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Details of Obama health care plan

By The Associated Press
February 22, 2010

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President Barack Obama released a health care overhaul proposal Monday that builds on legislation passed Christmas Eve by the Senate, and makes some changes to placate Democrats in the House. Here are some of the main features:

--HOW MANY COVERED: Like the Senate bill, Obama's proposal would cover 31 million uninsured Americans.

--INSURANCE MANDATE: Like the bills approved last year by the House and Senate, the proposal would require most everyone to be insured or pay a fine. There is an exemption for low-income people. The Senate bill exempted people with incomes under the federal poverty level ($21,200 for a family of four) whereas Obama's plan, like the House version, would exempt people under the tax-filing threshold ($45,295 for a family of four). But the fines levied under the insurance mandate would be higher than the Senate proposed. Obama also keeps a "hardship exemption" that excuses anyone from buying insurance if it would cost more than 8 percent of their income.

--INSURANCE MARKET REFORMS: Like the House and Senate bills, Obama's proposal would stop unpopular insurance industry practices such as denying coverage to people with pre-existing conditions or charging women more. In response to a recent 39 percent rate hike announcement by Anthem Blue Cross in California, Obama would give the federal government the authority to block rate hikes, roll back premium prices and force insurance companies to give rebates to consumers.

--MEDICAID: Like the Senate bill, Obama's proposal would expand the federal-state Medicaid insurance program for the poor to cover people with incomes up to 133 percent of the federal poverty level, $29,327 a year for a family of four. The federal government would pick up more of the tab, paying 100 percent of the cost for newly eligible individuals through 2017. Obama eliminated a special deal that would have given Nebraska 100 percent federal funding for newly eligible Medicaid recipients in perpetuity. A different, one-time deal negotiated by Sen. Mary Landrieu for her state, Louisiana, worth as much as $300 million stayed in.

--TAXES: Obama scaled back a tax on high-cost insurance plans that was opposed by House Democrats and labor unions. The tax would be delayed from 2013 until 2018 and the thresholds at which it is imposed would be moved up from policies worth $8,500 for individuals and $23,000 for families, to $10,200 for individuals and $27,500 for families. Those changes mean $120 billion in lost revenue over 10 years that Obama would replace mostly by applying an increased Medicare payroll tax to investment income as well as wages for individuals making more than $200,000, or married couples above $250,000. The Senate bill had applied the tax only to wage income.

--PRESCRIPTION DRUGS: Obama would close the "doughnut hole" coverage gap in the Medicare prescription drug benefit that kicks in once seniors have spent $2,830. The Senate bill would have provided a 50 percent discount on the cost of brand-name drugs in the doughnut hole but Obama would close the gap entirely by 2020. The added cost, which the White House did not disclose, would be paid for in part by an additional $10 billion in fees on the drug industry.

--EMPLOYER RESPONSIBILITY: Obama keeps the approach in the Senate bill, which doesn't require businesses to offer coverage, but charges fees to companies with more than 50 employees if the government subsidizes employees' coverage. Obama increases the fees to $2,000 per worker instead of $750, but grants companies an allowance that was not part of the original Senate plan.

--SUBSIDIES: Obama provides more generous subsidies overall for purchasing insurance than the Senate bill did. The aid is available for households making up to four times the federal poverty level ($88,000 for a family of four).

-- HOW YOU CHOOSE YOUR HEALTH INSURANCE: Small businesses, the self-employed and the uninsured could pick a plan offered through new state-based purchasing pools called exchanges. Liberals hoped Obama would go with a national exchange like the House bill did, but he stuck with the Senate's state-based approach. People working for big companies would not see major changes.

--GOVERNMENT-RUN PLAN: Obama did not include the government-run insurance plan sought by some Democrats. He kept the Senate approach, which gives Americans purchasing coverage through new insurance exchanges the option of signing up for national plans overseen by the federal office that manages the government health plan available to members of Congress. Those plans would be private, but one would have to be nonprofit.

--ABORTION: Obama did not change the abortion language in the Senate bill, which is opposed by anti-abortion groups that say it allows federal funding of abortion. The bill tries to maintain a strict separation between taxpayer funds and private premiums that would pay for abortion coverage.

No health plan would be required to offer coverage for the procedure. In plans that do cover abortion, beneficiaries would have to pay for it separately, and those funds would have to be kept in a separate account from taxpayer money. States could ban abortion coverage in plans offered through the exchange. Exceptions would be made for cases of rape, incest and danger to the life of the mother.