House Democratic leaders are offering a $1.2 trillion, 10-year health overhaul bill that expands coverage to millions of Americans. House Republicans have unveiled their alternative, after months of criticizing the Democrats’ approach.
In the Senate, Majority Leader Harry Reid, D-Nev., is finalizing legislation merging the work of two committees and making other changes.
Here are details on the three bills. The Senate bill has not yet been made public, so some specifics are unknown.
The House Democratic bill (Affordable Health Care for America Act):
WHO’S COVERED: About 96 percent of legal residents under age 65 — compared with 83 percent now. About one-third of the remaining 18 million people under age 65 left uninsured would be illegal immigrants.
COST: The Congressional Budget Office says the bill’s cost of expanding insurance coverage over 10 years is $1.055 trillion. The net cost is $894 billion, factoring in penalties on individuals and employers who don’t comply with new requirements. That’s under President Barack Obama’s $900 billion goal. However those figures leave out a variety of new costs in the bill including increased prescription drug coverage for seniors under Medicare, so the measure may be around $1.2 trillion.
HOW IT’S PAID FOR: $460 billion over the next decade from new income taxes on single people making more than $500,000 a year and couples making more than $1 million. The original House bill taxed individuals making $280,000 a year and couples making more than $350,000, but the threshold was increased in response to lawmakers’ concerns that the taxes would hit too many people and small businesses.
There are also more than $400 billion in cuts to Medicare and Medicaid; a new $20 billion fee on medical device makers; $13 billion from limiting contributions to flexible spending accounts; sizable penalties paid by individuals and employers who don’t obtain coverage; and a mix of other corporate taxes and fees.
REQUIREMENTS FOR INDIVIDUALS: Individuals must have insurance, enforced through a tax penalty of 2.5 percent of income. People can apply for hardship waivers if coverage is unaffordable.
REQUIREMENTS FOR EMPLOYERS: Employers must provide insurance to their employees or pay a penalty of 8 percent of payroll. Companies with payrolls under $500,000 annually are exempt — a change from the original $250,000 level to accommodate concerns of moderate Democrats — and the penalty is phased in for companies with payrolls between $500,000 and $750,000.
Small businesses — those with 10 or fewer workers — get tax credits to help them provide coverage.
SUBSIDIES: Individuals and families with annual income up to 400 percent of poverty level, or $88,000 for a family of four, would get sliding-scale subsidies to help them buy coverage. The subsidies would begin in 2013.
HOW YOU CHOOSE YOUR HEALTH INSURANCE: Beginning in 2013 through a new Health Insurance Exchange open to individuals and, initially, small employers; it could be expanded to large employers over time. States could opt to operate their own exchanges in place of the national exchange if they follow federal rules.
BENEFITS PACKAGE: A committee would recommend a so-called essential benefits package including preventive services; out-of pocket costs would be capped. The new benefit package would be the basic benefit package offered in the exchange.
INSURANCE INDUSTRY RESTRICTIONS: No denial of coverage based on pre-existing conditions. No higher premiums allowed for pre-existing conditions or gender. Limits on higher premiums based on age.
GOVERNMENT-RUN PLAN: A new public plan available through the insurance exchanges would be set up and run by the secretary of Health and Human Services. Democrats originally designed the plan to pay Medicare rates plus 5 percent to doctors, but the final version — preferred by moderate lawmakers — instead would let the HHS secretary negotiate rates with providers.
CHANGES TO MEDICAID: The federal-state insurance program for the poor would be expanded to cover all individuals under age 65 with incomes up to 150 percent of the federal poverty level, which is $33,075 per year for a family of four. The federal government would pick up the full cost of the expansion in 2013 and 2014; thereafter the federal government would pay 91 percent and states would pay 9 percent.
DRUGS: Grants 12 years of market protection to high-tech drugs used to combat cancer, Parkinson’s and other deadly diseases. Phases out the gap in Medicare prescription drug coverage by 2019. Requires the HHS secretary to negotiate drug prices on behalf of Medicare beneficiaries.
ANTITRUST: Would strip the health insurance industry of a long-standing exemption from antitrust laws covering market allocation, price fixing and bid rigging. The bill also would give the Federal Trade Commission authority to look into the health insurance industry at its own initiative.
The House Republican bill (Common Sense Health Care Reform and Affordability Act):
WHO’S COVERED: About 83 percent of legal residents under age 65 — roughly in line with the share covered now. The Congressional Budget Office says the GOP bill would only reduce the number of uninsured by 3 million people in 2019.
COST: CBO says the gross cost of the bill is $61 billion over 10 years, but some provisions such as caps on malpractice judgments would also reduce government health care spending. That leaves a net 10-year reduction of $68 billion in the federal deficit.
HOW IT’S PAID FOR: No new taxes, but Republicans would get savings by capping medical liability awards, stepping up efforts to fight Medicare and Medicaid fraud, and setting up an approval process for generic versions of high-tech drugs.
REQUIREMENTS FOR INDIVIDUALS: No mandates.
REQUIREMENTS FOR EMPLOYERS: No mandate to offer coverage to workers or help pay the cost of premiums.
SUBSIDIES: Expands and revamps high-risk pools for people who can’t get health insurance because of pre-existing medical conditions. Offers tax breaks to encourage enrollment in health savings accounts. Provides incentive grants to states that take steps to reduce insurance premiums and reduce the number of uninsured.
HOW YOU CHOOSE YOUR HEALTH INSURANCE: Allows individuals to purchase lower-cost coverage across state lines. Encourages auto-enrollment in employer-sponsored plans. Allows small businesses to pool together to buy coverage. CBO says the medical liability caps and other provisions would reduce premiums for people with private insurance, mainly for those who buy their own coverage or work for small businesses.
BENEFIT PACKAGE: No federal standard for basic benefits package. Insurers would have to allow children through age 25 to stay on their parents’ coverage. People who participate in wellness programs would get a discount on premiums.
INSURANCE INDUSTRY RESTRICTIONS: Insurers barred from dropping coverage when a person gets sick, except in cases of fraud. No annual or lifetime benefit caps.
GOVERNMENT-RUN PLAN: None.
CHANGES TO MEDICAID: No expansion of eligibility. Would help efforts to sign up people who are currently eligible but don’t apply for coverage.
DRUGS: Grants 12 years of market protection to high-tech drugs used to combat cancer, Parkinson’s and other deadly diseases.
ANTITRUST: No provision.
The Senate Democratic bill:
WHO’S COVERED: The Senate Finance version covered an estimated 94 percent of Americans. Illegal immigrants would not receive government benefits.
COST: Senate leaders aim to keep it under $900 billion over 10 years.
HOW IT’S PAID FOR: Fees on insurance companies, drug makers, medical device manufacturers. Tax levied on insurance companies, equal to 40 percent of total premiums paid on insurance plans costing more than $8,000 annually for individuals and $21,000 for families, but that number may rise to $23,000; retirees over age 55 and people in high-risk professions may be allowed to have somewhat more valuable plans before they’re taxed. Cuts to Medicare and Medicaid. A fee on employers whose workers receive government subsidies to help them pay premiums. Fines on people who fail to purchase coverage.
REQUIREMENTS FOR INDIVIDUALS: Almost everyone must get coverage through an employer, on their own or through a government plan. Exemptions for economic hardship. The Senate Finance Committee version required individuals and families to buy coverage as long as it cost no more than 8 percent of their income. Those who are obligated to buy coverage and refuse would face a fine of perhaps $100 in the first year of the program, likely to increase over time.
REQUIREMENTS FOR EMPLOYERS: Not required to offer coverage, but companies with more than 50 full-time workers would pay a fee as high as $750 multiplied by the total size of the work force if the government ends up subsidizing employees’ coverage.
SUBSIDIES: Tax credits for individuals and families likely making up to 400 percent of the federal poverty level, which computes to $88,200 for a family of four. Tax credits for small employers.
BENEFITS PACKAGE: All plans sold to individuals and small businesses would have to cover basic benefits. The government would set four levels of coverage: Under legislation passed by the Senate Finance Committee the least generous would pay an estimated 65 percent of health care costs per year; the most generous would cover an estimated 90 percent. Those numbers could change.
INSURANCE INDUSTRY RESTRICTIONS: No denial of coverage based on pre-existing conditions. No higher premiums allowed for pre-existing conditions or gender. Limits on higher premiums based on age and family size.
GOVERNMENT-RUN PLAN: Reid proposed a new federal insurance plan this week with payment rates to providers negotiated by the health and human services secretary. Unlike the House bill, states could opt out of the plan. It’s not clear the proposal commands enough votes to survive, and it could be replaced by a standby system pushed by moderates that would not go into effect until it was clear individual states were experiencing a lack of competition among private companies. The bill also would create nonprofit, member-owned co-ops to compete with private insurers.
HOW YOU CHOOSE YOUR HEALTH INSURANCE: Self-employed people, uninsured individuals and small businesses could pick a plan offered through new state-based purchasing pools. Employees would be generally encouraged to keep their work-provided coverage.
DRUGS: Grants 12 years of market protection to high-tech drugs used to combat cancer, Parkinson’s and other deadly diseases. Drug companies contribute $80 billion over 10 years with the majority of the money used to limit the prescription coverage gap in Medicare.
CHANGES TO MEDICAID: Income eligibility levels likely to be standardized to 133 percent of poverty, which is $29,327 a year for a family of four, for all parents, children and pregnant women. States could negotiate with insurers to arrange coverage for people with incomes slightly higher than the cutoff for Medicaid.
ANTITRUST: Amendment expected to be offered on the Senate floor to strip the health insurance industry of its antitrust exemption.