Congressional Democrats Meet to Merge Two Health Care Plans Into One

If it seems like the health care bill has been in the news forever, take heart. This week, the Democrats in the U.S. Congress are in preparations to merge the two bills passed last year by the Senate and House. The end result: one single bill. It will still have to be approved by both chambers of Congress before being sent on for President Obama to sign into law.

What are the differences between the two bills being merged together? Here’s a summary of the major points:

Abortion

It’s no secret that abortion coverage is one of the most contentious issues in any of the health care bills. As passed, both bills bar the use of federal funds to pay for abortions.

The Senate bill allows states to opt out of including abortion coverage in their exchanges, and would require anyone with such coverage to write two separate premium checks: one for abortion coverage, and one for everything else.

The House bill is written with tougher language requiring anyone seeking coverage for elective abortions to buy separate insurance riders.

Coverage Mandates

Both the Senate and House bills would make health insurance a requirement for most individuals, and would impose penalties on those who choose not to obtain coverage.

The Senate penalty would phase in with an initial $750-per-person penalty (up to a max of $2,250 per family), or a penalty of 2% of taxable income, whichever is greater, with the full penalty taking effect in 2016.

The House bill imposes a 2.5 percent penalty tax on income, up to the average cost of an insurance policy.

Employer Mandates

While the Senate bill does not include an actual employer mandate requiring coverage, firms with more than fifty workers would have to pay an annual fine of $750/worker if any of them obtain federally subsidized coverage on the exchange.
Federally-subsidized insurance is available to employees with company-sponsored plans that are deemed “unaffordable” – costing in excess of 9.8% of their salaries – but employers would pay a fine of up to $3,000 per employee receiving such a subsidy.

As well, the Senate bill would require some employers with health plans to provide vouchers to lower-income employees, in order for them to obtain insurance from the exchange.

The House bill, on the other hand, would require all employers with payrolls exceeding $750,000 to provide health insurance to their employees, or face a penalty of 8% of their payroll. Companies with a payroll between $500,000 and $750,000 would also be penalized, but their fines would be assessed on a sliding scale of 2 – 6 percent of their payroll.

Financing

Another major difference between the House and Senate takes on the healthcare bill is financing.

The Senate bill includes a 40 percent excise tax on high-cost health plans, and raises payroll taxes for Medicare to 2.35% from the current 1.45% for individuals who earn $200,000 or more a year, or couples who earn $250,000 or more. The Senate bill also includes special fees on drug companies, medical device makers, and insurers themselves, and imposes a 10% tax on indoor tanning.

The House bill would impose a 5.4% tax on individuals earning more than $500,000/year and couples who make more than $1 million, and imposes an excise tax of 2.5% on medical devices.

Insurance Market Reform

When it comes to market reform, the bills share many similarities. For example, both bar insurers from excluding people with pre-existing conditions, and prevent them from arbitrarily dropping policy holders. Both would also create insurance exchanges in which small businesses and individual consumers who don’t have employee-sponsored health plans can shop for coverage.

The differences are more subtle.

The Senate bill would create state-based exchanges, allow young people to stay on their parents’ policies until they turn 26, allow older clients to be charged up to three times more than younger policy holders, and require insurance companies to spend at least 85 cents of every premium dollar on medical care in small group markets, or 80 cents of every dollar in large group markets.

The House bill would create national exchanges, but allow the creation of state-based exchanges that meet minimum requirements, allow parents’ to keep their children on their policies until they turn 27, allow older people to be charged up to twice the amount of younger people, and require at least 85% of premium dollars be spent on medical care, with no concern for market size.

Medicaid

The Senate bill would make Medicaid available to everyone with an income up to 133% of the poverty level ($10,830 for an individual and $22,050 for a family of four in 2009), while the House bill would expand that to everyone with income up to 150% of the poverty level. Currently, many states have eligibility requirements that are below the poverty level.

Public Option

The Senate bill does not, strictly speaking, have a public option. Instead, it would direct the United States Office of Personnel Management, which currently oversees health policies for 8 million federal employees and their families, to contract with private insurance companies, and offer policies on the exchanges.

The House bill would create a new government health plan to compete with private insurers, and would require the plan to meet the same coverage requirements as private insurers.
In addition, both bills would create nonprofit cooperatives that would provide medical coverage to their members.