House & Senate Health Care Proposals

Summary of Key Provisions

Unlike the House bill, the Senate bill imposes a new payroll tax for individuals earning
over $200,000 and taxes on insurance companies, drug companies and medical device
manufacturers. Over the next decade, the bill would cost $848 billion, slightly less than
the $1 trillion House measure. But much of those savings are realized because it would
take effect in 2014, a year later than the House bill.

Both the House and Senate propose adding a new federal insurance program to help
with long-term care costs—the Community Living Assistance Services and Supports
program. It creates an optional insurance program that workers could purchase through
payroll deductions.

The stakes for American businesses, workers and retirees are substantial. Virtually
everyone will be touched by the reforms in these proposals. Here’s what they mean to
you:

Insurance for individuals

In both the House bill and the Senate proposal, insurance companies could not deny
coverage for preexisting conditions or cancel coverage because of illness. What they
could charge older adults for their coverage compared with what they charge younger
people would be capped.

• House Bill:

Everyone would be required to have health insurance. Those without coverage would
pay a penalty but no more than the national average premium for employer-provided
insurance, now $4,824 or $13,375 for a family. Families of four making less than
$88,200 a year would receive a subsidy to help pay premiums. A family of four earning
less than $33,070 would be eligible for Medicaid. Poor families’ premiums would be
subsidized depending on income.

• Senate Bill:

This measure has individual mandates and subsidies similar to the other bill. Penalties
for those without coverage range from $95 to $750 in 2016. A family of four earning
$29,326 would be eligible for Medicaid, adding about 11 million to Medicaid’s roles. A
temporary high-risk pool is created to insure those with preexisting conditions before the
program would take full effect in 2014.

If you’re insured by your employer, or you own a business

Some 157 million people—52 percent of the population—have health coverage through
their employers. They would not lose coverage if they get sick or lose their jobs. But if
they drop their coverage, they would face a penalty.

• House Bill:

If a company has an overall payroll of more than $500,000, it must cover contribute at
least 72.5 percent for individual coverage and 65 percent of an employee’s family
premiums or pay a fine for full-time employees. For part-time employees, employers
would need to contribute based on a ratio of their average weekly hours.

• Senate Bill:

If an employer has 50 or more full-time employees, the firm must offer insurance or pay
a fee of $750 per employee for employees who receive federal subsidies. A tax would be
imposed on “Cadillac” coverage plans provided by employers—plans that cost more
than $8,500 annually or $23,000 per family.

If you buy your own insurance

About 15 million people—5 percent of the population—buy their own insurance. If you
do, you could not lose it even if you get sick.

• House Bill:

You would have the option of purchasing insurance at a health insurance exchange,
where choices include private insurance plans and one from the government. Those who
don’t purchase coverage would have to pay a penalty. Premiums for low-income families
would be subsidized.

• Senate Bill:

Those who drop their insurance must pay a penalty ranging from $95 to $750 per person
in 2016.

If you don’t have insurance

About 46 million Americans—15 percent of the population—lack health insurance. The

number of uninsured people ages 50 to 64 has grown 36 percent since 2000, to 7.1
million. Men and women in this group face higher premiums because they are older and
usually have some health issues.

• House Bill:

Everyone would be required to be insured. Those who don’t purchase coverage must
pay a penalty. People could purchase insurance through a health insurance exchange,
where choices include competing private companies and a government option. Poor
families’ premiums would be subsidized depending on income. Insurance firms must
provide coverage to all eligible people regardless of any preexisting conditions.
Premiums for those over 60 could only be twice as high as those under 60.
• Senate Bill:

Insurance premiums could not exceed 10 percent of an individual’s income. People

could purchase insurance through a health insurance exchange, where choices include
private companies and no government option. People who don’t purchase coverage
must pay a penalty of between $1,500 and $3,800.

If you’re covered by Medicare

Some 44 million people—more than 11 percent of the population—are over age 65 and
covered by Medicare.

• House Bill:

The HHS Secretary would be authorized to negotiate drug prices. Costs of brand-name
prescription drugs in the drug plan’s coverage gap—the doughnut hole—would be cut in
half and the gap closes completely by 2019. The life of the Medicare trust fund is
extended by five years. The bill aims to eliminate $170 billion in overpayments to
Medicare Advantage programs, which make the cost of those plans 14 percent higher
than traditional Medicare. It would provide $15 billion in payments to skilled nursing
homes and rehabilitation centers; and provide Medicare coverage for doctors giving end-
of-life counseling. The House will address a scheduled 21 percent cut in reimbursements
for doctors participating in the Medicare program in a separate bill.

• Senate Bill:

Prices in the brand-name prescription drug coverage gap—the doughnut hole—are cut
in half starting in 2014. Also, starting in 2010, the Medicare doughnut hole would start to
be narrowed. The bill would extend the life of the Medicare Trust Fund by at least five
years. It also would eliminate the overpayment, or subsidies, to Medicare Advantage
programs; cut $15 billion in payments to skilled nursing homes and rehabilitation
centers; and provide Medicare coverage for doctors giving end-of-life counseling.

If you’re insured by Medicaid

New plans would expand Medicaid by an estimated 11 million to 15 million people.

• House Bill:

Medicaid expands. Families of four with income under $33,000 would be eligible.
Families of four earning $88,000 would pay no more than 12 percent of their income for
health insurance. Government subsidies would pay the rest.

• Senate Bill:

Medicaid expands. Families of four with income under $29,326 (133 percent of poverty)
would be eligible.
Financing the plan

• House Bill:

Total cost: $1.05 trillion over 10 years. Individuals with income over $500,000 and
families with incomes over $1 million would pay a 5.4 percent surtax. Costs would be
financed by $400 billion in cuts to Medicare and Medicare Advantage. Additionally, the
new taxes would kick-in right away while the provisions of the health care legislation
would lag by several years. This allows the Congress to “front load” the benefits of
health care reform in the first decade.

• Senate Bill:

Total cost: $848 billion over 10 years. Costs would be partially funded by about $420
billion in cuts from the future Medicare and Medicaid spending and $118 billion from
Medicare Advantage. In addition, nearly $300 billion would come from new taxes and
fees on health care insurers, clinical laboratories and manufacturers of health care
devices. The payroll tax for Medicare would rise from 1.45 to 1.95 percent for those
earning over $200,000 and a 5 percent excise tax for those getting elective cosmetic
surgery. The Senate also proposes an independent Medicare Advisory Committee
authorized to impose Medicare cuts directly. Additionally, the new taxes would kick-in
right away while the benefits of the health care legislation would lag by several years.
This allows the Congress to “front load” the cost of health care reform in the first decade.

Sources: Kaiser Family Foundation, Congress Daily, Reuters, AARP, US Chamber of Commerce.