The Power of A

The House bill unveiled this morning is a 1,990 page document that the Congressional Budget Office has scored at $894 billion over ten years, covering an additional 36 million Americans and 97% of citizens overall.  You can see the legislation in its entirety here; the section-by-summary here; a list of major changes from HR 3200 here; and a time line for the legislation here.  Below is a summary of the major provisions of the bill, with changes from HR 3200 noted in parentheses:

Insurance Reforms

-          Pre-existing conditions 2010: Section 106 bridges the prohibition on denying care due to pre-existing conditions in 2013 and passage of the bill by shortening the time period for examining pre-existing conditions to 30 days and limiting the window to withhold coverage on such conditions to 3 months (language was added to new bill).

-          Pre-existing conditions 2013: Section 211 prohibits insurers from denying coverage based on pre-existing conditions beginning in 2013.

-          Guarantee Issue: Section 212 prohibits insurers from denying health coverage based on medical conditions.

-          Insurance Rating: Section 213 limits age rating for insurers to 2:1 and prohibits all other insurance ratings except for geographic area and family size.

-          Extension of Dependent Coverage: Section 216 allows individuals up to age 26 to remain on their parents’ insurance plan (language new in this bill).

-          Form Standardization: Section 237 requires insurers to use standard forms for most major insurance transactions, like enrollment and claims payment.

-          Minimum Employer Coverage: Section 412 requires employers to contribute 72.5% of the premium for individual coverage and 65% for family coverage for an insurance offering to be valid.

-          Grandfathered Insurance Plans: Section 202 outlines the requirements for “grandfathered insurance plans” [i.e. plans currently in place that do not meet minimum benefits standards] and creates a five year grace period for those plans.

-          FSAs: Section 532 limits the nontaxable salary reductions for flexible spending accounts to $2,500 (new language not contained in original HR 3200).

-          Physician Sunshine Act: Section 1451 requires the disclosure of financial transactions above $5 between manufacturers/distributors of medical devices or drugs and physicians/health care entities.

Mandates

-          Individual Mandate: Sections 401 and 501 require all individuals to have health insurance or pay a 2.5% tax on their modified gross income.

-          Refusing Employer Coverage: Section 342 says people with employer-provided care are ineligible for an insurance subsidy, but beginning in year 2 those that can show that their employer-provided insurance is more than 12% of their income can enroll in the Exchange and become eligible for credits.

-          Employer Mandate: Section 413 requires employers, if an employee declines coverage due to cost and enters the exchange, to contribute 8% of that employee’s salary to the Exchange.  All employers who fail to make a credible offer of coverage are required to pay a penalty of 8% of that employee’s salary.

-          Employer Mandate Exemption: All businesses with less than $500,000 in payroll are exempt from the employer mandate.  Employers with payrolls between $500,000 and $750,000 have a sliding scale penalty under 8% for not providing insurance (new bill raised the exemption from $250,000 to $500,000 and raises the full penalty minimum from $400,000 to $750,000).

-          Medical Coverage Extension: Title III extends the coverage of specific medical treatments, including for nurse-midwives, marriage and family therapy, and vaccines.

New Health Care Entities

-          Standards Board: Sections 241 and 242 create a Health Choice Administration and Commissioner tasked with studying and defining qualified plan standards.

-          Insurance Exchange: Sections 301 and 302 establish a Health Insurance Exchange (under the Health Choice Commissioner) that allows individuals and businesses to shop for insurance products.  In year 1, uninsured individuals and employers with fewer than 26 employees are eligible to participate.  By year three it expands to businesses with fewer than 101 employees (new bill raised the employer size eligible to participate in the Exchange to 100 employees).

-          Navigators: Section 305 tasks the Commissioner with publicizing the exchange, and allows that person to work with the Small Business Administration and “small employer benefit arrangements” to offer information on the exchange.

-          Cooperatives: Section 310 allows for the creation of nonprofit health insurance cooperatives (original HR 3200 did not have co-ops language).

-          Public Plan: Section 321 allows for the creation of a public insurance option by 2013, which must follow the same rules governing private insurers.

-          Public Plan Reimbursement: Section 323 requires the Secretary of Health and Human Services to negotiate with providers for price on behalf of the public plan (modified from reimbursement at Medicare rates).

Affording Coverage

-          Credits for Individuals: Sections 341 outlines affordability credits for individuals: a sliding scale of tax credits for those with incomes up to 400% of the federal poverty limit and who buy insurance through the Exchange.  Only U.S. citizens are eligible for the credits (scaled back from HR 3200).

-          Small Business Tax Credit: Section 512 provides a section 38 tax credit to businesses that have 25 or fewer employees whose average salaries are under $40,000.  The credit is good for two consecutive years (previously the credit had been good for three).  Nonprofits are not able to receive this credit.

-          Loan Repayments: Division C, Title II creates a series of new loan reimbursement programs for medical fields, including nursing and dentistry.

Revenue Raisers

-          Wealthy Surtax: Section 551 establishes a 5.4% tax on individuals making over $500,000 and couples making over $1 million (modified the income floor from $280,000 single filers and $350,000 married filers).  This tax is not indexed for inflation.

-          Medical Device Tax: Section 552 creates a 2.5% tax on medical device manufacturers for every device sold for use in the U.S.