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Newsletter Article


Major Provisions of the Health Care Bill to be Offered on Senate Floor

By CQ Staff

November 23, 2009 – Senate Majority Leader Harry Reid, D-Nev., unveiled a version of the health care overhaul bill (HR 3590) Nov. 18 that will be debated after the Thanksgiving recess. The measure would expand Medicaid coverage, create state-run insurance exchanges, establish a public health care option to compete with private insurers and cost an estimated $848 billion over 10 years. The bill would:

Coverage Requirements
Individual Mandate
• Require most individuals to obtain minimum essential coverage, beginning in 2014.
• Exempt those who cannot afford coverage, including taxpayers with incomes less than 100 percent of the federal poverty level.
• Allow individuals and groups to keep their current health plans.
• Require those who do not obtain coverage to pay a penalty of $95 in 2014, rising to $750 in 2016 and indexed for inflation thereafter.

Employer Mandate
• Require businesses with 200 or more employees to automatically enroll employees into health insurance plans offered by the employer. Employees could opt out if they had other coverage.
• Require employers that have more than 50 employees and do not offer coverage to pay a $750 fee for each employee who gets a tax credit for health insurance through a state exchange.

Insurance Options
State Exchanges
• Require states to establish government-run insurance marketplaces, or exchanges, by 2014. All legal state residents could enroll in a plan through the exchange. If a state exchange is not operational by 2014, the Health and Human Services (HHS) secretary would establish and operate one.
• Allow insurers to offer one of four types of health plans. The plans would provide increasing levels of service and out-of-pocket costs.

Consumer Cooperatives
• Establish and appropriate $6 billion for a federal program to assist nonprofit, member-run health insurance issuers, known as the Consumer Operated and Oriented Plan (CO-OP) program.

Public Option
• Require the establishment of a public health insurance option within the exchanges by 2014. States could opt out if they provide health care coverage as comprehensive as required under the bill.
• Require the public option to cover essential health benefits, as defined by HHS. States could require additional benefits if they defray the costs.
• Require HHS to negotiate provider reimbursement rates for the public option. The rates could be no higher than average rates paid by private qualified health plans.

Tax Credits and Subsidies
• Provide tax credits to help low-income individuals and families to buy coverage on the exchange.
• Make most employees offered insurance by their employers ineligible for federal subsidies.
• Provide tax credits for certain small businesses that purchase health insurance for employees.

Insurance Requirements
• Bar insurance companies from denying coverage for pre-existing conditions or dropping coverage of those who become ill.
• Bar plans from imposing lifetime limits or creating plans that effectively discriminate in favor of higher-wage employees.
• Require all plans to cover preventive services and immunizations.
• Prohibit out-of-pocket expenses greater than those for health savings accounts.
• Cap deductibles at $2,000 for individuals and $4,000 for families for the small-group market.
• Provide that no individual, company or issuer would be required to participate in a federal health insurance program.

Abortion Restrictions
• Specify that abortion coverage could not be a mandated benefit as part of a minimum benefits package.
• Allow qualified health plans to decide whether to cover abortions, and if so, whether to limit coverage to pregnancies that result from rape or incest or that would endanger the woman's life, or to provide broader coverage.
• Allow the public option to cover elective abortion only if it uses money collected as premiums—not subsidies or federal funds—to pay for the procedure.
• Permit states to require coverage of abortions beyond those in cases of rape or incest or danger to the woman's life only if no federal funds are used for the coverage.
• Require each state exchange to offer at least one plan that covers abortion beyond the limits of rape, incest or danger to the woman's life and one that does not. Exchange plans that cover abortion would have to segregate revenue collected as private premiums from federal subsidy revenue and use only money from private premiums to pay for the procedure.
• State that the bill would not pre-empt state laws regarding the prohibition or requirement of funding or coverage for abortions.

Medicaid and Medicare
Medicaid Expansion
• Expand eligibility for Medicaid in 2014 to cover all children, parents and childless adults who are not eligible for Medicare and who have incomes up to 133 percent of the federal poverty level. States could expand eligibility as early as Jan. 1, 2011.
• Provide federal payments that would cover 100 percent of the cost of insuring newly eligible people under Medicaid through 2016, with additional aid available in subsequent years.
• Allow states to amend their state Medicaid plans to cover all non-elderly individuals with incomes above 133 percent of the federal poverty level.
• Require states to maintain the same income eligibility levels for adults through 2013, and the same levels for children currently in Medicaid through Sept. 30, 2019.
• Reduce Medicaid disproportionate-share hospital allotments, which are made to hospitals that treat a higher-than-average share of low-income patients.

Medicare Changes
• Repeal a scheduled 21 percent reduction in the Medicare physician pay rates scheduled for January and instead provide a 0.5 percent increase.
• Require Medicare to cover 100 percent of the cost of preventive services and waive beneficiary co-insurance requirements.
• Freeze the income thresholds from 2011 through 2019 for higher- income individuals who pay higher Part B premiums.

Prescription Drug Coverage
• Provide a $500 increase in 2010 for the onset of the coverage gap, or "doughnut hole," under the Medicare prescription drug program. Drug manufacturers would have to give a 50 percent discount on drugs that beneficiaries buy while in the coverage gap.

Medicare Advantage
• Make rates for Medicare Advantage the same as those for traditional Medicare fee-for-service plans.
• Base Medicare Advantage payments on the average of bids from Medicare Advantage plans participating in a market.

Children's Health Insurance Program
• Require states to maintain their current income eligibility levels for the Children's Health Insurance Program (CHIP) through fiscal 2019.
• Provide a 23 percentage point increase in the CHIP match rate from fiscal 2014 to 2019, but cap the rate at 100 percent.

Medical Malpractice
• Express the sense of the Senate that states should be encouraged to develop and test alternatives to the existing civil litigation system and that Congress should consider establishing a state demonstration program to evaluate alternatives to the existing civil litigation system for medical malpractice claims.

Revenue Provisions
Excise Taxes
• Impose a 40 percent excise tax on insurance companies that offer plans costing more than $8,500 a year for individuals and $23,000 a year for families, starting in 2013.
• Increase the hospital insurance tax rate for high-income taxpayers, including individuals who earn more than $200,000 and couples who file a joint return and earn more than $250,000.
• Impose a 5 percent tax on the amount paid for voluntary cosmetic surgery.

Flexible Spending Accounts
• Limit contributions to health care flexible spending accounts to $2,500 per year, beginning in 2011, and allow reimbursement only for prescribed drugs or insulin, not over-the-counter drugs.

• Raise $2.3 billion per year from fees on manufacturers and importers of prescription drugs that are sold in the United States.
• Raise $2 billion per year from fees on manufacturers and importers of medical devices that are sold in the United States.
• Raise $6.7 billion per year from fees on U.S. health insurance providers.

Itemized Deductions
• Increase to 10 percent, from 7.5 percent, the adjusted gross income threshold used for claiming the itemized deduction for medical expenses, except for those 65 and older, effective for taxable years beginning after Dec. 31, 2012.

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