The Power of A

Updated 1:11 PM: Yesterday evening Senate Majority Leader Harry Reid (D-NV) unveiled his merged comprehensive health care legislation, hours after the Congressional Budget Office (CBO) had released its score of the legislation.  The CBO scored the legislation as costing $848 billion over the next ten years, but would reduce the deficit $130 billion.  The bill according to CBO would also cut Medicare spending by $491 billion over 10 years and cover 94% of non-senior Americans.

Currently, the speculation is that Reid will make a motion to proceed on debate on the legislation on Saturday.  This motion, which will be filibustered, will require 60 votes to pass.  It is expected that all forty Senate Republicans will vote “no” on the motion, requiring a united Democratic caucus to proceed to debate on the bill.  Reid in public statements has sounded confident that he can get 60 votes on a motion to proceed, but the vote may have to be delayed due to Senator Baucus suddenly having to leave town.

The bill, which is over 2,000 pages long, combines the Senate HELP and Finance Committees health care bills passed earlier this year.  The Hill summarizes the major provisions here.

The following are the highlights of the legislation:

New Insuance Regulations

-            Insurers will be prohibited from denying coverage based on preexisting conditions, health status, and gender.

-           To immediately assist Americans who have no insurance due to preexisting conditions, the bill sets aside $5 billion to create a new program to provide affordable coverage to these individuals who would otherwise go uncovered until the ban on denying coverage due to preexisting conditions goes into place.

-          Dependents up to age 26 will upon passage of the bill be permitted to remain on their family’s insurance.

Insurance Affordability Measures

-          The bill extends Medicaid eligibility to all non-elderly Americans with incomes below the 133% of the federal poverty level.

-          Small employers with fewer than 25 employees whose average salaries are under $40,000 and offer credible coverage to full-time employees are eligible for a two year sliding scale tax credit to help provide the insurance.  For-profit employers will receive an income credit worth 35% the first year and 50% the second year, while nonprofit employers (any 501(c) is eligible) would receive a payroll tax credit worth 25% the first year and 35% the second year.

-          The bill seeks to begin reducing the Medicare “donut hole” by raising the ceiling on the initial coverage period by $500 in 2010.

-          To assist states if they face an increase in providing care to low income citizens, the bill provides federal money to pay for half the cost of any state’s Medicaid spending for the first year if that state’s costs increase more than 3%.

-          The bill would give tax credits on a sliding scale to individuals and families who earn up to 400% of the federal poverty level.

New Insurance Programs and Coverage

-          To assist consumers in completing health care paperwork, the bill provides federal grants to the states to create health insurance ombudsman programs.

-          Upon passage the bill requires all insurers to standardize enrollment and benefit forms as well as appeal procedures.

-          The bill does create a government-run “public option” that states could “opt-out” of participating.  In order to opt-out, a state would have to pass a law, not simply a resolution or leave the decision to the governor.

-          The public plan would require the government to negotiate reimbursement rates with providers.

-          The bill creates American Health Benefit Exchanges in the states for low-income individuals and small businesses to shop for different insurance plans.  Every state must have a SHOP Exchange for small business.

-          Within the established state Exchanges, a series of “navigators” are created to guide and educate Exchange-eligible individuals and businesses into the system.  Navigator-eligible entities include trade and professional associations, unions, and other membership organizations.

-          The bill also creates the “Consumer Operated and Oriented Plan” program, or Co-ops.  Co-ops would be state and regional nonprofit organizations whose sole purpose would be to create a health insurance plan for members of the co-op.  The nonprofit could not have been an insurance provider before July 17, 2009 and all profits must be used to lower insurance premiums.

-          The CLASS Act is included in the legislation, an initiative of the deceased-Senator Kennedy that creates a long-term social support for the elderly and disabled.

-          Specialists and practitioners who agree to work in underserved areas are eligible for tax incentives as well as repayment programs.

Health Care Coverage Requirements

-          The bill contains a requirement that individuals have insurance coverage.  The penalties for not having insurance begin in 2014 with a $95 fine, and scales up to $750 by 2016.

-          The bill does not have any employer mandate but, if even one employee in a company with more than 50 employees receives insurance through the exchange, the employer would be required to pay $750 for every person on their payroll, regardless of where they receive their coverage.

-          Employers with more than 200 employees are required to enroll their new employees in a health care plan but allows them the opportunity to opt-out of the insurance.

-          On abortion, the bill gives the Secretary of Health and Human Services the authority to determine when federal money is being used by insurers to fund abortions, and requires that all government money granted to insurers in the Exchanges be separated from private money used to cover abortion.  The bill does not prohibit plans in the Exchanges from offering coverage for abortion.

Revenue Raisers for Legislation

-          A tax is imposed on “Cadillac” health care plans, but the minimum level is raised to individual policies above $8,500 and family policies above $23,000.

-          The bill imposes a 0.5% increase in the Medicare Hospital Insurance tax on individuals who earn more than $200,000 and couples that earn over $250,000.

-          The bill uses the “Botox” tax to raise additional funds to pay for the legislation.  The bill imposes a 5 percent tax on any elective cosmetic surgery.

Section by section analysis

Title summary

Breakdown of how two bills were combined