The Final Healthcare Reform Bills: Comparing The House And The Senate Versions

Posted Sat, 2010/01/09 - 21:35 by Amer Kaissi

Photo:

After nearly six months of debates and intense discussions, we finally have two healthcare reform bills passed in each chamber of Congress: the House’s HR 3962 (Affordable Healthcare for America Act), and the Senate’s HR 3590 (Patient Protection and Affordable Care Act). As the passage of a final healthcare reform law largely depends on whether these two bills can be reconciled, it is important to understand the similarities and the differences between them.

Both bills establish new rules requiring insurers to accept all individuals in their plans, preventing them from cancelling coverage for pre-existing conditions and from setting premiums based on health status. While these issues are very important, the differences between the two bills are far more significant.

Health Insurance Exchanges

While both bills include provisions for the establishment of insurance exchanges, they differ vastly in how these will be set up. A health insurance exchange means that there would be a setting where all healthcare plans would be brought together to compete, so individuals and small companies can shop around, compare prices and coverage, and select a plan. In the House Bill, the exchanges will be operated by the federal government while states have the option to create exchanges that are subject to federal guidelines. However, in the Senate bill, it is the states that will operate the exchanges using federal guidelines.

Public Insurance Option

Another major difference relates to the public insurance option, which is a government-run health insurance plan (similar to Medicare but for all ages). While the House bill contains a public option in which the government negotiates rates with healthcare providers as private insurers currently do, the Senate Bill does not include a public option at all. Instead, it has a provision in which multi-state private insurance plans would be offered under contract with the federal Office of Personnel Management (at least one of the plans has to be not-for-profit).

Medicaid

Under both bills, Medicaid (the program for the poor and the needy) will be expanded, but the main difference relates to the change in eligibility rates. Under the House bill, the eligibility criteria for Medicaid would be expanded to up to 150% of the federal poverty level (roughly $16,245 for a family of four). Under the Senate Bill, the expansion is only to up to 133% of the federal poverty level.

Mandated Health Coverage

While both bills call for mandated health coverage for all Americans, differences still exist in terms of the penalties that would be applied in case an individual decides not to get coverage. In the House Bill, people who do not have health insurance coverage by 2013 will have to pay up to 2.5% of their income in penalty. The Senate’s penalties are a bit less harsh: people who do not have health insurance coverage will have to pay up to 0.5% of their income (or $95) in penalty by 2014, and up to 2% of their income (or $750) by 2016.

Funding the Bills

So who is going to be pay for all of this? The Senate and the House seem to differ on this issue too. In the Senate’s version, the money will come from a Medicare payroll tax increase of 0.9% (to 2.35%) for individuals earning more than $200,000 or families making more than $250,000 per year, and from a 40% tax on employer-sponsored health plans that exceeds $8,500 for individuals and $23,000 for families per year (the so-called Cadillac plans). In the House bill, the money will come from a 5.4% income tax surcharge on individuals with incomes over $500,000 and families with incomes over $1 million.

As the House and the Senate reconvene from the holidays’ break, it will be very interesting to see how and whether they can iron out their differences and have a final bill on the President’s desk to sign.

Permalink | 1 comment