US House of Representatives Passes HealthCare Reform
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.
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%.