What's Next for Health Insurance Reform?

Senate and House Negotiators Must Work Out Differences in Health Care Bills

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Dec. 28, 2009 -- The Senate and the House will try to reconcile their differing versions of health care reform when members of Congress return from their holiday break.

The Senate passed its health care bill on Christmas Eve by a vote of 60-39. Lawmakers must now work out differences in the House and Senate bills in a conference committee.

Here are the major elements of the Senate's health care bill, followed by a look at how that differs from the House bill.

Financing of Senate Bill

The legislation passed by the Senate, at a cost of $871 billion over 10 years, will be financed by taxes and fees, Medicare reductions, and at least one quirk.

To pay for coverage expansions, more than $400 billion will be cut from the Medicare program. The Senate bill also raises the Medicare payroll tax for individuals making at least $200,000 a year and couples earning at least $250,000, from 1.45% to 2.35%.

One key provision creates a new excise tax on high-cost "Cadillac'' benefits. Health plans valued at more than $8,500 for individuals and $23,000 for families would trigger the tax, though some occupations would be exempted.

Along with these new levies, medical industries -- from drug manufacturers to medical device makers -- would pay annual fees. Also, as a last-minute addition, tanning-salon treatments would draw a 10% tax, replacing a proposed levy on elective cosmetic medical procedures.

Main Provisions of Senate Bill

Insurer prohibitions: The Senate bill would bar health insurance companies from discriminating against people with pre-existing conditions. No longer could an insurer deny coverage to them.

It also would end premium differentials based on gender. Insurers could no longer set lifetime limits on coverage, and would be restricted on how much they charged older people. And the bill would also require insurers to spend at least 80% of their premium revenues on medical care.

Exchanges: States would establish new health insurance marketplaces where the uninsured, individuals, and small businesses could shop for health plans.

Subsidies: Lower- and middle-income individuals would receive government subsidies to afford health insurance. They would be available to people with incomes up to 400% of the federal poverty level ($88,200 for a family of four).

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Requirements for individuals: Most uninsured adults would have to purchase health insurance or face paying a penalty, which would begin at $95 a year per person in 2014, and rise to $750 or 2% of a household's income, whichever is greater, in 2016 and beyond.

Employer mandates: Companies with more than 50 full-time workers must offer health insurance or pay a fine if an employee obtains a subsidy for coverage through the insurance exchanges. Smaller businesses, meanwhile, would get tax credits to offer coverage.

Medicaid expansion: People with income up to 133% of the federal poverty level ($29,327 for a family of four) would be eligible to join Medicaid, the government insurance program for low-income Americans.

Other Issues in Senate Bill

Abortion restrictions: States could prohibit abortion coverage in their insurance exchanges, and people receiving subsidies would have to write a separate check for abortion coverage.

Illegal immigrants: The bill prohibits them from buying health insurance through the exchanges.

Young people: The legislation allows children to stay on their parents' health insurance plan through age 25.

Long-term care: The bill creates a voluntary federal program to provide long-term care insurance and cash benefits to people with severe disabilities.

Community health centers: Would receive an additional $10 billion.

Differences With House Bill

The legislation, after passing the Senate, must be reconciled with the House version of health reform in a conference committee. The major differences include a hot-button issue: the ''public option,'' the government-run health program intended to compete with private insurance plans.

The House bill contains a public option; the Senate dropped its version in favor of nationwide health plans being offered by private insurers.

Major differences also arise on taxes. Unlike the Senate version, the House plan does not impose a tax on ''Cadillac'' health plans, nor does it increase the payroll levy. Instead, it raises money with a surtax on couples with adjusted gross incomes of more than $1 million a year, and individuals with incomes of more than $500,000.

The House reform plan has tougher language restricting federal payment on abortion services. Its version has a bigger Medicaid expansion, and would allow illegal immigrants to buy insurance through the insurance exchange, though it would prohibit them from receiving subsidies.

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The insurance exchange would be created nationally in the House plan, not by states. And the House would end the insurance industry's antitrust exemption.

Come the new year, expect some testy negotiations on these differences between Senate and House Democrats.

WebMD Health News Reviewed by Louise Chang, MD on December 23, 2009

Sources

SOURCES:

Kaiser Health News: "New Report: Insurance Plans for Most Americans Wouldn't Cost More After Health Reform," "When Senate's Done, Health Bill Work Continues," "Requirement For Americans To Get Insurance Is Central To Health Overhaul."

New York Times: "Comparing the House and Senate Health Care Proposals."

Washington Post: "Health-care reform: How the bills stack up."

Wall Street Journal: "Key points of the Senate health-care bill."

Kaiser Family Foundation: "Focus on Health Reform."

Associated Press: "Dems, White House predict success on health care."

CNN: "FAQs about health care reform."

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