House, Senate bills diverge on details

WASHINGTON - A partial comparison of the health care bill passed by the House with the one expected to be considered by the Senate.

Majority Leader Harry Reid, Democrat of Nevada, is still finalizing the Senate legislation, which merges the work of two committees, so some specifics of that bill are unknown.

Cost: The Congressional Budget Office says the bill’s cost of expanding insurance coverage over 10 years is $1.055 trillion. The net cost is $894 billion, factoring in penalties on individuals and employers who don’t comply with new requirements. That’s under President Obama’s $900 billion goal. However, those figures leave out a variety of new costs in the bill, including increased prescription drug coverage for seniors under Medicare, so the measure may be around $1.2 trillion.

How it’s paid for: $460 billion over the next decade from new income taxes on single people making more than $500,000 a year and couples making more than $1 million. The original House bill taxed individuals making $280,000 a year and couples making more than $350,000, but the threshold was increased in response to lawmakers’ concerns that the taxes would hit too many people and small businesses.

There are also more than $400 billion in cuts to Medicare and Medicaid; a new $20 billion fee on medical device makers; $13 billion from limiting contributions to flexible spending accounts; sizable penalties paid by individuals and employers who don’t obtain coverage; and a mix of other corporate taxes and fees.

Requirements for individuals: Individuals must have insurance, enforced through a tax penalty of 2.5 percent of income. People can apply for hardship waivers if coverage is unaffordable.

Requirements for employers: Employers must provide insurance to their employees or pay a penalty of 8 percent of payroll. Companies with payrolls under $500,000 annually are exempt - a change from the original $250,000 level to accommodate concerns of moderate Democrats - and the penalty is phased in for companies with payrolls between $500,000 and $750,000. Small businesses - those with 10 or fewer workers - get tax credits to help them provide coverage.

Subsidies: Individuals and families with annual income up to 400 percent of poverty level, or $88,000 for a family of four, would get sliding-scale subsidies to help them buy coverage. The subsidies would begin in 2013.

Benefits package: A committee would recommend a so-called essential benefits package including preventive services. Out-of pocket costs would be capped. The new benefit package would be the basic benefit package offered in the exchange.

Insurance industry restrictions: No denial of coverage based on preexisting conditions. No higher premiums allowed for preexisting conditions or gender. Limits on higher premiums based on age.

Government-run plan: A new public plan available through the insurance exchanges would be set up and run by the secretary of Health and Human Services. Democrats originally designed the plan to pay Medicare rates plus 5 percent to doctors. But the final version - preferred by moderate lawmakers - would let the HHS secretary negotiate rates with providers.

How you choose your insurance: Beginning in 2013 through a new Health Insurance Exchange open to individuals and, initially, small employers. It could be expanded to large employers over time. States could opt to operate their own exchanges in place of the national exchange if they follow federal rules.

Cost: Senate leaders aim to keep it under $900 billion over 10 years.

How it’s paid for: Fees on insurance companies, drug makers, medical device manufacturers. Tax levied on insurance companies, equal to 40 percent of total premiums paid on insurance plans costing more than $8,000 annually for individuals and $21,000 for families; that number may rise to $23,000. Retirees over age 55 and people in high-risk professions may be allowed to have somewhat more valuable plans before they’re taxed. Cuts to Medicare and Medicaid. A fee on employers whose workers receive government subsidies to help them pay premiums. Fines on people who fail to purchase coverage.

Requirements for individuals: Almost everyone must get coverage through an employer, on their own, or through a government plan. Exemptions for economic hardship. The Senate Finance Committee version required individuals and families to buy coverage as long as it cost no more than 8 percent of their income. Those who are obligated to buy coverage and refuse would face a fine of perhaps $100 in the first year of the program, likely to increase over time.

Requirements for employers: Not required to offer coverage, but companies with more than 50 full-time workers would pay a fee as high as $750 multiplied by the total size of the work force if the government ends up subsidizing employees’ coverage.

Subsidies: Tax credits for individuals and families likely making up to 400 percent of the federal poverty level, which computes to $88,200 for a family of four. Tax credits for small employers.

Benefits package: All plans sold to individuals and small businesses would have to cover basic benefits. The government would set four levels of coverage: Under legislation passed by the Senate Finance Committee the least generous would pay an estimated 65 percent of health care costs per year; the most generous would cover an estimated 90 percent. Those numbers could change.

Insurance industry restrictions: No denial of coverage based on preexisting conditions. No higher premiums allowed for preexisting conditions or gender. Limits on higher premiums based on age and family size.

Government-run plan: Reid proposed a new federal insurance plan last week with payment rates to providers negotiated by the Health and Human Services secretary. Unlike the House bill, states could opt out of the plan. It’s not clear the proposal commands enough votes to survive, and it could be replaced by a standby system pushed by moderates that would not go into effect until it was clear individual states were experiencing a lack of competition among private companies. The bill also would create nonprofit, member-owned co-ops to compete with private insurers.

How you choose your insurance: Self-employed people, uninsured individuals, and small businesses could pick a plan offered through new state-based purchasing pools. Employees would be generally encouraged to keep their work-provided coverage.