individuals and small businesses to buy affordable health coverage; and

• Ensuring everyone who needs it will receive a tax credit for their premiums.

The Obama-Biden plan will reduce costs and save a typical American family up to $2,500 as reforms phase in by:

• Investing $10 billion a year over the next five years to move the U.S. health care system to broad adoption of standards-based electronic health information systems, including electronic health records;

• Lowering drug costs by allowing the importation of safe medicines from other developed countries, increasing the use of generic drugs in public programs and taking on drug companies that block cheaper generic medicines from the market;

• Requiring hospitals to collect and report health care cost and quality data;

• Reducing the costs of catastrophic illnesses for employers and their employees;

• Reforming the insurance market to increase competition by taking on anticompetitive activity that drives up prices without improving quality of care;

• Establishing an independent institute to guide reviews and research on comparative effectiveness; and

• Supporting providers to put in place care management programs and encourage team care through implementation of medical home type models that will improve coordination and integration of care of those with chronic conditions.

McCain

John McCain’s plan preserves the tax code treatment of employers’ health insurance expenses, and seeks help reduce the rising costs of health care. Building on the current employer-sponsored system, John McCain will provide all American families with a $5,000 refundable credit to obtain health insurance, either through their employers or in the private market. This substantial contribution and the greater choice it would provide employees would ease the financial burden on businesses providing health insurance to their employees. McCain will also take several additional steps to reduce the cost of health care in America. Those steps include: permitting the purchase of health insurance across state lines; lowering drug prices through re-importation and generics; reorienting our health-care system around preventive care; updating our health-care infrastructure with 21st century technology; promoting coordinated care, where patients pay a single bill for overall disease care; reforming the Medicare and Medicaid payment systems; promoting the availability of smoking-cessation programs; passing comprehensive medical-liability reform; and bringing more transparency to health-care costs.

John McCain’s plan stands in stark contract to Senator Obama’s proposal, which would dismantle the current employer-based framework in favor of a big new federal government bureaucracy. Obama would regulate the content of insurance plans coverage and meet mandate that employers pay a $12,000 fine if they don’t offer such plans. According to a study in the National Bureau of Economic Research, an employer mandate of $9,000 for family coverage would reduce wages by $3 per hour and cause 224,000 workers to lose their jobs. To put this in perspective, the Obama plan would lose more than the 219,000 jobs created by American small businesses so far this year. Obama would also build a big new health bureaucracy, shifting more control to lobbyist-filled Washington at a time when Medicare is broke and Congress has a single-digit approval rating. According to prior analysis of similar plans, it is estimated that his employer mandate combined with a national plan option would potentially “shred” the employer sponsored insurance system by almost one-third or more than 50 million lives and raise employer taxes by almost $110 billion.

Over a hundred million Americans have health, retirement and other valuable benefits voluntarily provided by their employer under a nationally uniform framework established by the 1974 Employee Retirement Income Security Act. However, a number of proposals – such as state waivers from ERISA – would eliminate the framework established under ERISA and subject employers to multiple sets of differing rules and regulations. Do you support the maintenance of the voluntary employer-provided system for health and retirement benefits? If so, what steps will you take to ensure that employers are able to continue to provide these benefits uniformly under ERISA?

McCain

The employer sponsored health system provides coverage to more than 160 million Americans. John McCain’s health care plan simply builds on this system. Employers would still have the same incentive to provide health insurance as they do today. At present, employers can deduct the full cost of employee compensation –– including health insurance and other fringe benefits –– as a legitimate business expense. Nothing will change for employers. They will continue to be able to deduct the cost of health insurance they provide to employees. In addition, payroll taxes continue to be protected from taxes under the McCain plan. These features make providing health insurance neutral for employers in terms of financial incentives.

More importantly, millions of American families with employer sponsored coverage in all tax brackets even with the same coverage as a “Members of Congress” (approximately $12,000) will now come out ahead with McCain tax credits with additional funds going into a portable HSA. Finally, the McCain plan through a variety of comprehensive cost-containment proposals addresses the single biggest threat to employer sponsored system –– rising costs.

John McCain’s plan stands in stark contract to Senator Obama’s proposal, which would dismantle the current employer-based framework in favor of a big new government bureaucracy. Obama would mandate that employers provide a $12,000 plan to their employees or else pay a $12,000 fine. According to a study in the National Bureau of Economic Research, an employer mandate of $9,000 for family coverage would reduce wages by $3 per hour and cause 224,000 workers to lose their jobs. To put this in perspective, the Obama plan would lose more than the 219,000 jobs created by American small businesses so far this year. Obama would also build a big new health bureaucracy, shifting more control to lobbyist-filled Washington at a time when Medicare is broke and Congress has a single-digit approval rating. According to prior analysis of similar plans, it is estimated that his employer mandate combined with a national plan option would potentially “shred” the employer sponsored insurance system by almost one-third or nearly 52 million lives and raise employer taxes by almost $110 billion.

Obama

Barack Obama’s retirement and health plans build on and strengthen existing employer-based systems. The Obama-Biden health care plan maintains patient choice, and establishes a National Health Insurance Exchange with a range of private insurance options as well as a new public health plan to allow individuals and businesses to buy affordable and accessible health coverage similar to that available to federal employees. Large employers that do not offer meaningful coverage or make a meaningful contribution to the cost of quality health coverage for their employees will be required to contribute a percentage of payroll toward the costs of the national plan. Small businesses will be exempt from this requirement and, if they offer a quality health plan to all of their employees and cover a meaningful share of the cost of employee health premiums, will be eligible for a new Small Business Health Tax Credit providing a refundable tax credit of up to 50 percent on premiums paid on behalf of their employees.

Obama recognizes that, due to federal inaction, some states have taken the lead in health care reform. Under the Obama-Biden plan, states can continue to experiment, provided they meet the minimum standards of the national plan.

The self-employed and micro-business (ten or less employees) community are finding it increasingly difficult to obtain for themselves or provide to their employees retirement and health benefits due to the lagging economy and high costs. As a candidate for President, what is your position on mandates? Do you support a mandate requiring all employers to automatically enroll their employees into a retirement savings vehicle (IRA or 401K type plan)? Do you support a mandate requiring all employers to provide health coverage to employees? And/or do you support an individual mandate on health care, requiring all citizens to purchase coverage?

Obama

Retirement benefits: Under the Obama-Biden retirement savings plan, larger employers that do not offer a retirement plan will be required to automatically enroll their employees in a direct-deposit IRA account. Employees can opt out by completing a written waiver, and employers will receive a temporary tax credit. This requirement will not entail any contribution or other out of pocket expense for the employer.

Small and new employers are exempt from this requirement, but will receive a tax credit if they voluntarily automatically enroll their employees in payroll-deposit IRAs. The plan will give options to the self-employed to access new, easy-to-enroll IRAs, such as through the use of automatic debit.

Health care benefits: Under the Obama-Biden health care plan, large employers that do not offer meaningful coverage or make a meaningful contribution to the cost of quality health coverage for their employees will be required to contribute a percentage of payroll toward the costs of the national plan.

Small businesses will be exempt from this requirement. Barack Obama understands that the skyrocketing cost of healthcare poses a serious competitive threat to America’s small businesses. To help small business provide quality health care to their employees and to reduce the burden on small businesses in our economy, Obama will offer a new Small Business Health Tax Credit, which will provide small businesses with a refundable tax credit of up to 50 percent on premiums paid on behalf of their employees. To be eligible for the credit, small businesses will have to offer a quality health plan to all of their employees and cover a meaningful share of the cost of employee health premiums.

The Obama-Biden health care plan maintains patient choice of doctors and insurance coverage and ensures that all Americans have access to quality, affordable health care coverage. By requiring insurance companies to cover pre-existing conditions, providing tax credits, and bringing down the costs of healthcare by $2,500 per family, the plan will ensure that all Americans, regardless of their health status or history, can get comprehensive benefits at fair and stable premiums.

Finally, the Obama-Biden plan will require that all children have health care coverage and will expand the number of options for young adults to get coverage by allowing people up to age 25 to continue coverage through their parents’ plans.

McCain

John McCain supports the “auto-IRA” proposal as discussed above because it ensures that workers have the choice of building an IRA if they wish to do so, but he opposes the other mandates identified in this question. He has a far better plan to harness the power of competition and choice to provide all American families with high-quality health insurance without creating a monstrous new government bureaucracy. Under McCain’s plan, every American family would receive a refundable $5,000 tax credit to purchase health insurance, either through their employer or across state lines. Those who prefer to keep their employer-sponsored coverage could do so, and those who wish to take advantage of a better deal in the private market could do that. This plan would prove especially beneficial to workers in the self-employed and micro-business community, who would now receive the same tax break as other workers even if their employers cannot afford to provide health insurance. Underlying this plan is the fundamental principle of choice — the ability of families to choose from a menu of options to find the health-care plan that best meets their needs — in contrast to plans that outsource healthcare decisions to bureaucrats in Washington.

John McCain will also take numerous steps to make health insurance more affordable by reducing costs, including: permitting families to purchase health insurance across state lines; lowering drug prices through re-importation and generics; re-orienting our health-care system around preventive care; updating our health-care infrastructure with 21st Century technology; promoting coordinated care; reforming the Medicare and Medicaid payment systems; promoting the availability of smoking-cessation programs; passing comprehensive medical-liability reform; and bringing more transparency to health-care costs.

John McCain’s plan stands in stark contract to Senator Obama’s proposal, which would dismantle the current employer-based framework in favor of a big new government bureaucracy. Obama would mandate that employers provide a $12,000 plan to their employees or else pay a $12,000 fine. According to a study in the National Bureau of Economic Research, an employer mandate of $9,000 for family coverage would reduce wages by $3 per hour and cause 224,000 workers to lose their jobs. To put this in perspective, the Obama plan would lose more than the 219,000 jobs created by American small businesses so far this year. Obama would also build a big new health bureaucracy, shifting more control to lobbyist-filled Washington at a time when Medicare is broke and Congress has a single-digit approval rating. According to prior analysis of similar plans, it is estimated that his employer mandate combined with a national plan option would potentially “shred” the employer sponsored insurance system by almost one-third or nearly 52 million lives and raise employer taxes by almost $110 billion.

In the past 20 years, many employers have curtailed their traditional pension plans (called defined benefit plans) in favor of defined contribution plans, such as 401(k) plans. Traditional pension plans guarantee specific lifetime income to retired workers — and the precipitous decline in these plans is having a detrimental effect on Americans’ retirement security. Defined contribution plans are designed to encourage retirement savings, but these plans shift 100% of the post retirement risk onto the retirees — who may be ill-equipped to understand their risks and capably manage these risks.

As a candidate, how would you encourage more risk-free and stable retirement income opportunities to the American people by either reinvigorating defined benefit pension plans or promoting the development of alternative mechanisms?

McCain

Defined-benefit plans are an important and valued retirement savings tool and can have many advantages, but they are not riskless and they may not meet the needs of workers that change jobs several times. For workers to collect the full value of such pensions, their working careers are tied to the employer. Given our increasingly dynamic economy and our increasingly mobile workforce, many of today’s generations of workers are well served by having other options as well. It is only natural that our pension system adapt to our changing economy. What’s more, for an employee to fully collect the full value of the pension, his or her employer must remain solvent for their entire career and retirement as well. Thus, while defined-benefit plans are a very import and valuable, they are not the only retirement savings tool.

John McCain believes that the auto-enrollment provisions are a good way to dramatically increase participation in retirement plans. By establishing a relatively high default contribution rate and a sensible but pro-growth default portfolio that becomes more conservative as a worker approaches retirement age, we will see much greater participation and much larger retirement portfolios. Indeed, the early evidence is that this has clearly occurred.

Obama

Barack Obama will protect and strengthen the largest and most risk-free defined benefit pension plan in the United States: our Social Security system. Social Security is indispensable to workers and seniors, and may be the most important and most successful public program our country has ever established. Obama is committed to ensuring Social Security is solvent and viable for the American people, now and in the future.

In the private pension system, defined benefit pensions have unique value in protecting American workers. Their continued decline is regrettable, although, in part, it reflects other fundamental trends in our economy and workplace. The Obama-Biden retirement security plan will encourage 401(k) and other defined contribution plans to emulate some of the best features of defined benefit pensions. For instance, automatic enrollment in 401(k) plans approximates the universal coverage of an employer’s work force that the defined benefit plan has traditionally achieved. Moreover, Obama and Biden will ensure savings incentives are fair to all workers by creating a generous savings match for low and middle-income Americans. They will expand the existing Savers Credit to match 50 percent of the first $1,000 of savings for families that earn under $75,000, and will make the tax credit refundable. To help ensure that this proposal actually strengthens retirement investments, the savings match will be automatically deposited into designated 401(k) or IRA accounts. Coupled with the automatic workplace IRA proposal, this proposal will stimulate tens of millions of new Americans to invest for retirement. Over 80 percent of the savings incentives will go to new savers, and 75 percent of people eligible for the incentives who are expected to participate in the new program do not currently save.

In addition, to provide better protections for pension participants from corporate bankruptcies, Obama will work to put promises to workers higher on the list of debts that companies cannot shed and will help ensure that the bankruptcy courts do not allow companies to demand more sacrifices from workers than from executives when companies fall on hard times.

Both the accessibility and the rising cost of health care insurance are of concern to many Americans, and many business owners as well. In a recent survey of our members, fully 82% reported that “the cost and availability of health insurance for myself and my employees” is a very or extremely important issues — second only to the state of the economy in importance to them as business owners at the present time. Further, 47% of our members mentioned health care issues, unaided, in an open-ended question about what two or three issues would be most important to their Presidential vote this fall (again, second only to the state of the economy).

While choice, access, and quality of care issues are among the most important health care issues for business owners, NAWBO members differentiate themselves from others in their greater than average concern for preventative care and wellness issues. In particular, our members tell us that it is just as important for them to see preventative and wellness care issues included in any health care reform plan as it is to ensure choice of plans and doctors; 91% and 90%, respectively, say that it is very or extremely important for any health care reform plan to include wellness and choice.

Please explain the major elements of your health care reform plan, including how you would include preventative care, wellness care, and continued choice among coverage options and providers.

Obama

The Obama-Biden administration will ensure affordable health coverage for all Americans. Their plan maintains patient choice, and establishes a National Health Insurance Exchange with a range of private insurance options as well as a new public health plan to allow individuals and businesses to buy affordable and accessible health coverage similar to that available to federal employees. The Obama-Biden health plan will provide tax credits to people so they can afford health care and will reduce the typical family’s medical expenditures by $2,500 per year while providing them with more health care options and greater security. The Obama-Biden plan will end insurance company discrimination and guarantee that all Americans — regardless of preexisting conditions — will be able to purchase any private insurance plan at an affordable and fair price.

The Obama-Biden health plan will ensure that all Americans have access to preventive health care services. Their proposal creates a voluntary national pool, the National Health Insurance Exchange, comprised of a range of private plans and a new public plan. These plans as well as all federally supported health plans, including Medicare, Medicaid and SCHIP, will be required to cover all essential clinical preventive services with minimal or zero co-pays and deductibles.

Under the Obama-Biden plan, women will have access to affordable coverage for maternity care, reproductive care, cancer screening and treatment, preventive care, mental health care, and other necessary services. Obama and Biden will also strengthen partnerships between federal, state and local public health authorities to expand access to proven community-based prevention programs, extend prevention efforts into workplaces and schools, and support federal initiatives.

Under the Obama-Biden health care plan, large employers that do not offer meaningful coverage or make a meaningful contribution to the cost of quality health coverage for their employees will be required to contribute a percentage of payroll toward the costs of the national plan.

Small businesses will be exempt from this requirement. Barack Obama understands that the skyrocketing cost of healthcare poses a serious competitive threat to America’s small businesses. To help small business provide quality health care to their employees and to reduce the burden on small businesses in our economy, Obama will offer a new Small Business Health Tax Credit, which will provide small businesses with a refundable tax credit of up to 50 percent on premiums paid on behalf of their employees. To be eligible for the credit, small businesses will have to offer a quality health plan to all of their employees and cover a meaningful share of the cost of employee health premiums.

McCain

The key to John McCain’s health-care reform plan is choice. Under his plan, each American family would be provided with a $5,000 refundable tax credit ($2,500 for individuals) to purchase health insurance, either through their employers or in the individual market. This tax credit would replace the current deduction for employer-sponsored health insurance, thereby equalizing the tax treatment of employer-sponsored and non-employer-sponsored plans and providing a substantial increase in the federal government’s contribution to most families’ health insurance. This tax credit is sufficient to fully cover the cost of a health care plan as good as a Member of Congress’, regardless of what tax bracket you are in. For lower income Americans, this credit would cover the cost of such a plan and provide a contribution to that person’s health savings account. All families would be able to keep employer-sponsored coverage, but they could also search for better deals in the individual market and even purchase health insurance across state lines. This would vastly expand the ability of American consumers to choose among an array of options to find the health-care plans that best meet their needs. In addition, families would be able to keep their health insurance and, more importantly, their doctors, even if a parent changes jobs or leaves the workforce.

John McCain has also proposed a comprehensive plan to reduce the costs of health care in America. A major proposal of his is to re-orient our health-care system around preventive care. Chronic conditions account for three-quarters of the nation’s annual health-care bill. By emphasizing prevention, early intervention, healthy habits, new treatment models, new public health infrastructure, and the use of information technology, we can reduce health care costs. We should dedicate more federal research to caring and curing chronic diseases.

John McCain’s other proposals for reducing health-care costs include: lowering drug prices through re-importation and generics; updating our health-care infrastructure with 21st century technology; promoting coordinated care, where patients pay a single bill for overall disease care; reforming the Medicare and Medicaid payment systems; promoting the availability of smoking-cessation programs; passing comprehensive medical-liability reform; and bringing more transparency to health-care costs.

John McCain’s plan stands in stark contract to Senator Obama’s proposal, which would dismantle the current employer-based framework in favor of a big new government bureaucracy. Obama would mandate that employers provide a $12,000 plan to their employees or else pay a $12,000 fine. According to a study in the National Bureau of Economic Research, an employer mandate of $9,000 for family coverage would reduce wages by $3 per hour and cause 224,000 workers to lose their jobs. To put this in perspective, the Obama plan would lose more than the 219,000 jobs created by American small businesses so far this year. Obama would also build a big new health bureaucracy, shifting more control to lobbyist-filled Washington at a time when Medicare is broke and Congress has a single-digit approval rating. According to prior analysis of similar plans, it is estimated that his employer mandate combined with a national plan option would potentially “shred” the employer sponsored insurance system by almost one-third or nearly 52 million lives and raise employer taxes by almost $110 billion.

Self-funding is the largest source of health benefits (much larger than insurance company “insurance” policies). As much as 80% of workers in non-federal employee benefit health plans use some form of self-funding, mostly under the ERISA law. Congress wisely created ERISA to be the ultimate consumer protection system with strict fiduciary and transparency requirements regulated by the IRS and Department of Labor. Self-funding also allows nationwide flexibility to design health plans for the needs and cost effectiveness of each employment group or employees such as collectively-bargained. We are puzzled and concerned that most discussion about health reform uses only the very limited term “insurance.” Does non-use or uninformed tinkering with self-funding indicate the intent to eliminate or starve the largest mode of consumer-oriented health coverage? If not, what role do you envision for this successful self-funding health coverage option?

Vocabulary clarification: Self-funding, also sometimes called self-insurance, is a federally-created and regulated funding vehicle for employee benefit plans. An employer for his workers, or a collective-bargained group, creates a fund and custom-designs useful types of coverage to function as its own “insurance company” known as the Plan. The Plan budgets for, administers, and pays claims. What would normally be insurance company profits stay in the Plan for future claims.

McCain

John McCain’s plan does not affect the current law related to self-funding. In discussions of the plan, the term “health insurance” is used broadly to include self-funding. John McCain will replace the current employee deduction with a refundable tax credit that can be used either for employer-sponsored health insurance (including self-funding) or insurance in the individual market. The central thrust of his plan is building on the current employer-sponsored plan — not dismantling it — to greatly expand choice for American families and to provide needed financial help for those families who cannot afford health insurance or whose employers do not provide it.

Obama

Barack Obama believes that employers — many of which self-insure or self-fund their health plans — play a critical role in our health care system. Accordingly, his plan will build upon our current employer-based system and improve it, incorporating self-insurance and self-funding coverage options like those already in place.

Large employers that do not offer meaningful coverage or make a meaningful contribution to the cost of quality health coverage for their employees will be required to contribute a percentage of payroll toward the costs of the national plan. Small businesses will be exempt from this requirement and, if they offer a quality health plan to all of their employees and cover a meaningful share of the cost of employee health premiums, will be eligible for a new Small Business Health Tax Credit providing a refundable tax credit of up to 50 percent on premiums paid on behalf of their employees.

The Obama-Biden health care plan maintains patient choice, and establishes a National Health Insurance Exchange with a range of private insurance options as well as a new public health plan to allow individuals and businesses to buy affordable and accessible health coverage similar to that available to federal employees.

The retail industry employs one out every five workers in today’s economy and is an important source of health coverage for our associates and their dependents. Our industry is eager to assist in efforts to improve the quality, cost and access to health coverage. Americans deserve better value for our collective health care dollar. The National Retail Federation supports comprehensive reform (see the NRF Vision for Health Care Reform) designed to build carefully from our present voluntary system of financing health coverage.

If elected, how would you ensure that federal health care reform expressly provides for continuity of coverage and care for the millions of Americans who currently enjoy employer-sponsored health coverage?

Obama

The Obama-Biden plan both builds on and improves our current insurance system, which most Americans continue to rely upon. Under the Obama-Biden plan, Americans will be able to maintain their current coverage, have access to new affordable options, and see the quality of their health care improve and their costs go down.

The Obama-Biden plan provides for continuity of coverage for the millions of Americans who currently have employer-sponsored coverage. Under the plan, those who are satisfied with their current employer-provided plan will keep their plan and benefit by cost reductions of as much as $2,500 per year for a typical family. In addition, the National Health Insurance exchange will ensure portability and choice in health care plans so that participants will be able to move from job to job without changing or jeopardizing their health care coverage.

McCain

Under John McCain’s health-care reform plan, every American who currently receives coverage under employer-sponsored plans would be able to keep that coverage — and the federal contribution to the coverage would probably increase. His plan calls for a $5,000 refundable tax credit for families ($2,500 for individuals) to purchase health care, either through their employers or in the private market. That credit would replace the current deduction for employer-sponsored health insurance, effectively equaling the tax treatment of employer-sponsored and non-employer-sponsored health insurance while making it much easier for families to purchase high-quality health insurance. Families could keep their employer-sponsored coverage or, if they so choose, find a better plan in the individual market.

At the same time, John McCain will take several steps to reduce the cost of health care in America, including: permitting families to purchase health insurance across state lines; lowering drug prices through re-importation and generics; re-orienting our healthcare system around preventive care; updating our health-care infrastructure with 21st century technology; promoting coordinated care, where patients pay a single bill for overall disease care; reforming the Medicare and Medicaid payment systems; promoting the availability of smoking-cessation programs; passing comprehensive medical-liability reform; and bringing more transparency to health-care costs.

John McCain’s plan stands in stark contract to Senator Obama’s proposal, which would dismantle the current employer-based framework in favor of a big new government bureaucracy. Obama would mandate that employers provide a $12,000 plan to their employees or else pay a $12,000 fine. According to a study in the National Bureau of Economic Research, an employer mandate of $9,000 for family coverage would reduce wages by $3 per hour and cause 224,000 workers to lose their jobs. To put this in perspective, the Obama plan would lose more than the 219,000 jobs created by American small businesses so far this year. Obama would also build a big new health bureaucracy, shifting more control to lobbyist-filled Washington at a time when Medicare is broke and Congress has a single-digit approval rating. According to prior analysis of similar plans, it is estimated that his employer mandate combined with a national plan option would potentially “shred” the employer sponsored insurance system by almost one-third or nearly 52 million lives and raise employer taxes by almost $110 billion.

What steps will you take to encourage employers to provide retirement plans and encourage employees to save for retirement and under what circumstances would you propose and support a mandatory retirement savings plan, in addition to social security, for all working individuals?

McCain

It is not appropriate for the federal government to mandate that all employers provide pension plans. Small companies may find it quite difficult and costly to do so, which is why John McCain supports the creation of auto-IRAs to help their employees to save for retirement.

Creating supplemental personal accounts to accompany Social Security is a good way to ensure not only that all working Americans have some sort of retirement saving, but also that everyone has the option to benefit from growth in financial markets.

The government should encourage employers to provide retirement plans and should encourage employees to participate in saving for their future retirement; however, outside of Social Security, it is not the federal government’s job to require mandatory contributions of employees’ wages to such supplemental retirement plans.

Obama

Obama will encourage employers to provide retirement plans and retirement savings arrangements, and he will require larger employers that choose not to sponsor a plan to allow employees to use the employer’s payroll system as a conduit to forward employees’ own contributions to their own IRAs. The Obama-Biden retirement security program will provide more financial incentives for employees to save both within and outside of employer plans, and will give employers tax credits to establish payroll deposit IRAs in the workplace. This will not only expand dramatically the employer-based retirement savings arrangements but also will have the effect of encouraging many small employers to step up to sponsoring a 401(k) or SIMPLE plan.

Do you believe that federal benefit laws relating to retirement plans offered by governments should afford tribal governments the same status as other governments?

Do you support legislation that will achieve this parity?

Obama

Barack Obama is a strong supporter of tribal sovereignty. He generally supports tribal governments being treated the same as state and local governments. Barack Obama also is a strong supporter of the rights of the American worker. As for tribal retirement plans, legislation has already passed both the House and the Senate, and is currently in conference. Senator Obama hopes that tribal leaders and other interested parties are able to reach a resolution, taking into account tribal sovereignty and worker protections.

McCain

As a former Chairman and current member of the Senate Committee on Indian Affairs, John McCain strongly supports tribal sovereignty and equal treatment for tribal governments with their state and local counterparts. He is familiar with the this issue and cosponsored the Governmental Pension Plan Equity Act of 2004, which amends federal benefits law to treat tribal governments the same as other state and local government employers. McCain will continue to support efforts to enact this important legislation.

In the Winter 2007 Quarterly Newsletter from the Women’s Institute for a Secure Retirement, cafeteria plans or flexible spending accounts are described as follows: “These plans allow employees to contribute a portion of salary, before taxes, to accounts designated for health care expenses, including premiums and child care expenses…If you don’t have one at your job, ask your employer about setting one up. You can reduce your federal taxes and have more money left to fund your retirement account.” Actually cafeteria plans are far better for employees than this description because each employee is generally allowed to select from a variety of benefits the ones that the employee wants or needs most (hence the derivation of the name “cafeteria plan”).

Unfortunately due to the tax code, small business owners, whether they operate as sole proprietors, partners, LLC members, or 2% or more Sub-S owners are all prohibited from participating in a cafeteria plan. Further, the tax code sets forth discrimination tests which make it all but impossible for the remaining small business owners (only those owning stock in a C corporation or owning less than 2% in a Sub-S corporation) to have any meaningful benefit from the plan. Not surprisingly, this creates quite a disincentive for small business owners to provide these plans for their employees. Even though cafeteria plans can provide health insurance, dental insurance, life insurance and disability insurance, they are prohibited from offering long term care insurance as one of the benefits that can be provided to employees. Given the longevity of our aging population, we should be providing people with the opportunity to buy this insurance in an easy, tax free, payroll deduction way — exactly what a cafeteria plan provides employees.

Senators Snowe, Bingaman and Bond have come up with a “SIMPLE” cafeteria plan bill which would allow small business owners to participate in a cafeteria plan, provide a small business exemption from discrimination tests in exchange for the company making a contribution on behalf of its employees and among other needed reforms, allows long term care insurance to be offered as an optional benefit under the plan. The input of all major small business associations and cafeteria plan providers was solicited on this important legislation and it has the support of all of these groups.

As President would you support the initiative to promote small business cafeteria plans so that employees and owners of small businesses can enjoy this same benefit offered by larger businesses and governmental entities?

McCain

John McCain shares the goal of empowering employees of small businesses to obtain cafeteria plans, and he believes that his health-care plan will achieve it. A critical facet of McCain’s health-care plan is equalizing the tax treatment of employer-sponsored and non-employer-sponsored plans, thus permitting employees of small businesses who currently lack health insurance to purchase it. This is accomplished through a $5,000 refundable tax credit for every family to purchase health insurance. His plan would also permit families to purchase health insurance across state lines. These two features would encourage a proliferation of innovative plans that employees of small businesses could purchase with tax-free dollars.

Obama

Barack Obama would welcome the opportunity to work with the Small Business Council of America and other stakeholders to explore ways to assist small business in providing health care, retirement, and other benefits to their employees.

Pension funds lately seem to have become a scapegoat in Congress. For example, there are proposals to limit their investments in energy and agricultural commodities and tax them on their oil and gas investments. But pension funds also help with job creation through their venture capital investments and are vital contributors to the growth of the capital markets. How would you, as president, reconcile these too seemingly disparate faces of pension funds — are they important contributors to the economy or are they speculators who need to be reined in?

Obama

Pension funds are a key element of our economy. They contribute importantly to private investment in the United States, holding several trillion dollars of “patient capital” which is invested over the long term.

Barack Obama understands that, under the Employee Retirement Income Security Act of 1974 (ERISA), adapted from the law of trusts, fiduciaries of pension plans are held to the highest standards of care and prudence — a “prudent expert” standard — in making their investment decisions and evaluating potential risk and return. Whether particular investments can play an appropriate role in a plan’s investment portfolio may depend on the specific nature of the investment, how much of it the plan invests in, and how it fits into the plan’s investment policy and into the entire portfolio, including whether it contributes to an overall diversification of risks.

Obama supports full disclosure of pension investments. When companies fail to disclose their investments, the resulting lack of transparency can make it easier for fund managers to make imprudent or even fraudulent investment decisions. Obama will ensure that all employees who have company pensions receive annual disclosures about their pension fund’s investments, including full details about which projects have been invested in, the performance of those investments and appropriate details about probable future investment strategies. This measure will provide employees and retirees important resources to make their pension fund more secure.

McCain

Pension funds should be administered in the best interests of their shareholders. It is not the business of Congress to covertly conduct industrial policy by imposing various mandates on their investment activities. It is in the best interest of the beneficiaries that pension funds invest in a broad variety of assets and in assets that will improve the financial standing of America’s retirees. It is incumbent upon government, however, to create a financial regulatory system that protects investors and markets so that we end up with a transparent and highly efficient market. These two goals need not be at odds with one another.

Congress in passing IRC Section 409A contemplated putting an end to the practice of top officers in publicly traded companies walking away with literally millions of dollars in non-qualified deferred compensation plans, even as a company was going down in flames. Unfortunately, after 400 pages of complex regulation, IRS has determined that Congress also intended to apply this code section to virtually every operating agreement set up by a small business. The effect of this is that owners of small businesses must review, among other things, their employment agreements, buy-sell or other purchase agreements, stock options, restricted stock arrangements, partnership agreements, limited liability company operating agreements, and numerous other standard business arrangements. It is even possible that money that is to go out to a retired owner based on receivables coming in after the owner’s retirement may be subject to this code section. It is going to cost small businesses hundreds of thousands of dollars to comply with this code section that is basically meaningless in the context of a small business.

Small businesses and our Nation’s economy would be better served if small business owners rather than giving fees to their tax advisors to cope with this super complicated new tax code section were able to invest this money in their companies thereby making their businesses more profitable and contributing to our Nation’s economy. If you become President, would you urge Congress to restrict the impact of this code section to the companies that were originally intended and carve out an exception for businesses whose net worth is below a certain amount or for small businesses utilizing a pass through entity?

McCain

There is no question that our tax code is too complicated and that the compliance costs can be severe, more so for small business owners than anyone else. John McCain has declared his intent to keep small businesses and other pass-through entities from facing steep tax increases, and if elected he will work with Congress to reduce compliance costs as well.

To be sure, 409A has spawned some absurd results: for instance, a large corporation that pays an executive an annual bonus of $100 million could be okay, but a small business owner who pays someone $1200 in 12 annual installments must navigate the new set of regulations.

Obama

Barack Obama would welcome the opportunity to work with the Pension Forum and other stakeholders to examine this issue and explore additional ways to assist small business in providing benefits to their employees.