US House of Representatives Passes HealthCare Reform

February 27, 2017

The United States House of Representatives has passed a healthcare reform bill, though it must still be approved by the Senate.

Here are the key propositions of the bill, broken into major categories:

Insurance Coverage Mandates and Penalties:

  • All individuals will be required to obtain healthcare coverage. There will be a 2.5% tax penalty for those who do not.
  • Most employers will be required to offer coverage to their workers, and to pay a minimum of 72.5% of the premium for each individual full-time worker, or 65% of the premium for family coverage. However, small firms (those with annual payroll of $500,000 or less) are exempt, and there are tax credits available to small companies.
  • Companies with annual payrolls between $500,000 – $750,000 that do not provide health coverage to their employees will have to pay fees on a sliding scale, ranging from 2 – 6% in 2% increments, while companies with payrolls over $750,000 will face fees of 8%.

Insurance Market Changes:

The new bill will:

  • Create an insurance market exchange where both small businesses and individual citizens will purchase coverage.
  • Set minimum benefit packages to be offered via such an exchange.
  • Create a new government health insurance plan to be sold via the exchange.
  • Allow the creation of nonprofit healthcare cooperatives which would sell coverage through the exchange.
  • Prevent insurers from excluding people for pre-existing conditions, or from charging higher premiums based on medical history.
  • Create a temporary high-risk pool insurance program to provide healthcare coverage to those who are currently uninsured, including those people who have been denied coverage because of pre-existing conditions. This program would be nation-wide, and would remain in operation until the exchange is functional.
  • Allow dependents to remain on their parents’ health insurance policies until they reach the age of 27.
  • Provide for the creation of rebates to consumers whose premiums far exceed the cost of their medical insurance expenses.
  • Creates a definitive process through which insurers will have to justify any premium increases.
  • Removes lifetime coverage limits.
  • Allows states to ender compacts, facilitating the sale of insurance across state lines.

Changes to Medicare and Medicaid

The proposed bill includes the following changes to Medicare and Medicaid.

  • Medicaid eligibility will be expanded to include anyone with an income of up to 150% of the poverty level.
  • In order to reduce hospital readmissions, payments will be based on quality of care instead of the number of services and treatments.
  • Payments to insurers providing Medicare services will be reduced for the Medicare Advantage program, to bring premiums more in line with the cost of current, traditional Medicare for senior citizens.
  • The gap in Medicare prescription drug coverage (aka the “doughnut hole”) will begin to close in 2010 with a 2019 target for complete elimination.
  • Medicare will be allowed to negotiate drug prices under its prescription drug program.

Financing

Finally, the healthcare reform bill includes propositions regarding insurance financing, some of which are:

  • A 5.4% surtax on individuals who earn more than $500,000/year and couples who earn more than $1 million.
  • A 2.5% excise tax on medical devises.
  • Repealing certain rules governing the way multinational companies may allocate interest expenses, with an expectation to recoup $6.1 billion over 10 years.
  • Reducing the number of tax breaks for foreign multinational companies incorporated in tax haven locals, which are likely to be using offshore structures to evade U.S. taxes.
  • The closure of a loophole that allows paper companies to earn tax credits for making biofuel that is already a byproduct of paper production. This loophole closure could net the government $24 billion over 10 years.
  • Write into law IRS rules which deny tax breaks on business transactions that lack an economic purpose, and are undertaken solely to create a tax write-off. Violators of this law could be fined 20-40%.