November 24, 2014

Health Care Bill Comparison

President’s Outline
(09/09/09)
Senate Leadership (Reid) Plan, as amended
(12/20/09)
House Passed Bill
(HR 3962)

INDIVIDUAL
MANDATE

(to purchase health
insurance

YesBeginning in 2014, individuals required to maintain minimum coverage or pay a penalty (the greater of a flat dollar amount or percentage of individual's income)
Beginning in 2013, individuals required to
obtain coverage or pay a penalty equal to
lower of 2.5% of their AGI above the filing
threshold* or the average premium in the
Exchange

*Note: In 2009, the threshold if $9350 for
singles and $18,700 for couples.
"PLAY or PAY"
(Employers must
offer insurance or contribute to
the cost of
subsidies)
YesEmployers w/ more than 50 workers that do not offer coverage would have to pay a penalty of $750 (indexed) for each full-time worker obtaining subsidized coverage through the Exchanges (explained below).
Employers with payroll above $500,000
must offer insurance to employees and
contribute a substantial share toward premiums,
or pay a fee (starting at 2% of payroll and
increasing to 8% for payrolls above $750,000).
Exemption for
SMALL BUSINESSES
 Exemption for firms with 50 or fewer workersExemption for annual payroll of
$500,000 or less.
Premium subsidies for
SMALL BUSINESSES
 Tax credits for small employers w/ fewer than 25 workers                             
Tax credits for businesses with 10 or fewer
employees and $20,000 or less in average
wages. Credits phase out if the employer
has 25 or more employees.
Insurers
required to
ACCEPT ALL
APPLICANATS

YesInsurers would have to accept all applicants and could not limit coverage for preexisting conditions.
Insurers would have to accept all applicants and could not limit coverage for preexisting conditions.
COMMUNITY RATING
(same price for all
regardless of age,
gender, health status)
 Insurers could not vary premiums to reflect differences in enrollees' health (except for tobacco use).Insurers could not vary premiums to reflect differences in enrollees' health.
Prohibit Annual and Lifetime
Limits on Benefits
 Prohibits annual and lifetime limits on benefits
Prohibits annual and lifetime limits on benefits
Caps OUT-OF-POCKET spending For all plans, prohibits out-of-pocket limits that are greater than the limits for Health Savings Accounts ($5,950 for individuals and $11,900 for families)Helps prevent medical bankruptcy by limiting out-
of-pocket costs
to no more than $5,000 for
individuals and $10,000 for families (indexed)
EXCHANGES where
people can compare
and purchase
insurance (with
federal subsidies)

Yes (and high risk
pools to provide
coverage prior
to establishment
of exchanges)

In 2014 each State would set up insurance "exchanges" through which individuals and families could receive federal subsidies to reduce the cost of purchasing coverage

To qualify for the exchanges, plans would have to meet specified standards (essential benefits and limits on cost sharing)

Firewall: Workers w/ employer-provided coverage are ineligible to use exchanges unless the cost of employer's insurance exceeds a specified percentage of income (9.8% in 2014)
In 2013 would set up a national "Health Insurance
Exchange" through which individuals and families may receive federal subsidies to reduce the cost of purchasing coverage

States could apply to operate their own exchanges
SUBSIDIES for
low- and
middle-income
to purchase
insurance
Tax credits up to
400% of FPL*
Exchanges would provide subsidies (in the form of refundable tax credits) for individuals and families between 133% and 400% of Federal Poverty Level (FPL) (FPL is $88,000 for a family of 4)
 
Exchange administers sliding scale "affordability credits" for premiums and cost sharing for
individuals and families between 150% and 400%
of Federal Poverty Level (FPL)
(FPL is $88,000 for a family of 4)
 

PUBLIC OPTION
as additional plan

offered in the

Exchanges

Cross-state sale
of health insurance

President
supports
public plan but
says
it’s not a
“silver bullet”
No public option -- replaced by requirement that the Office of Personnel Management (OPM) contract for  national or multi-state health insurance plans (one for-profit; one nonprofit)

States may form compacts to permit cross-state sale of health insurance

National public plan administered by HHS with provider payments to be negotiated. Premiums
would have to be sufficient to cover costs and pay
back the government for start-up funding.

States may form compacts to permit cross-state
sale of health insurance
Expand MEDICAID

CHIP
 Starting in 2014, most nonelderly w/ incomes below 133% of the FPL would be eligible for Medicaid. 

Increased federal match rate for CHIP (from an average of 70% to an average of 93%).
Starting in 2015, most nonelderly w/ incomes below 150% of the FPL would be eligible for Medicaid

CHIP-eligible children move to the Exchange or
Medicaid in 2014
Percent of new
MEDICAID costs
borne by the federal govt
 Federal government would pay 90% of the costs of newly eligible enrollees (compared to an average of 57% of current Medicaid costs); [100% for Nebraska]
Federal government would pay 91% of the costs of newly eligible enrollees (compared to an average 57% of current Medicaid costs)
CLASS Act
(New federal
Long-Term Care
Insurance)        
                                                             
Includes a voluntary federal program for long-term care insurance which would initially bring in excess premium revenue, but in the decade following 2029 would begin   to increase deficits according to CBO.  Only active workers could enroll.                       
Includes a voluntary federal program for long-term care insurance which would initially bring in excess premium revenue ($102 b), but in the decade following 2029   would begin to increase deficits according to CBO. Both active workers and nonworking spouses could enroll.
 President’s Outline
(09/09/09)
Senate Leadership (Reid) Plan, as amended
(12/20/09)
House Passed Bill
(HR 3962)
COVERAGE:
Share of legal,
nonelderly
covered                       
 Coverage of legal, nonelderly would increase from
83% to 94% by 2019 (reducing the number of
uninsured by 31 million through the Exchanges and
Medicaid/CHIP expansion)
Coverage of legal, nonelderly would increase
from 83% to 96% by 2019 (reducing the number
of uninsured by 36 million through the Exchanges
and Medicaid/CHIP expansion)
10-YEAR COST:
Subsidies;
Medicaid;
Small Employer
Tax Credits
“Around $900
billion”
$871 billion:  gross cost of coverage
provisions ($436 b in subsidies; $395 b in
net outlays for Medicaid and CHIP; $40 b in
tax credits for small employers)  
$1.052 trillion:  gross cost of coverage
provisions ($620 b in subsidies; $425 b in
net outlays for Medicaid and CHIP; $25 b in
tax credits for small employers)                                                                        
NET DEFICIT
IMPACT
“I will not sign a bill
that adds one dime
to our deficits now
or in the future”

Net deficit reduction of $132 b in first 10 yrs. 
"In the subsequent decade, the collective effect of
its provisions would probably be continued reductions
in federal budget deficits if all of the provisions
continued to be fully implemented." -- CBO

Net deficit reduction of $138 b in first 10 yrs. 
"In the subsequent decade, the collective
effect of its provisions would probably be
slight reductions in federal budget deficits." --CBO                            
MAJOR COSTS
(2010-2019)
 Health Insurance Exchange Subsidies (begin 2014)
--$436 b (outlays and tax credits)

Expand Medicaid/CHIP (beginning 2014)
--$395 b
Revenue Losses from Small Employer Tax Credit
--$40 b
Part D Doughnut Hole: Coverage Gap Discount Program
--$19.5 b
Prevention and Public Health Fund
--$13 b
 Funding for Community Health Centers and NHSC
--$10 b
Increased appropriations for IRS, HHS
--Subject to annual discretionary decisions


Note: This outline of major costs does not include
the effect of separate pending legislation that
seeks to cancel scheduled cuts in Medicare physician
pay under the sustainable growth rate (SGR)
mechanism--which costs in excess of $200 billion.

Health Insurance Exchange Subsidies (2013)
--602 b
Expand Medicaid/CHIP (beginning 2013)
--$425 b
Upward Adjustment in some Medicare Payments
--$57 b
Public Health Investment Fund
--$33 b (subject to appropriations)
Revenue Losses from Small Employer Tax Credit
--$25 b
Spending for High-Risk Pool
--$5 b
Public Health Insurance Option
--Deficit Neutral
Increased appropriations for IRS, HHS
--Subject to annual discretionary decisions by
   Appropriations Committees

Note: This outline of major costs does not
include the effect of separate pending legislation
that seeks to cancel scheduled cuts in Medicare
physician pay under the sustainable growth rate
(SGR) mechanism--which costs in excess of
$200 billion.
MAJOR
OFFSETS
(2010-2019)
 

Medicare Reductions in FFS Payment Rates,
in expectation of productivity improvements*
--$186 b
40% Excise Tax on High-Cost "Cadillac" Plans (2013)
--$149 b
Reduce Medicare Advantage Subsidies
--$118 b
Fees on Manufacturers, Importers and Health Insurers
--$101 b
Establish Long-Term Care Insurance (CLASS)
--$72 b
Increase Medicare HI Tax on wages above $200K/$250K
--$87 b
Reduce Medicare and Medicaid DSH Payments**
--$43 b
Penalty Payments by Employers & Uninsured
--$28 b and $15 b, respectively
Independent Payment Advisory Board (see below)
--$28 b
Temporary Adjustment in Part B Premiums
--$25 b
Standards for electronic admin. transactions
--$19 b
Raise to 10% floor on medical expense deduction
--15 b
Increase Part D Premiums for High-Income Beneficiaries
--$11 b
Biologics price competition
--$7 b
5% Excise Tax on cosmetic surgery
--$6 b

*Assumes that Medicare spending would be held
to average annual increase of 6%
during next
2 decades, compared to 8% in the past 2 decades.

**Disproportionate Share Hospitals (DSH) receiving
payments due to large number of low-income
patients served

5.4% Surtax on AGI above $500K ($1 m - joint)
--$460 b
Medicare Reductions in FFS Payment Rates
in expectation of productivity improvements
--$228 b
Reduce Medicare Advantage Subsidies
--$170 b
Penalty Payments by Employers
--$135 b
Establish Long-Term Care Insurance (CLASS)
--$102 b
Reforms to Medicare Part D, e.g. drug rebates
--$42 b
Penalty Payments by Uninsured Individuals
--$33 b
Exclude certain fuels from biofuels tax credit
--$24 b
Excise Tax on Sale of Medical Devices
--$20 b
Reduce Medicare and Medicaid DSH Payments**
--$20 b
Other New Revenues
--$66 b


*Assumes that Medicare spending would be held
to average annual increase of 6%
during next
2 decades, compared to 8% in the past 2 decades.

**Disproportionate Share Hospitals (DSH) receiving
payments due to large number of low-income
patients served
 




COST
CONTAINMENT

 

Independent
Medicare
Commission

to devise and
implement cost
savings (excluding elgibility and
benefits)

Competition from
co-op and health insurance
exchange;

Fraud crackdown;

Cut Medicare
Advantage
subsidies;

Demo projects on
capping medical malpractice
awards;

Require insurance
companies to cover
routine checkups
and preventive care

40% Excise Tax on High-Cost "Cadillac" Plans (2013)
--threshold of $8,500 for single policies and $23,000
for family policies (indexed)

Reducing the rate of growth in future Medicare payments
(although CBO says "it is unclear whether such a reduction in the growth rate could be achieved")

Independent Payment Advisory Board (IPAB) would
develop recommendations that would limit the rate of
growth in Medicare; the recommendations would
go into effect unless blocked by Congress;
During 2015-2019, Board would have to act
if Medicare is projected to grow more rapidly
than a measure of inflation (average of CPI for medical
services and the overall index for urban consumers);
After 2019, IPAB would have to act if growth exceeds the
rate of increase in GDP (per capita) plus 1%;
Strict Limitations on Board's Powers:
could
not impact eligibility or benefits, or payments to
hospitals

HHS to adopt and regularly update standards
for electronic administrative transactions

Requirement for insurers to provide rebates if administrative costs exceed specified levels

Require coverage of preventive services and
immunizations
which some argue will reduce
costs over the long-term (although CBO has said that prevention and wellness programs, while improving
outcomes, do not score as a cost savings --
08/07/09 CBO letter)

Unlike the Senate bill, the House bill does not
include any limitation on the employer provided
health care exclusion.  (Many believe that limiting
that tax exclusion would be the most effective
method of placing downward pressure on health
care costs.)

Reducing future Medicare provider payments

Medicare demos: accountable care organizations;
medical homes; bundling of payments;
incentives to decrease hospital readmissions

Administrative simplification (similar to the
Senate provision on standards for
electronic administrative transactions)

CBO Analysis of House Bill (Revised)    JCT Analysis of House Bill    CBO Analysis of Revised Reid bill   CBO Correction   JCT Analysis of Reid Bill   
For comments on this side-by-side, contact ckonigsberg@concordcoalition.org